MGMT 425 Test 1

What led to the decline of central planning in the 1980's?

-Failure to create economic value -Failure to provide incentives -Failure to measure up to the market system -Failure to satisfy consumer needs

What are the three things that make up a Market Economy?

-Free choice to buy anything as long as you have the money -Free enterprise to be able to produce and sell anything you want -Price Flexibility (price based on supply and demand)

What are the five freedoms of a democracy?

-Free expression -Periodic Elections -Civil and Property Rights -Minority Rights -Nonpolitical Bureaucracies

What are the Gauges of Economic Development?

-Gross National Product (GNP) -Gross Domestic Product (GDP) -Purchasing Power Parity -Human Development Index

What are some benefits of globalization?

-Increases wealth and efficiency -Gives the labor market flexibility -Creates jobs in developing nations -advances developing nations' economies

What are some problems with globalization?

-It eliminates jobs in developed nations -Lowers wages in developed nations -Exploits workers in developing nations

What is a legal system?

A set of laws and regulations including methods for enacting and enforcing laws

Social Status

like social classes (middle and lower) in the U.S.

Denationalization

national boundaries are becoming less relevant and important

Attitudes

positive or negative evaluations of objects or concepts

Caste system

you are born into a certain caste and work within your caste, marry into your caste, and you can't move out of your caste.

What are the two main globalization institutions?

- The World Bank -International Monetary Fund (IMF)

What are some components of culture?

-Aesthetics -Values -Attitudes -Attitudes toward cultural change -Manners and customs -Social Structure

What are the five methods for managing political risk?

-Avoidance -Adaptation -Dependency Maintenance -Information Gathering -Influencing local politics (U.S.- Foreign Corrupt Practices Act)

What are some types of Economic Systems?

-Centrally Planned Economy -Mixed Economy -Market Economy

What are the types of legal systems?

-Common Law -Civil Law -Theocratic Law

What are the three forms of secular totalitarianism?

-Communism -Tribal -Right- Wing

What are the five forms of political risk?

-Conflict and violence -Terrorism and kidnapping -Property seizure -Policy Changes -Local content requirements

What are the types of political systems?

-Democracy -Totalitarianism

What are the different religions of the world?

-Judaism (first religion with one God; 18 million followers) -Christianity (largest religion with over 2 billion followers - Hinduism (oldest religion) -Confucianism (founded in China; over 225 million followers) -Shinto ("way of the gods"; founded in Japan)

What is the political risk of Totalitarianism?

-Likelihood that a government will undergo political change (Market of the exporter, production facilities, the ability to bring profits back to their country)

What are the two classifications of risk?

-Macro Risk -Micro Risk

What led to the decline in the mixed economy?

-Many are converting to market- based systems -Government owned assets are less efficient and innovative -Private companies are more competitive and efficient

What is globalization's impact on businesses global products?

-Market activities are becoming standardized -More market opportunities are being created -Uneven income streams are being leveled off (seasonal products)

What are the characteristics of a market economy?

-Most resources are owned by the individuals or privately owned companies

What are some examples of industrial property?

-Patent- right to the inventor -Trademarks

What are the characteristics of a mixed economy?

-Resources are split 50-50 between government and privately held companies -Proponents of a mixed economy believe that successful economic systems must not only be efficient but should protect society

What are the implications of democracies for business?

-Stable business environment -Laws protecting individual property rights

Globalization vs Democracy

-The critics feel it undercuts the political and legal authority of national, regional, and local governments -Supporters feel it spreads democracy

What is the idea of a centrally planned economy?

-The government owns everything -founded on the belief that the welfare of the group is more important than that of the individual -Karl Marx founded this idea

What is Culture?

-The set of values, beliefs, rules, and institutions held by a specific group of people -It is also a complex portrait of a people in a certain community

What are the forces of globalization?

-decreased barriers to trade and investment through the General Agreement on Tariffs and Trade -World Trade Organizations helping regulate trade and international commerce -Regional trade Agreements (i.e. NAFTA, the European Union, APEC, and higher technological innovations)

What is globalization's impact on business production?

-there is more access to low- cost workers -there is more access to technical expertise -there is more access to production inputs

Social Group

2 or more people (nuclear or extended family)

What is National Culture?

A country's or nation's culture

Subcultures

A different culture within an overall culture

Right- Wing

A market based economy (modern China)

What is theocratic law based on and what are some types?

Based on religious teachings. Islamic, Hindu, and Jewish Law are examples

What is civil law based on and where did it start?

Based on rules and statutes. Traced back to fifth century Rome

Social Mobility is comprised of __________ and _____________.

Caste system and the class system

Who participates in international business?

Companies of all sizes in sorts like: -Entrepreneurs and small business -Large multinational corporations

Markets

Convergence in buyer preferences around the world

Internationalization

Cooperation between countries or nations

Cultural Literacy

Detailed knowledge about a culture that enables a person to function effectively within it

Production

Dispersal of production activities and resources

What does the International Monetary Fund do?

Enforces rules of international monetary system

Wide Participation

Everyone that is eligible to participate, a large portion do participate in elections etc.

What does globalization have an impact on?

It has an impact on economic, cultural, political, and technological integration

Canada is a moderately feminine society.

False

China is an individualistic society where communication is direct, group harmony is not expected and conflict is considered acceptable.

False

In Panama, people are very tolerant of unorthodox behavior and ideas, and they are considered to be a low certainty avoidance society.

False

Panama is a relatively masculine society.

False

The United States is a long- term oriented culture where businesses measure performance on a long- term basis rather than a short- term basis.

False

Aesthetics

Good taste in arts

Who does international business involve?

It involves consumers, financial institutions, companies, and even governments

What is a political system?

How a group of people, activities, processes etc. govern themselves.

What is political participation?

How much a group of people in a certain area are able to or do participate in politics (voting)

What is the Human Development Index?

How well you are satisfying the needs of your citizens

How do totalitarian governments operate?

Individuals govern without the support of the people

What does the world bank do?

It finances economic projects in developing countries

What does the Hofstede Framework study?

It studies cultural differences among 5 dimensions -Individualism (US) vs. Collectivism (Japan) -Large vs. Small power distance -Large vs. Small uncertainty avoidance -Achievement vs. nurturing -Long- term orientation

What does the Kluckhohn- Strodtbeck Framework study?

It studies cultural differences among 6 dimensions

What is unspoken language?

It's not what you say but how you say it; hand gestures; facial expressions

What are antitrust regulations?

Laws to prevent price fixing, sharing markets, gaining unfair monopoly

What is one of America's biggest shortfalls?

Not being bilingual

Tribal

One tribe or ethnic group imposes its will on others

What is the "Brain Drain" Phenomenon?

People leave a place to get a better education and do not return to their land

Global Products

Products that are the same in all countries It is very important for companies to monitor local needs and be aware of any changes in those markets

What is a Theocratic Totalitarianism?

Religious leaders run the country

Attitudes toward cultural change

The United States is accused of affecting other cultures

What belief was the market economy founded on?

The belief that the individual's concerns should be placed above the group's concerns

Ethnocentricity

The belief that your ethnic group or culture is superior to others

What is an example of Intellectual Property?

The coke formula or some type of software

Globalization

The process by which national institutions and economies are becoming more integrated and interdependent with each other

What are Economic Systems?

The structure and processes that a country uses to allocate its resources and conduct its commercial activities

What does a political system include?

The structures, processes, and activities by which nations govern themselves.

International Business

The total of all business transactions that cross the borders of two or more nations

Communism

These countries have broad control of political system and economic system

How are government leaders elected in a democracy?

They are elected by the people

What is a copyright?

They give creators the right to publish or dispose of original works

Macro Risk

Threatens all companies in an industry

Micro Risk

Threatens companies in a particular industry

What is common law based on and where did it originate?

Tradition, precedent, and usage. It originated in England

Canada is a short- term oriented culture where businesses measure performance on a short- term basis rather than a long- term basis.

True

In Canada, people have an easy acceptance of new ideas which is consistent with more uncertainty accepting.

True

In China, power is centralized, managers rely on their bosses and rules, and employees expect to be told what to do. This is consistent with a high level of power distance.

True

Panama is considered a collectivistic society where everyone takes responsibility for fellow members of their group.

True

The United States is considered to be a highly individualistic culture, and employees are expected to be self- reliant and display initiative.

True

What is Secular Totalitarianism?

When the military comes in to run the country

Narrow Participation

When your country puts a limit on who can vote and voting is discouraged.

What is the impact on business in a totalitarian country?

You can't make what you want, and you don't have free will

Values

ideas, beliefs, and customs