Intl Business Exam 2
What are the weaknesses of the political argument for government intervention that it is necessary to create jobs?
A common political argument for intervention is that it is necessary to protect jobs. However, political intervention often hurts consumers, and it can be self- defeating. Countries sometimes argue that it is important to protect certain industries for reasons of national security. Some argue that government should use the threat to intervene in trade policy as a bargaining tool to open foreign markets. This can be a risky policy; if it fails, the result can be higher trade barriers.
What are the theoretically possible levels of economic integration (in order)?
A number of levels of economic integration are possible in theory. In order of increasing integration, they include a free trade area, a customs union, a common market, an economic union, and full political union.
What other attempts of regional economic integration are being made throughout the world (besides the EU)?
Although no other attempt at regional economic integration comes close to the EU in terms of potential economic and political significance, various other attempts are being made in the world. The most notable include NAFTA in North America, the Andean Community and Mercosur in Latin America, and ASEAN in Southeast Asia.
Do businesses gain or lose from government efforts to open protected markets? Is this more beneficial than governments working to protect domestic industries from foreign competition?
Business may have more to gain from government efforts to open protected markets to imports and foreign direct investment than from government efforts to protect domestic industries from foreign competition.
What are ethical dilemmas?
Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.
What factors are ethical issues and dilemmas in international business rooted in?
Ethical issues and dilemmas in international business are rooted in the variations among political systems, law, economic development, and culture from nation to nation.
What are the different levels of economic integration?
In a free trade area, barriers to trade among member countries are removed, but each country determines its own external trade policy. In a customs union, internal barriers to trade are removed, and a common external trade policy is adopted. A common market is similar to a customs union, except that a common market also allows factors of production to move freely among countries. An economic union involves even closer integration, including the establishment of a common currency and the harmonization of tax rates. A political union is the logical culmination of attempts to achieve ever-closer economic integration.
What stance has the European Commission taken with respect to competition policy?
Increasingly, the European Commission is taking an activist stance with regard to competition policy, intervening to restrict mergers and acquisitions that it believes will reduce competition in the EU.
What concerns make it difficult to achieve economic integration?
Integration is not easily achieved or sustained. Although integration brings benefits to the majority, it is never without costs for the minority. Concerns over national sovereignty often slow or stop integration attempts. In 2016, these concerns resulted in Britain voting for exit from the EU.
What is the Kantian approach to ethics?
Kantian ethics state that people should be treated as ends and never purely as means to the ends of others. People are not instruments, like a machine. People have dignity and need to be respected as such.
What do moral philosophers think about the various approaches to business ethics?
Moral philosophers contend that approaches to business ethics such as the Friedman doctrine, cultural relativism, the righteous moralist, and the naive immoralist are unsatisfactory in important ways.
What are multinational corporations doing to practice business-focused sustainability?
Multinational corporations that are practicing business-focused sustainability integrate a focus on market orientation, addressing the needs of multiple stakeholders, and adhering to corporate social responsibility principles.
What is regional economic integration?
Regional economic integration is an attempt to achieve economic gains from the free flow of trade and investment between neighboring countries.
Under what circumstances will regional economic integration not increase economic welfare?
Regional integration will not increase economic welfare if the trade creation effects in the free trade area are outweighed by the trade diversion effects.
What do rights theories fundamentally recognize? What do this rights establish?
Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. These rights establish a minimum level of morally acceptable behavior.
How many EU countries use the euro? What economic gains come from having a common currency?
Seventeen EU members now use a common currency, the euro. The economic gains from a common currency come from reduced exchange costs, reduced risk associated with currency fluctuations, and increased price competition within the EU.
What is the argument behind strategic trade policy?
Strategic trade policy suggests that with subsidies, government can help domestic firms gain first-mover advantages in global industries where economies of scale are important. Government subsidies may also help domestic firms overcome barriers to entry into such industries.
What are the various approaches to business ethics?
The Friedman doctrine states that the only social responsibility of business is to increase profits, as long as the company stays within the rules of law. Cultural relativism contends that one should adopt the ethics of the culture in which one is doing business. The righteous moralist monolithically applies home- country ethics to a foreign situation, while the naive immoralist believes that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.
What is the GATT? What are the effects of the GATT?
The GATT (General Agreement on Tariffs and Trade) was a product of the postwar free trade movement. The GATT was successful in lowering trade barriers on manufactured goods and commodities. The move toward greater free trade under the GATT appeared to stimulate economic growth.
What is the Single European Act? What did it accomplish?
The Single European Act sought to create a true single market by abolishing administrative barriers to the free flow of trade and investment among EU countries.
What are the results of the Uruguay round of the GATT?
The completion of the Uruguay Round of GATT talks and the establishment of the World Trade Organization have strengthened the world trading system by extending GATT rules to services, increasing protection for intellectual property, reducing agricultural subsidies, and enhancing monitoring and enforcement mechanisms.
What is the concept of justice developed by John Rawls?
The concept of justice developed by John Rawls suggests that a decision is just and ethical if people would allow it when designing a social system under a veil of ignorance.
What is the result of the creation of single markets in the EU and North America?
The creation of single markets in the EU and North America means that many markets that were formerly protected from foreign competition are now more open. This creates major investment and export opportunities for firms within and outside these regions.
What factors make it possible for firms in a free trade area to realize enormous cost economies? What does realizing cost economies mean?
The free movement of goods across borders, the harmonization of product standards, and the simplification of tax regimes make it possible for firms based in a free trade area to realize potentially enormous cost economies by centralizing production in those locations within the area where the mix of factor costs and skills is optimal.
What is the infant industry argument for government intervention? How does it differ in theory and in practice?
The infant industry argument for government intervention contends that to let manufacturing get a toehold, governments should temporarily support new industries. In practice, however, governments often end up protecting the inefficient.
What will follow the lowering of barriers to trade and investment among countries within a trade group?
The lowering of barriers to trade and investment among countries within a trade group will probably be followed by increased price competition.
What do the most common ethical issues in international business involve?
The most common ethical issues in international business involve employment practices, human rights, environmental regulations, corruption, and social responsibility of multinational corporations.
What are the problems associated with strategic trade policy?
The problems with strategic trade policy are twofold: (a) Such a policy may invite retaliation, in which case all will lose, and (b) strategic trade policy may be captured by special-interest groups, which will distort it to their own ends.
What is ethics? What is business ethics?
The term ethics refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization. Business ethics are the accepted principles of right or wrong governing the conduct of businesspeople, and an ethical strategy is one that does not violate these accepted principles.
What are the two types of arguments for governmental intervention in international trade?
There are two types of arguments for government intervention in international trade: political and economic. Political arguments for intervention are concerned with protecting the interests of certain groups, often at the expense of other groups, or with promoting goals with regard to foreign policy, human rights, consumer protection, and the like. Economic arguments for intervention are about boosting the overall wealth of a nation.
What should managers do to make sure that ethical issues are considered in international business decisions?
To make sure that ethical issues are considered in international business decisions, managers should (a) favor hiring and promoting people with a well- grounded sense of personal ethics; (b) build an organizational culture and exemplify leadership behaviors that place a high value on ethical behavior; (c) put decision-making processes in place that require people to consider the ethical dimension of business decisions; (d) establish ethics officers in the organization with responsibility for ethical decision making; (e) be morally courageous and encourage others to do the same; (f ) make corporate social responsibility a cornerstone of enterprise policy; and (g) pursue strategies that are sustainable.
What effect do trade barriers have on firms? What is a typical response to trade barriers?
Trade barriers act as a constraint on a firm's ability to disperse its various production activities to optimal locations around the globe. One response to trade barriers is to establish more production activities in the protected country.
Which trade policies are pro-producer and anti-consumer? Why?
Trade policies such as tariffs, subsidies, antidumping regulations, and local content requirements tend to be pro-producer and anticonsumer. Gains accrue to producers (who are protected from foreign competitors), but consumers lose because they must pay more for imports.
What factors is unethical behavior rooted in?
Unethical behavior is rooted in poor personal ethics, societal culture, the psychological, and geographic distances of a foreign subsidiary from the home office, a failure to incorporate ethical issues into strategic and operational decision making, a dysfunctional culture, and failure of leaders to act in an ethical manner.
What is the utilitarian approach to ethics?
Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences, and the best decisions are those that produce the greatest good for the greatest number of people.