MGMT 450 Exam 2 Mahajan

Education

U.S. allows anybody to go to college, but UK only allows upper class to go

Self-reference Criteria

Unconscious use of one's own culture to help assess to knew surroundings

Cross-cultural Literacy

Understanding how cultural differences can affect the way business is conducted

Goal Orientation

-Aggressive Goal Behavior: Place high value on material possessions -Passive Goal Behavior: Place higher value on relationships and quality of life

Factor Conditions

-All input factors it takes to make a product -Expands Hecksher-Ohlin by adding infrastructure, education, etc.

Time

-Arab cultures find it normal for meetings to start late and be interrupted

Bad Gifts in China

-Clocks and Knifes

Gold Standard

-Countries agree to buy and sell paper currencies in exchange for gold -Allow free export of gold bullion and coins -Created fixed exchange rate

Mercantilism

-Country's wealth is determined by its holdings of gold and silver -Discourage imports and encourage exports

Maturing Product Stage

-Demand and exports peaks and innovative firm expands -Competition begins in other industrialized countries

Gift-Giving and Hospitality

-Different gift giving etiquettes -Hospitality customs differ -Communicating bad news -Business cards

World Bank

-Est. in 1944 -Original goal was to help finance reconstruction of war-torn western Europe -Later decided to build economies of developing countries

World Bank

-Est. in D.C. -189 Members -U.S. has largest voting bloc -Give loans for PRODUCTIVE PURPOSES (Ex: Roads and infrastructure, not debt)

International Monetary System

-Est. rules which countries value and exchange currencies -Provides mechanism for correcting imbalances between country's international payments and receipts

Non-verbal Communication

-Facial expressions -Hand gestures -Intonation -Eye contact -Body Positioning -Body Posture

Heckscher and Ohlin Relative Factor Endowments

-Factor endowments vary among countries -Goods differ according to the types of factors used to produce them

Ricardo's Comparative Advantage

Country should produce things which it has a relative advantage in producing

Adaptive Culture

Culture can change in response to external forces in the environment

Nixon's 1971 Speech

Ended the second gold standard

EU Central Bank

European Central Bank

Time Orientation

Extent to which culture have long-term or short-term outlooks

Nuclear Family

Father, mother, and children living together

U.S. Central Bank

Federal Reserve

Krugman's New Trade Theory

-Firms play cat-and-mouse by trying to attain economies of scale and sustain competitive advantage -Do this by owning intellectual property rights, investing in R&D, achieving economies of scope, and exploiting the experience curve

Early Country Based Theories

-Focus on individual country -Useful for describing trade in commodities -Price is important

Porter's National Competitive Advantage Theory

-Hybrid of country and firm based theories -Says combination of factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry give firm competitive advantage

Social Orientation

-Individualism: cultural belief the individual comes first -Collectivism: cultural belief the group comes first

Shared Culture

-Individuals who share a culture are members of a specific society -Those who do not share the same culture are considered not part of that society

New Product Stage

-Innovating country develops innovative product -Produce locally and minimize costs because unsure of demand -Sell locally and minimal exports

World Bank Group

-International Development Association -International Finance Corporation -MIGA

Translation Disasters

-KFC and Jolly Green Giant

European Monetary System

-Manages currency relationships between EU members -ERM pledged to maintain fixed exchange rates +-2.25% par -ERM also maintains floating exchange rate between USD

Standardized Product Stage

-Market stabilizes and product becomes commodity -Firms forced to produce product in developing countries to lower costs -Innovative firm now imports and developing country exports product

Hospitality Differences

-Never vertically jab chopsticks into food -Slurping and Burping is okay -Boss usually faces door -China woo's in private dining room

IMF

-Oversees functioning of the International Monetary System -Gives loans whenever a country's BOP is imbalanced

Power Orientation

-Power Respect: people respect authority because of hierarchical significance -Power Tolerance: People more willing to question authority and their decisions

Balance of Payment Accounting System

-Records international transactions -Supplies info of health of natl. economy -Supplies info of changes in fiscal and monetary policies

Hofstede's 5 Dimensions of Culture

-Social Orientation -Power Orientation -Uncertainty Orientation -Goal Orientation -Time Orientation

Age

-The U.S. spends time on the youth and will promote them -Asian countries will only make older people managers

Inter-Industry Trade

-Trade with other industries -Undifferentiated goods (coal or sugar)

Intra-Industry Trade

-Trade within the same industry -Differentiated goods (cars or computers)

G5

-U.S -Japan -UK -Germany -France

Bretton Woods System

-U.S. Dollar-based Gold Standard -U.S. pledged to redeem $35/1oz gold -Fixed exchange rate system (+-1%)

Status

-U.S. it's achieved by hard work -Japan by the group you're in -India by your caste

Leontief Paradox

-U.S. should export things high in capital and import things high in labor -This wasn't the case because failed to consider land, human capital, and technology

Uncertainty Orientation

-Uncertainty Acceptance: Individuals stimulated by change and thrive on new opportunities -Uncertainty Avoidance: Individuals dislike ambiguity and avoid it at all costs

Collapse of Gold Standard

-WWI -Great Depression -Competitive Devaluations -Beggar-Thy-Neighbor Policies -WWII

Color meanings in China and India

-White is bad and used for funerals and symbolizes death -Red is good and used for weddings and symbolizes marriage

4 Characteristics of Culture

1) Learned behavior 2) Interrelated 3)Adaptive 4)Shared

Vernon's Product Life Cycle Theory

1) New Product Stage 2) Maturing Product Stage 3) Standardized Product Stage

Acculturation

Adjusting and adapting to another persons culture

Adam Smith's Absolute Advantage

Advocates free trade among countries by producing the things in which you have an absolute advantage in

Language

-3,000+ -More than one indicates diversity of cultures

Numbers in China

-4 is unlucky -8 is lucky/prosperity

Bretton Woods Era

-44 countries met in New Hampshire 1944 -Goal was to create economic environment and promote world peace -Renewed gold standard -Created World Bank and IMF

Lingua Franca

-A common language understood by 2 people who speak 2 different languages -Most common is english

Sterling Based Gold Standard

1821-WWI British pound sterling was strongest currency because they had the most gold. People trusted they would get gold if they used the pound

Islam

2nd largest following and pray 5 times a day

Adjustable Peg

Atlering pegs under extraordinary circumstances

Economies of Scale

Average cost of producing a good decreases the more the output of the good increases (the more its sold typically because fixed costs)

Achieving Economies of Scope

Average costs decrease as as the number of different products produced increases (It's cheaper to make a new product line if you already produce similar things as opposed to starting from scratch)

Intra-generationally

Behaviors learned from peers or people of similar age

Inter-generationally

Behaviors passed down from parents and grandparents

Ethnocentrism

Belief that ones own culture is superior to others

Hinduism

Caste system

Cultural Cluster Approach

Clustering countries together by similar cultures (mostly languages)

Culture

Collection of values, beliefs, behaviors, customs, and attitudes that distinguish one society from another

Bowing

Depth and duration mean different things in Japan

Beggar-Thy-Neighbor Policies

Devaluing ones currency after wwI to make your goods cheaper than another country in order to export

Brady Plan 1989

Focussed on writing off parts of the debts or providing funding for debtors to buy back loans below face value

G7

G5 + Italy and Canada

Investing in R&D

Gives firms first-mover advantage because these products and markets are typically too expensive to enter for most countries

Joint Family

Grandparents living with kids and grandkids

Backtranslation

Having one person translate a message, then having a second person translate the message back into the first language to see if it still makes sense

Lower Stratification

High social mobility

Disadvantages of Mercantilism

Hurts citizens the most because gov. subsidizes commodities in the from of taxes on the people

Demand Conditions

If the consumers in the market for which the product is entering have demand for the product

Triffin Paradox

If there is only one reserve currency required by each country to keep in their reserves, it will be the very one that comes under scrutiny

Body Positioning

In Saudi Arabi its 9-10 inches but in U.S. its 20 inches

Linder's Country Similarity Theory

International trade of manufactured goods should occur between consumers in same stage of economic development AND countries with similar per capita incomes

Interrelated Culture

Japan is very group oriented and hierarchical. The U.S is very independent oriented and everyone is seen as equal

Higher Stratification

Low social mobility

Hall's Low-Context, High-Context Approach

Low-context: Words explicitly convey speakers message High-context: Conversation and culture cues are just as important as the words

Ramadan

Month of fasting from sunrise to sunset

International Finance Corporation

Offers loans to entrepreneurs ($35 million to help build plant)

International Development Association

Offers soft loans to developing countries ($25 million given to Guinea to reduce water pollution)

Par Value

Official price or value of currency

Owning Intellectual Property Rights

Owning trademarks, brand names, etc. gives a firm a competitive advantage

Hard Loan

Pay back in currency that retains value, has interest, and within a time period

Fixed Exchange Rate

Price of one currency does not change relative to another currency (pegged)

Exchange Rate

Price of one currency in terms of a second currency

Exploiting the Experience Curve

Producing a product so much that each time you get better and more efficient at producing it, lowering the cost of production

Multilateral Investment Guarantee Agency

Provides insurance of political risk for companies to do business in developing countries

Caterpillar Fundamental English

Simplified english of 800 words for workers to understand

Baker Plan 1985

Stressed importance of debt rescheduling, tight IMF monetary policies, and continued lending to debtor nations

Convertible Currencies

Strong currencies exchanged without legal restrictions

Sole of the shoe to Middle Eastern cultures

Symbolizes the worst form of disrespect if shown to another person

International Trade

Trade between residents of 2 countries

SDR's

Used to settle transactions within the IMF

Trade

Voluntary exchange of goods, services, assets, or money between one person or org and another