MKT 310 Exam 1

Important Cultural Concepts

Self-Reference Criterion - we all have unconscious tendency to use our own framework (built around culture) to evaluate others Ethnocentrism - the belief that one's culture is superior to others. Usually a consequence of self-reference criterion

Hofstede's Cultural Dimensions Model: Individualism vs. Collectivism

-I -entrepreneurship -greater product variety -emphasis on individual achievement -universalism -we -large companies -products show group membership -emphasis on group membership -particularism

masculinity vs. femininity

-differentiated sex roles -one sex may dominate -live to work -independence is the ideal -big and fast -undifferentiated -equality between sexes -work to live -interdependence is ideal -small and slow

High context vs. Low context

-meaning of individual behavior depends on the situation -greater emphasis on non-verbal messages -seen in countries that comprise of one group -meaning of individual behavior depends on words, not situation -intentions and feelings are expressed verbally -occurs in multicultural countries

low vs. high uncertainty avoidance

-take risks -high stress -deviant persons and ideas are tolerated -belief is placed in generalists and common sense -avoid risks -ease and lower stress -deviation is not tolerated -belief is placed in experts and their knowledge

high vs. low power distance

-there should be an ordered inequality in the world -superiors are inaccessible -decision making is limited to superiors -power holders should have certain privileges -inequality should be minimized -superiors are accessible -everyone can make decisions -everyone has the same privileges

religion

1. A monotheistic religion—the belief in one God. Christianity Correct 2. In order to escape growing opposition, the prophet Muhammad left Mecca. Islam Correct 3. A moral force requires the acceptance of certain responsibilities. Hinduism Correct 4. Suffering originates in a person's desire for pleasure. Buddhism

For each issue, decide whether the description of the argument is an Argument For Globalization or an Argument Against Globalization.

1. Manufacturing jobs move to low wage countries. Argument Against Globalization Correct 2. Increased efficiency of the whole economy. Argument For Globalization Correct 3. Lack of adequate regulations to protect the environment. Argument Against Globalization Correct 4. Economic power shifts from nations to international institutions. Argument Against Globalization Correct 5. Tougher environmental regulations follow economic progress. Argument For Globalization 6. Real power resides with nation-states. Argument For Globalization Correct 7. The gap between the rich and the poor nations of the world has gotten wider. Argument Against Globalization Correct 8. Living standards improve. Argument For Globalization

1. The laws on business practices are evolving, but you see potential problems in ensuring contract disputes are resolved fairly. Evaluate Costs Correct 2. The current leader of the country has been in power for decades, but his health is failing. Social unrest may affect the leadership transition, and there are several opposition groups. Evaluate Risks Correct 3. You see an opportunity to establish a strong market presence before your competitors, and you will be able to set product standards. Evaluate Benefits Correct 5. Distribution systems are not well developed, and you may have to create your own. While this could create a competitive advantage, it is expensive to set up. Evaluate Costs Correct 6. Property rights seem to be well protected as part of a total system that shows few signs of state control of key sectors. Evaluate Benefits Correct 7. You are looking at a country's population growth. You are concerned not only about the total population, but also about the growth of the middle class and its consumers. Evaluate Benefits Correct 8. Social unrest has been triggered by rising prices for food and essentials. The government, which already has a large debt burden, may need to borrow more. Evaluate Risks

1. Markets move more freely, and private enterprise grows in a supportive environment. Economic Trend Correct 2. Sub-Saharan Africa was the poorest region in the world for decades, but democratic reform has allowed it to revel in an annual growth rate of 5 percent over the past decade. political Trend 3. The end of the Cold War ushered in a "new world order." Political Trend Correct 4. Privatization is a way to stimulate growth and efficiency by offering private investors the incentive of profits. Privatization can mean increases in productivity, entering new markets, and leaving losing ones. Economic Trend Correct 5. States choose their levels of participation in the economic system. The number of centrally-planned economies—centrally planned by the state—is declining. economicTrend

Select the most appropriate dimension of Hofstede's cultural values for each person below.

1. Ming is from a powerful family, and because of this, she will be in an authoritative position in the workplace. Power Distance Correct 2. Ben has very loose ties with his family and enjoys wearing provocative T-shirts to express a sense of freedom and uniqueness. He shows no interest in joining the family business. Individualism/Collectivism Correct 3. Elena has worked at the same company for more than 15 years. She parks in the same parking spot every day and values routine and predictability. Uncertainty Avoidance Correct 4. Jiro is extremely driven and assertive. His goal is to become the most powerful man in the company. Masculinity/Femininity Correct 5. Bill works very hard in his job and expects to see the reward of his labor quickly. Time Orientation

Select the most appropriate change in the political economy with each scenario.

1. Totalitarianism failure: Brutal regimes have found citizens protesting, rebelling, and at times removing leaders of the country. Spread of Democracy Correct 2. Deregulation: Price controls are replaced by supply and demand. Restrictions on private enterprise are removed, and restrictions on foreign investment and trade are eased. Spread of Market-Based Systems Correct 3. Emergence of middle and working classes: Once citizens experience new freedoms that come with increasing prosperity and dispassionate enforcement of contracts, they push for democratic reform. Spread of Democracy Correct 4. Legal system protecting property rights: Private property rights must be protected, and an enforcement mechanism put into place. Commercial codes must be improved, and courts must be made effective. Spread of Market-Based Systems Correct 5. Huntington: A noted author envisioned a world split into different civilizations with different value systems and ideologies. This vision suggests a world hazardous to business with global terrorism. New World Order and Terrorism Correct 6. New information and communication technologies: These technologies have created new conduits for the spread of democratic ideals and information from free societies. Spread of Democracy Correct 7. Privatization: The economy and former state monopolies must be opened to competition. Governance must also change from state to private owners and managers. Spread of Market-Based Systems Correct 8. Fukuyama: A noted author suggests the war of ideas may be at an end, and liberal democracy will be the way of the future. It is a vision of a harmonious world. New World Order and Terrorism

private vs. public action

1. You face demands from government officials that will be required before you are allowed to do business. Payments are to be made to individuals, not the government. public Action 2. A government official is demanding trips, education payments for his children, and a new care before he will allow your firm to be considered for a procurement bid. public Action 3. Your business is told to pay a group of individuals or face violent retribution. You have learned other similar businesses have faced similar demands. private Action 4. You've learned your firm will face very expensive new licensing fees in addition to a new tax regulation that targets foreign firms (you) in a specific industry. Public Action Correct 5. A group of hackers based in the country where your firm wishes to conduct business has broken into your database and is demanding payment or they will destroy your firm's records. Private Action Correct 6. You thought your contract would protect your rights, but your customer is now refusing to pay for merchandise already received, and the courts don't seem willing to help you. private

What are the four major forms of totalitarianism today?

1.Communist totalitarianism: advocates achieving socialism through totalitarian dictatorship 2.Theocratic totalitarianism: political power is monopolized by a party, group, or individual that governs according to religious principles 3.Tribal totalitarianism: a political party that represents the interests of a particular tribe monopolizes power 4.Right wing totalitarianism: individual economic freedom is allowed but individual political freedom is restricted in the belief that it could lead to communism

Broader Conceptions of Development

Amartya Sen - development should be assessed less by material output and more by the capabilities and opportunities that people enjoy the United Nations created the Human Development Index (HDI) [highest is Norway] based on life expectancy, education attainment, and whether average incomes are sufficient to meet the basic needs of life in a country reflects Sen's ideas and gauges a country's economic development and likely future growth rates

If GNI adjusted for cost of living in China is about $13,000 while GNI adjusted for cost of living is about $56,000 in the United States, then

Americans enjoy a higher standard of living.

The Changing World Order The Changing World Output and World Trade Picture The Changing FDI Picture The Changing Nature of the Multinational Enterprise

China continues to move toward greater free market reforms. If this continues for two more decades, China may move from third-world to industrial superpower more rapidly than Japan did. It is estimated that today's developing nations may account for more than 60 percent of world economic activity by 2025, while rich nations' activity, currently at 55 percent, may decline to 38 percent. Toyota rapidly increased its investment in auto production facilities in the United States and Europe in the late 1980s and early 1990s. One of the world's largest real estate companies, the Dalian Wanda Group, hopes to become a world class multinational by 2020. Already, the company, which began in China in 1988, has assets in the United States, the United Kingdom, Australia, and Spain.

Political Systems

Collectivist Individualist Democracy Totalitarianism

Economic and Human Welfare

Critics argue: -exploitation of lesser developed country citizens -loss of manufacturing jobs in developed countries -growing gap between the rich and poor -leads to a "race to the bottom" (cheapest producer wins) supporters argue: -leads to global economic development, including the development of lesser developed countries -improves human welfare -provides opportunities to people in emerging markets

National Sovereignty and Cultural Identity

Critics of globalization argue: -loss of National Identity (undue influence of WTO, Worldbank, IMF) -imposing Western values as "universal" (cultural imperialism) Supporters of globalization argue: -interaction across boundaries leads to the mixing of cultures in particular places and practice -is leading to greater appreciation of cultural differences in developed countries

Required Political System

Democratic regimes tend to be more conducive to long-term economic growth than dictatorships - even the benevolent kind limiting human freedom also suppresses human development and therefore limits progress

What is the difference between Democracy and Totalitarianism

D - political system in which government is by the people, exercised either directly or through elected representatives -most common form today is representative democracy, where elected representatives vote on behalf of constituents T - form of government in which one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited

State as Strategist

D1: domestic policy capabilities - regular vs. developmental D2: policy networks and the State's domestic autonomy: individualism vs. communitarianism D3: international autonomy and foreign policy capabilities: security vs. prosperity D4: Legitimacy and the balance of economic and noneconomic values: efficiency vs. equity

Risks

Doing business in foreign markets involves risk -Political risk - the likelihood that political forces will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise -Economic risk - the likelihood that economic mismanagement will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise -Legal risk - the likelihood that a trading partner will opportunistically break a contract or expropriate property rights

Costs

Firms must be prepared to deal with the costs of doing business in foreign markets: -political costs: include the cost of paying bribes or lobbying for favorable or fair treatment -economic costs: relate primarily to the sophistication of the economic system, including the infrastructure and supporting businesses -legal costs: can be higher in countries with dramatically different product, workplace, and pollution standards, or where there is poor legal protection for property rights

According to the _________, it is illegal to bribe a foreign government official to obtain or maintain business over which that foreign official has authority.

Foreign Corrupt Practices Act

__________ measures the total annual income received by residents of a nation.

GNI

Types of Service

Hard: -ex: computer software, advertising, equipment leasing -Characteristics: tangibility, storability, separability, homogeneity (depends on physical object for storage and export) Soft: -ex: Restaurants, hotels, healthcare -Characteristics: Intangibility, perishability, inseparability, heterogeneity -require simultaneity of production and consumption (require physical proximity between the service provider and the consumer. No export option.

Tribal Totalitarianism Representative Democracy Pseudo Democracy Right-Wing Totalitarianism Theocratic Totalitarianism Communist Totalitarianism

Kenya: Politicians from the Kikuyu tribe have long dominated the political system. United States: Elected representatives who fail to perform adequately will be voted out of office at the next election. Russia: These states lie between pure democracies and complete totalitarian systems of government. Germany in the 1930s: In retreat since the early 1980s, a common feature of this type of regime is an overt hostility to socialist or communist ideas. Saudi Arabia: Found in states where political power is monopolized by a party, group, or individual that governs according to religious principles. China: Continues to move toward greater free market reform; at the same time, however, the country continues to deny many basic civil liberties to its citizens.

State Governance

M-form U-form

Legal Systems

Market economies require a well-functioning legal system -should protect property rights and the machinery to enforce that system -many countries have made significant strides toward creating a strong legal system, but more work is necessary

Implications of Changing Political Economy

Markets that were formerly off-limits to Western business are now open -China could be a bigger market than the U.S., the EU, and Japan combined -India is also a potentially huge market

Drivers of Globalization

Reduction of transaction costs Reduction of transportation costs Globalization has been speed up by information technology

The Spread of Market-Based Systems

Since the late 1980s there has been a transformation from centrally planned command economies to market-based economies -command and mixed economies failed to deliver the sustained economic performance achieved by countries that had adopted market-based systems -many countries shifted to a market-based system

Consumer Welfare

Supporters of Globalization: -benefits consumers worldwide -wider choice of products -more affordable products -wider reach to consumers Critics of Globalization: -loss of local retailers -promotion of consumerist culture -uncontrolled access leading to marketing of harmful products to uneducated populations (cigarettes)

The Nature of Economic Transformation

The shift toward a market-based economic system involves: -deregulation -privatization -the creation of a legal system to safeguard property rights

The more flexible approach to time that has emerged in parts of Miami where there are large immigrant populations suggests that

a nation's culture is not static.

Individualism

a political philosophy that suggests individuals should have freedom over their economic and political pursuits -can be traced to Aristotle who argued that individual diversity and private ownership are desirable stresses: -individual freedom and self-expression -letting people pursue their own self-interests to achieve the best overall good for society -democratic systems and free markets

Differences in Economic Development

affects its attractiveness as a possible market or production location for firms measure is gross national income (GNI) purchasing power parity (PPP) adjustment provides a more direct comparison of living standards in different countries

Benefits of doing business in a country are a function of market size, and current and future consumer purchasing power

by identifying and investing early in potential future economic stars, firms may be able to gain first mover advantages (entrants into a market)

Manufactured Goods

characteristics: tangibility, storability (can delay when a product is used), separability (what the product is vs. the service), homogeneity (want to inc. ex: shoes, toys, and cars

Types of legal systems

civic law, common law, customary law, muslim law, mixed system

Some countries consider bribes to be

compensation for work that would otherwise not be completed by underpaid government workers.

Apple's production presence in China

creates both low skilled and engineering level jobs.

Steve has been preparing for his trip to Sweden. He has learned that in Sweden a tradition called Academic Quarter helps to define the acceptable time for arriving for meetings. Steve is

cross cultural literacy

Some economists support the practice of paying small bribes based on the argument that they

helps promote economic growth

agreements across cultures

high context cultures lay greater emphasis on general agreement with business partners over contracts low context cultures rely on contractual agreements

According to the video, the standard of living in the United States is _____ as compared to that of China.

higher

globalization

economic: most affected area. Direct investments increased and MNC did politics: climate change, terrorism, financial crisis. Broader groups of countries like EU, G-20, and UNO. Or NGO. culture: Mick world - western culture destroys other cultures.

Knowing what time to show up for a meeting in a foreign country reflects which part of culture?

folkways

Apple's investment in production facilities in China to produce its iPhone can best be described as

foreign direct investments

Apple sources parts for its iPhone from around the world before assembling the phones in China. This reflects the

globalization of production.

what do open markets not include?

import tariffs import quotas import bars

Deregulation

involves removing legal restrictions on the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate -removing price controls -abolishing laws limiting private enterprise -removing restrictions on foreign investment and trade

The practices of bribery

is a normal part of business in some countries.

Factors of Production

land, labor, capital, entrepreneurship

Second Mover Advantage

learning from others that have gone into the market before you

Foreign Corrupt Practices Act

limits corruption in the US -it is illegal to bribe a foreign government official in order to obtain or maintain business over which the foreign official has authority -all publicly traded companies must keep detailed records so that it is clear whether a violation of the act has occurred -facilitating or expediting payments to secure the performance of routine government actions are permitted

dimensions of culture

material elements social institutions humans and the universe aesthetics language

Your U.S.-based company wants permission to build a factory in a foreign country. You have been asked to pay a bribe in order to get the paperwork approved. You should

not pay because doing so is prohibited by the Foreign Corrupt Practices Act.

If gross national income per capita adjusted for differences in the cost of living is about $13,000 in China, a developing country, and is about $56,000 in the United States, a developed country, then

on average, Americans can afford more goods and services than their Chinese counterparts.

Geography, Education, and Economic Progress

other factors influencing a country's rate of economic development include: 1.) Geography - influences economic policy, and thus economic development -countries with favorable geography are more likely to engage in trade which can promote economic growth 2.) Education levels -countries that invest more in the education of their young people develop faster economically

Appointments and schedules are fluid. I spend my time doing what I consider the most important.

polychronic time

Masculinity vs. Feminity

•Differentiated sex roles •One sex may dominate •Live to Work •Independence is the ideal •Big and fast is the ideal •Undifferentiated sex roles •Equality between the sexes •Work to Live •Interdependence is the ideal •Small and Slow is beautiful

Match the driving force to the correct description and implication for business. declining investment barriers technology: transportation technology: computing and communication declining trade barriers

rapid FDI growth and new production opportunities and new markets faster and cheaper shipping and optimal production explosive growth of high-power, low-cost computing and growth in services lower tariffs and increased international trade in goods and services

States in Transition

since the late 1980s, a wave of democratic revolutions has swept the world, and many of the previous totalitarian regimes collapsed there has been a move away from centrally planned and mixed economies towards free markets

I like open area for my office. I prefer that my secretary control access to see me.

space

Cultural Geographic National Geographic

space material possessions friendship patterns agreements among cultures time - monochronic, schedules, lines, polychronic, meeting needs, no lines

The main factor driving Apple's decision to locate its iPhone production in China was

speed

global standard

technology can be delivered anywhere affordably

GNI figures are helpful in understanding an economy because they

tell us how poor a country is relative to another.

The primary reason Apple established production facilities in China for its iPhone was to capitalize on

the ability of subcontractors to rapidly respond to changes in demand.

Why are asian countries leading the pack in improving education?

they focus on rewarding high performing teachers rather than focus on standard test scores

What is the purpose of the PPP?

to be able to compare the standard of living among different countries

Privatization

transfers the ownership of state property into the hands of private investors -because private investors are motivated by potential profits to increase productivity, privatization should increase economic efficiency -privatization efforts are more successful when they are accompanied by more general deregulation and opening of the economy

Agreements Across Cultures

•High context cultures lay greater emphasis on general agreement with business partners over contracts •Low context cultures rely on contractual agreements.

Hofstede's Cultural Dimensions Model: Individualism vs Collectivism

•I •Entrepreneurship •Greater product variety •Emphasis on individual achievement Universalism •We •Large companies •Products show group membership •Emphasis on group membership •Particularism

Dimensions of Culture

•Material Elements •Social Institutions •Humans and the Universe •Aesthetics •Language

High vs. low context

•Meaning of individual behavior depends on the situation •Greater emphasis on non-verbal messages •Seen in countries that comprise of one cultural group •Meaning of individual behavior depends on words, not the situation. •Intentions and feelings are expressed verbally •Occurs in multicultural countries

Time

•Monochronic •Schedules Lines •Polychronic •Meeting needs •No lines

Important cultural concepts

•Self-Reference Criterion - we all have an automatic and unconscious tendency to use our own thought framework (built around our own culture) to evaluate others. •Ethnocentrism - The belief that one's culture is superior to others. Leads to disregard or contempt for the culture of the other country. Usually a consequence of self-reference criterion.•Self-Reference Criterion - we all have an automatic and unconscious tendency to use our own thought framework (built around our own culture) to evaluate others. •Ethnocentrism - The belief that one's culture is superior to others. Leads to disregard or contempt for the culture of the other country. Usually a consequence of self-reference criterion.

Silent languages of culture

•Space •Material Possessions •Friendship Patterns •Agreements Among Cultures •Time

Low vs. High Uncertainty Avoidance

•Take risks •High stress •Deviant persons and ideas are tolerated Belief is placed in generalists and common sense •Avoid risks •Ease and lower stress •Deviation is not tolerated •Belief is placed in experts and their knowledge

High vs. Low Power Distance

•There should be an ordered inequality in the world •Superiors are inaccessible •Decision making is limited to superiors Power holders should have certain privileges •Inequality in society should be minimized. •Superiors are accessible. •Everyone can make decisions •Everyone has the same privileges