Management Chapter 4 study guide

NAFTA (North American Free Trade Agreement)

Allows open trade between the US, Mexico, and Canada.

The Digitec company has recently decided to design and manufacture a laptop that retails for under $50, in a effort to make the information technology available to people in places like rural Africa and rural India. This is known as what type of strategy?

Bottom of the pyramid strategy

The three dimensions of global mindset are

Cognitive Dimension Psychological Dimension Social Dimension

A multinational corporation typically receives more than 25 percent of its total sales revenues from operations inside the parent's home country

False

Culture shock refers to a person's ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses

False

Ethnocentrism refers to a natural tendency of people to regard their own culture as inferior to other cultures

False

Fifteen member states of the EU have adopted the rupee, as a single European currency

False

German, Swiss, and North American cultures are among the high-context cultures

False

Market risk is defined as the risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments

False

The primary emphasis of polycentric companies is on their home countries

False

The term top of the pyramid refers to the more than four billion people who earn the least, as defined by per capita income

False

The extent to which trade and investments, information, social and cultural ideas, and political cooperation flow between countries is called?

Globalization

bottom of the pyramid (BOP) concept

Proposes that corporations can alleviate poverty and other social ills, as well as make significant profits, by selling to the world's poor.

An MNC is managed as an integrated worldwide business system

True

Business has become a unified, global field, and events and ideas that influence organizations in one country are likely to influence organizations in other countries as well.

True

Geocentric companies are truly world-oriented and favor no specific country

True

Large international firms typically are called multinational corporations.

True

Companies that think _______ have a competitive edge

globally

political instability

includes riots, revolutions, civil disorders, and frequent changes in government

WTO (World Trade Organization)

monitors international trade and has legal authority to arbitrate disputes on some 400 trade issues

Ethocentrism

natural tendency of people to regard their own culture as superior and to downgrade or dismiss other cultural values

high-context culture

people are sensitive to circumstances surrounding social exchanges

low-context culture

people use communication primarily to exchange facts and information

Globalization

refers to the extent to which trade and investments, information, social and cultural ideas, and political corporations flow between countries

Exporting

the company maintains its production facilities within the home nation and transfers its products for sale in foreign countries

Political Risk

the risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments

MNC (multinational corporation)

typically receives more than 25 percent of its sales revenues from operations outside the parents home country

global outsourcing (offshoring)

using suppliers outside the United States to provide labor, goods, or services

How many nations signed on for negotiation when GAT was created in 1947?

23

North America is a

Low- context culture

Characteristics of the MNC

Managed as an integrated worldwide business system in which foreign affiliates act in close alliance and cooperation with one another Ultimately controlled by a single management authority that makes key strategic decisions relating to the parent and all affiliates Presumed to exercise a global perspective

global mindset

ability of managers to appreciate and influence individuals, groups, organizations, and systems that represent different social, cultural, political, institutional, intellectual, and psychological characteristics

Today's companies compete in a

borderless world