BA310 Midterm CH1&5

BRIC Economies

Brazil, Russia, India, China All examples of emerging market economies.

The 2008 financial crisis had a negative impact on Brazil, China, and India because those countries had diversified their export destinations and had large domestic markets. True or False?

False

Effective Country Policy Measures

Good Governance Property Rights Competitive Markets Anticorruption Policies

Meta-Cognitive CQ

Individual level of conscious cultural awareness during cross-cultural interactions Consciously question one's cultural assumptions Reflect during interactions.

Key International Institutions that Facilitate Globalization

International Monetary Fund World Bank World Trade Organization (WTO)

Hofstede's Cultural Value Dimensions

Power distance - reflects the level of egalitarianism (equality) in the society. Uncertainty avoidance - The extent to which societies tolerate risk or are risk-averse. Individualism-Collectivism - the worth of an individual versus the worth of a group. Masculinity-Femininity - the extent to which a society minimizes gender inequality. Time Orientation - extent to which a society minimizes short-run or long-run time orientation.

Institutional Structure

The rules, enforcement mechanisms, and organizations that support market transactions

Digital Divide

The seperation between those nations who have adopted the internet and technology and those who have not.

WTO Agreements:

Trade W/O Discrimination Increasingly freer trade Predictability of trading relationships Promotion of fair trade Ecouragement of economic reforms in developing countries.

China and India have a large growing middle-income class with strong appetites for the consumption of domestic goods and services as well as imports. True of False?

True

Countries that try to keep their currencies weak may increase exports in the short run but at the expense of high import costs that could lead to rising inflation. True or False?

True

Foreign direct investment refers to inflows of capital from abroad for investing in domestic plant and equipment for the production of goods and/or services as well as for buying domestic companies.

True

Free Flow of goods and services is a key aspect of globalization.

True

The Asian financial crisis of 1997 was the result of East Asian economies' excessive dependence on export-led economic growth, so when industrialized economies slowed, East Asian exports declined, and growth slowed that led to the crisis. True or False?

True

The socio-economic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries, which in turn could lead to increased economic growth and geo-political integration and interdependence among nations of the world refers to Globalization.

True

Cross-Cultural Competence (CCC)

an individual ability to function effectively across cultures. With rise in globalization, this is becoming ever-more important.

Behavioral CQ

capability to display appropriate verbal and nonverbal actions when interacting with people from different cultures.

Motivational CQ

drive to direct attention and energy toward learning about and functioning in situations characterized by cultural differences.

High/Low Power Distance

high - superiors and elders are treated with deference and respect centralized, tall organizational structures wide salary gaps (Spain, Italy, Kuwait, Qatar) Low - flatter, decentralized structures, smaller ratio of supervisor to employee narrow salary gaps (New Zealand, Australia)

Cultural Intelligence (CQ)

individual ability to adjust and function effectively in culturally diverse contexts.

Culture

learned behavior; a way of life for one group of people living in a single, related, and independent community

Short/Long-Run Time orientation

people are oriented towards the future (strong propensity to save and invest, thriftiness) people are oriented towards the recent past and the present (focus on achieving quick results)

DIGITAL ERA

the period of transformation that adjust lifestyles to make the Internet and wireless technologies a part of everyday life.

Elements of Culture

- Aesthetics perceived as taste and beauty by a society (Color, music, form) - Material Culture (refers to the physical objects, resources, and spaces that people use to define their culture) - Religion - Social Institutions (the way people are related to one another in a group setting) - Values (Basic beliefs or philosophies pervasive in a society. define what is Right or Wrong; Good vs. Bad - Attitudes (Feelings or opinions)

Cultural Dimensions of Doing Business in Arab Countries

- Avoid sitting so that the sole of one's shoe is shown. - The left hand is viewed as "unclean." - Good posture is imperative. - Foreign business representatives should not inquire about the wives of Arab business representatives. - Do not be overly praise the possessions of Arab hosts, as this could create a perception that you expect your hosts to give them to you. - Arab business representatives will probably be reluctant to do business with women. - If a woman is accepted, modest dress is appropriate. - Arab business representatives may frequently divert from the topic initially discussed, then return to it.

Cultural Dimensions of Doing Business in Korea

- Elders are respected for their knowledge and wisdom. - "Yangban" refers to the noble class's culture of honor, reputation, and dignity (similar to the concept of gravitas in Western cultures) - "Inwa" involves harmony among unequals: loyalty is owed to parents and authority figures, yet superiors are responsible for the well-being of their subordinates. - A personal relationship needs to occur before business matters can be discussed with foreigners

Cultural Dimensions of Doing Business in China

- Guanxi ("gwanshe") A philosophy denoting friendships among unequals (as between subordinates and superiors) and the unlimited exchanges of favors; it is utilitarian and not based on sentiment, emotions, or a group orientation Exchanges are often uneven, an advantage for weaker member in the guanxi relationship. - Persons of low rank may be powerful and influential due to guanxi relationships with superiors. - Foreigners who want to conduct business in China may need to seek out lower-level persons and obtain their favor in order to gain access to more powerful superiors who are decision makers

The International Monetary Fund's Role in Global Financial Stability:

- Promote exchange rate stability and an open system of international payments. - Lend countries foreign exchange to help address balance of payment problems. - Provide a forum for cooperation on international monetary problems Facilitate international trade that promotes job creation, economic growth, and poverty reduction.

Globalization requires:

- Transparent political institutions (open, trustworthy, stable, accountable governments, organizations, etc.) - Adaptive institutions that provide societal stability and incentives for private investment - Independent Judiciary and Free Press

Cultural Dimensions of Doing Business in Japan

- Upon meeting a Japanese executive, a slight bow and handshake are appropriate. - Business card etiquette is important. On one side, the information should be in English; the other side should have the same information in Japanese. - It is not appropriate to look directly into the eyes of your Japanese hosts. - It is important for your Japanese hosts to know your title and rank. They prefer to do business with high-ranking individuals. - Japanese business has a group orientation, rather than an individualistic one. "The peg that stands out gets hammered down" is a Japanese saying. - Japanese executives expect foreign business representatives to arrive prepared and to have decision-making authority. - New potential business partners must have been referred to Japanese business representatives through a third party.

CCC is important because:

-Greater employee mobility Globally, 58% of companies are expecting international assignments to increase. - Increasing Workplace Diversity In the U.S, immigrants account for 16% of current labor force. Between 2000 - 2050 immigrants will account for 83% of the growth in the working-age population

Decoupling

A global shift in which industrialized country-dependent developing economies grow based on their own underlying economic strengths rather than those of highly-developed countries.

Multi-Polar World

A world economy in which the engines of growth are comprised of both industrialized (e.g., the United States) and emerging market economies (e.g., BRIC countries)

Culture Affects...

All Aspects of business.

The World Bank

Also Located in DC and has 188 countries. Initial role was to aid the reconstruction of Europe after World War II. Currently, focuses on: - Agreements supporting international standards in financial systems. - Information and knowledge transfer to developing countries to support sustainable development. - Global integration through trade liberalization. - Eradicating of poverty and communicable diseases.

Language

Can be expressed both verbally and non-verbally by what is said, and tone, gesture, eye contact, body language, etc.

4 Dimensions of Cultural Intelligence (CQ)

Cognitive CQ Meta-Cogitive CQ Motivational CQ Behavioral CQ

Sustainable Development

Economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs, whether environmentally, socially, or economically.

Emerging Market Economies

Economies progressing to becoming more advanced. Are implementing more open trade and free-market policies Are becoming the world's center of economic gravity through innovation, research and development.

Global Middle Class Consumption

Emerging markets such as China, India, and other parts of Asia have rising middle classes growing in consumption with each passing year and are projected to increase at a faster rate in the future.

Globalization

It is the socio-economic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries. It can lead to increased economic growth and geo-political integration and interdependence among nations of the world

Cognitive CQ

Knowledge of cultures, cultural environments, values, norms, practices, & customs.

Characteristics of Culture:

Learned Not Inherited (not part of DNA) Not easily modified, static

High/Low Uncertainty Avoidance

Less risk taking, more written rules, structured orgianizational activities. (High) (Germany, Switzerland) more risk-taking, fewer written rules, less structured. (Low) (Greece, Russia, Poland)

International Monetary Fund

Located in DC. 188 countries. Oversees International Monetary System - the global system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other.

World Trade Organization (WTO)

Located in Geneva, Switzerland. Contains 160 countries. Began in 1948 under the General Agreement on Tariffs and Trade (GATT) - Liberalized trade by lowering and/or removing trade barriers such as tariffs, quotas, and subsidies. - The only international organization dealing with the rules of trade between nations.