IB Test #1 Terms

Multinational Enterprise (MNE)

A firm that owns business operations in more than one country.

Social Stratification

A system by which a society ranks categories of people in a hierarchy

Business Ethics

Accepted principles of right or wrong governing the conduct of businesspeople.

First Movers Advantage

Advantages accruing to the first to enter a market.

Human Development Index (HDI)

An attempt by the UN to assess the impact of a number of factors on the quality of human life in a country.

Modern Capitalism

An economic system that involves careful calculation of costs of production relative to profits, borrowing and lending money, accumulating all forms of capital, and drawing labor from an unrestricted global labor pool

Individualism

An emphasis on the importance of guaranteeing individual freedom and self- expression.

Ethical Dilemmas

Are situations in which none of the available alternatives seems ethically acceptable. Doing the right thing, or even knowing what the right thing might be is often far from easy.

Innovation

Development of new products, process, organizations, management practices, and strategies.

Power Distance

Dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities.

Market-based Economic System

Economic system in which buyers and sellers interact in markets to make economic decisions about which goods and services are produced, distributed, and consumed.

Noblesse Oblige

French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth. In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises.

Late-Mover Disadvantages

Handicaps experienced by being a late entrant in a market.

International Monetary Fund (IMF)

International institution set up to maintain order in the international monetary system.

General Agreement on Tariffs and Trade (GATT)

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and let to the WTO.

Sullivan Principles

Named after Leon Sullivan, a black baptist minister and a member of GM's board of directors. Said that GM should not obey the apartheid laws in South Africa and that they should try to make the country abolish the laws

Mores

Norms seen as central to the functioning of a society and to its social life.

Foreign Corrupt Practices Act

Outlawed the paying of bribes to foreign government officials to gain business.

Folkways

Routine conventions of everyday life.

Sustainable Strategies

Strategies that not only help the multinational firm make good profits, but that do so without harming the environment, while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its multiple stakeholders.

Pure Command Economy

The goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are all planned by the government.

Political Economy

The political, economic , and legal systems of a country are interdependent; they interact and influence each other, and in doing so they affect the level of economic well-being.

Cross Cultural Literacy

Understanding how the culture of a country affects the way business is practiced.

Communists

believed that socialism could be achieved only though violent revolution and totalitarian dictatorship.

Hernando de Soto

developing world will not benefit from capitalism until property rights are better defined and protected.

Amartya Sen

development should be assessed less by material output and more by the capabilities and opportunities that people enjoy

Individualism Versus Collectivism

dimension focused on the relationship between the individual and his or her fellows.

Masculinity Versus Femininity

dimension looked at the relationship between gender and work roles.

Uncertainty Avoidance

dimension measured the extent to which different socialized their members into accepting ambiguous situations and tolerating uncertainty.

World Values Survey

documented how values change, the study linked these changes in values to changes in a country's level of economic development.

Protestant Ethics

emphasize the importance of hard work and wealth creation (for the glory of God) and frugality (abstinence from worldly pleasures)

North American Free Trade Agreement (NAFTA)

formed in 1994 stating free trade area among Canada, Mexico, and the United States.

Utilitarian Approaches to Ethics

hold that the moral worth of actions or practices is determined by their consequences. An action is judged desirable if it leads to the best possible balance of good consequences over bad consequences.

Utilitarianism

idea that the goal of society should be to bring about the greatest happiness for the greatest number of people

Ethnocentrism

is a belief in the superiority of ones own ethic group or culture.

Market Economy

is a economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

Gross National Income (GNI)

is a yardstick for the economic activity of a country; it measures the total annual income received by residents of a nation.

Civil Law

is based on a detailed set of laws organized in codes.

Common Law

is based on tradition (a country's legal history), precedent (cases that have come before the courts in the past), and custom (the ways in which laws are applied in specific situations).

Theocratic Law System

is one in which the law is based on religious teachings.

Friedman's Basic Position

is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

Righteous Moralism

is the belief that a multinationals home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. This approach is typically associated with managers from developed nations.

Cultural Relativism

is the belief that ethics are nothing more than the reflection of a culture-all ethics are culturally determined- and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

Foreign Direct Investment (FDI)

occurs when a firm invests resources in business activities outside its home country.

Legal System

protects property right and limits corruption is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions, where economic activity is heavily regulated by the state, and where corruption is rampant and the rule of law is not respected.

Right Theories

recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

Collectivism

refers to a political system that stresses the primacy of collective goals over individual goals.

Corporate Social Responsibility (CSR)

refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor decisions that have both good economic and social consequences.

Globalization of Markets

refers to the merging of historically distinct and separate national markets into one huge global marketplace.

Globalization of Production

refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital).

Globalization

refers to the trend towards integrated global economic system.

Private Action

refers to theft, privacy, blackmail, and the like by private individuals or groups.

Democratic Reforms

right to vote, social security, minimum wage, unemployment insurance

Command Economy

the government plans the goods and services that a country produces, quantity in which they are produced, and the prices at which they are sold.

Political System

the system of government in a nation.

Public Action

to violate property rights occurs when public officials, such as politicians and government bureaucrat, extort income, resources, or property itself from property holders.

Confucianism

was the official ethical system of China.

Global Commons

which everyone benefits but for which no one is specifically responsible. Occurs when a resource held in common by al, but owned by no one, is overused by individuals, resulting in its degradation.