International Business Vocabulary

Which of the following is a macro factor underlying the trend toward greater globalization?

Dramatic developments in recent years in information processing and other technologies.

BC Lumber (Main points)

Due to an earthquake in China, the Canadian government spent $8 million on the failing lumber industry. They sent engineers to build wooden homes. Good for Canada's lumber industry, as it is promoting the high quality lumber

What makes a company international?

1. owning a retail outlet in another country 2. Owning a manufacturing plant in another country 3. Importing/exporting internationally 4. Investing internationally

Process (does this really matter?)

1. understand why they entering (4 reasons)

The Republic Of Marwa has decided to open its economy to globalization. Which of the following will facilitate this decision of Marwa?

Adopting the Contracts For the International Sale of Goods (CIGS)

_____ is most likely to be the consequence of economic progress.

Adoption of democracy

IMF

Agency created to regulate fixed exchange rates and enforces the rules of the international monetary system

GES: Joing Venture/Merger

Agreement between 2 or more organizations to share assets to control a new business. PROS: share knowledge, more money to use CONS: lose some control, disagreements

Environment

All the forces surrounding and influencing the life and development of the firm.

GES: Strategic Alliance

Companies coopoerate to co-develop their products CONS: does not combien assets, less formal PROS: greater potential for disagreements

Corportate Globalization

Companies have more power than nations, corporate wealth in measured by NET INCOME, as opposed to GDP

GES: Franchising

Company authorizes an individual to conduct busienss in prescribed manner. PROS: business plan is set, brand recognition CONS: expensive, lack of control

_____ is an ethical system that has influenced behavior and shaped culture in parts of Asia, however it cannot be considered as a religion.

Confucianism

_____ is not concerned with the supernatural, has little to say about the concept of a supreme being or an afterlife, and believes that loyalty to one's superiors is an absolute obligation.

Confucianism

______________________ consist of individuals and households who are the final users of goods and services

Consumer Markets

____________ refers to how direct or indirect communication is between parties

Contexting

A legally enforceable agreement between two or more persons either to do or not to do a certain thing or things.

Contract

_____ are documents that specify the conditions under which an exchange is to occur and details the rights and obligations of the parties involved.

Contracts

A strong belief that economic progress leads to adoption of a totalitarian regime underlies the fairly permissive attitude that many Western governments have adopted toward human rights violations in China.

FALSE

A well-functioning market economy does not require laws to protect private property rights and mechanisms for contract enforcement.

FALSE

According to Freedom House, all democracies are free countries in terms of political and civil liberties.

FALSE

According to Geert Hofstede, high power distance cultures were found in societies that tried to play down inequalities of power and wealth as much as possible.

FALSE

According to the influential economist Jeffrey Sachs, tropical regions have a more extensive division of labor than temperate regions.

FALSE

After WWII, the advanced nations of the West committed themselves to increasing barriers to the free flow of goods, services, and capital between nations. T/F

FALSE

All right-wing dictatorships display an affinity toward socialist or communist ideas. T/F

FALSE

Although free markets and democracy can still be found around the world, the tide has been running in favor of command economies and totalitarian dictatorships.

FALSE

As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries. T/F

FALSE

As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities. T/F

FALSE

As a result of international trade, the economies of the world's nation-states are becoming less intertwined. T/F

FALSE

As firms follow each other around the world, they bring with them many of the assets that served them well in other markets. Thus, greater diversity replaces uniformity. T/F

FALSE

Author Francis Fukuyama envisioned a world split into different civilizations, each of which has its own value systems and ideology.

FALSE

Beginning in the 1970's, Japan and European firms began to shift labor-intensive manufacturing operations from developing nations to their home countries where labor costs were lower. T/F

FALSE

Bribes are legal payments meant to facilitate performance of duties that the recipients are already obligated to perform. T/F

FALSE

Buddhism has the highest number of adherents in the world today.

FALSE

Buddhism supports the caste system.

FALSE

Buddhism was founded in China.

FALSE

By the mid-1990s, communism was rising worldwide. T/F

FALSE

Class membership in the United States is determined to a much greater degree by individual background and schooling, as opposed to economic achievements.

FALSE

Command economies provide a more favorable environment for innovation and entrepreneurs than market economies. T/F

FALSE

Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by pursuing retaliatory trade policies rather than free trade policies. T/F

FALSE

Historically, pure market economies were found in communist countries where collectivist goals were given priority over individual goals. T/F

FALSE

In Amartya Sen's view, development is solely an economic process, and not a political process.

FALSE

In American society, the high degree of social mobility and the extreme emphasis on individualism have resulted in the emergence of class consciousness.

FALSE

In a 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 dictated by the interaction of demand and supply. T/F

FALSE

In a representative democracy, elected representatives who fail to perform their job adequately cannot be voted out of office at the next election. T/F

FALSE

In both China and India, the shift toward a command-based economic system has produced large gains despite weak property rights and endemic corruption.

FALSE

In countries where individual goals are given primacy over collective goals, we are less likely to find market-based economic systems. T/F

FALSE

In most democratic states, those who question the right of the rulers to rule find themselves imprisoned, or worse. T/F

FALSE

In practical terms, collectivism creates a more favorable environment for international businesses to operate in than individualism. T/F

FALSE

In the past quarter century, the volume of cross-border trade and investment has been growing less rapidly than global output. T/F

FALSE

It is easier for companies based in countries with a high degree of class consciousness to establish a competitive advantage in the global economy.

FALSE

Liability laws are typically least extensive in highly developed nations. T/F

FALSE

Max Weber argued that the Catholic promise of salvation in the next world, rather than this world fostered "a spirit of capitalism."

FALSE

Max Weber argued that the ascetic principles embedded in Hinduism encourage the kind of entrepreneurial activity in pursuit of wealth creation that we find in Protestantism.

FALSE

New information and communication technologies have increased a state's ability to control access to uncensored information.

FALSE

One concern of globalization opponents is that it undermines the influence of super national organizations and promotes the sovereignty of individual nation-states. T/F

FALSE

The benefits, costs, and risks associated with doing business in a country are independent of that country's political, economic, and legal systems. T/F

FALSE

The emphasis on individualism has led to the widespread diffusion of self-managing work teams within Japanese organizations.

FALSE

The emphasis on individualism results in a low degree of managerial mobility between companies.

FALSE

The globalization of markets and production and the resulting growth of world trade, FDI, and imports all imply that firms are finding it easier to protect themselves from the attack of foreign competitors. T/F

FALSE

The late Influential political scientist Samuel Huntington predicted that the universalization of Western liberal democracy will be the final form of human government.

FALSE

The least rigid system of social stratification is a caste system.

FALSE

The primacy of the value of group identification encourages managers and workers to move from company to company.

FALSE

The shift toward deregulation has been easier for former command economies than for mixed economies.

FALSE

The social democrats believed that socialism could be achieved only through violent revolution and totalitarian dictatorship. T/F

FALSE

The term "public action" refers to the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit. T/F

FALSE

The term political economy is used to stress the fact that the political, economic, and legal systems of a country are independent of each other. T/F

FALSE

There is a strict one-to-one correspondence between a society and a nation-state.

FALSE

Totalitarian states that limit human freedom are highly conducive to progress in terms of innovation, entrepreneurship, and economic growth.

FALSE

When a nation shifts away from a market-based economy, the state-owned businesses are sold to private investors.

FALSE

When law courts interpret civil law, they do so with regard to tradition, precedent, and custom. T/F

FALSE

Foreign Direct Investment

FDI

Gem Globe, a US company, has invested substantial capital in precious stones mining activities outside the US. This practice is referred to as:

FDI.

When a firm invests resources in business activities outside its home country, it is referred to as:

FDI.

Which of the following best exemplifies violation of folkways?

Failing to greet a person you know

A system in which currency values are based on supply and demand

Floating Exchange Rate

A directed discussion with 8 - 12 people is known as ___________________

Focus Group

_____ are social conventions concerning things such as the appropriate dress code in a particular situation, good social manners, eating with the correct utensils, neighborly behavior, and the like.

Folkways

In the 1970s, the United States passed the _____ following revelations that U.S. companies had bribed government officials in foreign countries in an attempt to win lucrative contracts

Foreign Corrupt Practices Act

The process of converting the currency of one country into the currency of another.

Foreign Exchange

The market of Banks and other financial institutions that buy and sell different currencies

Foreign Exchange Market

The right to use a company name or business process in a specific way is known as __________________________

Franchising

According to _____, the collapse of communism will result in the new world order that will dominated by a universal civilization characterized by democratic regimes and free market capitalism.

Francis Fukuyama

Which of the following best exemplifies facilitating or expediting payments in business?

Making small payments to government officials in order to speed up the work they are already obligated to perform

The exclusive rights to possess and use property and its profits to exclude everyone else from interfering with it, and to dispose of it in any legal way.

Property Rights

Evironmental Restrictions

Protects Canada's environment and natural resource based industries. Ex: prevents foreign insects, diseases...

Safety Regulations

Protects Canadian and affect domestic and imported products

Marketing efforts directed at the final user of an item _________

Pull Promotions

FDI (Foreign Direct Investment)

Purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control.

Large-scale surveys that collect numeric data are known as ___________________

Quantitative Research

Which of the following is most likely to be observed in today's global economy?

Rapid rise in the share of world output accounted for by developing nations such as China and India

Which of the following is a major reason for some of the world's poorest countries to have suffered from economic stagnation?

Rapidly expanding population

Buddhism, Hinduism, Islam, Confucianism, Christianity

Rate 5 on a scale from least to most beneficial to free market (Max Weber 1904)

Land or whatever is built on or attached to that land.

Real Property

To attract foreign investments, Canada could...

Reduce tarrifs and create more trade alliances, give more tax benefits and insentives, devalue currency

_______________________ attempts to create a long-term, mutually beneficial buyer-seller relationship

Relationship Marketing

Theocratic Law

Religious Teachings (NOT India)

Theocracy

Religious rule of a few (Vatican, Iran)

Which of the following is most likely to be implemented by a country as a part of deregulation?

Removal of price controls

Which of the following is most likely to be an implication of the global financial crisis of 2008-2009, and the recession that followed?

Retrenchment from free markets and democracy

Folkway

Routine conventions of everyday life (Ex: manners)

Standards

Rules for how products are used or how they perform

Which of the following statements is true about the late influential political scientist Samuel Huntington's vision of the new world?

Samuel Huntington theorized that modernization in non-Western societies can result in a retreat toward the traditional.

It is possible that economic growth in developed nations has offset the fall in the share of national income enjoyed by unskilled workers, raising their living standards. T/F

TRUE

Judges under a civil law system have less flexibility than those under a common law system. T/F

TRUE

Karl Marx advocated state ownership of the basic means of production, distribution, and exchange (i.e., businesses). T/F

TRUE

Like Christianity and Judaism, Islam is a monotheistic religion.

TRUE

Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic policies and free market economies. T/F

TRUE

Many totalitarian regimes failed to deliver economic progress to the vast bulk of their populations.

TRUE

Which of the following statements is true about the business implications of the Japanese society?

There is a low degree of movement from company to company among managers and workers in Japan.

Which of the following statements is true regarding the globalization of markets?

There still exist significant differences among national markets along many relevant dimensions, including distribution channels, culturally embedded value systems, and legal regulations.

Which of the following is a characteristic of high uncertainty avoidance cultures?

They allow a manager to tightly control the subordinates' initiatives.

How have new information and communication technologies, including the Internet, affected the political economy in general?

They have reduced a state's ability to control access to uncensored information.

_____ is a form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties.

Totalitarianism

Restrictions that reduce free trade among countries are known as __________________

Trade Barriers

Buying or selling an account

Trade Credit

When a country exports more goods and services than the country is importing it is called _________________

Trade Surplus

Protectionism

Trade barriers are imposed by the government to protect domestic industries from foreign competition

An argument in support of the falling barriers to international trade and investment is that the falling barriers:

drive the global economy toward greater prosperity.

When compared to the American society, the Japanese society lacks:

dynamism and entrepreneurship.

In comparison to market economies, command economies lack:

dynamism and innovation.

Lamboria Republic is facing a high rate of inflation, and the government debt in the country is also high. As a result, the country's business environment is beginning to deteriorate, and the profits of the business enterprises are hurt. According to this information, Lamboria Republic is facing a(n) _____ risk.

economic

The government of Ugania had been extending huge amounts of loans to the business enterprises in the country. However, the borrowers failed to generate the profits necessary to repay their debts. As a result, national banks in Ugania had a lot of nonperforming assets on their books, and the Uganian currency was devalued. In this context, the business enterprises in Ugania are most likely to face a(n) _____ risk.

economic

Generally, the costs and risks associated with doing business in a foreign country are typically lower in:

economically advanced countries.

When state officials, such as politicians and government bureaucrats, violate property rights by extorting income, resources, or the property itself from property holders, it is described as:

public action.

Social unrest and disorder are less likely to be found in countries that contain more than one ethnic nationality.

FALSE

Society refers to a group of people whose values and norms differ from each other.

FALSE

The Gross national income (GNI) per capita comes much closer to Amartya Sen's conception of how development should be measured than narrow economic measures such as Human Development Index (HDI).

FALSE

The IMF is less controversial than its sister institution, the World Bank. T/F

FALSE

The Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until they relax the property rights offered by their legal systems.

FALSE

The US accounted for a significantly larger share of the world economy in 2011 than it did in the 1960's. T/F

FALSE

The WTO is seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations. T/F

FALSE

The rise of the internet is increasing the barriers that small firms face in building international sales. T/F

FALSE

Communication from the audience back to the sender is known as ___________________

Feedback

Which of the following is a benefit of lowering the barriers to international trade?

Firms can view the world, rather than a single country, as their market.

_____ are primarily the advantages that accrue to early entrants into a market.

First-mover advantages

Fixed Costs and Variable Costs

Fixed: doesnt depend on how much is produced Variable: depends on the amount that is produced

Hybrids

Floated Peg- peg the rate to the US dollar and they periodically review their peg to adjust to keep it in line with market value

Although most international trade and investment is still conducted by large firms, many medium-sized and small businesses are becoming increasingly involved in international trade and investment. T/F

TRUE

Among developing nations, the largest recipient of FDI has been China. T/F

TRUE

By adopting the Contracts for the International Sale of Goods (CIGS), a nation signals to other adopters that it will treat the convention's rules as part of its law. T/F

TRUE

By identifying and investing early in a potential future economic star, international firms build brand loyalty and gain experience in that country's business practices.

TRUE

Economic freedom does not necessarily equate with political freedom.

TRUE

If newly privatized firms are protected from foreign competition by barriers to international trade and foreign direct investment, they continue to act like state monopolies.

TRUE

In China, state-owned companies still dominate the banking, energy, telecom, health care, and technology sectors.

TRUE

In Samuel Huntington's thesis, global terrorism is a product of the tension between civilizations and the clash of value systems and ideology.

TRUE

In a class system, individuals born into a class at the bottom of the social hierarchy can work their way up.

TRUE

In general, as countries get richer, they enact tougher environmental and labor regulations. T/F

TRUE

Which of the following statements is true about the implications of globalization on developing countries?

The citizens of developing countries have achieved higher living standards due to globalization.

Which of the following statements is true about the class system in the United States when compared to the British class system?

The class system in the United States is more pronounced than in Britain.

A distinctive name, symbol, work, picture, or combination of these that is used by a business to identify its services or products.

Trademark

Common Law

Tradition/Precedent based (former GB colonies)

Many _____ believe that the way to achieve nirvana—a state of complete spiritual perfection— is to lead a severe ascetic lifestyle of material and physical self-denial, devoting life to a spiritual rather than material quest.

Hindus

In 1904, _____ theorized that there was a relationship between Protestantism and the emergence of modern capitalism.

Max Weber

Standard of Living

Measured by the kinds and quality of goods and services, people can afford. Standard of living and is determined by productivity

A dispute resolution method that makes use of neutral third party

Mediation

_____ generally permits individual economic freedom, but restricts individual political freedom on the grounds that it would lead to the rise of communism.

Right-wing totalitarianism

Tribal

Rule by a few (Africa)

"Not all democracies are free, as some still restrict certain political and civil liberties." Which of the following countries best fits this argument?

Russia

International Business

conducts transactions across national borders

The minimum that a firm has to do to engage in international business is to:

export or import products from other countries.

Many of our jobs are dependent on

exports, imports, or foreign investment.

Survival values typically stress the importance of:

economic and physical security.

Janet believes that the cultural group she belongs to is superior and is hence highly intolerant toward employees from the cultures of other countries. This behavior of Janet is known as:

ethnocentrism

A presumption of democracy is that...

every individual's vote is equal in theory

Bilated Trade

Two countries trade with each other

External forces consist of (7-11)

7. Physical: elements of nature such a topography, climate, and natural resources.

In the United States, the Foreign Corrupt Practices Act was passed during the 1970s following revelations that:

U.S. companies had bribed government officials in foreign countries in an attempt to win lucrative contracts.

Rights theories

a twentieth-century theory that recognizes that human beings have fundamental rights and privileges that transcend national boundaries and cultures

Social identification

adopts or enacts the identity of the group one is affiliating with, strong social significance and often influences self-esteem

The _____ has been a major force facilitating international trade in services.

advent of the Internet

Material culture or artifacts

are all the human-made objects of a culture; people who study material culture are concerned with how people.

In the present times, many of the former Communist nations of Europe and Asia:

are committed to democratic politics.

According to Hofstede, in societies where _____ was emphasized, the ties between individuals were tight.

collectivism

When _____ is emphasized, the needs of society as a whole are generally viewed as being more important than individual freedoms.

collectivism

The belief that the group is more important than the individual is known as ____________________

Collectivism

Information that has already been collected and published is called _______________

Secondary Data

Geocentric

Seeks total integration of global operations, focuses on the company itself. Company deals with specific goods and services realting to country's trend

Which of the following is inconsistent with the Marxist philosophy?

Selling state-owned enterprises to private investors

In practical terms, individualism translates into an advocacy for democratic political systems and market economics. T/F

TRUE

Intellectual property laws stimulate innovation and creative work. T/F

TRUE

International businesses lobby their respective governments to push for international agreements to ensure that intellectual property rights are protected and that the law is enforced. T/F

TRUE

Islam is not just a religion; it is also the source of law, a guide to statecraft, and an arbiter of social behavior.

TRUE

Islamic law is primarily a moral rather than a commercial law and is intended to govern all aspects of life. T/F

TRUE

A common law system tends to be less adversarial than a civil law system. T/F

FALSE

A company has to be the size of a multinational giant to facilitate, and benefit from, the globalization of markets. T/F

FALSE

A country's economic system and property rights regime do not influence the attractiveness of the country as a market or investment site.

FALSE

According to Max Weber, Protestant ethics discouraged the development of capitalism.

FALSE

Compared to common law system, it is more expensive to draw up contracts in a civil law jurisdiction.

FALSE

Confucianism and Confucian ethics influence behavior and shape culture in parts of Asia, hence it is correct to characterize Confucianism as a religion.

FALSE

Countries that markedly increased their share of world output from 1960 to 2010 included Germany, France, and the UK. T/F

FALSE

Entrepreneurial individuals have fewer economic incentives to develop valuable new innovations in market economies than in planned economies.

FALSE

Five of the fastest growing economies of the past 30 years—China, South Korea, Taiwan, Singapore, and Hong Kong—had one thing in common at the start of their economic growth: democratic governments.

FALSE

One of the tenets of collectivism is that the welfare of society is best served by letting people pursue their own economic self-interest. T/F

FALSE

Political systems that emphasize collectivism tend to be democratic, while political systems that place a high value on individualism tend to be totalitarian. T/F

FALSE

A caste system is a closed system of stratification in which social position is determined by the family into which a person is born.

TRUE

It is more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.

TRUE

Language is one of the defining characteristics of a culture.

TRUE

Plato did not equate collectivism with equality. T/F

TRUE

Rituals and symbols are the most visible manifestations of a culture and constitute the outward expression of deeper values.

TRUE

Strong identification with the group tends to create pressures for mutual self-help and collective action.

TRUE

Strong legal protection of property rights is a requirement for a business environment to be conducive to innovation, entrepreneurial activity, and hence economic growth.

TRUE

The IMF and the World Bank were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire. T/F

TRUE

The Internet has been a major force facilitating international trade in services. T/F

TRUE

The Uruguay Round, held under the umbrella of GATT, extended GATT to cover services as well as manufactured goods. T/F

TRUE

The WTO, the IMF, and its sister institution the World Bank, and the UN were all created by voluntary agreement between individual nation-states. T/F

TRUE

The concept of mobility between castes within an individual's lifetime makes no sense to traditional Hindus.

TRUE

The emphasis on individualism may make it difficult to build teams within an organization to perform collective tasks.

TRUE

The emphasis on individualism results in a low degree of managerial mobility between companies.

TRUE

The governments of China, Vietnam, and Laos are communist in name only because those nations have adopted wide-ranging market-based economic reforms. T/F

TRUE

The murabaha contract is the most widely used among the world's Islamic banks, primarily because it is the easiest to implement.

TRUE

The purchasing power parity for different countries is adjusted (up or down) depending upon whether the cost of living is lower or higher than in the United States.

TRUE

The real costs of information processing and communication have fallen dramatically in the past two decades. T/F

TRUE

The stock of FDI refers to the total cumulative value of foreign investments in a country. T/F

TRUE

The use of a grading system in schools teaches children the value of personal achievement and competition.

TRUE

Throughout the 1990's, the amount of investment directed at both developed and developing nations increased dramatically. T/F

TRUE

Values provide the context within which a society's norms are established and justified.

TRUE

WHile advances in telecommunications are creating a global audience, advances in transportation are creating a global villages. T/F

TRUE

When firms do not wish to accept the Contracts for the International Sale of Goods, they often opt for arbitration by a recognized arbitration court to settle contract disputes. T/F

TRUE

When intellectual property laws are lax, firms are at a greater risk of having their ideas stolen by local entrepreneurs. T/F

TRUE

When product safety laws are tougher in a firm's home country than in a foreign country, the ethical thing to do is to adhere to home-country standards. T/F

TRUE

Without a legal system that protects property rights, and without the machinery to enforce that system, the incentive to engage in economic activity can be reduced substantially by private and public entities.

TRUE

Ad Valorem

Tariff that charges based on a percentage of imported goods

Specific Tariff

Tariff that institutes a fixd charge for each good imported

Tariffs

Tax or duties on imported goods. Increases prices for consumers (good for domestic businesses). Free Trade Agreements reduce or eliminate this

Experimental research study that measures the likely success of a new good or service is called _______________

Test Market

In the context of the changing demographics of the global economy, which of the following has seen a decline?

The U.S. share of world exports of goods and services

Which of the following countries has seen a relative decline in its share of world output between 1960 and 2010?

The United States

_____ has experienced a decline in the share of FDI stock between 1980 and 2010.

The United States

_____ was the world's most dominant industrial power in the early 1960s.

The United States

Private action to violate property rights occurs when public officials, such as politicians and government bureaucrats, extort income, resources, or the property itself from property holders. T/F

FALSE

Utilitarian approaches to ethics

hold that the moral worth of actions or practices is determined by their consequences

When schools emphasize respect for others, obedience to authority, honesty, neatness, being on time, and use a grading system, they are:

indirectly teaching cultural values and norms.

In many Western societies, the _____ is the basic building block of social organization.

individual

Culture

individual world views, social rules, and interpersonal dynamics characterizing a group of people set in a particular time and place

In practical terms, _____ translates into an advocacy for democratic political systems and free market economics, which in general creates the most favorable environment for international businesses to operate in.

individualism

A(n) _____ risk can be defined as the likelihood that a trading partner will opportunistically break a contract or expropriate property rights.

legal

In the context of common law, the term "tradition" most likely refers to the:

legal history of a country.

Although China and India are very large markets when measured by number of consumers, their _____ makes them a relatively small market when measured in economic terms.

limited purchasing power

The natives of The Republic of Coastland are always prepared to take risks and they also demonstrate less emotional resistance to change. Apart from these characteristics, the ties between people are loose, sex roles are less sharply distinguished, and inequalities of power and wealth are discouraged in the country. According to this information, the Republic of Coastland most likely demonstrates _____.

low uncertainty avoidance

In 1944, the IMF was established to:

maintain order in the international monetary system.

Ethnocentric

maintains tight control from head office over the company's foreign operations

A boom in product liability suits and awards in the United States resulted in a dramatic increase in the cost of liability insurance. Many business executives argue that this:

makes American businesses less competitive in the global marketplace.

According to the author Francis Fukuyama, the world is most likely witnessing the end of:

mankind's ideological evolution.

Early outsourcing efforts were primarily confined to:

manufacturing activities.

Individualism-Collectivism

measures the degree to which people in the culture are integrated into groups

Globalization critics argue that the decline in unskilled wage rates in advanced economies is due to the:

migration of low-wage manufacturing jobs offshore.

Mores are best defined as:

norms that are seen as central to the functioning of a society and to its social life.

Well before the time

of Christ, Phoenician, and Greek merchants were sending representatives abroad to sell their goods.

Hall offers a classification

of cultures based upon communication styles and specifically, on the role that the context plays in the communication patterns.

Approximately 70 percent

of exports from developed economies go to other industrialized nations, not to developing countries.

The cost of doing business is most likely to be the lowest in:

open democratic societies.

As perceived by critics of globalization, the national sovereignty of democratic states and the ability to control their own destiny has been undermined due to the:

policies imposed by the unelected bureaucrats of supranational organizations.

A company has business interests in a country where the President-elect wants the country to adopt socialism and protectionism. Consequently, the company will be concerned about the _____ risks of continuing to do business in that country.

political

When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise, the business enterprise is said to be facing a(n) _____ risk.

political

The bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource are called _____ rights.

property

The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World War II, was to:

protect domestic industries from foreign competition.

According to Hinduism, the way to achieve spiritual perfection is:

to lead a severe ascetic lifestyle of material and physical self-denial.

During the late 1980s and early 1990s, many of the world's nation-states moved away from:

totalitarian governments.

As a result of _____ protection, the Nike "Swoosh" logo is protected from being used by any other shoe manufacturer.

trademark

A totalitarian political system in which a party, group, or individual that represents the interests of a particular ethnic group monopolizes political power is referred to as:

tribal totalitarianism.

The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism:

until property rights are better defined and protected.

Ethical dilemma

a situation in which there is no ethically acceptable solution

Group Identity

Answers who are we, and in turn crease a "non-we" or "them"

Social Identity

- a person acquires this identity via affiliation or membership whether in families, ethnic groups, occupations or through other channels

Nation

- an imagined political community and imagined as both inherently limited and sovereign

Civil law system

- based on a detailed set of laws that are organized into codes

Common law system

- based on tradition, precedent, and custom (basically based on similar situations in the past and how they were dealt with)

Implications for Managing

- be aware of one's context

Information Gathering

- can ask employees that have served in a particular host country

The decision to label another as us or them is rooted in three distinct cognitive processes

- categorization

Motives for Entering Foreign Markets

(1) the desire to increase profits and sales or (2) the desire to protect these profits and sales from being eroded by competitors.

Political Risk

- companies activities within a host country face risks arising from changes in government, policies, the level of conflict, corruption or quality of public service

_____ first commercialize innovative new products and processes, and help provide much of the dynamism in an economy.

Entrepreneurs

Create Value in a Way it Cannot do at Home

- Adding Volume (growth)

What to do about Political Risk/Uncertainty

- Fight, Flight, Freeze or Accept and act

One's self identity

- Self construal—who am i?

Nationalism

- a belief that embodies both the description of identity, and a claim of superiority as one group/nation is contrasted with another

Cultural Distance

- a country's cultural attributes determine how people interact with one another and with companies and institutions

The Full Analysis

- a full analysis should consider how a company's own characteristics operate to increase or reduce distance from foreign markets

Legal System

- a legal system comprises the set of laws, regulations and processes by which laws are enacted and applied to fact situations

Effect of Economic Distance

- companies that rely on economies of experience, scale and standardization should focus more on countries that have similar economic profiles (have to replicate existing business model and competitive advantage) - competitive advantage comes from economic arbitrage—the exploitation of cost and price differentials between markets - major disparities in supply chains and distribution channels are a significant barrier to business - cross country complexity place a premium on responsiveness and agility which makes it hard for cross-border competitors to match the performance of local players

The main types of political risk, ranked in decreasing order

- conflict and violence

The Effect of Cultural Attributes

- create distance by influencing the choices that consumers make between substitute products because of their preferences for special features

The four dimensions

- cultural distance

Doing Business in a Totalitarian/Authoritarian System

- doing so may oblige the company to pay bribes or other fees to government officials

Doing Business in a Democratic Government

- foreign companies usually participate in activites intended to influence governments such as lobbying or participating in an industry wide trade association

Identities have four distinct and universally persistent roots:

- gender, country, socio-economic class and ethno-religious origins

Administrative or Political Distance

- historical and political distance shared by countries greatly affect trade between them

Barriers of Entry are Most Likely to be Implemented if...

- it is a large employer

The Effect of Geographic Attributes

- low value to weight of bulk ratios occur particularly high costs as geographic distance increases

Four reasons to enter a market

- obtain resources - improve overall efficiencies - to sell - acquire strategic assets

Multilateral Trade

Trade between two or more countries

Political, Economic, Legal

A Political Economy refers to... (3 things)

16. What is a multinational corporation

A business that has direct investments abroad in multiple countries. Multinationals generate significant jobs, investment and tax revenue for the regions and nations they enter

Absolute Advantage

A country has an absolute advantage if they can produce something with less resources.

Trademark

A symbol or word legally registered of representing a company/product. Worth lots of money

International product life cycle (IPLC)

A theory explaining why a product that begins as a nation's export eventually becomes its import.

While the lowering of trade barriers made globalization of markets and production a theoretical possibility, which of the following has made it a tangible reality?

A. Major advances in communication, information processing, and transportation technologies

This exists when a country can produce a good or service at a lower cost than other countries _______________

Absolute Advantage

An amound owed to a supplier

Account Payable

An amound due from a customer to a company that sells on credit

Account Receivable

Class System

Achievement based social strata system (high social mobility)

The belief that geography can influence economic policy, and hence economic growth rates, goes back to:

Adam Smith.

___________________ is any form of paid, non-personal sales communications

Advertising

Time Zones

Affects trade

World Bank

Agency created to provide financing for national economic development efforts

Which of the following is true about the three main types of legal systems?

Although Islamic law is primarily concerned with moral behavior, it has been extended to cover certain commercial activities.

Productivity (and factors)

Amount of work accomplished in a unit of time usisng the factors for productions. Efficient use of human resources, costs of labour, quality of technology, education, and work ethic/lifestyle

Method of Conflict resolution that uses a neutral third party to make a binding decision

Arbitration

_____ argued that private property is more highly productive than communal property and will thus stimulate progress.

Aristotle

Which of the following statements is true about the general implications of globalization?

As a result of globalization, a severe crisis in one region of the world can affect the entire globe.

Friedman Doctrine

As long as it's legal, it's okay (Doctrine)

Which of the following statements best supports the claim that greater uniformity replaces diversity in the context of global markets?

As rival global firms follow each other across countries, they bring with them their brand names, products, and marketing strategies from other national markets, thus creating homogeneity across markets.

A decade ago the government of Weinsland decided to liberalize the country's economy. As a result, today the country is experiencing rapid economic advancement and societal changes that are favorable for international business. Which of the following changes is most likely to occur in Weinsland?

As the country gets richer, there will be a shift in the society from "traditional" to "secular rational" values.

Straw Man Argument

BS/ Easy way out is this Argument

CBSA

Canada Boarder Service Agency. In order to import things to the country, you need to get a 10-digit tariff number from them and they will determine the value of the import.

The NAFTA was formed in 1994 between:

Canada, Mexico, and the United States.

Which of the following is most likely to be an advantage that first-movers tend to have relative to last-movers?

Greater brand loyalty

Universalism

Condition in which concepts apply to all people and are ruled based

particularism

Condition in which context determines what concepts apply, relationship based

For more than 2,000 years until the 1949 Communist revolution, _____, which teaches the importance of attaining personal salvation through right action, was the official ethical system of China.

Confucianism

Which of the following is a non-religious system of ethics that considers the values of loyalty, reciprocal obligations, and honesty in dealings with others central to its ideology?

Confucianism

_____ is a non-religious, ethical system principally followed in China, Korea, and Japan.

Confucianism

Describe the time required for payment and other condition of a sale on account

Credit terms

Interacting with a person from another culture is called ________________

Cross Cultural Awareness

_____ means an understanding of how cultural differences across and within nations can affect the way business is practiced.

Cross-cultural literacy

The accepted behaviors, customs, and values of a society is a ______________________

Culture

Which of the following has reduced as a result of globalization?

Differences in material cultures between national economies.

The exchange of goods and services between two parties with no money involved is called ________________

Direct Barter

Which of the following best illustrates the globalization of production?

Daily Diamonds inc buys diamonds from South Africa and exports them to India for the cutting process.

The business funds obtained from the owners of the business is called _____________________

Equity Funds

Government restrictions to regulate the around and value of a nation's currency

Exchange Controls

The amount of currency of one country that can be traded for one unit of the currency of another.

Exchange Rate

Negative impact of globalization on developing countries

Exploitation of cheap labour, domestic production will suffer, loss of culture (people loose their houses for expansion)

Mercantilism

Export MORE than you import

One whose terms are openly declared, either orally or in writing.

Express Contract

A group that consists of parents, children, aunts and uncles, and grandparents all living together is called ___________________

Extended Family

Uncontrollable forces

External forces over which management has no direct control, although it can exert an influence.

A lawsuit brought about to enforce the rights of a person or an organization or to seek a remedy to the violation of their rights

Litigation

GES: Foreign Direct Investment

Greenfield: creating a new organization in foreign company Brownfield: purchasing an exisiting company in a foriegn company

Measures the total value of all goods and services produced by the country ______________________

Gross National Product

The difference between the cost of an item for a business and the price for which the business can sell that item is called ________________________

Gross Profit

A monetary unit that is freely converted into other currencies

Hard Currency

One that is not explicitly agreed to by the parties but is inferred either from the parties' conduct or from the law.

Implied Contract

Products bought from businesses in other countries are ___________________

Imports

Which of the following statements is true about the cultural dimension "Confucian dynamism"?

In Confucian dynamism, the units of resources required to produce a good are assumed to remain constant no matter where one is on a country's production possibility frontier.

Which of the following statements is true of Confucianism?

In Confucian thought, loyalty to one's superiors is regarded as a sacred duty.

Which of the following is true about the three broad types of economic systems?

In a command economy, state-owned enterprises have little incentive to control costs and be efficient.

Which of the following is true about property rights?

In many countries, laws protecting property rights are not enforced by the authorities and the rights are violated.

Which of the following best exemplifies an entrepreneur?

Javier purchased an invention of his friend to start a company that processes plastic bags into synthetic cloth.

An agreement between two or more companies from different countries to share a business project is called _______________________

Joint Ventures

Modern socialism traces its intellectual roots to:

Karl Marx.

LDC means _________________

Less Developed Country

The use of promotions that are customized for various target markets is known as __________________

Localized Advertising

The point at which supply and demand cross is ____________________

Market Price

___________________ is the orderly collection and analysis of data that is used to obtain information about a specific marketing concern

Market Research

The four major elements of _______________________are product, price, distribution, and promotion

Marketing Mix

A document that details the marketing activities of an organization is known as a ________________________

Marketing Plan

The amount added to the cost of a product to determine the selling price which includes operating costs and profit on the item is called__________________

Markup

Anything people will accept for exchange of goods and services

Money

_____ predicts that the power of microprocessor technology doubles and the cost of production falls every 18 months.

Moore's law

Richard has recently purchased a computer for $600. Compared to the $900 computer which he had purchased way back in 2010, the new one seems to be more efficient in terms of the price he has paid and the power of the microprocessor technology. This phenomenon is best explained by:

Moore's law.

In the context of the changing political economy since the late 1980s, which of the following statements is true?

Most of the world's nation-states are providing greater political and civil liberties to their citizens.

Which of the following is most likely to be protected by a copyright?

Movies produced and directed by a person

Which of the following statements is true about culture?

Multinational enterprises can themselves be engines of cultural change.

The failure of a responsible party to follow standards of due care.

Negligence

Which of the following statements is most likely to be true about the risks of doing business in a country?

One visible indicator of economic risk is the level of business and government debt in the country.

___________________ is the most attractive alternative given up when a choice is made

Opportunity cost

Also called commercial markets and business to business marketing, this consists of buyers who purchase items for resale or additional production _____________

Organizational Markets

Currency Fluctuations

Our dollar is valued according to its worth on the international market. This can cause problems in trade. Ex: you guy something @ 1.00 = 1.45 Euros, but when you pay it changes

Which of the following terms best represents the system of government in a nation?

Political system

Which of the following law systems is most likely to be used by a law court if it solves a complicated case related to property rights, by basing his judgment on similar, old cases that have come before the courts?

Precedent law system

Command Economy

Price, Quantity, of everything is determined by govt

Which of the following creates an environment that is conducive to product and process innovations and to entrepreneurial activity?

Privatization

Which of the following steps is most likely to be involved in the deregulation of an economy?

Privatizing the state-owned enterprises

A document that states a promise to pay a set amound by a certain date

Promissory Note

Which of the following Confucian ethics is central to the Chinese concept of guanxi?

Reciprocal obligations

Methods of Organizing an MNC

Seperate employees, functional, product, geographic, matric (staff may be separated according to function, products, or sype of market but information flows across all departments)

Automobile companies promote different car models in different countries depending on factors such as demographics, local taste, local fuel costs, income levels, traffic congestion,a nd cultural values. This most likely demonstrates that:

Significant differences still exist among national markets.

___________________ sets a relatively high introductory price

Skim Pricing

_____ attempt to achieve the same ideologies as that of the communists without violent revolution and totalitarian dictatorship.

Social democrats

_____ are defined as hierarchical social categories, often based on family background, occupation, and income.

Social strata

Facism

Strict rule (Italy, Germany 1940s)

A currency that is not easy to exchange for other currencies

Soft Currency

______________________ is a business that is owned by one person

Sole Proprietorship

In the Republic of Lantharia, the state-owned telephone company enjoys a monopoly. The government of Lantharia Republic wants to maximize the operating efficiency this company by privatizing it. Which of the following is most likely to help the government in being successful in this endeavor?

Spliting the company into independent units to compete with each other

The use of one promotional approach in all geographic regions is called ________________

Standard Advertising

Which of the following creates an unfavorable environment for innovations and entrepreneurship?

State monopoly in production

Laws that have been enacted by a body of lawmakers.

Statutory Law

___________________ is the relationship between the amount of a good or service that businesses are willing and able to make available and the price

Supply

The regulations imposed under the _____ agreement, oblige WTO members to grant and enforce patents lasting at least 20 years and copyrights lasting 50 years.

TRIPS

Which of the following is true about legal systems?

The government of a country defines the legal framework within which firms do business.

Which of the following is an implication of the global changes in political and economic systems for international business?

The ideological conflict between collectivism and individualism is less in evidence today.

Economies of Scale

The more you make in a company using the same labour and overhead costs, the cheaper each unit is. This allows the company to become competitive.

Which of the following factors in a country is most likely to cause a political risk for an international business?

The presence of more than one ethnic nationality

Exchange rate

The price of one currency stated in terms of another currency.

Economic globalization

The tendency toward an international integration of goods, technology, information, labor, and capital, or the process of making the integration happen.

importing

The transportation of any good or service into a country or region, from a foreign origination point

direct investment

The purchase of sufficient stock in a firm to obtain significant management control. 10% or more

Which of the following is most likely to indicate that the nation of Erbia has adopted deregulation?

The retail sector in Erbia has been opened for foreign direct investment.

Which of the following has seen a positive change from 1960 to 2010?

The share of world output accounted for by developing nations.

Which of the following conditions is most likely to act as a deterrent for foreign firms willing to do business with former Communist nations of East Europe and central Asia?

The signs of growing unrest and totalitarian tendencies seen in these countries

Which of the following statements is true about the changing foreign direct investment picture of the global economy?

The sustained flow of foreign investment into developing nations is an important stimulus for economic growth in those countries.

Long-Term Orientation/ Confucian Dynamism

This is the added dimension, as a result of a study among students in 23 countries around the world, using the questionnaire designed by Chinese scholars. Hofstede describes it as dealing with Virtue regardless of Truth, that is, the level to which people in the culture will persevere to overcome obstacles they cannot overcome with will or strength

Which of the following statements is true about the implications of technological innovations for the globalization of markets?

Though technological innovations are ushering in the "global village," significant national differences remain in consumer preferences, and business practices.

GDP

Value of all goods and services produced by a domestic economy over a one year period.

Individualism

What idea is Aristotle known for?

The G20 comprises the ___ of the 19 largest economies in the world, plus representatives of the EU and the European Central Bank.

finance ministers and central bank governors

Due to strong legal protection of property rights, businesses and individuals will:

invest more in innovations.

For foreign direct investment (FDI) to occur, a firm should primarily:

invest resources in business activities outside its home country.

In a _____ economy, all businesses are state owned, the rationale being that the government can then direct them to make investments that are in the best interests of the nation as a whole rather than in the interests of private individuals.

pure command

In a Confucian culture, loyalty of the subordinates to their superiors should be:

reciprocated by the superiors by bestowing blessings on them.

Strong enforcement of intellectual property laws:

reduces the piracy (theft) of intellectual property.

The advent of containerization has:

significantly lowered the costs of shipping goods over long distances.

economies of scale

situation where the average cost of producing each unit of output decreases as a plant gets larger and output increases

Every society structures its

social relationships, and these patterned arrangements of relationships define an important aspect of culture. There are two main classes of social institutions, based on the conditions of their formation: kinship and free association.

In the context of social structure, the American society is characterized by a low degree of:

social stratification.

A(n) _____ is a person who believes in public ownership of the means of production for the common good of nation.

socialist

In the past two decades, majority of Latin American countries have:

sold state-owned enterprises to private investors.

Hindus see mobility between castes as something that can be achieved through:

spiritual progression and reincarnation.

A well-functioning market economy is most likely to lack:

state intervention in pricing and production.

At a macro level, freer trade is effected by

state-to-state treaties

The _____ refers to the total cumulative value of foreign investments.

stock of foreign direct investment

In addition, most societies consider their culture

superior to all others (ethnocentricity).

context

the relevant environment

Leadership traits

vary by culture

International trade

which includes exports and imports

___________________ is a share of the company's profits

Dividends

Political Influence

- most often foreign companies engage in lobbying (making direct representations to elected officials and policy experts within a public service) either directly or through an industry association

Types of Adaptation

- partnerships to include local companies with good political standings

Theocratic law system

- religious teaching are at the core of this type of system

Geographic Distance

- the farther you are from a country, the harder it will be to conduct business there

Economic Distance

- the wealth or income of consumers is the most important economic attribute that creates distance between countries and it has a marked effect on the levels of trade and the types of partners a country trades with

Global Capital Markets

- used for short term borrowing

External forces consist of (1-6)

1. Competitive: kinds and numbers of competitors, their locations, and their activities.

Hofstede's Five Dimensions

1. Individualism-Collectivism

The 1992 Uruguay ROund:

provided enhanced protection for patents, trademarks, and copyrights.

In the context of cost, which of the following can be considered as the most attractive market or investment site?

A country that has a well-developed body of business contract law

Which of the following must be true if the critics of globalization are correct?

A decline in the labor's share of the economic pie means lower living standards.

Islamic Languages

A high context (not mostly spoken) languages

Patent

A license given by the government, gives holder right to a certain process, design or innovation

English

A low context (mostly spoken) language

Which of the following is true about the Islamic banking method — the mudarabah?

A mudarabah contract is similar to a profit-sharing scheme.

Which of the following nations is most likely to be unappealing as a place for doing business?

A nation that has a totalitarian political system

In 1600, Great Britain's British East India Company,

A newly formed trading firm, began to establish foreign branches throughout Asia, an action soon followed by many of the other European nations intent on exploiting trade opportunities for national advantage including Portugal, the Netherlands, and France. In 1602, the Dutch East India Company was formed to carry out colonial activities in Asia and to open ocean trade routes to the East. The first company to issue stock, it is also frequently identified as the world's first multinational corporation.

Which of the following is a feature of representative democracy?

A nonpolitical police force and armed service

Which of the following is an indicator of low human development in a country?

A score of 0.3 on the HDI scale

Political risk can be usually managed through....

Adaptation, incorporating a risk evaluation and activity adjustment into business strategy or its implementation

Which of the following statements is true of Geert Hofstede's work on cultural dimensions?

B. Hofstede's work fails to consider that many countries have more than one culture.

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

An OECD convention that establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective

Mercantilism

An economic philosophy based on the belief that (1)A nation's wealth depends on accumulated treasure, usually precious metals such as gold and silver, and (2) to increase wealth, government policies should promote exports and discourage imports.

Confucian dynamism

Another term for long-term orientation

ethonocentricity

Assuming one's one culture is to be superior to other cultures

Confucian Dynamism

Attitude toward long term thinking ("customer for life")

Which of the following is most likely to be advocated by individualism?

Communal property is more highly productive than private property.

_____ is a form of totalitarianism which advocates that socialism can be achieved only through a totalitarian dictatorship.

Communist totalitarianism

The difference between a country's imports and exports is called __________________

Balance of Trade

Trade Sanction

Ban on trade of specific items

Which of the following has been declining in the developing nations of the world such as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil?

Barriers to the free flow of goods, services, and capital

communitarinanism

Belief that the group is the beneficiary of actions

A written order by an exporter to an importer to make a payment

Bill of Exchange

Caste System

Birth based social strata system (low social mobility)

What is the common aspect of the teachings of Hinduism and Buddhism?

Both stress the afterlife and spiritual achievement rather than material progress.

The number of units a business must sell to make a profit of zero is known as ___________________

Breakeven Point

Which of the following best exemplifies ethnocentrism?

Bryan's belief in the superiority of his culture has resulted in conflicts with his colleagues from different countries.

_____ was founded in India in the sixth century b.c. by Siddhartha Gautama, an Indian prince who renounced his wealth to pursue an ascetic lifestyle and spiritual perfection.

Buddhism

Sami follows a religion founded by an Indian prince—Siddhartha Gautama. Unlike the other Indian religions his religion does not propagate the caste system. Also, his religion emphasizes right seeing, thinking, speech, action, living, effort, mindfulness, and meditation as a route for spiritual transformation. According to this information, Sami can be considered as a:

Buddhist

In the context of property rights, which of the following best exemplifies private action?

Business owners stealing their competitors trade secrets and intellectual properties

Which of the following statements is true about the former communist nations of East Europe and central Asia?

Businesses in these economies tend to be characterized by high risks as well as high returns.

Which of the following legal systems is most likely to be based on tradition, precedent, and custom?

Common law

Which of the following statements is true of mores?

Certain mores have been enacted into law.

Which of the following is a criticism of Hofstede's four cultural dimensions?

Certain social classes were excluded from Hofstede's work sample.

Which of the following is true about communism?

China has moved sharply away from strict adherence to communist ideology in the economic sphere.

Which of the following statements is true about the implications of revolutions occurring in China for international businesses?

China represents a huge and largely untapped market for international business.

_____ is the mother tongue of the largest number of people in the world.

Chinese

Which of the following best exemplifies FDI?

Chivalry, a US based phone company, has set up its own assembly plant in Japan to cater to the needs of the Asian market.

Ryan is the executive general manager of a U.S. multinational and Jacob is a manager in a similar position, but works for another U.S. company that operates only in its home country. In this context, which of the following business functions will be most typically exclusive to Ryan?

Choosing an appropriate mode for entering a particular foreign country

Islam has roots in both Judaism and ____.

Christianity

Which of the following is the most dominant religion in the world in terms of numbers of adherents?

Christianity

Also called code law, is a complete set of rules enacted as a single as a single written system or code.

Civil Law

Several Parties (Individuals or organizations) take legal action as a group

Class Action Suit

_____ refers to a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with members of other classes.

Class consciousness

In the country of Normian Republic, an individual's right to own land is restricted to a large extent on the basis that it runs counter to "the common good." In this context, which of the following is most likely to be the political system adopted by Normian Republic?

Collectivism

Prepared by the exporter, provides a description of the merchandise and the terms of the sale.

Commercial Invoice

Which of the following best exemplifies violation of mores?

Committing a financial fraud

A legal system that relies on the accumulation of decisions made in prior cases.

Common Law

Which of the following statements is true about the difference between contracts in common law and civil law systems?

Contracts drafted under a common law system tend to be longer than those drafted under a civil law system.

The _____ establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations.

Contracts for the International Sale of Goods

Controlled, Regulated, Prohibited

Controlled: alcohol, compressed gas, infectious material Regulated: Prescription drugs Prohibited: cocain, used aircrafts, automatic firearms, baby walkers...

A legal right that protects the original works of authors, music composers, playwrights, artists, and publishers.

Copyrights

A business that operates as a legal entity separate from any of the owners is known as _________________

Corporation

Corruption and Bribery

Corruption: misuse of entrusted power for private gain

Which of the following statements is true about the global economy of the twenty first century?

Countries have extensively adopted liberal economic policies.

Which of the following reasons contributed to the Great Depression of the 1930s?

Countries progressively raising trade barriers against each other.

In which countries are we likely to find free market economies?

Countries where individual goals are given primacy over collective goals

Immigation Policies

Covers who can visit and work in Canada. Employers need to apply for work permits for their workers to come

The idea that you carry your beliefs, values, and assumptions with you at all times is called ___________________

Cultural Baggage

A contract a person or company buys that allows the buyer the option to purchase a foreign currency sometime in the future at today's rate

Currency Option

In the context of common law, which of the following terms refers to the ways in which laws are applied in specific situations?

Custom

Government employee authorized to collect the duties levied on imports is known as ___________________

Customs Officials

Civil Law

Detailed sets of laws organized into codes (many countries)

The making, buying, and selling goods and services within a country is known as _______________________

Domestic Business

Benefits of Globalization

Developing Countries: increased employment, tax revenue, international relations, access to technology Developed Countries: lower costs of production, new markets for trade, corportate growth

Foreign direct investment (FDI)

Direct investments in equipment, structures, and organizations in a foreign country as a level that is sufficient to obtained significant management control; does not include mere foreign investment in stock markets.

MAIN THING TO REMEMBER ABOUT ALL DIS CAGE SHIT

Distance --> Differences --> Cost --> Risk

Theory of Competitive Advantage

David Ricardo demonstrated in 1817 that even though one nation held an absolute advantage over another in the production of each of two different goods, international trade could still create benefit for each country (thus representing a positive-sum game, or one in which both countries "win" from engaging in trade). The only limitation to such benefit-creating trade is that the less efficient nation cannot be equally less efficient in the production of both goods.

Within Nations (income inequality)

Debate of whether globalization is increasing income inequality amoung people within nations

Between Nations (income inequality)

Debate of whether globalization is widening the gap in average incomes between rich and poor nations.

Opportunity Cost

Decisions need to be made as to what a country will be producing, because more of one product means less of the other. What you 'give up' is th eoppurtunity cost

Which of the following terms refers to a political system in which government is by the people, exercised either directly or through elected representatives?

Democracy

Which of the following is most likely to guarantee the success of privatization?

Deregulating and opening of the economy

In the context of global economy, which of the following has been widely accepted since the late 1980s?

Deregulation of economies to promote greater competition

This verifies the country to which the goods are being shipped ________________

Destination Control Statement

Which of the following statements is true about Hinduism?

Hinduism supported India's caste system.

Which of the following does Islam prohibit?

Earning profits by breaking contractual obligations

Which of the following statements is true about gross national income (GNI)?

Economist Amartya Sen has argued that development should be assessed less by material output measures such as GNI per capita.

Market Economy

Economy determined by Supply and Demand, govt. generally hands off

Affects of Foreign Acquisition

Effects domestic competition, foreign companies do not contribute to that country (profits are brought back to the host country), standards

Canada's Advantages

Efficient markets, well-functioning institutions, infrastructure, human resources/workforce

Moving payments through banking computer systems

Electronic Funds Transfer

Against Globalization

Eliminate jobs in developed nations

Which of the following is most likely to prove detrimental to democracy and international business?

Emergence of different civilizations, each of which has its own value systems and ideology

Right-Wing Government

Endorse private ownership of property and a market-based economy but severley limit political freedoms

When a Japanese and a German businessperson get together to do business, it is most likely that they will communicate in _____ .

English

_____ is the most widely spoken language in the world, and is increasingly becoming the language of international business.

English

A firm has to become a multinational enterprise, investing directly in operations in other countries, to engage in international business. T/F

FALSE

The United Nation of Amberia, a Western European country, fought on the winning side of the Cold War. Which of the following was most likely being propagated by the country by participating in the Cold War?

Free markets

___________________ means that the selling price includes the cost of goods and freight, but the buyer must pay for insurance separately

Free on Board Shipping

Supporters of globalization insist that dislocation in the form of lost jobs is a trade-off that will ultimately lead to the economy being better off. Which of the following is being justified in this case?

Free trade of goods and services.

A company that arranges to ship goods to customers, like a travel agent for cargo is known as a ___________________

Freight Forwarder

The ___ was originally established in 1999 to formulate a coordinated policy response to financial crises in developing nations.

G20

General Agreement on Tariffs and Trade

GATT

Drivers of International Business

GATT (General Agreement on Tariffs and Trade), government changes allowing freer movement and trade, evolution of the Internet, the Euro

Which of the following would be the biggest gain for the world's poor nations from the 2001 Doha WTO talks?

Gain from reduced agricultural tariffs and subsidies

_____ isolated four dimensions—power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity—that he claimed summarized different cultures.

Geert Hofstede

____ is an international treaty that committed signatories to lowering barriers to the free flow of goods across national borders and is the predecessor to the WTO.

General Agreement on Tariffs and Trade

The advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. This goal was enshrined in the:

General Agreement on Tariffs and Trade.

Which of the following is the most appropriate solution to the problem of rising carbon dioxide emissions in developed economies?

Get the nations of the world to agree to policies designed to limit pollutant emissions.

Polycentric

Gives foreign operations greater autonomy, taking market difference into account

___________________ is created when items that consumers need and want are created in other countries

Global Dependancy

_____ refers to the shift toward a more integrated and interdependent world economy.

Globalization

Markets and Productions

Globalization globalizes what two things?

Utilitarian

Go with the flow (majority)

As per the U.S. law and OECD convention, which of the following will most likely to be considered as a grease payment?

Gold Fire Inc. made a small payment of $20 to speed up some paper work related to tax returns in a less developed country.

Imports

Goods and services purchased abroad and brought into a county

Exports

Goods and services sold abroad and sent out of a country

Which of the following best exemplifies public action?

Government bureaucrats demand bribes from international businesses in return for the rights to operate in Cedia Republic.

In the context of individualism, which of the following is inconsistent with the works of the ancient Greek philosopher Aristotle?

Government dictating what is in best interest of society

Trade Quota

Government imposed limit on amount of goods that can be imported over a specific period of time

Mixed Economy

Govt tends to take over troubled firms (BAIL OUTS)

Buy America Act

Govt. policy that makes govt people buy 51% American made goods

Which of the following is true about grease payments?

Grease payments are technically bribes, however they are distinguishable from bribes.

Which of the following does the U.S. law and OECD convention allow as an exception?

Grease payments or speed money

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

Gross national income

monochronic

Having to do with linear time, sequential activities

Dharma, karma, and nirvana are terms related to:

Hinduism

Max Weber argued that the ascetic principles embedded in _____ do not encourage entrepreneurial activity in pursuit of wealth creation because it is perceived that such activities make the attainment of nirvana more difficult.

Hinduism

Maya is a follower of a religion which emphasizes that individuals should be judged solely by their spiritual achievements. The caste Maya belongs to is of the highest order in her religion, and hence is highly respected. She also firmly believes that she was born into the high caste as a result of her spiritual development in her previous life. Maya follows:

Hinduism

Which of the following religions does not owe its founding to any one particular individual?

Hinduism

_____ began in the Indus Valley in India, and is the world's oldest major religion.

Hinduism

Power Distance

How society deals with people of different capabilities

The _____ is based on three measures: life expectancy at birth, educational attainment, and average incomes based on PPP estimates.

Human Development Index

International Monetary Fund

IMF (Maintains order in international monies)

A document that summarizes a company's revenue from sales and its expenses over a period of time, usually one year is known as ___________________

Income statement

Which of the following is most likely to be the result of high degrees of class consciousness in societies?

Increase in the costs of production

Pro Globalization

Increases wealth and efficiency in all nations

Although the number of societies with caste systems diminished rapidly during the twentieth century, one partial example still remains in:

India.

The belief in the individual and his or her ability to function relatively independently is known as ________________.

Individualism

Which of the following can be traced to the ancient Greek philosopher, Aristotle?

Individualism

Which of the following statements is true about social stratification?

Individuals are born into a particular social stratum.

Referring to a nation's transportation, communication, and utilities systems, this factor supports international trade in industrialized countries _____________________

Infrastructure

_____ is broadly defined as the development of new products, processes, organizations, management practices, and strategies.

Innovation

Initech Incorporated, a multinational giant, runs a number of diversified businesses. Which of the following can be considered as an intellectual property of the firm?

Innovations and capabilities, and skills of the employees

Which of the following statements is true about innovations and entrepreneurship?

Innovations in production and business processes lead to an increase in the productivity of labor and capital.

Explains the amount of insurance coverage for fire, theft, water, or other damage that may occur to goods in a shipment

Insurance Certificate

Property based on ideas, (patients, trademarks, copyrights, etc.). the technical knowledge or creative work that an individual or company has developed.

Intellectual Property

In the context of "knowledge" economy of the twenty-first century, which of the following statements is true about intellectual property?

Intellectual property has become an increasingly important source of economic value for businesses.

The cost of using someone else's money.

Interest Rates

Global business, international trade, and foreign trade are other terms for __________________

International Business

Court that settles disputes between nations when both nations request that it do so and also advises the U.N. on matters of International Law.

International Court of Justice

An agency that helps to promote economic cooperation by maintaining an orderly system of world trade and exchange rates

International Monetary Fund

Which of the following statements is true about the trends in the changing nature of multinational enterprises?

International business is conducted not just by large firms but also by medium-size and small enterprises.

Summary of International Trade Theory

International trade occurs primarily because of relative price difference among nations. These differences stem from differences in production costs, which result from:

Which of the following terms best defines the relationship between the level of corruption and economic growth rate in a country?

Inversely proportional

The government of Nerumbia wants to open the country's economy to international business, and increase its overall attractiveness as a potential market or investment site. Which of the following will facilitate this decision of the Nerumbian government?

Investing in infrastructure and in the required supporting businesses

Investment Regulations

Investments or acquisitions by foreign companies are reviewed by ICA

GES: Exporting

Is the marketing and direct sale of domestically produced goods in another country. PROS: no investment in product facilities, quick entry to country, learn about foreign markets CONS: significant inventment reliance, trade barriers

Which of the following is a religion that prohibits the payment or receipt of interest, as it is considered to be usury?

Islam

Zain finds it hard to dine with his American colleagues as his religion prohibits the consumption pork and alcohol. He also quit his previous job in a bank on the base that his religion considers the payment or receipt of interest as exploitative and unjust. According to this information, Zain is a follower of:

Islam

Which of the following statements is true of Islam?

Islam forbids the consumption of pork and alcohol.

"Mudarabah" and the "murabaha" are:

Islamic banking methods.

A major distinction between a conventional bank and an Islamic bank is that:

Islamic banks cannot pay or charge interest.

_____ is the most widely practiced theocratic legal system in the modern world.

Islamic law

Which of the following is a typical function of a trademark?

It allows merchants or manufacturers to designate and differentiate their products.

Which of the following falls under the functions of the WTO?

It can issue a ruling instructing a member-state to change trade policies that violate GATT regulations.

Which of the following statements is most likely to be true regarding private ownership?

It gives entrepreneurs an incentive to search for better ways of serving consumer needs.

Which of the following statements best defines personal space?

It is the comfortable amount of distance between you and someone you are talking with.

Which of the following is a possible downside of emphasizing the primacy of group identification over individualism?

It leads to a lack of dynamism and entrepreneurship.

Which of the following statements is true about the Internet and World Wide Web?

It makes it easier for buyers and sellers to find each other, wherever they may be located.

How does privatization help stimulate gains in economic efficiency?

It provides incentives to new private owners to search for increases in productivity and to enter new markets.

WHich of the following is an argument put forth by critics of the IMF?

It usurps the sovereignty of nation-statesby telling governments what economic policies they must adopt.

Which of the following is a part of the agenda of the Doha Round of talks launched by the WTO?

Limiting the use of antidumping laws

Tariff, Subsidies, Import Quota, Voluntary Export Restraint, Local Content Requirements, Administrative Policies, Anti-Dumping Policies

List the seven trade policies (you'll'a never get 'athis!)

offshoring

Locating activities in another nation

A very low-priced item used to attract customers to a store, is with the hope that shoppers will make other purchases while shopping for the low-priced item ____________________

Loss Leader

Most Favoured Nation

Lowers tariff rate due to the attempt to have a betetr relationship with that country

Multinational Enterprise

MNE

The motivation for much of the foreign direct investment by non-U.S. firms was the desire to:

disperse production activities to optimal locations.

Disadvantages of Multinational Corporations

Lack of communications, transportation costs, more tax is being collected (if the country in interest does not have a tax treaty)

Which of the following is an implication of high degree of managerial mobility in societies that emphasize individualism?

Lack of company-specific experience, knowledge, and a network of contacts among managers

Which of the following is the cause behind the Basque separatist movement that is going on in Spain for decades?

Language and culture differences

When Galaxy Ventures, a real estate company, entered the low cost housing business, the market was already saturated with other players. Thus, the company was forced to exit the market due to lack of customer loyalty and substantial dividends. Which of the following is a term used to described the situation faced by the company?

Last-mover disadvantages

Which of the following systems is a part of the political economy?

Legal system

A financial document issued by a bank for an importer in which the bank guarantees payment

Letter of credit

A broad legal term referring to almost every kind of responsibility, duty, or obligation.

Liability

Selling the rights to use some intangible property (production process, trademark, or brand name) for a fee or royalty is known as __________________________________

Licensing

Increase profits and sales

Managers are always under pressure to increase the sales and profits of their firms, and when they face a mature, saturated market at home, they begin to search for new markets outside the home country.

Mores

Mannerisms that are very important to society

Which of the following statements is true about the global changes in political and economic systems?

Many of the undeveloped and impoverished national markets of eastern Europe, Latin America, Africa, and Asia are potentially enormous for international business.

What are mini-multinationals?

Medium-sized and small multinationals

Which of the following statements is true with regard to Geert Hofstede's cultural dimensions?

Members of high uncertainty avoidance cultures had a strong need for rules and regulations.

Which of the following is most likely to be the best suited product for a global market?

Microprocessors

Which of the following has been detrimental to the globalization of markets and production?

National differences in culture, consumer preferences, and business practices

The difference between money taken in and payment for expenses is called__________________

Net Income/Profit

Should a country that is good at everything, produce everything?

No, focus on what you are good at because... counties do not have infinite resources, they cannot produce everything themsevles, and they have to do something with the money that they earn from exports

Most developed countries have societies organized around this type of family, ___________________

Nuclear Family

Involves data collection by watching and recording shopping behaviors __________________________

Observational Data

Which of the following statements is most likely to be true of outsourcing?

Outsourcing production to foreign countries increases the chance for companies to gain significant orders for their orders for their products from those countries.

foreign production begins:

Overseas consumers, especially those in developed nations, have similar needs and the ability to purchase the product.

Leontief Paradox

Paradox that says the country with the highest capital per worker has a lower capital per labor ratio in exports than imports

Silver Tape Corporation has developed a new type of adhesive tape. Which of the following types of legal protections can grant the company exclusive rights for a defined period to the manufacture, use, or sale of the new adhesive tape?

Patent

The grant of an exclusive right of an inventor to make, sell, and use a product or process.

Patents

Kantian Ethics

People are not machines and need respect (Ethics)

GES: Licensing

Permits a company in the target country to use the property of a licensor for a free. PROS: little investment, quick entry, avoids trade barriers CONS: profits may be limited, lack of control and licensee may be a competitor

Property that is tangible but does not have a permanent location.

Personal Property

Which of the following is an aspect of nonverbal communication?

Personal space

The specific responsibility that both manufacturers and sellers have for the safety of their products.

Product Liability

_____ laws hold a firm and its officers responsible when a product causes injury, death, or damage.

Product liability

Which of the following statements is true about product safety and liability laws?

Product liability can be much greater if a product does not conform to required safety standards.

Veronica had been getting red patches on her face after using a protein-based lotion manufactured by Nature Life Research Lab. On consulting a dermatologist, she learnt that the lotion's steroid levels were beyond the standard levels permitted by the government and the damage caused by the lotion was irreversible. Which of the following will address Veronica's grievances?

Product liability laws

Purpose of the IMF

Promoting international monetary cooperation

Includes everything that can be owned

Property

Which of the following has been advocated by Karl Marx?

Socialism

Imposes responsibility on a manufacturer or seller for intentionally or unintentionally causing injury to another.

Strict Liability

According to the World Values Survey, as countries get richer, a shift occurs away from "traditional values" linked to religion, family, and country, and toward "secular rational" values.

TRUE

Although countries such as China and India are currently relatively poor, their economies are already large in absolute terms and growing more rapidly than those of many advanced nations.

TRUE

Although upward social mobility was possible in Britain, it could not normally be achieved in one generation.

TRUE

By offering the same basic product worldwide, firms help to create a global market. T/F

TRUE

Confucianism is not concerned with the supernatural and has little to say about the concept of a supreme being or an afterlife.

TRUE

Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances. T/F

TRUE

Contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. T/F

TRUE

Despite all the talk about the emerging global village, differences between countries such as cultures and political systems are very profound and enduring. T/F

TRUE

Differences among countries require that international business vary its practices country by country. T/F

TRUE

During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments.

TRUE

Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic growth, define innovation broadly to include not just new products but also new processes, new organizations, new management practices, and new strategies.

TRUE

FDI occurs when a firm invests resources in business activities outside its home country. T/F

TRUE

Globalization has resulted in greater uniformity replacing diversity across national markets. T/F

TRUE

If a country's economy is to sustain long-run economic growth, the business environment must be conducive to the consistent production of product and process innovations and to entrepreneurial activity.

TRUE

In a totalitarian country, all the constitutional guarantees on which representative democracies are built—an individual's right to freedom of expression and organization, a free media, and regular elections—are denied to the citizens. T/F

TRUE

In general, command and mixed economies failed to deliver the kind of sustained economic performance that was achieved by countries adopting market-based systems.

TRUE

In most eastern European nations, the title to urban and agricultural property is often uncertain because of incomplete and inaccurate records, multiple pledges on the same property, and unsettled claims resulting from demands for restitution from owners in the pre-Communist era.

TRUE

In return for loans, the IMF requires nation-states to adopt specific economic policies aimed at returning their troubled economies to stability and growth. T/F

TRUE

Individuals become a member of the social category to which their parents belong.

TRUE

One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and western Europe. T/F

TRUE

Other things being equal, a nation with democratic political institutions, is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions. T/F

TRUE

People who cannot take food or safety for granted tend to have authoritarian tendencies, and believe that men make better political leaders than women.

TRUE

Substantial impediments, such as barriers to foreign direct investment, make it difficult to achieve the optimal dispersion of their productive activities to locations around the globe. T/F

TRUE

The Cold War was in many respects a war between collectivism, championed by the former Soviet Union, and individualism, championed by the United States. T/F

TRUE

The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity. T/F

TRUE

Under the Islamic banking method of mudarabah, when an Islamic bank lends money to a business, rather than charging that business interest on the loan, it takes a share in the profits that are derived from the investment.

TRUE

Which of the following statements is true of purchasing power parity (PPP)?

The PPP data gives a static picture of economic development.

Who among the following can claim product liability from the offender?

The airbags in Brian's car, manufactured by Zigwheels Inc, failed to inflate when his car met with an accident. This injured Brian and damaged the car.

China Innovation Inc. is a devout follower of Confucian ethics. Hence, it hires people who live by similar principles. Which of the following is most likely to be a characteristic of this company?

The cost of doing business will be low for those companies that enter into a business with China Innovation Inc.

Which of the following is most likely to be true about the overall attractiveness of a country as a potential market or investment site for an international business?

The costs and risks associated with doing business in a foreign country tend to be greater in politically unstable nations.

Which of the following is a dimension of social structure that is particularly important when explaining differences between cultures?

The degree to which the society is stratified into classes or castes

Which of the following statements is most likely to be true about the economic prospects of a country?

The economic system and property rights regime are reasonably good predictors of economic prospects of a country.

controllable forces

The elements over which management does have some control are the internal forces, such as the factors of productions ( capital, raw materials, and people) and activities or the organization (personnel, finance, production, and marketing). These are the forces management must administer in order to adapt to changes in the uncontrollable environment variable.

Which of the following statements is true about Buddhism?

The emphasis on wealth creation that is embedded in Protestantism is not found in Buddhism.

The United Republic emphasizes individual performance and achievements in every sphere of society. Which of the following statements is true about the society of this country?

The employees in this country will lack loyalty and commitment to a company.

GDP Per Capita

The value of goods produced per person in a country. Calculated by countries GDP divided by its population

Which of the following statements is true about most Western societies?

The value systems of many Western societies emphasize individual achievement.

absolute advantage

Theory that a nation has absolute advantage when it can produce a larger amount of a good or service for the same amount of inputs as can another country or when it can produce the same amount of a good or service using fewer inputs than could another country.

competitive Advantage

Theory that a nation having absolute disadvantage in the production of two goods with respect to another nation has a comparative or relative advantage in the production of the good in which its absolute disadvantage is less.

resources endowment

Theory that countries export products requiring large amounts or their abundant production factors and import products requiring large amounts of their scarce produce factors.

Monopolistic advantage theory

Theory that foreign direct investment is made by firms in oligopolistic industries possessing technical and other advantages over indigenous firms

Which of the following statements is true about the changing economic system since the 1980s?

There has been a shift away from a mixed economy.

Which of the following best supports the economic transformation from a centrally planned command economy to a market-based economy?

Transferring the ownership of state property into the hands of private individuals

GATT

Treaty designed to promote free trade by reducing both tariffs and nontariff barriers to international trade

Definition of globalization

Trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies

Which of the following statements is true about the changing demographics of the global economy?

U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports.

Foreign Corrupt Practices Act

US law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions

The ___ was established in 1945 by 51 countries committed to preserving peach through international cooperation and collective security.

United Nations

Decentralized Organizations

Use local production facilities, ad agencies, sales rep , to target specific international markets. PROS: proximity to markets, flexibility, cultural sensitivity

Which of the following reasons has made outsourcing of service activities to low-cost producers in other nations possible?

Use of modern communication technology.

Foreign Relations

Used to influence polivies or actions of other coutnries (for human rights...)

GNP

Value of all goods and services produced by a country's domestic and international activities over a one-year period

Business expenses that change in proportion to the level of production are known as ___________________

Variable Costs

Which of the following best exemplifies a first-mover advantage?

Venus Inc. has more than 50 percent market share in the telecom industry, because no other company had invested in this industry before Venus Inc.

What is the difference between folkways and mores?

Violating mores tends to bring more serious retribution than violating folkways.

World Bank

WB (drives economic development)

Which of the following organizations was established at the 1992 Uruguay Round?

WTO

World Trade Organization

WTO (polices the world's trading, has 'teeth,' unlike the UN)

Adam Smith, Absolute Advantage

What Economist created the term for when a country is more efficient at production of something than another county?

Ricardo, Comparative Advantage

What Economist created the term for when trade can benefit all parties (even non efficient ones)

Samuelson

What Economist thinks that free trade is not beneficial enough for the right country?

Krugman

What economist discovered the concept of economies of scale?

Socialism

What idea is Marx known for?

Collectivism

What idea is Plato known for?

Hechsher and Ohlin

What two economists argued that countries will make use of their natural endowments?

1977 Illegal to bribe

What year was the Foreign Corrupt Practices Act and what did it do?

Trading Bloc

When many countries trade as a whole, and trade within

Which of the following statements is true about privatization?

When newly privatized firms are extensively protected from foreign competition, they have little incentive to restructure their operations to become more efficient.

Infant Industry Protection

When the govt helps out new companies in a market

Global Inequality (income inequality)

Whether globalization is increasing income inequality between all people of the world, no matter where they live

Uncertainty Avoidance

Whether society doesn't like or is okay with RISK

A business that buys large quantities of an item and resells them to a retailer ________________________

Wholesaler

neutral vs. affective

Withholding emotion Vs. expressing emotion

A bank whose major function is to provide economic assistance to less developed countries

World Bank

The ___ is the less controversial sister institution of the IMF which was created along with the IMF in 1944.

World Bank

A country characterized with low uncertainty avoidance and low masculinity will:

be less resistant to change and less distinguishing between men and women in the same job.

Muslim countries are likely to be receptive to international businesses as long as those businesses:

behave in a manner that is consistent with Islamic ethics.

The _____ of the Cold War era has vanished.

bipolar world

In the global marketplace, the globalization of the world economy has resulted in a relative decline in the:

dominance of U.S. firm.

Universal Declaration of Human Rights

a United Nations document that lays down the basic principles of human rights that should be adhered to

Many commentators have blamed the problems that led to global financial crisis of 2008-2009, and the recession that followed on:

a lack of regulation.

Code of ethics

a business's formal statement of ethical priorities

Categorization

a category's job is to enable a person to understand or assume things about another and indeed about oneself, exist to group like things

Comparative Advatnage

a country has a comparative advantage in producing a good if the oppourtunity cost of producing that good in terms of other goods is lower in that country that others.

Determinants of ethical behavior

a culturally accepted way of doing business

Ethical Strategy

a culture of action that does not violate a company's business ethics

Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the:

developing nations of the world such as China, India, and Brazil.

Just distribution

a distribution of goods and services that is considered fair and equitable

Capricorn Creative Inc., a U.S. based advertising firm, was the first in the advertising industry to identify the growth potential of Brazil and to make huge investments in it's economy. As a result, the firm was able to build brand loyalty and gain experience in that country's business practices. In the language of business strategy, Capricorn Creative has typically benefited from:

a first-mover advantage.

Globalization

development of an increasingly integrated global economy (free trade, free flow of capital...)

The recent trend to outsource information technology jobs to countries such as India indicates that:

a good education system is a determinant of national competitive advantage.

Only a totalitarian regime that is committed to _____ is capable of promoting economic growth.

a market system and strong protection of property rights

Which of the following statements is true about political systems?

it is possible to have totalitarian societies that are not collectivist.

Royalties

a payment to owner for right to use properties and compensates for the use of the asset.

Licensing

a permit from someone allowing owenership ro use of something (patent, copyright, trademark)

Adam Smith argued

against mercantilism by claiming that market forces, not government controls, should determine the direction, volume, and composition of international trade. He argued that under free, unregulated trade, each nation should specialize in producing those goods it could produce most efficiently (for which it had an absolute advantage, either natural or acquired).

Competitive Advantage

ability to produce a product more cheaply or efficiently than competitors

In a social context, the term values is used to describe the:

abstract ideas about what a group believes to be good, right, and desirable.

Business Ethics

accepted principles of right or wrong governing the conduct of businesspeople

As a result of _____, large amounts of economic activity in India are unrecorded and the official GDP figures of the country fail to tell the entire story of the economy.

active bartering

In the context of the environment, globalization critics argue that:

adhering to labor and environmental regulations significantly increases the costs of manufacturing enterprises.

The government of Great Lanthania is planning to adopt a market-based economic system. To be able to do so, the government of this country should:

adopt privatization.

In the context of political economy, the past three decades have seen a general move toward:

adoption of legal systems that better enforce property rights.

Social comparison

after a person has categorized themselves as part of a group and started to identify with the group, very quickly thereafter comparisons take place

Language is an important

key to a culture, and without it, people find themselves locked out of all but a culture's perimeter

Five major kinds of drivers

all based on change, are leading international firms to globalize their operations: (1) political, (2) technological, (3) market, (4) cost, and (5) competitive.

All that you have read so far points to one salient fact:

all managers need to have a basic knowledge of international business to be able to meet the challenge of global competition.

The lowering of trade and investment barriers:

allows firms to base production at optimal locations outside their home country.

If a society emphasizes the group as the primary unit of social organization, it is most likely to:

discourage employees from moving from company to company.

Trade Embargo

ban on trade with a country

In the Republic of Cedia, people are extremely conscious about their social backgrounds. This in turn regulates their relationships with members of other classes. As a result of the heightened class consciousness:

an antagonistic relationship will exist between management and labor classes.

Rationalizing

an attempt to increase the companie's effectiveness of efficiency. Downsizing, cutbacks, layoffs, relocating. "Kaizen" is japanese for: gaining competitive advantage, commit to quality

Products of the mind, such as computer software, a screenplay, a music score, or the chemical formula for a new drug, constitute:

an intellectual property.

Hofstede's fifth dimension of Confucian dynamism captures:

attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.

nternational business

any commercial transaction that crosses the borders of two or more nations.

When firms do not wish to accept the rules of the CIGS, they often opt for _____ to settle contract disputes.

arbitration

The force in the foreign environment

are the same as those in the domestic environment except that they occur outside the firm's home country.

Totalitarian/Authoritarian States

are those in which the heads of governments lack the support of the population, tightly control the lives of the people they rule and do not tolerate opposing viewpoints

Tribally based governments

are where societies, tribal (or ethnic) groups impose their will on other such groups

Gift giving is an important

aspect of every international manager's life, and a confusing aspect for many.

According to the UN Carter, one of the four purposes of the UN is to:

be a center for harmonizing the actions of nations.

Grease payments are technically _____.

bribes

Reducing Variable Costs

buying in greater quantities for discounts, and become more efficient (producing more with that specific amount of time or money)

A _____ system is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime.

caste

In a country called Burnada, the citizens are restricted from moving out of the strata they are born into. Also, individuals are allowed to engage only in the occupation associated with their particular strata. The system of social stratification being practiced in Burnada can be identified as a:

caste system.

How can companies use international trade to achieve economies of scale?

cheapter material, cheaper labour, selling to more people/expanding the market

Democracy, in its purest form, is based on the belief that:

citizens should be directly involved in decision making.

A _____ law system is based on a detailed set of laws organized into codes.

civil

In Samuel Huntington's thesis, global terrorism is a product of the:

clash of value systems and ideology between civilizations.

A _____ system is a form of open stratification in which the position a person has by birth can be changed through his or her own achievements or luck.

class

Mountland Republic follows a system of social stratification that allows for flexibility in terms of social mobility. In this system of open stratification the status of a person is solely determined by his or her own socioeconomic achievements. Mountland Republic is most likely to be following a _____ system of social stratification.

class

The influential economist Jeffrey Sachs argues that throughout history, _____ , with their long engagements in international trade, have been the most supportive of market institutions.

coastal states

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

command

Total Quality Managment

commitment to continously improve products, processes and work habits

The collapse of _____ in eastern Europe was precipitated by the growing gulf between the vibrant and wealthy economies of the West and the stagnant economies of the East.

communism

In the early twentieth century, the socialist ideology split into two broad camps and the people who believed that socialism could be achieved only through violent revolution and totalitarian dictatorship were referred to as:

communists

One of the first American

companies to own foreign production facilities, have worldwide distribution networks, and market its products under global brands was Singer Sewing Machine.

Pros of Expansion

company growth, new markets and consuemrs, increased profits, inexpensive supplies, low labour cost, financing

International environment

consists of the interactions (1) between and domestic environmental forces and the foreign environmental forces and (2) between the foreign environmental forces of two countries when an affiliate in one country does business with customers in another.

Product safety and product liability laws are enforced to protect:

consumers

The government of Greenland Republic protects its newly privatized firms from foreign competition by imposing stringent barriers to international trade and foreign direct investment. As a result of this, the newly privatized firms will:

continue acting like state monopolies.

A composer can protect an original musical score from being copied and sold by someone else by acquiring a(n) _____ for the score.

copyright

To account for differences in the _____, one can adjust GNI per capita by purchasing power.

cost of living

In 2010, the PPP per capita of China was $7,640 and the PPP per capita of the United States was $47,360. This means that the:

cost of living was lower in China.

When Shop Smart opened its first super market in China it was unable to generate any sales. After conducting a research, it was understood that the local sales personnel found it difficult to communicate with the American store managers. In addition, Chinese consumers found it difficult to shop in the American way. Shop Smart's failure in China can be attributed to the lack of:

cross-cultural literacy.

Production mangers have found that

cultural values and attitudes toward change can seriously influence the acceptance of new production methods.

In the context of political economy, one notable development of the past 20 years has been the spread of:

democracy

Countries with _____ are more likely to attain high and sustained economic growth rates and are thus a more attractive location for international business.

democratic regimes

Foreign business

denotes the operations of a company outside its home or domestics market, many refer to this as business conducting withing foreign country. This term sometimes is used interchangeably with international business, although that will not be the practice in this book.

The United Nation of Zorwaya has strict restrictions on direct investment by foreign enterprises, and it opposes the establishment and operation of private enterprises. The highest authority in the country enforces tight control over prices and production output. According to this information, the United Nation of Zorwaya most likely opposes _____.

deregulation

Aesthetics

describe a culture's sense of beauty and taste and is expressed in many areas, most directly in art, drama, music, folklore and dance.

Uncertainty Avoidance

describes a society's comfort with uncertainty.

Masculinity-Femininity

describes the distribution of roles between the genders

socialcultural

description of the social world through which we observe the effects of culture

The work by Jeffrey Sachs suggests that investments in _____ help explain why some countries in Southeast Asia have been able to overcome the disadvantages associated with their tropical geography and grow far more rapidly than tropical nations in Africa and Latin America.

education

Advantage of Euro

elimination of exchange rate fluctutations, no tansaction costs, increased trade across borders, increased corss boarder employement

Economic advances in many countries have led to the:

emergence of increasingly prosperous middle and working classes.

According to Max Weber, Protestantism encouraged capitalism's development by:

emphasizing on the importance of hard work and wealth creation for the glory of God and frugality.

WTO

enforces the rules of international trade

The risks of doing business are most likely to be the highest in a country that:

faces frequent changes in government and government policy.

Small legally acceptable payment made to speed up the issuance of permits or licenses, or process paperwork is typically referred to as a(n):

facilitating payment.

A difference in the attitudes of people toward time in different cultures is an example of the _____ in individual cultures.

folkways

The common law system enjoys a degree of flexibility not found in other systems because :

it is interpreted by the law courts with regard to tradition, precedent, and custom.

The ________ refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and qaulity of factor such as labor, energy, land, and capital.

globalization of production

West Electronic Corporation sources goods and services for its electronics products from different locations around the globe in an attempt to take advantage of differences in the cost and quality of labor and land. This process demonstrates:

globalization of production.

In comparison to pure command economies, free market economies lack:

government control over production and pricing.

A common feature of many right-wing dictatorships is:

governments that are made up of military officers.

Ceria Republic is a country that has achieved rapid economic growth and prosperity over the last couple of decades as a result of globalization. Hence, the country is most likely to see a cultural shift away from _____ .

greater collectivism

One common measure of economic development is a country's:

gross national income.

Since 1980, the world's containership fleet has more than quadrupled, reflecting in part the:

growing volume of international trade.

A notable trend in the demographics of the multinational enterprise since the 1960s is the:

growth of mini-multinationals.

The sustained flow of foreign investment into developing nations:

has been increasing since the 1980s.

polychronic

having to do with simultaneous activities, multi-tasking

"Exporting jobs" to low-wage nations has contributed to:

higher unemployment in wealthy advanced economies such as the United States.

Globalization results in greater degree of _____ across markets than would be present otherwise.

homogeneity

If in the present time, an international company decides to do business with the former Communist nations of Europe and Asia it would most likely benefit from the:

host of export and investment opportunities presented by these companies.

International business is reflected in...

how a company responds to differences that it encounters outside of its home market

We have see that sociocultural forces are

important business. Increasingly, one useful way managers quickly build a general sense of what to expect in a culture is to use an analytical framework.

Adam Smith

incensed by government intervention and control over both domestic and foreign trade, published An Inquiry into the Nature and Causes of Wealth of Nations (1776), in which he tried to destroy the mercantilist philosophy.

The Cedian government believes that its citizens should have complete freedom in their economic and political pursuits, and the Cedian ideology is "private profit over public good." In this context, it can be said that Cedia most likely follows the philosophy of:

individualism

At a micro level, trade is enabled by a country's

institutions, policies, infrastructure and services

Patents, copyrights, and trademarks establish ownership rights over _____ property.

intellectual

Michelle, an Italian fashion designer, sells her merchandise by exporting them to the US, UK, and Brazil. According to this info, Michelle is most likely involved in:

international trade.

Post-democracy

is a condition in which the vestiges of a democratic state have been superseded by practices that give considerable de facto power to corporations, donors to political parties, or those minorities that are able to concentrate influence at particular vulnerable points in the political system

Democracy

is a system wherein the composition of governments is decided by a method of voting that enables wide participation

domestic environment

is all the uncontrollable forces originating in the home county that influence the life and development of the firm.

Global company (GC)

is an organization that attempts to standardize and integrate operations worldwide in most or all functional areas.

Floating Currency

is determined by the market, worth whatever people are willing to spend on it. Currency is determined by foreign investment, imports/exports, inflation... This is used by countries with stable economies, market will autmatically correct rate to relfect inflation, is not perfect especially instability

One of the downsides to the emphasis on individualism is that it:

is difficult to build teams within an organization to perform collective tasks.

A transnational corporation

is generally regarded as an enterprise comprising entities in more than one county that operate under a system of decision making that permits coherent policies and a common strategy. The entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the others and, in particular, to share knowledge, resource and responsibilities with the others.

Plague,

is one of the worst natural disasters in history. Believed to have originated in Asia, the plague moved west with traders and soldiers, carried by oriental ratfleas that lived on rodents that stowed away on ships and caravans. Call the Black Death in Europe and repeated in waves from the mid-1300s through the 1500s, the plague ravaged cities, caused widespread hysteria, and killed one-quarter of China's people and one-third of the population of Europe.

What is High Productivity reflected it?

is reflected in higher wages, increased profits, generates tax revenue, and is vital for living standards

Pegged Currency

is set by the government and is pegged to the US dollar (usually). The government buys foreign currency to meet supply/demand. This is good for instable countries. However, blackmarkets do pop up (for the currency at market value), when people see that currency isnt worth as much as pegged rate they will exchange the currency.

Power Distance

is the extent to which members of a society expect and accept power to be distributed unequally.

Development of the microprocessor is most likely to be considered the single most important innovation in technology because:

it has enabled the explosive growth of low-cost computing.

Free trade alone, some argue, is a necessary but not sufficient prerequisite to help the world's poorest countries bootstrap themselves out of poverty. They also recommend:

large-scale debt relief.

Handicaps experienced by an organization because of entering into a market after several other companies who have already established their brands in the market, are referred to as _____.

late-mover disadvantages.

If a company from a highly developed nation hesitates to enter into a joint venture with a company from a developing nation due to inadequate protection of intellectual property rights, it is trying to avoid a(n) ____ risk.

legal

Copyright

legal right to be the only one to reproduce, publish adn sell a book/song

A person seeking and receiving help through a guanxi network is:

liable to a social sanction if he or she does not reciprocate when called upon.

Chinese is the mother tongue of the largest number of people, but English is the most widely spoken language in the world. This indicates that:

many people speak English as a second language.

A _____ economy is an economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

market

In most totalitarian states:

media are heavily censored.

Sustainability

meeting humanity's needs without harming future generations

Universal Lingo, a UK based language translation company employing just 65 people worldwide, has an annual turnover of $1.5 million. In this context, Universal Lingo is most likely to be classified as a(n):

mini-multinational firm.

In a _____ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while in other sectors there is significant state ownership and government planning.

mixed

The Boldovian government took Sea Lion Inc., a domestic, private shipbuilding firm, into state ownership to save the company from bankruptcy. However, the other private competitors in the shipbuilding industry were raged at this decision of the government. As a result, the government had to reduce the tax burden on all other private shipbuilding firms so that both the state-owned enterprise and private firms could co-exist. According to this information, Boldovia has most likely adopted a _____ economy.

mixed

In comparison to contracts in a civil law system, contracts drafted under a common law framework tend to be:

more specific.

Indictments against theft, incest, and cannibalism are examples of how violating _____ can bring about serious retribution.

mores

If a country wants to improve its attractiveness as a place for doing business and as an investment site, it should:

move toward a market-based system.

The rise of Islamic fundamentalism is, in part, a response to the:

movement in traditional Islamic societies toward modernization.

Silver Fire Electric Inc., a U.S. company, has productive activities in more than two countries. As a result, it would be most appropriate to refer to Silver Fire Electric as a(n) _____ enterprise.

multinational

The World Bank was primarily created in 1944 to:

promote economic development.

In 2008-09, the G20 primarily worked to:

provide a forum to launch a coordinated policy response to the global financial crisis.

The globalization of production mainly occurs due to the:

national differences in the cost and quality of factors such as labor, energy, land, and capital.

In mixed economies, governments sometimes tend to take into state ownership troubled firms whose continued operation is thought to be vital to national interests. Once a government takes into state ownership such troubled firms, they are said to be _____.

nationalized

Jack, the CEO of Silver Touch Inc., raised his eyebrow in surprise at a new employee's valid suggestion to improve the sales turnover. He made a thumbs-up gesture as a sign of approval for the implementation of the employee's suggestion. Jack is typically using:

nonverbal communication.

In a society, actions of people directed toward one another are governed by a set of social rules called:

norms

The sale of state-owned enterprises to independent, nonpublic investors is referred to as:

privatization.

Nonverbal communication

or the unspoken language, can often tell business people something that the spoken language does not.

Centralized Organization

produce and sell goods from one central location, use common marketing themes to create international marketing campaigns PROS: build global image, consistent messege, cost

A software company uses engineers in India to perform maintenance functions on software designed in the US, and Indian accountants to compile tax returns. This US based company is most likely using:

outsourcing.

A _____ grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention.

patent

Black economy is most likely to be prevalent when:

people engage in barter agreements to avoid paying taxes.

The Human Development Index comes close to Amartya Sen's conception of how development should be measured although _____, suggested by Sen in his thesis, is not included in the index.

political freedom

Hofstede's _____ dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities.

power distance

In economic terms, the long-run monetary benefits of doing business in a country are most likely to be a function of the:

present wealth (purchasing power) of consumers of the country.

In the context of property rights, _____ refers to theft, piracy, blackmail, and the like by private individuals or groups.

private action

After the collapse of communism in Dehran, successful business owners often had to pay "protection money" to the mafia or face violent retribution. In the context of property rights, the behavior of the mafia is an example of:

private action.

The _____ movement started in Great Britain in the early 1980s when then Prime Minister Margaret Thatcher started to sell state-owned assets such as the British telephone company.

privatization

experience curve

reduction of unit costs of production as accumulated volume increases, due to improved efficiently resulting from increased cumulative experience and learning.

Political Systems

refers to the structures, processes and activities by which a nation makes choices and hence engages in self governance

A(n) _____ is built upon the ideals of an individual's right to freedom of expression and organization, a free media, and regular elections.

representative democracy

In a _____, individuals periodically elected by citizens form a government to make decisions on behalf of the electorate.

representative democracy

People in the West tend to associate a(n) _____ with a free market system, strong property rights protection, and economic progress.

representative democracy

Market-Driven Organizations

responds to market needs by providing customers with high quality goods and services. Must be flexible, able to adapt, adn resport quickly to change.

The philosophy behind intellectual property laws is to:

reward the originator of a new invention, book, musical record, and the like for his or her idea and effort.

The fascist regimes that ruled Germany and Italy in the 1930s and 1940s had adopted:

right-wing totalitarianism.

Cultural relativism

the belief that ethics are culturally determined and that firms should adopt the ethics of the culture in which they operate

A concern voiced by critics of globalization is that today's increasingly interdependent global economy shifts economic power toward:

supranational organizations such as the World Trade Organization.

International trade theory shows

that nations will attain a higher level of living by specializing in goods for which they possess a comparative advantage and importing those for which they have a comparative disadvantage.

Naïve immoralist

the belief that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that his firm should not either

Kantian ethics

the belief that people should be treated as ends and never as means to the ends of others

Righteous moralist

the belief that a multinationalist's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries

The distinctive culture of Wengiston has been losing its predominance among the citizens of the country. This is due to the fact that the people of Wengiston are extensively adopting certain universally accepted values and norms. This behavior of the people in Wengiston demonstrates _____.

the convergence hypothesis.

States that limit the freedom of religious expression with laws based on religious principles, most likely follow the political system of:

theocratic totalitarianism.

Social Responsibility

the idea that businesspeople should consider the social consequences of economic actions when making business decisions

In international business

the international manager has three choices in deciding what to do with a concept or a technique employed in domestic operations: (1) transfer it intact, (2) adapt it to local conditions, or (3) not use it overseas.

The absence of a legal system that protects property rights and the lack of machinery to enforce that system in a market economy usually results in:

the lack of incentives to engage in economic activity.

Collectivist-inclined totalitarian states tend to enact laws that severely restrict private enterprises, whereas the laws enacted by governments in democratic states, where individualism is the dominant political philosophy, tend to be pro-private enterprise and pro-consumer. This indicates that the:

the legal framework of a country reflects the rulers' dominant political ideology.

currency devalution

the lowering of a currency's price in terms of other currencies

To development effective marketing campaigns,

the marketer has to understand the foreign market the firm is selling into

Gerald gifted his son, David, a computer two years ago. Recently, he decided to gift his daughter, Julian, a computer of her own. In the context of the two year gap between the purchase of both the computers and Moore's law, it is most likely that:

the microprocessor in Julian's computer will be more advanced in terms of power than that of David's.

Communist or post-communist governments

these hold the belief that public well being can only be derived from the establishment of a Communist party and the institution of full governmental control on economic activites

Portfolio investment

the purchase of stocks and bonds to obtain a return on the funds invested. 10% or less

Both China and India have achieved high growth rates despite relatively weak property rights regimes and high levels of corruption, because of:

the shift toward a market-based economic system.

Conversational distances

the space between people in a conversation, tend to vary across cultural borders, as well. For example, they tend to be much smaller in the Middle East than in Anglo cultures.

Corporate Governance

the system of procedures and processes by which corporations are managed, directed, and controlled; provides the means through which firms undertake ethical behavior, CSR, and sustainability

exporting

the transportation of any domestic good or services to a destination outside a country or region.

Jewish law is an example of a _____ law system.

theocratic

A legal system which is based primarily on religious teachings is referred to as the:

theocratic law system.

Canada's Disadvantages

trained staff rate is declining, tax rates are high, less innovation promotion by the government, declining university enrollment rate

As a result of globalization, the _____ in the United States has increased.

unemployment rate

Managers at the Blue Dragon Inc., an international company with operations in China and the United States, are often heard complaining about the difficulties in achieving synergy and cooperation between the employees of both the countries. On extensive research it was concluded that the cultural differences between these countries, which resulted in different work-related values, caused the lack of cooperation. In order to effectively tackle this problem, Blue Dragon Inc. should:

vary its management process and practices to account for these differences.

Growing income inequality between the skilled and unskilled workers in advanced nations, such as the United States, is a result of the:

wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted.

Star Volans Inc. is planning on expanding its business globally. In terms of the costs involved in conducting business in a country, it will be most economical for the company if it chooses a country:

where politicians are held accountable by the electorate.

foreign direct investment

which international companies must make to establish and expand their overseas operations.

What are regional trade agreements

• Agreements made by smaller groups of nations that increase trade and cross-border investment between countries. NAFTA, EU, APEC

What is a born global firm

• Company that adopts a global perspective and engages in international business from or near its inception

5. What are the two drivers of globalization

• Falling barriers to trade and investment and technological innovation