International Management Exam 2

Total Population

-the most general indicator of potential market size -first characteristic of the population that analysts examine. - Population size alone poor indicator of economic strength and market potential

Characteristics of developed economies ***

1. Per capita gross national income of $12,056 or more (World Bank Criterion) 2. A high material standard of living, high quality of life index

Types of Countermeasures

1. know the country and region so risk assessment is realistic 2. insurance and outsourced skills, such as hostage negotiations, as needed to cope with crisis 3. train for daily living skills: varying driving routes, awareness of surroundings, antiterrorism training

Principles of Common Law Systems

1. the rights of the individual exist alongside those of the state. 2. the trial is adversarial. 3. the defendant is presumed innocent until proven guilty. 4. case law develops through judgments and precedents. 5. case law coexists with statute law and in most class a constitutions. 6. crimes are punished and civil wrongs are rectified by compensation.

What is the GNI of India?

10.39 trillion PPP dollars (2018)

What is the GNI of USA?

20.84 trillion PPP dollars (2018)

What is the GNI of China?

25.3 trillion PPP dollars (2018)

Developed Economies

A classification for high-income industrialized nations, which have high living standards and the most technically developed infrastructure

Developing Economies

A classification for the world's lower-income nations, which have less technically developed infrastructures and lower living standards

Compound Duty

A combination of specific and ad valorem duties

Extraterritoriality

A countries attempt to apply its law to nonresidents and foreigners, and to activities that take place beyond its borders. Tax and employment, antitrust and environmental laws.

Patents

A government grant giving the inventor of a product or process the exclusive right to manufacture, exploit, use and sell that invention or process. Country specific laws vary widely. Patent trolls and pirates challenge the patent system.

Purchase Power Parity

A means of adjusting the exchange rates for two currencies so the currencies have equivalent purchasing power.

Income Distribution

A measure of how a nations income is apportioned among its people

Population distribution

A measure of how the inhabitants are distributed over a nation's area

GNI Index

A measure of the degree to which family income within a country is distributed equally. Wide range around the world.

Population Density

A measure of the number of inhabitants per area unit (inhabitants per square kilometer or square mile).

Non-quantitative Barriers

Direct government participation in trade. customs and other administrative procedures. Government and private standards.

Private Consumption

Disposable income, Discretionary income

Age Distribution***

Distributions of age groups within populations vary widely, but developing countries

Emerging Market Economies

Economies with per-capita incomes in the low to middle range that are in a transition toward developed status.

Subsidies

Financial contributions, provided directly or indirectly by a government, which confer a benefit, including grants, preferential tax treatment, and government assumption of normal business expenses

When measuring the value produced in an economy, most international organizations prefer to use?

GNI

Economic Growth Rate

GNI and GNI per capita only provide a snapshot of an economy. Managers should supplement their analyses by assessing economic growth rates as measures of an economy's absolute size. Rapid and rising rates imply consumer demand.

Measuring the size of an economy

GNI measures total value of all income. GNI per capita indicates how advanced economy is but should be used with caution.

high-income economies

GNI per capita of $12,056 or more

Middle income economies ***

GNI per capita over $995 but less than $12,056, which can be further divided into: * Upper-middle- income:

GNI per Captia

High income economies, Middle income economies, and low income economies

The world bank categorizes countries based on GNI per capita, using the following categories?

High- income economies, middle- income economies, low -income economies

Large foreign debts may do what?***

Hinder access to foreign currency to pay for imports billed in foreign currency, if such currency is being used to pay foreign debt, hindering access to raw

Product liability standards

Holds a company and its officers and directors liable and possibly subject to fines or imprisonment when their product causes death, injury, or damage.

Foreign Environment ****

Includes all the uncontrollable forces originating outside the home country that surround and influence the firm. The interaction between domestic and foreign environmental forces or between se

Trade obstacles

Includes political, financial, and legal obstacles. Packaging and language requirements. Tariffs, quotas, voluntary export restraints.

Litigation

Legal proceeding conducted to determine and enforce particular legal rights. can be complicated and expensive.

Non-tariff Barrier

NTBS are all forms of discrimination against imports other than import duties

Performance of Contracts

No worldwide court has the power to enforce its decrees. The worldwide courts that do exist, such as the UN's International Court of Justice, rely on the voluntary compliance of the parties before them. Each nation in the world is sovereign and has its own rules for recognizing decrees and judgments from other nations.

Quantitative Barriers

Numerical limits for specific goods imported during specific period

Incoterms

Predefined commercial terms established by the international chamber of commerce.

One reason a government chooses to restrict trade would be to?

Protect domestic infant industries

Reasons for restricting Trade

Provide for National Defense, Impose Sanctions, Protect an infant or dying industry, Protect domestic jobs, Ensure fair competition, and Retaliate

Common Law

Relies on previous court decisions and interprets statutes and regulations. Relationship between judicial decisions and statutes can be more complex due to precedents. More adversarial, but more flexible, than civil law systems.

Religious Law

Religious document or source is the basis of the legal system. Some religious law prohibits charging interest.

TRIPS

The agreement on trade related aspects of intellectual property rights is an international legal agreement between all the member nations of the world trade organization

Atlas Conversion Factor

The arithmetic average of the current exchange rate and the exchange rates in the two preceding years, adjusted by the ratio of domestic inflation to the combined inflation rates of the euro zone, japan, the united kingdom, and the U.S.

Nationalization and privatization are implemented by?

The government

Because of the importance of economic information to the control and planning functions at headquarters, the collection of data and preparation of reports are usually the responsibility of..

The home office

Rural-to-urban shift

The movement of a nations population from rural areas to cities

Nationalization

The taking of private property by a government to make it public. Motivated by the belief that government can manage a public good or necessity better that the private, profit-driven sector.

Gross National Income (GNI)

The total value of all income generated by the residents of a nation, including both the domestic production of goods and services and income from abroad

Civil Law

This approach is based on codification, a systematic collection of laws designed to cover all areas of concern. Derived from ancient Roman law and influenced by religious law. The most widespread system globally.

Unite Labor Costs **

Total direct labor costs divided by units produced. Low or slowly rising unit labor costs may indicate opportunity to lower production costs and may indicate locations of new competition in world markets.

Sources of international law

Treaties are agreements between countries. Also called conventions, covenants, compacts, or protocols.

Foreign Corrupt Practices Act (FCPA)

U.S. law prohibits payments to foreign government officials in order to receive special treatment. Facilitating payments are allowed. New agreements include UNCAC signed in 2018.

WIPO is a?

UN agency that administers intellectual property systems

Japan restricts the number of automobiles its manufacturers can export to the United States each year. What is this an example of?

Voluntary export restraint

WIPO

World intellectual property organization

Intellectual Property

a creative work or invention that is protectable by patents, trademarks, trade names, copyrights, and trade secrets.

Specific Duty

a fixed sum levied on a physical unit of an imported good

Trade names

a name used by a merchant or manufacturer to designate and differentiate its products. Protected by WIPO and TRIPS.

Trademarks are defined as

a shape, color, design, sound, phrase, abbreviation by which a product is designed

Countervailing Duties

additional import taxes levied on imports that have benefited from exports subsidies

Disposable Income

after tax personal income

Discretionary income

amount of income left after paying taxes and making essential purchases

Competition laws

another term for antitrust law, used by the EU and other countries. U.S. law includes per se concept

Cybercrime

any legal internet- mediated activity that takes place in electronic networks

The most important sources of international law are?

bilateral and multilateral treaties, along with customary law.

The three main approaches to law are?

civil, common, and religious

What are labor costs based on

compensation, productivity and exchange rates

Some countries impose both an ad valorem duty and a specific duty on a single import. What type of duty are these countries using?

compound

CIF

cost, insurance, freight-foreign port

A large international debt may result in?

decreased levels of foreign exchange available

Miscellaneous laws

employees working abroad must be alert to local laws. legal penalties may be harsh. law of home country plays no part in a foreigners arrest.

When governments nationalize a firm, they don't seek to...

extract more money from the firm.

FAS

free alongside ship port of call

Public International Law

governs relations between governments.

Private international law

governs relationships between individuals and companies that cross international borders.

Piracy

hijacking and kidnapping on the seas

In U.S. Accounting law, the Sarbanes-Oxley Act...

holds corporate officers personally responsible for their corporate filings.

Strict liability standards

holds the designer or manufacturer liable for damages caused by a product without the need for a plaintiff to prove negligence in the products design or manufacture.

Sarbanes-Oxley Act (sox)

in response to world-wide scandals, sets higher standards for boards, management, and accounting firms.

Crisis of Confidence

investors wary after worldwide financial scandals.

Tort law

is an injury inflicted on another person, either intentionally or negligently

Government stability has to do with what?

leadership that listens to citizens and responds to their needs

Currently, what percentage of the worlds total population is found in developing countries?

more than 75%

Reductions in birthrates are occurring worldwide because?

of an increased level of urbanization

Personal consumptions

ownerships of goods and Consumption of key materials

Instable government cannot maintain its self in...

power or makes sudden, unpredictable, or radical policy changes

Antitrust laws

prevent inappropriately large concentrations of power and its abuse through price fixing, market sharing, and monopolies

Large and growing international debts of middle and low-income nations cause what?

problems for their govenments and for multinational firms.

Cross border litigation

prompts question of which law should apply. Choice of law or choice of forum.

Kidnapping

provide source of operating funds for terrorists

If the United States and Italy fell into a trade dispute, which form of international law would govern the situation?

public

U.S. responses to foreign tariffs are likely to?

raise the cost of the imported goods for U.S consumers

The primary reason tariffs are put in place is to?

raise the price of imports, to protect domestic goods.

Smaller nations would like patent protection to be?

reduced, so that they can make money sooner.

Trademarks

shape, color, design, phrase, abbreviation, or sound used by merchants or manufactures to designated and differentiate their products. Vary from country to country. Madrid agreement of 1891 administered by WIPO.

Stability

stable government maintains itself in power and whose fiscal, monetary, and political policies are predictable and not subjected to sudden, radical changes.

Tariffs

taxes on imported goods for the purpose of raising their price to reduce competition for local procedures or stimulate local production

Copyrights

the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit. Protects tangible property.

underground economy

the part of a nations income that, because of un-reporting or underreporting, is not measured by official statistics.

Privatization

the selling of government owned property to the private sector to gain more efficiency in business operations, to raise money or to change in political climate/ philosophy

Gross Domestic Product

the total monetary value of all goods and services produced within a nation.

Trade obstacles are considered to be legal forces beacuse

they often are based on legislation.

What is the purpose of economic analyses?

to assess the overall outlook for the economy and the impact of economic changes on the firm

Terrorism

unlawful acts of violence committed for a wide variety of reasons

Country Risk Assessment (CRA)

An assessment of a country's economic situation and politics to determine how much risk to employees, property, and investment exists for the firm doing business there

Ad Valorem Duty

An import duty levied as a percentage of the invoice value of imported goods

Variable Levy

An import duty set at the difference between world market prices and local government- supported prices

Trade secrets

Any information that a business wants to hold confidential. Includes formulas, processes, patterns, designs. Most common type of IP protection.

voluntary export restraint

Are export quotas imposed by exporting nation. Orderly marketing arrangements are formal agreements

Accounting Law

Consists of Crisis of Confidence and the Sarbanes-Oxley Act

Rapid and rising rates imply what

Consumer Demand

CFR

Cost and freight foreign port.

Rule of law

Country's based on the rule of law encourage foreign investment. These countries tend to protect human rights of citizens an increasing global concern.