BUS206 Test 1
A major legal challenge that companies face in the global environment often involves which of the following?
dealing with product liability issues
Which of the following has NOT been a major force in increasing globalization in recent decades?
decreasing global competition
The methods a country uses to regulate business practicers, define how companies conduct business transactions, specify the rights and obligations of those engaged in business transactions, and provide legal redress to those who believe they have been wronged in business transactions are aspects of a country's ____________.
legal system
Four ways to manage political risk
- Avoidance: avoid investment or withdraw investment from a risky location. - Adaption: accommodate the risk. (equity sharing, participative management, localization, and developmental assistance) - Dependency: Keep the subsidiary and host nation dependent on parent firm. (input/market/position control and staged contribution) -Hedging: minimizing losses (use political risk insurance and/or debt financing)
Why do companies engage in international business?
- To expand sales - Acquire resources -Diversify or reduce risks
Non-Verbal Communication:
1) Chronemics: The way time is used in a culture - Miami everyone late 2) Proxemics: The way a culture uses space - In US/Germany space communicates power, executives may have larger corner offices vs - In France, executives communicate central position by working in middle of everyone. 3) Haptics: touching 4) Kinesics: The way people communicate with hand gestures or other movements - Italians
Management Implications of Power Distance
1) Management selection -low power: educational achievement -high power: social class, elite education 2) Evaluation/Promotion: -low power: performance -high power: compliance, trustworthiness 3) Renumeration: -low power: small wage difference between management and worker -high power: large wage difference between management and worker 4) Leadership style -low power: participative; less direct supervision - high power: theory x; authoritarian, with close supervision
To have more effective cross cultural communication:
1) develop cultural sensitivity - attempt to anticipate meaning by internalizing honest cross cultural empathy (context of culture in mind) 2) Careful encoding - Encoding a message in many ways to ensure that listener gets correct meaning. Written can be better than verbal. 3) Selective transmission: -Better to be face to face than written, if not possible schedule conference call rather than email i.e. gianfranco 4) Careful decoding of feedback - multiple meanings for how people can say things - can be useful to ask colleagues to help whats going on 5) Follow up actions: -managers must always follow through with what has been agreed upon -Contract follow through can be hard given that cultures have different ideas of what constitutes a contract.
Four Stages of Culture Shock
1. Honeymoon stage: positive touristy feeling, may last up to several weeks 2. Irritation and Hostility: Crisis sage when cultural differences arise in workplace, home and daily life. Expatriate may feel homesick and disoriented causing to lash out. Can last forever. 3. Gradual Adjustment: period of recovery where expatriate learns to predict patterns of behavior, uses language and starts to accept new life. 4. Biculturalism: stage where expatriate grows and appreciates local people and practices and can now function in their home culture and new culture. Many do not get here stating they are content with stage three, gradual adjustment.
Hofstede's Cultural Dimensions
1. Power distance (high or low), CEO talking to janitor example High power characteristics: -inequality is fundamentally good -Everyone has a place, some high and some low -Most people should depend on a leader -The powerful are entitled to privileges -The powerful should not hide their power 2. Collectivism vs. Individualism: strong emphasis on community or every man for himself? -Individualism: loosely knit framework where individuals take care of themselves and immediate families only - Collectivism: tightly knit framework where everyone can expect everyone to take care of each other with unquestionable loyalty. 3. Uncertainty avoidance (high or low) -Does society focus on trying to control the future or just let it happen? 4. Masculinity vs. femininity 5) Confucian Dynamism (long term vs. short term orientation) Long term relationships vs. trying to get rich
Select the correct order, going from low to high total impact of an MNE, of the following types of political risk: (1) distributive political risks, (2) systematic political risks, (3) catastrophic political risks, (4) procedural political risks
2, 4, 1, 3 Systematic, procedural ,distributive, catastrophic
Which of the following is the most accurate statement about culture?
Although most cultural variables are universal, the forms these variables take differ from culture to culture.
Cultural Adaptation Curve
Bell curve with mood on y axis
Which of the following types of political risk often is caused by ethnic or civil disorder and includes those random political developments that adversely affect the operations of all companies in a country?
Catastrophic- ethnic/civil ALLLLLL
In a democracy ___________.
Citizens have the right to participate in the decision-making process
When divergent cultures come in contact, _______ occurs.
Cultural collision
Which of the following best describes a pluralistic society?
Different ideologies are held by different segments of society.
A culture in which people prefer to handle tasks sequentially is a polychromic culture.
FALSE
The best way of conducting business domestically is also typically the best way to conduct business internationally.
FALSE
When dealing in business with people from another country, it is good to use slang and tell jokes to put everyone at ease.
FALSE
Distributive political risks arise from political actions, such as public corruption or a partisan judicial system, that interfere with transactions between sellers and buyers and that can significantly raise costs of getting things done.
FALSE - PROCEDURAL
The political system of a country refers to the laws that regulate actions, along with the processes by which those laws are enforced and by which redress for grievances acquired.
FALSE- NOT PROCESSES
In a mixed economy, all dimensions of economic activity, including pricing and production decisions, are determined by a central government plan.
FALSE- command
A civil law system anchors itself in the wisdom of daily experience or, more intellectually, great spiritual or philosophical traditions.
FALSE- issues w contracts/laws
Where future orientation is high, people are less willing to delay gratification by investing.
FALSE- people like to invest when expectation is high
Examples of high vs. low context
High to low: -Japan -Middle East -Latin America -Africa -Mediterranean -England -France -North America -Scandinavia -Germany -Switzerland
Signs of High and Low context cultures:
High: - Long lasting relationships -Deep distinguishably between members and foreigners -Communication is IMPLICIT & INDIRECT -i.e. Japan Low: -Less personal involvement with others -Reliance on legal system -Business and pleasure do not mix -i.e. USA
Organizing work differently to improve productivity will likely fail _______.
If changes interfere with strongly held values......... changes should never interfere w ones values
Most of the worlds goods and services are sold _________.
In countries where they are produced.
Which of the following is characterized by low dependence on an organization and a desire for personal time, freedom, and challenges?
Individualism
Which of the following countries has a theocratic form of totalitarianism?
Iran
Internationally, how does a person's competence affect his or her eligibility for employment and promotions?
National norms differ
In a totalitarian political system, ________.
One agent monopolizes political power.
_______________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return.
Political risk
Four types of political risk that MNC's may be exposed to (least to most destructive)
Special products destroy cats 1) Systematic risk: risks that affect all firms in a country 2) Procedural- Reflects the costs of getting things done because of problems like governmental corruption, labor disputes, and/or a partisan judicial system. 3. Distributive- Reflects revisions in such items as tax codes, regulatory structure, and monetary policy imposed by governments in order to capture greater benefits from the activities of foreign firms. 4. Catastrophic- Random political developments that adversely affect the operations of all firms in a country.
A common law system is based on tradition, judge-made precedent, and usage in which the court assigns a preeminent position to existing case law to guide dispute resolution.
TRUE
In a high power distance culture, people generally accept and expect that power is distributed unequally.
TRUE
MNC managers should constantly monitor the political environment of the countries in which the MNC operates in, buys from or sells to, and manage the associated risks proactively.
TRUE
Many foreign basketball teams recruit tall youngsters in foreign countries into basketball camps where they can develop basketball skills and perhaps become candidates for professional play. This is an example of engaging in international business to acquire resources.
TRUE
National origin is an ascribed group membership.
TRUE
The fact that a company is the market leader in one country is no guarantee that it will be the leader in another country.
TRUE
The rule of law holds that governmental authority is legitimately exercised only in accordance with written, publicly disclosed laws that have been appropriately adopted and which are enforcing in keeping with established procedure.
TRUE
When a U.S. citizen flies Japan Airlines, it is an export service for Japan
TRUE
In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are all planned by the government.
TRUE- COMMAND, i tell u what to do
Preference for a consultative management style is prevalent in a society with lower power distance.
TRUE- managers vibe with u
Which of the following is a reason that international business has grown at such a rapid pace in the past few decades?
The end of the political schism between the communist and non-Communist blocs
Culture Shock
The state of disorientation and anxiety of about not knowing how to behave in a culture which is unfamiliar. The cause of this is the trauma people experience when having to cope with a completely different life than they had been doing prior to this.
Reports suggest ______ between the per capita income of a country and its tendency to regulate business activity.
an inverse relationship i.e. cuba (regulates everything)
The broadening set of interdependent relationships among people from different parts of the world is known as ___________.
globalization
In a(n)________ culture, people tend to regard seemingly peripheral information as pertinent to decision making and infer meanings from things that people say either indirectly or casually.
high-context highcontext=low communication
When a company does business in another country whose official language is the same as its home country's the company ________.
may encounter differences to meanings of the same words.
Some argue that gross national income, and its expression in terms of per capita, growth rate, or PPP refinements, focuses too much on ______, thereby only partially representing the scale and scope of a country's level of development.
monetary indicators
Because certain cultural attributes can link groups from different nations more closely than groups within a given nation, international businesspeople___________.
must be careful to compare relevant groups when comparing nations i.e. jewish vs. israeli
A business' day-to-day activities are best described as its ______ concerns.
operational
Although globalization may bring economic growth, critics nevertheless contend that _______.
the inequality of gains puts some people in a relatively worse economic situation. i.e. MADE IN USA
