INTB 3355 Final exam Review

Attitudes toward time

- 2 aspects. 1st Aspect: Past focused vs Present focused - primary focus on past, present, future 2nd Aspect: Sequential (monchronic) vs Synchronous (polychronic)

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 standard

Arbitration

- A dispute resolution process agreed to by parties in lieu of going to court, in which one person or a body makes a binding decision

Location

- Builds political and trade relationships. geographic proximity plays a role in the formation of trading groups as well. With proximity, knowledge of trade partners is likely, delivery faster, and freight and service costs lower.

NAFTA Percursor

- Canada-US Free Trade Agreement (since 1989)

Climate

- Climatic conditions explain differences in human and economic development. -Meteorological conditions: Temperature Precipitation Wind

Property Seizure

- Confiscation - Expropriation - Nationalization

Culture- Accounting & Finance

- Controls are based on the perception of trust in people - Formal controls - Informal controls

Topography

- Creates differences in economies,cultures,politics,social structure. - The surface features of a region

European Parliament

- EU legislative body whose members are popularly elected from member-nations - People of Europe

International Institutions from an International Business Perspective

- Economic Integration Agreements - NAFTA - The European Union

International economic analyses

- Economic analyses for multinationals are more complex than those for a purely domestic firm because there are many economies to consider instead of just one, there are interactions between them, and values are highly divergent. - Management requires economic data and socioeconomic data. - Analysts use data from governmental and international organizations and industry associations. - The purpose of economic analyses is to assess the overall outlook for the economy and the impact of economic changes on the firm

NAFTA concerns for canada

- Energy trade policies - losing manufacturing jobs to Mexico

European Commission

- Executive Branch; Oversees the implementation of the legislation, taking non-compliers to the Court of Justice - Body responsible for the EU's day-to-day operations - 28 countries, 28 commissioners - Nominated by their countries, appointed by the commission president-elect, approved by a vote of the European Parliament

Low Context Cultures

- Explicit communication, direct and to-the-point - Monochronic (linear time, sequential activities; tangible, uses schedules) - Rule oriented, people play by external rules - More knowledge is codified, public, external, and accessible - Sequencing, separation of time, space, activities, relationships - More interpersonal connections of shorter duration - Knowledge is more often transferable - Task centered - Decisions/activities focus around what what needs to be done, division of responsibility - Used in USA, some of Europe (France, Scandinavia, Germany, Switzerland)

Nationalization

- Forced asset transfer to the government of an entire industry The transfer of a major branch of industry or commerce from private to state ownership or control - large scale, with/without compensation

Expropriation

- Forced transfer of assets from a company to the government with compensation The taking of private property by a government to make it public - small scale, with compensation

Confiscation

- Forced transfer of assets from a company to the government without compensation A legal form of seizure by a government or other public authority - small scale, no compensation

Types of Economic Integration Agreements

- Free trade area (FTA) - Customs union - Common market - Complete economic integration

middle-income economies

- GNI per capita of over $1,045 but less than $12,746, which can be further divided into: a. Upper-middle-income economies: GNI per capita over $4,125 but less than $12,746 b. Lower-middle-income economies: GNI per capita of over $1,045 up to $4,125

Performance of contracts - Major problems

- Getting other side to perform obligations - No worldwide court has power to enforce decrees - UN International Court of Justice relies on voluntary compliance - International contracts are complicated to enforce

Individualism vs. Communitariasm

- Has to do whether people plan their actions with reference to individual or group benefits - communitariasm: belief that the group is the beneficiary of actions

NAFTA (North American Free Trade Agreement)- Launched

- January 1, 1994 among Canada, Mexico and United States - Created one of the world's largest free trade zones and one of the most powerful productive forces in the global economy - Trade in Northern America tariff-free - Last trade area to have tariffs dropped was U.S. corn exports in Mexico

United Nations solutions

- Many countries, including the United States, have ratified the UN Convention on the International Sale of Goods (CISG) to solve jurisdictional problems related to contract performance.

How does culture affects business functions

- Marketing - Human Resources - Production - Accounting & Finance - Leadership

Free Trade Area (FTA)

- NAFTA: drop internal tariffs - free trade area: area in which tariff among members have been eliminated, but members keep their external tariffs. 1. Example: Association of Southeast Asian Nation (ASEAN) 2. Example: North American Free Trade Agreement (NAFTA) (Canada, Mexico, US): drop internal tariffs - restriction remain on movement of service, people, and capital

European Union Development- 6 Original Members

- Original members (1952: West Germany, Italy, France, Belgium, Netherlands, Luxembourg) - Recent member 2013: Croatia - others (study guide)

Ecuador vs chevron case

- Over three decades of oil drilling in the Ecuadorian Amazon, Chevron dumped more than 18 billion gallons of toxic wastewater into the rainforest, leaving local people suffering a wave of cancers, miscarriages and birth defects. Now, with the support of an international campaign for justice, the communities affected by Chevron's negligence are holding one of the world's largest oil companies to account

Leadership

- Relationship between leader and followers - Hierarchical? Lateral? Paternalistic? Heroic?

NAFTA Stipulations

- Removal of most tariffs and restrictions on trade between the U.S., Canada, and Mexico - Wide range of agreements on agricultural, textile and automotive trade - Agreements on telecommunications and intellectual property - mobility workers - environmental policies

Economic Integration agreements

- Represents attempts by nations to create agreements that lead to improved trade conditions for parties to the agreement - Informal normative institutions - Follow a general pattern - Trading blocs (FTA, common markets) bring cost reductions inside integrated areas through reductions in tariffs, quotas, and trade barriers and bring const increases outside the trading blocs

European Central Bank (ECB)

- Role: To manage the euro, keep prices stable and conduct EU economic & monetary policy - Location: Frankfurt, Germany 1998

Hall's Framework

- Simple, but powerful - Based on communication styles and the role of context - High Context Culture - Low Context Culture

Council of the European Union

- The EU's primary policy-setting institution - Member-states - Nation's minister serves as the representative - Decisions are set forth in regulations & directives & supranational

complete economic integrations

- The final stage of economic integration: The integrated units (Policy) have no or negligible control of economic policy, including full monetary union and complete or near-complete fiscal policy harmonisation. - -Complete economic integration is most common within countries, rather than within supranational institutions. - An example of this are the original thirteen colonies of the United States of America, which can be viewed as a series of highly integrated quasi-autonomous nation states. In this example it is true that complete economic integration results in a federalist system of governance as it requires political union to function as, in effect, a single economy.

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

Foreign Corupt Practices Act

- U.S. law banning payments to foreign government officials for special treatment - Bribes (questionable or dubious payments) paid to government officials by companies seeing to purchase contracts from those governments

Performance of Contracts - possible solutions

- UN Convention on International Sale of Goods (CSID) - Private Solutions - Arbitration, an alternative to litigation - Incoterms, the International Chamber of Commerce's universal trade terminology

NAFTA concerns for mexico

- US migration policies - High corn subsidies for US farmers

High Context Culture

- a culture in which the meaning of the communication act is inferred from the situation or location - Implicit and indirect communication; context is critical/plays strong role - Polychronic (simultaneous activities, multitasking) - Less verbally explicit communication, less written/formal information - More internalized understandings of what is communicated - Multiple cross cutting ties and intersections with others - Long term relationships - Strong boundaries-insider/outsider - Knowledge is situational, relational - Decisions/activities focus around personal face-to-face relationships, often around a central authority person - Used in Asia, Latin America, Middle East

Universalism vs. Particularism

- addresses whether rules or relationships regulate behaviors

Achievement cultures

- are meritocracias that reward what you do

Attitude towards the environment

- are we in harmony with nature or does our understanding of the natural order of things (or culture) suggest that we control nature? - Trompenaars's dimension of internal vs. external direction is similar to Kluckhohn and Strodtbeck's relationship to nature.

Customs Union

- collaboration that adds common external tariffs to the FTA 1. Example: The Southern African Customs Union (SACU, 1910): oldest; South Africa, Lesotho, Namibia, Swaziland, and Botswana members 2. Example: Common Market of the South (Mercosur or Mercosul): Argentina, Brazil, Paraguay, Uruguay, and Venezuela, and the Andean Community (Perú, Ecuador, Bolivia, Colombia)

Universalits

- condition in which concepts apply to all. Rules apply to everyone. Universalist cultures tend to be rules-based

Particularists

- condition in which context determines what concepts apply to whom. Before they apply the rules. Particularist cultures tend to be relationship-based

Ascription cultures

- consider who a person is by family lineage or age, or other attributes

Culture

- consists of the individual world views, social rules, and interpersonal dynamics characterizing a group of people set in a particular time and place. - learned from an individual level; we are not born with culture - the various aspects are interrelated - is shared, patterned, and mutually constructed through social interaction - defines the boundaries of different groups - communicate through social, legal, language, and other borders (work in different cultures)

Common market

- created when a customs union lift restrictions on the mobility of services, people, and capital among the member-nations - Single market; all barriers (standards, borders, taxes) become common

Achievement vs Ascription

- focuses on the basis of social status and reward, with status being related to either who a person is or what a person does

The European Union

- is a unified trade and monetary body of 28 member countries - It eliminates all border controls between members - Allows the free flow of goods and people, except for random spot checks for crime and drugs. - Transmits state-of-the-art technologies to its members -The areas that benefit are environmental protection, research and development, and energy - Customs union -> common market -> - Three areas of integration: economic, domestic policy, & foreign policy

International dispute settlement

- litigation - performance of contracts

NAFTA Main Goals

- promoting economic growth by easing the movement of goods and services between the US, Mexico and Canada

EU impact on international business

- significant member of EU regulations have major impact in the US, Japan, China, and elsewhere, because of the EU's size and importance as a trading partner. - EU standards tend to be advanced, especially in ecology and sustainability requirements - EU is the world's largest trading economy, a large source of FDI outlaws, and the source for 26% of the world's total output - common currency & common import/export processes have reduced that cost of doing business - Example: Google, Microsoft

TROMPENAARS' FRAMEWORK (7 DIMENSIONS OF CULTURE)

- the first 5 address the culture's patterns for relationships among people - the final 2 have to do with time and nature 1) Universalism vs. Particularism (rules vs. relationship) 2) Individualism vs. Communitarianism 3) Neutral vs. Affective (unemotional vs. emotional) 4) Specific vs. Diffuse 5) Achievement vs. Ascription 6) Attitudes Toward Time (2 Aspects) 7) Attitudes Toward the Environment

Privatization

- the selling of government-owned property sector - transfer of public sector assets to the private sector - transfer of management of the state activities through contracts & leases - contracting of activities previously conducted by the state

Sources of laws in international business

- treaties - customary international law

NAFTA positive consequences

1. Intra-North American trade has more than tripled since NAFTA's inception 2. Agricultural trade in both directions between Mexico and the US increased from $7.3 billion in 1994 to $ 20.1 billion in 2006 3. Trade between the three parties currently accounts for about 80% of Canadian and Mexican trade and more than a third of US trade 4. Increased foreign direct investment between the three countries 5. Mexico protected from financial instability in South America 6. Increased export manufacturing in Mexico

Situation for terrorism and kidnapping

1. Kidnapping for ransom 2. Paying ransom becomes counterproductive 3. Countermeasures by industry 4. Chemical and biological terrorism Additional Info: 1. Kidnapping as a means of funding terrorist groups 2. Business executives as targets 3. Insurance 4. Prevention

NAFTA negative consequences

1. Reduction in manufacturing jobs in the US 2. Direct losses vs. real wages 3. Environmental concerns in Mexico's industrial areas 4. Mexican productivity vs. real wages 5. Mexico affected by 2001 US recession, 2008 recession 6. Mexican agriculture

Extraterritorial

A countries attempt to apply its laws to foreigners or nonresidents and to acts and activities that take place outside of its borders

Culture includes everything but

A.Religion B.Religion and politics C. Higher education and universal values *D.None of the above

Culture includes everything:

Aesthetics, attitudes & beliefs, religion, material culture, language, societal organization, education, laws & political structures

Yes, as ruled by the Ecuadorian courts

Based on the information you have, do you believe Chevron should pay a compensatory fine?

Past focused

Change moves slowly Example: East Asia, traditional values are important, as are ancestors

Formal controls

Compliance through rules and sanctions

Informal controls

Compliance through social norms

Leadership, accounting, finance, marketing, human resources, production.

Culture plays a significant role in the disciplines of:

False

Developed economies tend to have low savings rates.

- higher access to healthcare - higher healthcare costs

Do you think healthcare represents a higher percentage of household consumption in the US due to

Emerging market economies

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

Income is more evenly distributed in the richer nations

From comparisons of income distribution studies over time, it generally appears that

Low income economies

GNI per capita of $1,045 or less

high-income economies

GNI per capita of $12,746 or more

Expropriation

Government seizure of the assets of a handful of companies with compensation is known as:

Culture- Human Resources

How do people work in groups? How do groups acquire resources?

Train your employees on security measures

If a country with a moderate risk of kidnapping presented a great opportunity for investment, would you

True

Immigration has a positive impact on employers, managers, workers with complementary skills, the federal government; and a negative impact on states with generous social services.

specific cultures

In specific cultures such as the US, people make distinctions between their work relationships and personal relationships, so that they do not carry over beyond work

European Court of Justice

Judicial branch of EU

After World War II, whose views were favored by most countries around the world?

Keynes

In the documentary "The Commanding Heights: The Battle for the World Economy," who are the two main economists whose views are presented?

Keynes & Hayek

Which one of the two believes in government intervention in the economy, and which one believes in free markets?

Keynes: Government intervention Hayek: Free market

litigation

Legal proceeding conducted to determine and enforce particular rights

Sequential (monochronic)

Linear actions follow one another. The controlling image of time is a river or stream. Scheduling is done in discrete units with no overlap

Synchronous (polychronic

Many actions can occur at more or less at the same time Example: middle eastern tend to be polychronic. Saudi Arabia non-native participant will be challenged, may feel insulted to not have full attention of people

University scheduling patterns

Monochronic time is best illustrated by

Unequal distribution of income, with a very small middle class

Most developing nations share the following characteristic(s):

Affective (emotional) cultures

Much more expressive

opposing trends

Nationalization and privatization are

Germany

Of Western European economies, which one stood out in the decades following World War II by embracing more free market oriented economic policies?

False

Only in communist countries do governments own the factors of production

Internal Direction

People believe that they can control nature or their environment to achieve goals. They believe the natural world controls them and they need to work with their environment. This includes how they work with teams and within organizations.

Political risk - conflict and violence

Sources: 1. Citizens protesting against their environment 2. Territorial Disputes 3. Disputes based on ethnic, racial, or religious divisions

Present focus

Tend to neither plan nor dwell on the past; now is what is important ( Wall Street Culture)

Neutral (unemotional) cultures

Tend to withhold emotional expression

True

The US should outlaw the use of "grease" by US companies abroad.

Context

The relevant environment; beyond explicit communication

Neutral vs. Affective

Unemotional vs. emotional

Political risk - terrorism and kidnapping I

Unlawful acts of violence for a variety of reasons: 1. Ransom 2. Overthrow government 3. Release of imprisoned colleagues 4. Revenge 5. Punish religious non-believers

Spanish, Catalan, Euskera, Gallego

What are the languages spoken in Spain?

Middle Eastern countries (Iran, Qatar), Russia, US, African countries, China

What countries do you consider the major players in the global oil industry today?

Culture- Marketing

What motivates people to buy and what do they prefer to buy?

20%

What percentage of world oil production is controlled by private companies?

Canada, Saudi Arabia, Venezuela, Iraq, Mexico

What were the top 5 countries of origin for US crude oil imports in 2017?

Often complex, so contracts should include choice-of-law and choice-of-forum clauses

Where litigation in international disputes should occur is

Canada

Which member country has been most interested in renegotiating NAFTA energy trade agreements

Economic

Which type of integration came first in the history of the European Union?

An international court should be created that could make binding decisions

Who should make a binding decision in the Ecuador vs. Chevron case?

Gross national income

_______ refers to the total value of all income generated by the residents of a nation, including both domestic income and income from abroad.

Treaties

agreements between countries (aka conventions, covenants, compacts, protocols)

Ethnocentricity

belief that one's own ethnic group or culture is superior to that of others

Specific vs. Diffuse

distinguishes among cultures based on their differentiation between private life and public or work life.

Customary International Law

international rules derived from customs and use over centuries

NAFTA concerns for US

losing manufacturing jobs to Mexico

External Direction

people tend to be responsive to external forces

Diffuse cultures

work relationships carry over to other areas of life and influence them