Term
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Definition
| Buisness transactions_________________________ |
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Term
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Definition
| _exporting importing___________________ (product vs. service) |
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Term
| International investment: |
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Definition
Foreign dirtect– investments made for the purpose of actively controlling property, assets, or companies located in host countries
Foreign portfolio________ investment – purchases of foreign financial assets for a purpose other than control |
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Term
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Definition
Private individuals
Individual companies
Groups of companies
Governmental agencies |
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Term
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Definition
Globalization refers to _shift towards more integrated and interdependent economy____________________ _________________________________________.
Characterized by denationalization
Different from internationalization
Means an increasingly _freer_____ flow of goods, services, money, people, and ideas across national borders
Two components:
The globalization of __markets_________
The globalization of _production________
The merging of historically distinct and separate national markets into one huge global marketplace
_tastes and preferences___________________________ on some global norm
Firms offer stadardized products_____________________ worldwide creating a world market
________falling barriers______to cross-border trade have made it easier to sell internationally
Advance in ____global products_______ |
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Term
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Definition
| products marketed in all countries essentially without any changes |
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Term
| The most global markets are |
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Definition
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Term
| Globalization of Production |
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Definition
Refers to _regional economic integration_____________________________________ _______________________________________________ ___________________________________________ (e.g., labor, land, capital, energy, etc.)
Benefits:
Access lower-cost workers
Access production inputs
Access technical expertise
Outsourcing of productive activities to different suppliers results in the creation of products that are ______ in nature |
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Term
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Definition
Pro Factors
Lower prices for goods and services
Economic growth stimulation
Increase in consumer income
Creates jobs
Countries specialize in production of goods and services that are produced most efficiently
Con Factors
Destroys manufacturing jobs in wealthy, advanced countries
Wage rates of unskilled workers in advanced countries declines
Companies move to countries with fewer labor and environment regulations
Loss of sovereignty |
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Term
| The Emergence of Global Institutions |
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Definition
Globalization has created the need for institutions to help manage, regulate and police the global marketplace
World Trade Organization (WTO)
International Labor Organization (ILO)
International Monetary Fund (IMF)
World Bank
United Nations
These supranational institutions promote the convergence of how international activities should be conducted. |
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Term
| Regional Economic Integration |
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Definition
| Regional economic integration refers to agreements among countries in a geographic region to _______, and ultimately ________, _________________________ to the ____ flow of goods, services, and factors of production between each other. |
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Term
| Top three regional free-grade blocs |
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Definition
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Term
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Definition
| The process of developing strategies, designing and operating systems, and working with people around the world to ensure sustained competitive advantages |
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Term
| Managing in the Global Marketplace |
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Definition
Managing an international business is different from managing a purely domestic business in four areas:
Countries are different
Range of problems confronted by a manager in an international business is wider and the problems themselves are more complex than those confronted by a manager in a domestic business
An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system
International transactions involve converting money into different currencies |
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Term
| The political, economic, and legal systems of a country are |
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Definition
| _independent____________ they interact and influence each other, and in doing so they affect the level of economic well-being. |
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Term
| Political systems can be assessed according to two dimensions |
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Definition
Degree to which they emphasize collectivism as opposed to individualism
Degree to which they are democratic or totalitarian |
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Term
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Definition
Collective goals are more important than individual goals
Individual rights are sacrificed for the good of the majority
In the modern world collectivism is expressed through socialism |
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Term
| __________individualism_____ |
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Definition
Is the direct opposite of collectivism
Central tenet is that individual economic and political freedoms are the ground rules on which society is based |
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Term
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Definition
Government is by the people, exercised either directly or through elected representatives (representative democracy)
Elected representatives are held accountable through safeguards |
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Term
| __________totalitarianism______ |
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Definition
One person/party exercises absolute control over all spheres of human life (competing political parties are banned)
Communist totalitarianism
Theocratic totalitarianism
Tribal totalitarianism
Right wing totalitarianism |
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Term
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Definition
| Refer to any governmental action or politically motivated event that could adversely affect the long-run profitability or value of a firm. |
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Term
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Definition
| refers to the forced sale of an MNC’s assets to local buyers, with some compensation to the firm, perhaps leaving a minority ownership with the MNC. |
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Term
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Definition
| occurs when a local government seizes and provides inadequate compensation for the foreign owned assets of an MNC; when no compensation is provided, it is confiscation. |
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Term
| Macro-political risk event |
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Definition
| : an event that affects ____ foreign firms doing business in a country or region. |
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Term
| Micro-political risk event: |
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Definition
an event that affects ____ industry or company or _____________ companies.
Often called “creeping expropriation” – a government’s gradual and subtle action against foreign firms. |
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Term
| Political Risk Assessment |
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Definition
Use experts or consultants____________________ familiar with the country or region under consideration
Monitor important trends that may portend political change
Assess the likelihood of political change and develop several plausible scenarios to describe possible future political conditions
Develop internal staff and in house capabilities_____________________________________
Have staff assigned to foreign subsidiaries
Have affiliates monitor local political activities
Hire people with expertise in the political and economic conditions in regions critical to the firm’s operations |
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Term
| Managing Political Risk suspending |
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Definition
Avoidance of new investment
Withdrawal of current investment |
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Term
| Managing Political Risk dependency |
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Definition
Control over key inputs or technology
Control over distribution
Expatriate control in key positions |
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Term
| Managing Political Risk adaptation |
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Definition
Equity sharing
Participative management
Localization
Development assistance |
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Term
| Managing Political Risk hedging |
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Definition
Political risk insurance
Local debt financing |
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Term
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Definition
Timeless information gathering_________________________ is always the key.
International businesses can unwittingly increase their own political risk by stirring up local emotions and sentiments.
Thus international managers should have a solid grasp of local values, customs and traditions. |
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Term
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Definition
Connection between political ideology and economic systems
Countries where individual goals are given primacy Market economy: what is produced & in what quantity is determined by supply/demand and signaled to producers through a price system
Countries where collective goals are given primacy
Command economy: what is produced & in what quantity is planned by government |
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Term
| Differences in Economic Development |
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Definition
Different countries have dramatically different levels of economic development
Two common measurements of economic development
GDP (Gross Domestic Product), GNP (Gross National Product), GNI (Gross National Income)
Purchasing Power Parity (PPP) which accounts for differences in the cost of living |
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Term
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Definition
The likelihood that economic mismanagement will cause drastic changes in a country’s business environment that hurt the profit and other goals of a particular business enterprise.
The government abruptly changes is domestic monetary or fiscal policies
The government decides to modify its foreign-investment polities
Major indicators:
a country’s inflation rate
the level of business and government debt in the country |
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Term
| quantitative______________ approach |
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Definition
| Measure statistically a country’s ability to honor its debt obligation by assigning different weights to economic variables |
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Term
| _qualitative_____________ approach |
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Definition
| Assess the competence of the country’s leaders and analyze the types of policies they are likely to implement |
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Term
| __checklist____________ approach |
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Definition
| Rely on a few easily measurable and timely criteria believed to reflect or indicate changes in the creditworthiness of the country |
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Term
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Definition
Rules or laws that regulate behavior
Processes through which laws are enforced & grievances are redressed
Three main types of legal systems in use around the world:
Common law
Civil law
Islamic law |
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Term
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Definition
U.S. and 26 other countries of English origin or influence
Past court decisions act as precedents to the interpretation of the law and to common custom
Under common law:
_contract should be very detailed____________________ _____________________ |
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Term
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Definition
About 70 countries, predominantly in Europe
Based on a comprehensive set of laws organized in to a code. Interpretation of these laws is based on reference to codes and statutes.
Under civil law:
___contract can be shorter and less specific___________________ ______________________ |
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Term
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Definition
| about 27 countries primarily islamic countries. Based on religious beliefs; dominates all aspects of life. Relationship building is very important |
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Term
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Definition
Government’s protectionist policies
Tariffs and non-tariff barriers
Quotas
Other import and trade restrictions
Tax system
Foreign tax credits
Holidays
Exemptions
Depreciation allowances
Taxation of corporate profits
Government involvement |
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Term
| Appropriability of technology |
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Definition
| the ability of the innovating firm to profit from its own tech by protecting it from competitors_____________________ |
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Term
Protection of intellectual property rights differs greatly from country to country
Firms can |
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Definition
Stay away from countries where intellectual property laws are lax
File law suits
Lobby governments for intellectual property rights agreements and enforcement |
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Term
| Appropirateness of technology |
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Definition
the transfer of technology should __suit the level of development of the host country and the needs and expectations of the people who will use the tech___________________________ Necessary infrastructure
Host government’s regulations or requirements
Local people’s readiness and willingness to use new technological methods |
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Term
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Definition
Benefits
Size of economy
Potential economic growth
Costs
Corruption
Lack of infrastructure
Legal costs
Risks
Political Risks: Social unrest/Anti-business trends
Economic Risks: Economic mismanagement
Legal Risks: Failure to safeguard property rights/to enforce contracts |
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Term
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Definition
| are __accepted principles of right and wrong___________________ ________________ governing the conduct of business people. |
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Term
| International business ethics |
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Definition
| refers to the business conduct or morals of MNCs in their relationships with individuals and entities. |
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Term
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Definition
| is a strategy or course of action that does not violate the accepted principles. |
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Term
| Many of the ethical issues and dilemmas in international business are rooted in the fact that |
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Definition
| _political systems, law economic development and culture vary significantly from nation to nation__ Many practices that are considered unethical or illegal in some countries are accepted ways of doing business in others |
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Term
| Ethical issues associated with employment practices abroad include |
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Definition
Long work hours
Poor work conditions
Extremely low pay
The use of child labor |
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Term
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Definition
| Developing nations often lack environmental regulations, and according to critics, the result can be higher levels of pollution from the operations of multinationals than would be allowed at home. |
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Term
| Hazardous Wastes Disposal |
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Definition
Company often choose to dispose hazardous waste in less developed countries to take advantage of weaker regulations and lower costs.
E-waste (from electronic components, computers, cell phones, etc.), all of which are full of hazardous materials, produces sickness and death for its handlers in developing countries. |
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Term
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Definition
Exporting pesticides that are prohibited, restricted or not registered for use in the home country to developing countries.
Exporting hazardous materials that are not used domestically to developing countries (e.g., Canada’s asbestos export).
Exporting unapproved drugs (e.g., without FDA approval) to developing countries. |
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Term
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Definition
International businesses can gain economic advantages by making payments to government officials
The United States passed the Foreign Corrupt Practices Act to fight corruption
Outlawed the paying of bribes to foreign government officials to gain business opportunities |
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Term
| _straw man approaches___________________ |
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Definition
Friedman doctrine
Cultural relativist
Righteous moralist
Naïve immoralist |
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Term
| ____are favored by moral philosophers and from the basis for current models of ethical behavior_____________________ |
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Definition
Utilitarian view
Rights theories
Justice theories |
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Term
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Definition
| that the only social responsibility of business is to increase__________, as long as the company stays _within the rules of law________________ |
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Term
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Definition
| believes that ethics are culturally determined and firms should adopt the ethics f the cultures in which they operate__________________ |
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Term
| Righteous Moralist claims |
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Definition
| that a multinational’s home country standards of ethics _________ ____________________________ should be followed in all foreign countries (also called ethnocentric approach). |
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Term
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Definition
| that if a manager sees that firms from other nations are not following ethical norms in a host country then they should not either. |
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Term
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Definition
hold that the moral worth of actions or practices is determined by their consequences_______________
An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences
One problem with utilitarianism is in measuring the benefits, costs, and risks of an action
The second problem related to utilitarianism is that it does not consider justice, so the minority will always be at a disadvantage |
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Term
| Rights theories recognize |
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Definition
that human beings have fundamental rights and privileges which _transcend national boundaries and cultures_______Rights establish a minimum level of morally acceptable behavior
Moral theorists argue that fundamental human rights form the basis for the moral compass that managers should navigate by when making decisions that have an ethical component |
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Term
| United Nations Universal Declaration of Human Rights specifies |
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Definition
Nations Universal Declaration of Human Rights specifies the basic principles that should always be adhered to irrespective of the culture in which one is doing business
Everyone has the right to work, to free choice of employment, to just and favorable conditions of work, and to protection against unemployment
Everyone, without any discrimination, has the right to equal pay for equal work
Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection
Everyone has the right to form and to join trade unions for the protection of his interests |
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Term
| Justice theories focus on |
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Definition
attainment of a just distribution of economic goods and services A just distribution is one that is considered fair and equitable
John Rawls’ justice theory: all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage |
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Term
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Definition
The process to think through ethical problems
Identify which stakeholders a decision would affect and in what ways
Determine whether a proposed decision would violate the fundamental rights of any stakeholders
Establish moral intent - place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated
Engage in ethical behavior
Review the decision to make sure it was consistent with ethical principles |
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Term
| Corporate Social Responsibility Consists of three layers of activity-Strategic |
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Definition
| in which a corporation builds social responsibility into its core operations to create value and build competitive advantage. |
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Term
| Corporate Social Responsibility Consists of three layers of activity-risk management______________ |
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Definition
| whereby a corporation develops a code of conduct that it will follow in its global operations and agrees to operate with greater transparency. |
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Term
| Corporate Social Responsibility Consists of three layers of activity -traditional philanthropy_______________ |
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Definition
| whereby a corporation donates money and, perhaps, employee time toward a specific social cause. |
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Term
| Managing Subsidiary-Host Country Interdependence Trade-offs resulted from |
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Definition
| the conflicting goals and concerns between MNC companies/subsidiaries and host countries create an interdependnt_____________ relationship. |
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Term
| Basis of bargaining power of large corporations |
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Definition
Large-scale, worldwide economies
Strategic flexibility
Control over technology
Control over production location |
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Term
| Basis of bargaining power of host governments |
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Definition
Control of raw materials
Control of market access
Ability to set rules and regulations |
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Term
The effective management of subsidiary-host country interdependence must
have |
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Definition
a long term perspective__________________________________
be based on the corporations socially responsive stance________________________________ |
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Term
| Three dimensions of sustainability: |
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Definition
Economic
Social
Environmental |
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Term
| Sustainable development of business: |
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Definition
| adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today, while protecting, sustaining and enhancing the human and natural resources that will be needed in the future. |
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Term
| Managing Ecological Interdependence |
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Definition
Reduce energy use in operations
Reducing waste from operations
Add “green” components to products and operational processes
Deal with the increasing scarcity of natural resources
Look for alternative raw materials
Develop new methods of recycling or disposing of used materials
Expand the use of by-products |
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