International Business - Exam 1 PDF

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International Business, Dr. Lopez, INB 3300, Lecture Notes...

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International Business Lopez INB 3300 Exam 1 globalization the trend towards a more integrated and interdependent world economy globalization of markets selling products in more than one country; creating one huge global marketplace with common tastes and preferences among consumers ex: Coke, Apple, Starbucks, McDonald's globalization of production having different parts of a product manufactured in other countries to take advantage of national differences in cost and quality of factors of production ex: Boeing plane parts produced in different countries General Agreement on Tariffs and Trade (GATT) international treaty that committed signatories to lowering barriers to the free flow of goods across national borders and led to the World Trade Organization World Trade Organization (WTO) created after the Uruguay Round of GATT negotiations; primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states International Monetary Fund (IMF) created by 44 nations at a meeting set up to maintain order in the international monetary system offer loans as a last resort to nation-states whose economies are struggling. In return, the IMF requires the country to adopt specific economic policies to help get the economy back up and growing World Bank set up to promote general economic development in the world's poorer nations less controversial than IMF United Nations (UN) made up of 93 countries to promote peace, security, and cooperation four purposes include:

- to maintain international peace and security - to develop friendly relations among nations - to cooperate in solving international problems and in promoting respect for human rights - to be a center for harmonizing the actions of nations Group of Twenty (G20) comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and European Central Bank international trade when a firm exports goods/services to consumers in another country foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country name 2 regional trade agreements - North American Free Trade Association (NAFTA) - European Union (EU) microprocessors enabled the explosive growth of high-power, low-cost computing; increased the amount of info that could be processed by people and firms Moore's Law predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months containerization simplifies transshipment from one mode of transport to another; lowered the cost of shipping goods over long distances list the world's 6 most important national sources - US - UK - Germany - the Netherlands - France - Japan stock of foreign direct investment the total cumulative value of foreign investments multinational enterprise (MNE) any business that has productive activities in 2 or more countries

international business any firm that engages in international trade or investment; doesn't have to be a multinational enterprise-just have to export/import products from other countries political economy the political, economic, and legal systems of a country political system the system of government in a nation collectivism a political system that stresses the primacy of collective goals over individual goals; was advocated by Greek philosopher Plato communists believed that socialism could only be achieved through violent revolution and totalitarian dictatorship ex: North Korea social democrats those committed to achieving socialism by democratic means individualism believe that a person should have freedom in their economic pursuits; advocated by ancient Greek philosopher Aristotle, and British philosopher Adam Smith define the two tenets of individualism - place emphasis on the importance of guaranteeing individual freedom and self-expression - the welfare of society is best served by letting people pursue their own economic self-interest democracy a political system in which government is by the people, exercised either directly or through elected representatives representative democracy a political system in which citizens elect individuals to represent them in government totalitarianism a political system in which one person or political party exercises absolute power over all spheres of human life and prohibits opposing political parties communist totalitarianism

a version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship ex: Russia, China, Vietnam, Cuba theocratic totalitarianism political power is monopolized by a party, group, or person that governs according to religious principles ex: Islamic influence in Iran and Saudi Arabia tribal totalitarianism a party, group, or person that represents the interests of a particular tribe (ethnic group) monopolizes political power ex: Zimbabwe, Tanzania, Uganda, Kenya right-wing totalitarianism political power is monopolized by a party, group, or person that generally permits individual economic freedom, but restricts individual political freedom (including free speech) on the grounds that it would lead to the rise of communism market economy an economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced all businesses are privately owned command economy an economic system in which the government plans the goods and services that a country produces, the quantities produced, and the prices they are sold at all businesses are state owned mixed economy a mix between market and command economies; certain sectors are privately owned and others are regulated by state ownership and government planning legal system the rules or laws that regulate behavior along with the processes by which the laws are enforced and through which redress for grievances is obtained common law based on tradition, precedent, and custom; allows judges more flexibility to interpret laws so it applies to each case's circumstances civil law based on detailed set of laws organized into codes; allows judges less flexibility because there's no room for interpretation

theocratic law based on religious teachings contract law the body of law that governs contract enforcement; contracts are very detailed with all contingencies spelled out United Nations Convention on Contracts for the International Sales of Goods establishes a uniform set of rules governing certain aspects of the making and performances of everyday commercial contracts between sellers and buyers who have their businesses in different nations property rights the legal rights over the use of which a resource is put and over the use made of any income that may be derived from that resource; property rights can be violated through public and private action private action theft, piracy, blackmail, and the like by pirate individuals or groups public action public officials extort income or resources from property holders ex: excessive taxation, requiring expensive licenses from property owners, or taking assets into state ownership without compensating owners Foreign Corrupt Practices Act (FCPA) - a law that makes it illegal to bribe a foreign government official to obtain or maintain business over which that person has authority - requires all publicly traded companies to keep detailed records that would reveal whether a violation of the act has occurred grease payments/speed money facilitating or expediting payments for the purpose of securing the performance of a routine governmental action (issuing permits/licenses, processing paperwork, etc) intellectual property a product of intellectual activity protected by copyrights, trademarks, and patents ex: computer software, screenplay, musical composition, chemical formula patent grants the inventor of a new product/process exclusive rights for a defined period to the manufacture, use, or sale of that invention

copyright the exclusive legal rights of authors, composers, artist, and publishers to publish and disperse their work trademarks designs and names, officially registered, by which merchants or manufacturers designate and differentiate their products World Intellectual Property Organization (WIPO) an international organization whose members sign treaties to agree to protect intellectual property Paris Convention for the Protection of Industrial Property created in 1883; an international agreement between 170 nations to protect intellectual property product safety laws set certain standards to which a product must adhere product liability involves holding a firm and its officers responsible when a product causes injury, death or damage gross national income measures the total annual income received by residents of a nation; a yardstick for the economic activity of a country purchasing power parity (PPP) provides more direct comparison of living standards in different countries using the cost of living in US as a base; an adjustment in GDP per capita to reflect differences in the cost of living human development index created by the UN; an attempt to assess the impact of a number of factors on the quality of life in a country based on life expectancy, education, and whether average incomes are sufficient to meet basic needs of life in a country what will high economic freedom cause? high economic growth and richer citizens and more innovation what kind of economic growth do strong property rights render? HIGH

list the 3 reasons for the spread of democracy - many totalitarian regimes failed to deliver economic progress to their people - new info and communication technology has reduced a state's ability to control access to uncensored info - the rise of prosperous middle and working classes have pushed for democratic reforms Amartya Sen believed that development should focus on expanding the capabilities of the opportunities available to people Francis Fukuyama argued that liberal democracy has triumphed and will become the final form of human government Samuel Huntington argued that future wars will be fought between cultures, not countries; that global terrorism is a conflict that results from the strong ideological boundaries separating civilizations from one another Hernando de Soto argued for the importance of business and property rights list some of the freest market-based economies today Hong Kong, Singapore, New Zealand, Switzerland, Australia, Canada, Chile, Ireland, Estonia, UK, and US deregulation removal of government restrictions to the free play of markets, establishment of private enterprises, and the way in which businesses operate ex: removing price controls, abolishing laws regulating establishment and operation of private businesses, and removing foreign direct investment restrictions privatization the selling of state-owned businesses to private investors, usually through an auction legal systems laws protecting private property rights and providing mechanisms for contract enforcement first-mover advantage accrue to early entrants into a market can establish brand loyalty and gain experience in that country's business practices before others enter

late-mover disadvantage handicaps that late entrants might suffer from political risk of doing international business the likelihood that political forces will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a business enterprise greater in countries with political unrest and disorder economic risk of doing international business 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 legal risk of doing international business the likelihood that a trading partner will opportunistically break a contract or expropriate property rights cross-cultural literacy an understanding of how cultural differences across and within nations can affect the way in which business is practiced culture a system of values and norms that are shared among a group of people and that when taken together constitute a design for living values provide the context within which a society's norms are established and justified; abstract ideas about what a group believes to be good, right, and desirable norms the social rules that govern the actions of people toward one another folkways the routine conventions of everyday life that hold little moral significance; rituals and symbolic behavior ex: dress codes, good social manners, neighborly behavior, which utensils to use mores norms that are seen as central to the functioning of a society as a whole; hold more moral significance; address the customs and conventions that embody the fundamental values of a group or society ex: indictments against theft, adultery, incest, and cannibalism

list the determinants of culture - prevailing political and economic philosophies - social structure - religion, language, and education society a group of people sharing a common set of values and norms nation-states political creations that can contain a single culture or several cultures social structure the basic social organization of a culture group social structure an association of two or more people who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior can result in a lack of dynamism and entrepreneurship individual social structure "independent contractors" who build their personal brand by the knowledge, skills, and experience they have can result in constant innovation social strata hierarchical social categories based on family background, occupation, and income; people are born into certain stratum that determine their level of health, income, and education social mobility the extent to which people can move out of the strata they are born into caste system a closed stratification system in which social position is determined by the family a person is born into, and change in that position is usually not possible during a person's life class systems a less rigid stratification system in which social mobility is possible class consciousness

a condition where people tend to perceive themselves in terms of their class background; shapes their relationships with members of other classes ethical system a set of moral principles, or values, that are used to guide and shape behavior; usually surrounded by religions religion a system of beliefs and rituals that are concerned with the realm of the sacred what is the most widely practiced religion in the world? Christianity what is the second largest world religion? Islam Islam - based on the teachings of prophet Muhammad - worshippers referred to as Muslims - read the Koran - worship Allah - believe worldly gain and temporal power are an illusion - followers are "God's surrogate" circumscribed by a code of conduct for interpersonal relations - only do business with others who behave with consistent Islamic ethics, customs and business practices Hinduism - the world's oldest major religion - embodied by leader Gandhi - believe in dharma and reincarnation, and karma - judge people by their spiritual achievements- not material - support the caste system and only way to move out of your caste is during reincarnation Buddhism - worship Buddha who achieved nirvana in 6th century - do not support caste system - stress the afterlife and spiritual achievement rather than worldly activities Confucianism - NOT a religion- no supernatural leader or supreme being - founded in 5th century by Confucius - stresses attaining personal salvation through right action - three main values: loyalty, reciprocal obligations, and honesty in dealing with others

Which language is the language of international business? English Name top 4 most widely spoken languages in the world English, French, Spanish, and Mandarin Dimensions of Geert Hofstede's study of how culture relates to workplace values - power distance - individualism vs. collectivism - uncertainty avoidance - masculinity vs. femininity - long-term vs. short-term orientation power distance a theory of how a society deals with the fact that people are unequal in physical and intellectual capabilities uncertainty avoidance the extent to which cultures socialize members to accept ambiguous situations and to tolerate uncertainty Global Leadership and Organizational Behavior Effectiveness (GLOBE) an instrument designed to address the notion that a leader's effectiveness is contextual World Values Survey (WVS) a research project that explores people's values and norms, how they change over time, and what impact they have on society and business...