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45 Cards in this Set
- Front
- Back
Which of the following is not a major type of international business activity for typical manufacturers?
a. Portfolio investments (capital) b. Export c. Import d. Foreign Direct Investment (FDI) e. All of the above are not major international business activities |
Portfolio investments (Capital)
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5. All of the following are COSTS of global business EXCEPT:
a. Lowered price of goods for consumers b. Exporting jobs to emerging countries c. Technology leaking d. Loss of power and sovereignty for hosting countries |
Lowered price of goods for consumers.
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12. Which of the following statements is NOT true according to a video clip on Nike shown or
discussions we had in class? a. Nike seems to have paid wages above local minimum/running wages. b. Nike had legally acceptable but ethically questionable business practices in other countries such as using child labors. c. Nike’s issues can be easily taken care of as long as their business practices overseas are legally sound and acceptable. d. The issues Nike faced can be resolved by long-term plans that recognize their responsibilities as a corporate citizen in the international markets. e. All of the above are true. |
c. Nike’s issues can be easily taken care of as long as their business practices overseas are
legally sound and acceptable |
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Global Business
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Performance of trade and investment activities by firms across national borders.
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Globalization
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ongoing economic integration and growing interdependency of countries worldwide
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FDI (Foreign Direct Investment)
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An internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant, and equipment
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Multinational Enterprise
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A large company with substantial resources that performs various business activities through a network of subsidaries and affiliates located in multiple countries.
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Portfolio Investment
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Passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns.
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Reasons for doing international business
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Larger Market, Gain knowledge of technology, exposure, spread risk by diversifying market presence, if one country economy goes down then can depend on other market presence.
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Major international business activities for a typical firm
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Exporting, importing, and Direct Investment (the ownership or control of a company in another country)
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U.S. trade relationships with major trade partners
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Trade with the Pacific Rim, Japan and China
• Trade with Canada and Mexico • The continuous, long-term U.S. trade deficit |
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Benefits of (need for ) international business at the economy level
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Good for job creation, bring in wide range of products and services to a country, expand consumer choices, exert pressure on domestic products to improve standard of living, allows for economies of scale, allows firms to hone their competitive skills abroad
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Current U.S. trade position
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Increasing deficit. Imports increasing more rapidly than imports
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What is “business ethics”?
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Business ethics include practices and
behaviors that are good or bad |
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Costs of international business
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Critics say it increases the wealth of
corporations and investors at the expense of the poor, and does other damage to society in general • Exporting Jobs • Wage rates of unskilled workers in advanced countries • Countries – MNE dependent • Loss of control and sovereignty |
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Ethics and its relationship with economics and laws
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Workplace practices
– Child labor – Wages – Work schedule • Human rights – Treating employees • Environmental policy – Somebody has to pay for it • Corruption – Bribing is not illegal in every country • Exercising power of MNCs – Negotiating with local gov’t and employees |
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Common ethical issues in international business
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Challenges as MNCs make their decisions
in and for different business environments – Cultural systems (Values, virtues, etc…) – Political systems (Corruption and bribing) – Legal systems (Minimum wages) – Economic development • Something that is ethical and totally accepted in one country may not be necessary the case in other countries. |
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US Foreign Corrupt Practices Act
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US Foreign Corrupt Practices Act (FCPA)
Bribery Provisions The 5 basic elements of the FCPA are that . . . 1. Anyone subject to U.S. jurisdiction 2. who, with corrupt ___________, 3. makes a payment (or does some act in furtherance of an offer, promise, gift or authorization of the giving of anything of value) 4. to a foreign “official” |
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Definition of culture
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The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.
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Acculturation
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Acculturation is the
process of adjusting and adapting to a specific culture other than one’s own. It is one of the keys to success in international operations. |
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Elements of culture
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Language (verbal and nonverbal), religion, values and attitudes, manners and customs, material elements, aesthetics, education, social institutions, time orientation
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Language
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Verbal
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Religions including world major religions and their impact on the followers’ life
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Religion impacts international business in
shaping the attitudes, values, and beliefs of a culture • The Major World Religions |
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Values & attitudes
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____Values__
are shared beliefs norms that have internalized by _Attitudes__ are evaluations of alternatives based on these values. Bureaucratic Japanese would think buying foreign products is |
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Manners & Customs
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Using left-hand to eat in some
culture where it is the “toilet hand” • General Mills’ Betty Crocker cake mix in Japan • Campbell’s soup packaged in Mexico for large families • Johnson & Johnson Potential problem areas for global firms arise from an insufficient understanding of: |
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Material culture
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Material culture is manifested in
• Economic infrastructure • Social infrastructure • Financial infrastructure • Marketing infrastructure • Cultural convergence |
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Aesthetics
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Good taste is expressed
through colors, form, and music. • The meanings of colors and symbols vary from country to country. • Example: the color of mourning in the US and Europe vs. that of Asia Time dictates expectations about planning, scheduling, profit streams, and what constitutes tardiness in arriving for work and meetings. |
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Education
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• Assessing the educational level of
a culture |
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Social institutions (stratification, reference groups, etc)
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Kinship relationships
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High vs. low context cultures
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____High Context___ Culture
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Hofstede’s five dimensions of culture (definitions, how they could affect IB activities, etc)
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1. Individualism versus collectivism refers to
whether a person primarily functions as an individual or within a group. 2. Power distance describes how a society deals with inequalities in power that exist among people. 3. Uncertainty avoidance refers to the extent to which people can tolerate risk and uncertainty in their lives. 4. Masculinity versus femininity refers to a society’s orientation based on traditional male and female values. |
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Power Distance
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Power distance describes how a society
deals with inequalities in power that exist among people. |
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Individualism vs. Collectivism
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• ___Individualist__ societies: ties among people are relatively loose;
each person tends to focus on his or her own self-interest; competition for resources is the norm; those who compete best are rewarded financially. |
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Uncertainty Avoidance
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refers to the extent to
which people can tolerate risk and uncertainty in their lives. High uncertainty avoidance societies create institutions that minimize risk and ensure financial security; companies emphasize stable careers and produce many rules to regulate worker actions and minimize ambiguity; decisions are made slowly because alternatives are examined for potential outcomes. |
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Masculinity vs. Femininity
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refers to a
society’s orientation based on traditional male and female values. Masculine cultures value competitiveness, assertiveness, ambition, and the accumulation of wealth; both men and women are assertive, focused on career and earning money, and may care little for others. • Examples- Australia, Japan. The U.S. is a moderately masculine society; as are Hispanic cultures that display a zest for action, daring, and competitiveness. • In business, the masculinity dimension manifests as self-confidence, proactiveness and leadership. • Feminine cultures emphasize nurturing roles, interdependence among people, and caring for less fortunate people- for both men and women. • Examples-Scandinavian countries- welfare systems are highly developed, and education is subsidized. |
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Long-term Orientation
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Hofstede added a fifth dimension -- long-term vs. short-term
orientation -- which was not identified in his earlier study. This dimension describes the degree to which people and organizations defer gratification to achieve long-term success. • Long-term orientation tends to take the long view to planning and living, focusing on years and decades. • Examples- traditional Asian cultures-China, Japan, and Singapore, which partly base these values on the teachings of the Chinese philosopher Confucius (K’ung-fu-tzu) (500 B.C.), who espoused: long-term orientation, discipline, loyalty, hard work, regard for education, esteem for the family, focus on group harmony, and control over one’s desires. • Short-term orientation - the U.S. and most other Western countries. |
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Types of cultural knowledge
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• Cultural knowledge can be defined by
the way it is acquired: |
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Cultural training methods
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Internal education programs that increase
cultural sensitivity |
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Culture shock and its stages
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A condition of confusion and anxiety that results from
living in an alien culture for an extended period. • Often akin to mental depression that appears one day for reasons not understood by the sufferer. • Usually occurs only after the person has been in the foreign country for a few months and the “excitement” of living abroad has worn off. • Experienced by most people who live abroad for extended periods. • Results from the stress overload caused by the barrage of jarring and dis-orienting incidents. “Like being Especially difficult in high stress settings like big cities or very foreign cultures. • Can be minimized if the person knows the local language and culture well. • Tourists don’t get it; Expatriates may avoid it if their lives are very structured and protected. • People almost always get over it; But many give up and go home early. • May be the single greatest cause of failed overseas assignments. Initial euphoria |
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Self Reference Criterion
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Recognition of differences
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Characteristics of culture
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Cultures are never right or wrong, better or worse, just
different • Culture changes at a glacial pace • Culture is very complicated • Culture and language are perfectly intertwined • There is such variety in culture that, given the same problem to solve, ten different nationalities are capable of producing ten very different solutions • When in doubt, just imitate the locals. |
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Ethnocentrism
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• “…regarding one’s culture
as superior to others” |
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Characteristics of culturally matured person
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• Objective
• Tolerant of cultural differences • Flexible in your dealings / Able to “do as the Romans do” • Knowledgeable of cultures, history, global economic and social trends • Humble about your own culture |
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Reverse Culture Shock
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Readjustment to home country culture
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Ethics and Corporate Social Responsibility in International Business
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Operating a business in a manner that meets or exceeds the ethical, legal, commercial, and public expectations of stakeholders (customers, shareholders, employees, and communities)
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