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International Business Midterm

Terms in this set (82)

gross national income (GNI)
the yardstick for measuring economic activities of a country; measures the total annual income of a nation's residents; doesn't consider differences in the cost of living; GDP + net foreign income earned
purchasing power parity (PPP)
an adjustment in GDP or GNI per capita to reflect differences in the cost of living
Human Development Index (HDI)
an attempt by the U.N. to assess the impact of a number of factors on the quality of human life in a country; based on life expectancy at birth, educational attainment, and whether average incomes (based on PPP) are sufficient to meet the basic needs of life in a country
innovation
the development of new products, processes, organizations, management practices, and strategies
entrepreneurs
those who first commercialize innovation
1. many totalitarian regimes fail to deliver economic progress
2. new information and communications technology have reduced a state's ability to control access to uncensored information
3. economic advances have led to the emergence of increasingly prosperous middle and working classes that have pushed for democratic reforms
3 main reasons for the recent spread of democracy
deregulation
removal of government restrictions concerning the conduct of a business
political risk
the likelihood that political forces will cause drastic changes in a country's business environment that will adversely affect the profit and other goals of a particular business enterprise
economic risk
the likelihood that events, including economic mismanagement, will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a particular business enterprise
legal risk
the likelihood that a trading partner will opportunistically break a contract or expropriate intellectual property rights
cross-cultural literacy
understanding how the culture of a country affects the way business is practiced
culture
a system of values and norms that are shared among a group of people and when taken together constitute a design for living
values
abstract ideas about what a society believes to be good, right, and desireable
norms
social rules and guidelines that prescribe appropriate behavior in particular situations
society
a group of people who share a common set of values and norms
folkways
routine conventions of everyday life
mores
norms seen as central to the functioning of a society and to its social life; very serious punishment for violation; can include theft, cannibalism, incest, adultery, etc.
social structure
the basic social organization of a society
group
an association of two or more individuals who have a shared sense of identity who interact with each other on the basis of a common set of expectations about each other's behavior
social strata
hierarchical social categories often based on family background, occupation, and income
social mobility
the extent to which individuals can move out of the social strata into which they are born
caste system
a system of social stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual's lifetime
class system
a system of social stratification in which social status is determined by the family into which a person is born and by subsequent socioeconomic achievements; mobility is possible
class consciousness
a tendency for individuals to perceive themselves in terms of their class background
religion
a system of shared beliefs and rituals concerned with the realm of the sacred
ethical system
a coherent collection of beliefs about the right way to behave in a society
1. power distance
2. individualism vs. collectivism
3. uncertainty avoidance
4. masculinity vs. femininity
5. long-term vs. short-term orientation
Hofstede's 5 dimensions that summarize differences in cultures
power distance
theory of how a society deals with the fact that people are unequal in physical and intellectual capabilities
ethnocentrism
behavior that is based on the belief in the superiority of one's own ethnic group or culture; often shows disregard or contempt for the culture of other countries
ethical dilemma
a situation in which there is no ethically acceptable solution
Foreign Corrupt Practices Act
U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions
cultural relativism
the belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate; ignore home country ethics
speed money/grease payments
(facilitation payments) legal payments to speed up or ensure performance of normal government duties
righteous moralist
one who claims that a multinational's home country standard of ethics are the appropriate ones for companies to follow in foreign countries
naive immoralist
one who asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either
utilitarian approaches to ethics
these hold that the moral worth of actions or practices is determined by their consequences; actions are desirable if they lead to more good than bad consequences; fails to consider justice
Kantian ethics
the belief that people should be treated as ends and never as means to the ends of others; people have dignity and need respect; people are not machines
rights theories
a 20th-century theory that recognizes that human beings have fundamental rights and privileges that transcend national boundaries and cultures
Universal Declaration of Human Rights
a United Nations document that lays down the basic principles of human rights that should be adhered to
code of ethics
a business's formal statement of ethical priorities
corporate social responsibility (CSR)
the idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decision that have both good economic and social consequences
sustainable strategies
strategies that not only help the multinational firm make good profits, but that do so without harming the environment, while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its multiples stakeholders
ethics
the accepted principle of right and wrong that govern the conduct of a person, the members of a profession, or the action of an organization
Friedman Doctrine
approach to business ethics that says the only social responsibility of a business is to increase profits, so long as the company stays within the law; no focus on CSR; business shouldn't get involved with anything that isn't profitable; let the free market system work
noblesse oblige
the idea that with power comes social responsibility for corporations to give back to the societies that enable them to prosper and grow
whistleblowing laws
laws about how much protection people get under their government for revealing unethical practices; usually only in public sector
Confucianism
teachings and writings on morality and ethics, etiquette, honesty, trustworthiness, love, loyalty, and the proper exercise of political power
polycentrism
the belief that local customs and values should prevail over that of one's home country
geocentrism
the belief that the best practices and ideas can be found in and adopted from any part of the world
political economy
refers to the interdependence of the political, economic, and legal systems of a country; the systems interact and influence each other
totalitarianism
one person/party exercises control over all spheres of human life; opposing parties are prohibited; communist, theocratic, tribal, military regimes (right wing)
collectivism
a political system that emphasizes collective goals as opposed to individual goals; society > individual; restrict individual rights for the common good
socialist
someone who believes in public ownership of the means of production for the common good of society
communists
those who believe that socialism can only be achieved through revolution and totalitarian dictatorship
social democrats
those committed to achieving socialism by democratic means
theocratic totalitarianism
a political system in which political power is monopolized by a party, group, or individual that governs according to religious principles; Iran, Saudi Arabia
tribal totalitarianism
a political system in which a party, group, or individual that represents he interests of a particular tribe (ethic group) monopolizes political power
right-wing totalitarianism
a political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom on the grounds that it would lead to communism; military dictatorships
market economy
an economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced; government's role is to prevent monopolies and encourage free and fair competition
comand economy
an economic system where the allocation of resources, including determination of what goods and services should be produced, and in what quantity, is planned by the government
legal system
system of rules that regulate behavior and the processes by which the laws of a country are enforced and through which a redress of grievances is obtained
common law
a system of law based on tradition, precedent, and custom; flexible; judges have the power to interpret the law
civil law
a system of law based on a very detailed set of written laws and codes; judges have the power to apply the law, but not interpret it; not much flexibiltiy
theocratic law
a system of law based on religious teachings
Convention on Contracts for the International Sale of Goods (CIGS)
a set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of business in different nations
private action
first way of violating property rights; theft, piracy, blackmail, and the like by private individuals/groups
public action
second way of violating property rights; the extortion of income or resources of property holders by public officials, such as politicians and government bueraucrats
privatization
To change from government or public ownership or control to private ownership or control
first-mover advantages
advantages accruing to the first to enter a market
late-mover disadvantages
handicaps experienced by being a late entrant to a market
gross national product (GNP)
the market value of final goods and services produced by domestically owned factors of production
gross domestic product (GDP)
the value of production that occurs within a country's borders whether done by domestic or foreign factors of production
GINI index
A statistical formula that measures the amount of inequality in a society; its scale ranges from 0 to 100, where 0 corresponds to perfect equality and 100 to perfect inequality
globalization of markets
moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market
globalization of production
trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of diferences in cost and quality in factors of production
General Agreement of Tariffs and Trade (GATT)
international treaty that committed signatories to lowering barriers to the free flow of goods across national borders; led to the WTO
World Trade Organization (WTO)
the organization that succeeded the GATT; primarily responsible for policing the world trading system; promotes the lowering of barriers to cross-border trade and investment
International Monetary Fund (IMF)
international insitution set up to maintain order in the international monetary system
World Bank
int'l institution set up to promote general economic development in the world's poorer nations
United Nations
an international org made up of 193 countries headquartered in NYC, formed in 1945 to promote peace, security, and cooperation
Group of Twenty
a forum for international economic development that promotes discussion between industrial and emerging-market countries on key issues related to global economic stability
FDI
direct investment in business operations in a foreign country
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