Cross Cultural Mgmt #1

Chaebols

Very large, family-owned Korean companies with major economic and political power

European Union

A political and economic community of European member countries

Foreign Direct Investment (FDI)

Investment in property, plants, or equipment in another country

Globalization

The growing social, political, economic, cultural, and technological connection between countries

International Management

Applying management practices across different countries and adapting to different environments

Keiretsu

a Japanese network of independent yet closely connected companies that often hold small equity stakes in one another.

Management

Completing activities efficiently and effectively through other people

Maquiladora

A factory, mainly in Mexico, that imports materials duty-free, assembles them, and exports the finished goods

Ministry of International Trade and Industry (MITI)

was a powerful government agency in Japan that drove the country's rapid post-World War II economic growth

MNC (multinational companies)

A company that operates, sells, or has management and ownership in more than one country

North American Free Trade Agreement (NAFTA)

Free-trade agreement between the United States, Canada, and Mexico

Offshoring

Moving some company activities to another country

Outsourcing

Hiring an outside organization to perform activities previously done by the company

United States-Mexico-Canada Agreement (USMCA)

Trade agreement between the United States, Canada, and Mexico that replaced NAFTA

World Trade Organization (WTO)

Global organization that oversees rules for international trade and investment

What are some pros of globalization and free trade?

More trade, lower prices, more jobs and investment, and access to new markets and products

What are some cons of globalization and free trade?

Job losses in some industries, increased competition, inequality, and dependence on other countries

How might social media create closer connections among nations?

It allows people to communicate, share cultures, and understand people from other countries more easily

Which regions may benefit from globalization in the future?

Developing regions with growing economies, markets, and investment opportunities may benefit

Which regions may experience setbacks from globalization?

Regions or industries that cannot compete internationally may experience job losses or economic disruption

Act of State Doctrine

U.S. courts generally recognize the acts of foreign governments within their own countries

Civil or Code Law

Law based on Roman law and written legal codes

Collectivism

The belief that society's needs are more important than individual desires

Common Law

Law based on English law that relies heavily on previous court decisions

Democracy

A political system where citizens control the government directly or through elected representatives

Doctrine of Comity

Countries should respect the laws and legal authority of other countries

Foreign Corrupt Practices Act (FCPA)

US law that prohibits bribing foreign govt officials

Individualism

The belief that people should be free to pursue their own economic and political goals

Islamic Law

Law based on the Qur'an and teachings of the Prophet Muhammad

Nationality Principle

A country has jurisdiction over its citizens even when they are outside the country

Principle of Sovereignty

Governments have the right to govern themselves

Protective Principle

A country can regulate actions outside its borders that threaten its national security

Socialism

A system where the government owns some institutions and social goals are emphasized over profit

Socialist Law

Law based on Marxist socialist principles, used in countries such as China and former Soviet states

Territoriality Principle

A country has jurisdiction over activities occurring within its borders

Totalitarianism

A political system where one party controls government and most areas of political and social life

How can political changes affect U.S. MNCs?

Changes can create new opportunities but may also increase political risk, regulations, or uncertainty

How can legal changes affect U.S. MNCs?

Companies may need to change how they operate to follow new laws and regulations

How might political and legal systems affect investment?

Stable and predictable systems can encourage investment, while uncertainty can discourage it

How does technology increase global integration?

Technology makes communication, trade, financial transactions, and information sharing faster and easier

How can technology create greater fragility?

Countries and companies become more dependent on connected systems, so disruptions can spread quickly

Corporate Governance

The system used to direct and control a corporation

Corporate Social Responsibility (CSR)

A company's actions to benefit society beyond what the law requires

Ethics

The study of morality and standards of right and wrong behavior

Fair Trade

A movement that promotes better trading conditions and sustainability for producers in developing countries

Nongovernmental Organizations (NGOs)

Private, nonprofit organizations that address social, political, economic, or environmental issues

Sustainability

Meeting current needs without harming the ability of future generations to meet their needs

Do governments and companies have an ethical responsibility to help developing countries?

They may have a responsibility to support economic and social development, especially when they have the resources to help

Who is best equipped to provide assistance: governments, companies, or NGOs?

Each has different strengths, so working together can provide broader support

Should companies use their best ethical practices in other countries?

Companies should try to maintain strong ethical standards even when local practices differ

How can ethical reputation and CSR improve business performance?

They can build trust, strengthen the brand, attract customers and employees, and reduce risks