IBT Reviewer

International

- Global, nationwide, cross-countries, foreign, worldwide, etc

Business

Work, dealings, commerce, transactions, source of income, profits, etc

Trade

Exchange, barter system, swap, conversion, etc.

Globalization

refers to the shift toward a more integrated and interdependent world economy.

Facets of Globalization

1. Globalization of Business
2. Globalization of Health Care
3. Globalization of Education& Research
4. Globalization of Technology
5. Globalization of Religion
6. Globalization of Poverty
7. Globalization of Law
8. Globalization of Culture & Tradition
9. Globalization of Politics
10. Globalization of Economy
11. Globalization of Currency
12. Globalization of Organizations1

Globalization of Business

Globalization of Markets
Globalization of Production

Globalization of Markets

refers to the merging of historically distinct and separate national markets into one huge global marketplace.

Globalization of Production

refers to the sourcing of goods and services from locations around the globe

Global Institutions:

1. GATT / WTO - General Agreement on Tariffs and Trade / World Trade Organization
2. IMF - International Monetary Fund
3. WB - World Bank
4. UN - United Nations

World Trade Organization (WTO)

is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties

International Monetary Fund (IMF)

was established to maintain order in the international monetary system

World Bank (WB)

was set up to promote economic development

World Bank (WB)

an international organization dedicated to providing financing, advice, and research to developing nations

United Nations (UN)

was established October 24, 1945, by 51 countries committed to preserving peace through international cooperation and collective security

United Nations has the important goal

of improving the well-being of people around the world.

Divers of Globalization

1. Declining trade and investment barriers.
2. Technological Advancement

International Business

is any firm that engages in international trade or investment

Political System

the system of government in a nation

Political systems can be assessed according to two dimensions.

- The first is the degree to which they emphasize collectivism as opposed to individualism.
- The second is the degree to which they are democratic or totalitarian.

Collectivism

refers to a political system that stresses the primacy of collective goals over individual goals

Individualism

refers to a philosophy that an individual should have freedom in his or her economic and political pursuits.

Democracy

refers to a political system in which government is by the people, exercised either directly or through elected representatives.

Representative Democracy

Citizens periodically elect individuals to represent them.

Totalitarianism

is a form of government in which one person or political party exercises absolute control over all spheres of human life

Types of Totalitarianism

Theocratic totalitarianism
Tribal totalitarianism
Right-wing totalitarianism
Communist totalitarianism

Theocratic totalitarianism

is found in states where political power is monopolized by a party, group, or individual that governs according to religious principles.

Tribal totalitarianism

occurs when a political party that represents the interests of a particular tribe (and not always the majority tribe) monopolizes power.

Right-wing totalitarianism

generally permits some individual economic freedom but restricts individual political freedom

Communist totalitarianism

advocates achieving socialism through totalitarian dictatorship. The most famous among the four.

Economic System

A means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country

Public Action

Means disciplinary actions, disciplinary fines, reprimands, probation, conditions or restrictions on a licensee, suspensions, summary suspensions, cease and desist orders, revocations, denials of license, or any other type of action taken by a member Board that is public.

Economic systems regulate the factors of

production, including land, capital, labor, and physical resources

Types of Economic System

market economy, command economy, mixed economy

Market Economy

all productive activities are privately owned, as opposed to being owned by the state.

Command Economy

the government plans the goods and services that a country produces

Mixed Economy

certain sectors of the economy are left to private ownership and free market mechanisms

Legal Systems

Common Law System
Civil law system
Theocratic law system

Common Law System

is based on tradition, precedent, and custom.

Civil Law System

is based on a detailed set of laws organized into codes.

Theocratic Law System

is one in which the law is based on religious teachings.

Contract

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved.

Contract Law

The body of law that governs contract enforcement.

Property Rights

Refers to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.

Private Action

Refers to theft, piracy, blackmail, and the like by private individuals or groups.

Intellectual property

refers to property that is the product of intellectual activity, such as computer software, a screenplay, a music score, or the chemical formula for a new drug.

Patent

grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention.

Copyrights

are the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.

Trademarks

are designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products (e.g., Christian Dior clothes)

Product safety laws

set certain safety 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 (GNI)

is the total amount of money earned by a nation's people and businesses.

Gross Domestic Product (GDP)

is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

Purchasing Power Parity (PPP)

the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currencies, and, to some extent, their people's living standards.

HDI

Used to measure the quality of human life in different nations.

3 measures of HDI:

Life expectancy at birth, educational attainment & Income sufficiency

Deregulation

involves removing legal restrictions to the free play of the markets, the establishment of private enterprises, and the manner in which private enterprises operate.

Privatization

transfer of ownership from state property to private individuals.

Political Risk

the likelihood that political forces will cause drastic changes in a country's business environment.

Economic Risk

the likelihood that economic mismanagement will cause drastic changes in a country's business environment.

Legal Risk

the likelihood that a trading partner will break a contract or expropriate property rights.

Cross-cultural Literacy

an understanding how cultural differences across and within nations can affect the way business is practiced.

Culture

a system of value and norms that are shared among people & that when taken together constitute a design for living.

Culture

a system of value and norms that are shared among people & that when taken together constitute a design for living.

Values

abstract ideas about what a group believes to be good, right, and desirable.

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 daily life.

Mores

norms that are seen as central to the functioning of a society to its social life.

Social Structure

a basic social organization.

Group

an association of 2 or more individuals w/ shared sense of identity or goals.

Social Strata

society's categorization of its people.

Social Mobility

the extent to w/c individuals can move out of the strata into which they are born.

Caste System

closed system of stratification in w/c social position is determined by the family into which a person is born and change in that position is not possible.

Class System

an open stratification in w/c the position a person has by birth can be changed through his or her achievements or luck

Class Consciousness

a condition where people tend to perceive themselves in terms of their class background

Religion

a system of shared beliefs and rituals that are concerned with the realm of the sacred.

Language

spoken and unspoken means of communication

Spoken language

defines the characteristics of a culture.

Unspoken language

nonverbal communication.

Formal education

the medium thru w/c individuals learn.

ethics

refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization.

Business ethics

are the accepted principles of right or wrong governing the conduct of businesspeople, and an ethical strategy is one that does not violate these accepted principles.

Ethical dilemmas

are situations in which none of the available alternatives seems ethically acceptable.

Unethical behavior

is rooted in poor personal ethics, societal culture, the psychological and geographical distances of a foreign subsidiary from the home office

approaches to business ethics

the Friedman doctrine, cultural relativism, the righteous moralist, and the naive immoralist are unsatisfactory in important ways.

Friedman doctrine

states that the only social responsibility of business is to increase profits, as long as the company stays within the rules of law

Cultural relativism

contends that one should adopt the ethics of the culture in which one is doing business.

righteous moralist

monolithically applies home-country ethics to a foreign situation

naive immoralist

believes 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

hold that the moral worth of actions or practices is determined by their consequences

Kantian ethics

state that people should be treated as ends and never purely as means to the ends of others

John Rawls

developed concept of justice

concept of justice

suggests that a decision is just and ethical if people would allow for it when designing a social system under a veil of ignorance.

To make sure that ethical issues are considered in international business decisions, managers should

(a) favor hiring and promoting people with a well-grounded sense of personal ethics;
(b) build an organization culture that places a high value on ethical behavior;
( c ) make sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in a manner that is consistent with that rhetoric;
(d) put decision-making processes in place that require people to consider the ethical dimension of business decisions;
(e) be morally courageous and encourage others to do the same.

Ethical strategy

is a strategy, or course of action, that does not violate these accepted principles

Garrett Hardin

Tragedy of the common

tragedy of the common

occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.

Foreign Corrupt Practices Act

in the United States. The act outlawed the paying of bribes to foreign government officials to gain business.

social responsibility

refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions

Noblesse oblige

is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.