International Business - Chapters 5 and 6

Cultural Understanding

Plays a major role in global business success. Includes the business market, competition, technology, economy, and the legal and political climate.

Culture

Learned behavior; a way of life for one group of people living in a single, related, and independent community. Relatively static.

Acculturation

The ability of a firm to adjust to a culture different from its own.

Global Firm

Has the responsibility to ascertain the level of importance of various aspects of culture in the foreign markets it serves and recognize these aspects when doing business overseas.

Verbal Communication

Refer to the message's actual content.

Nonverbal Communication

Tone of voice as well as gestures, body position, facial expressions, eye contact, and any other body language that accompanies verbal communication.

Backward Translation

Translating a message from English into a foreign language, then translating it back into English to check for accuracy.

Religion

the belief in and worship of a superhuman controlling power; a powerful cultural aspect that must be recognized as companies manage their operations overseas.

Values

Basic beliefs or philosophies that are pervasive in a society.

Attitudes

Feelings or opinions.

Manners and Customs

The way a society does things that prevail in foreign countries; an aspect that describes this best is gift-giving.

Material Culture

A direct result of technology, best demonstrated by the economic, social, financial, and marketing infrastructure. The availability of these segments allows international businesses to conduct business in their country of choice.

Economic Infrastructure

Transportation, energy, and communication systems.

Social Infrastructure

Housing, medical services and educational institutions.

Financial Infrastructure

Consists primarily of banks.

Marketing Infrastructure

Refers to marketing research and advertising firms.

Leapfrog

A growing movement wherein technological advances bypass intermediate stages industrialized nations experience.

Aesthetics

What is perceived as taste and beauty in a society.

Education

Must be analyzed in order to understand if the people of a particular country would be able to operate the machineries required by the company or if they'd be able to understand the advertisements.

Social Institutions

The way people in a society relate to one another within group settings.

Reference Groups

Groups that are important to an individual.

Social Stratification

Groups at the top of the social pyramid exert a great degree of control over others at the lower level of the pyramid.

Geert Hofstede

Dutch researcher pioneering research into cultures with different IBM employees located in 64 countries.

Individualism V. Collectivism

The worth of an individual versus the worth of a group.

Power Distance

Level of egalitarianism in a society.

Masculine V. Feminine

Extent to which a society minimizes gender inequality, extent to which ones' culture is attributed to a masculine or feminine attribute.

Uncertainty Avoidance

Extent to which societies tolerate risk or are risk averse.

Time Orientation

The extent to which a society emphasizes short-run or long-run time horizons.

Fons Trompenaars

Developed Hofstede's study and added a number of cultural variables to the theory.

Universalism V. Particularism

The importance of rules versus relationships.

Neutral V. Emotional

Extent to which a society expresses itself emotionally.

Specific V. Diffuse

The degree to which a society compartmentalizes roles.

Achievement V. Ascription

How rewards in a society are handed out; performance v. place in society.

Global Leadership and Organization Behavior Effectiveness

Meaning of the term "GLOBE" in the Globe Project.

The Globe Project

Surveyed thousands of business executives from 61 different countries along 9 different cultural dimensions.

Martin Gannon

He believed that it would be difficult for one to learn about culture through simple 'do's and don'ts' and insisted on using an image to define cultures.

I.e. French Wine - purity, classified, composed, matured.

Inhwa

Korean philosophy stressing harmony among unequals, loyalty to parents and authority figures, and superiors being responsible for the well-being of subordinates.

Guanxi

Chinese philosophy denoting friendships among unequals and unlimited exchanges of favors, not based on sentiment, group orientation, or emotions.

Democracy

Greek for "rule by the people", form of government in which all citizens have the right to vote.

Athenian Democracy

Purest form of democracy, developed at 500 BCE, in which all adult citizens vote directly on matters affecting the community.

Representative Democracy

Form of government in which citizens vote to elect given individuals to serve as their representatives for a certain period of time.

Constitutional Monarchies

Representative democracies with ceremonial monarchs, serving as permanent heads of the state with no real political power.

Totalitarian Countries

Individuals govern without the support or consent of the citizenry, like those with military dictatorship.

Theoretically Totalitarian

Nonelected religious leaders have political control of the country.

Communism

Economic ideology where the government or state basically owns and controls all major factors of production and is philosophically an economically classless society; Karl Marx.

Socialism

An economic ideology where the government/state plays a strong role in the economy and may own stakes in certain businesses.

Capitalism

An economic ideology where businesses are privately owned, strong individual incentives exist, and the government plays very little role in the economy.

Economic Risks

The risks that economic problems or mismanagement in a given country will have a meaningful negative impact upon the conduct of business in that country.

i.e. currency devaluation, conversion restrictions, militant labor unions, hyperinflation.

Political Risk

The risk that political forces or problems in a given country will have a meaningful negative impact upon the conduct of business in that country.

Micropolitical Risk

A political risk that only affects a certain industry or set of firms in a given country.

Macropolitical Risk

Political risk that essentially affects all businesses in a given country.

Terrorism

Involves unlawful acts of violence threatening the physical safety of others.

Terrorism Insurance Act of 2002

A US law that after a certain deductible provides US businesses government insurance coverage for the risk of terrorism.

U.S International Development Financial Corporation

A US government agency that sells political risk insurance to US businesses operating in countries with which the United States has a bilateral investment treaty.

Corruption

A situation where businesses are able to illegally alter relevant private and/or public decision making by way of bribes, kickbacks, blackmail, extortion, and related activities.

Private Corruption

A business corruption involving other private businesses, individuals, or groups.

2020 TRACE Bribery Risk Matrix

Comprehensive study of corporate bribery in developed countries throughout the world, ranking countries on the risk of bribery occurring in that country.

Public Corruption

Practice of making illegal payments to government officials or engaging in blackmail, extortion, or other related activities in order to obtain government contracts or approval for business activities.

Foreign Corrupt Practices Act

1977 law in the United States prohibiting US Companies from bribing or otherwise corrupting foreign officials in order to win foreign government contracts or obtain other foreign government assistance for their business.

Civil Law Legal System

A legal system based on a comprehensive listing of legal rules in sets of written codes of law; real power lies in the legislative branch of the government.

Legislative Branch of the Government

Enacts specific laws or rules that are then set forth in given legal codes.

Common Law Legal System

One where legislative bodies generally enact less specific legal rules, so that judges and courts are given considerable authority with respect to interpreting these rules base on a precedent and other factors.

William The Conqueror, 1066

Where common law legal systems originated from.

Theocratic Law Legal System

A legal system based on a religious document and religious teachings.

Criminal Law

Establishes which violations of a nation's laws are crimes punishable by possible incarceration.

Contract Law

Body of law governing legally enforceable agreements between parties to engage in economic exchange.

Shorter in those with civil law, and lengthier in those with common law.

Tax Law

The body of law dealing with governmental levying of taxes on individuals and corporations.

Tax Haven Countries

Countries with little or no tax transparency, as a way of potentially illegally avoiding tax.

Antitrust Laws

Designed to promote "fair competition" among businesses.

Collusion

Practice of companies acting in a manner that secretly thwarts competition among themselves.

Monopoly

Situation where there is only a single seller of a product in an industry, and there are very high barriers to enter this industry.

Product Safety Law

The law that establishes the standards of product safety to which the manufacturers and sellers of products are to be held.

Caveat Emptor

"buyer beware"; involves placing the burden of determining product safety on consumers.

Caveat Venditor

"seller beware"; involves placing on manufacturers or sellers of products the burden of making sure products are safe or at least clearly and explicitly warning consumers about the potential safety risks of said product.

Dispute Settlement Law

Law governing how disputes that arise in the course of global business are settled.

Litigation

Bringing the case to a public or government-run court of law to settle the dispute.

Arbitration

an alternative dispute resolution process whereby the parties designate a neutral private person or group of persons to hear and decide the case.

Intellectual Property

Property that is the product of intellectual rather than physical activity.

Intellectual Property Protections

Are essentially limited monopoly rights legally granted by a nation to the creator of the intellectual property.

Patents

Rights granted to the inventor of a product or process that excludes others from selling, making, or using the invention for a certain period of time; 5 - 20 years.

(20 years in the Philippines). Japan and US as the leading powerhouse for it, and now China.

Trademark

A distinctive phrase, name, word, picture, symbol, or design, or a combination of these, that identifies a given business's service or product and is owned by said business.

Genericized Trademark

A trademark that has become so well known or colloquial that it now describes a general class of product or service as opposed to a specific product or service as intended by the trademark's owner.

(10 years in the Philippines)

Copyright

The exclusive legal right of authors, playwrights, publishers, artists, composers, performers, photographers, and other creators to publish and disseminate their work as they see fit.

(Life + 50 years in the Philippines).

Berne Convention

Provides for international copyright protections; treaty.