Globalization, Ethics, and Cultural-Political Systems in International Business

Globalization

The trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies.

International Business

Any commercial transaction (such as sales, investments, or logistics) that takes place across international borders between two or more countries.

Global Product

A good or service marketed worldwide with minimal modifications to its brand name, features, or styling to leverage universal consumer appeal and lower production costs.

Denationalization

The process by which national boundaries become less relevant as nations cooperate and integrate economically, causing individual domestic markets to merge into a single global market.

Falling Barriers to Trade and Investment

Reductions in tariffs, quotas, and restrictions on foreign capital managed by global watchdogs like the World Trade Organization (WTO).

Technological Innovation

Advances in telecommunications, shipping containerization, and e-business infrastructure that dramatically lower the cost and time of moving data and products globally.

Ethics

The principles, values, and beliefs that define right and wrong behavior for individuals, businesses, and organizations.

1984 Bhopal Disaster

A toxic gas leak at a Union Carbide chemical plant in India that caused thousands of immediate deaths and long-term health crises.

1986 Chernobyl Disaster

A catastrophic nuclear accident in Ukraine (Soviet Union) that released widespread radioactive contamination across Europe.

Methods to Improve Ethical Behavior

Hire employees with high ethical standards.

International Ethical Issues

Corruption and Bribery in securing foreign market contracts.

Social Responsibility

A business's intention to go beyond its legal obligations to do the right things and act in ways that benefit society.

Social Obligation

When a firm engages in social actions only to meet its minimum legal and economic responsibilities.

Social Responsiveness

A firm's capacity to adapt to changing societal conditions and practical market expectations.

US Foreign Corrupt Practices Act (FCPA)

A federal law that prohibits US companies and their representatives from paying bribes to foreign government officials to win or retain business.

Culture

The set of values, beliefs, rules, and institutions held and passed down by a specific group of people.

Cultural Literacy

The detailed knowledge about a culture that enables a professional to live, negotiate, and function effectively within it.

Ethnocentricity

The belief that one's own ethnic group or culture is superior to all others, which can cause companies to misjudge and fail in foreign markets.

Nuclear Family

A household unit consisting of a couple and their immediate dependent children.

Extended Family

A wider kinship network including grandparents, aunts, uncles, and cousins living together or in close geographic proximity.

Democracy

A system where government leaders are elected directly by the citizens or their representatives.

Totalitarianism

A system where a single individual or political party exercises absolute control over all spheres of life, banning opposition.

Political Risk

The likelihood that a society or government will undergo political changes that negatively affect local business operations and profitability.

Five Freedoms in a Democracy

Freedom of expression and speech.

Personal Communication

The system of conveying thoughts, feelings, and information through speech, writing, and actions.

Common Law

Legal system based on tradition, precedent, and custom (e.g., US, UK).

Civil Law

System based on a detailed, comprehensive set of written laws and codes (e.g., France, Germany).

Theocratic Law

Legal framework based directly on religious teachings and texts (e.g., Islamic Sharia law).

Market Economy

Resources are owned and allocated primarily by the private sector through market demand.

Command Economy

The government owns and controls all production goods, pricing, and distribution.

Mixed Economy

Land, factories, and economic choices are split between private ownership and state control.

GATT

General Agreement on Tariffs and Trade: A multilateral treaty created after WWII designed to promote free trade by reducing tariffs and other trade barriers.

WTO

World Trade Organization: The formal international body that replaced GATT, tasked with regulating global trade rules and arbitrating trade disputes via a binding settlement panel.