Global Business Exam

What are the 3 subsections of business systems analysis?

1. Culture

2. Business Environment

3. Business System

What are the 3 subsections of culture in the business systems analysis?

1. Rationale

2. Identity

3. Authority

What are the 3 subsections of business environment in the business systems analysis?

1. Financial Capital

2. Human capital

3. Social capital

What are the 3 subsections of business system in the business systems analysis?

1. Ownership

2. Networks

3. Management

What are the 3 major frameworks for analysing the possibility of international conflict?

1. Liberalism

2. Realism

3. Institutionalism

What does rationale consist of in business systems analysis?

1. What does society see as the goal of the business? (e.g. shareholder value)

2. What are the means society considers appropriate for reaching these goals?

What does identity consist of in business systems analysis?

1. Is the society individualistic or group-based? (look up at Hofstede’s website)

2. What are the reference groups? (e.g., family, clan, company)

What does authority consist of in business systems analysis?

1. Is the society hierarchical or egalitarian? (look up at Hofstede’s website)

2. What determines hierarchy in society? (e.g., wealth, religion)

What does financial capital consist of in business systems analysis? (3)

1. Is finance direct (markets), indirect (banks), state-provided, or informal (friends, etc.)?

2. What are the rules for capital allocation? (e.g., state-controlled, market criteria, relationships)

3. Is capital “patient” (i.e., long-term)?

What does human capital consist of in business systems analysis?

1. What is the structure and quality of the education system?

2. How do people acquire skills for their jobs?

3. Do unions exist?

4. Are unions belligerent or cooperative?

5. How are unions organized? (company unions, industrial unions, craft-based unions)

6. Is employment for the long term?

What does social capital consist of in business systems analysis?

1. Can people trust strangers? If yes, what is the mechanism that keeps people honest? (institutionalized trust)

2. To what extent does trust depend on knowing the other person well? (interpersonal trust)

What does ownership consist of in business systems analysis?

1. What is the ownership pattern for companies? (e.g., family, market, government)

2. How much control do owners have over their companies?

What does “Networks” consist of in business systems analysis? (3)

1. Are production chains networked? (i.e., long-term cooperation without ownership integration)

2. Do competitors collaborate?

3. Are there any other networks of which firms are part?

What does management consist of in business systems analysis? (3)

1. How are decisions made? (e.g., top-down, participatory)

2. How much is delegated to employees?

3. What are the criteria for promotion?

What is the purpose of the state in political analysis for business?

Government exists to establish order and provide for defense. To that end, a functioning economy is needed.

What is the purpose and source of institutions in political analysis for business?

1. For the two state objectives, a functioning economy is required which needs clear rules of the game. These rules are called “institutions.”

2. The state is a major source of institutions, such as laws and regulations

How can politics be analyzed?

Through the AIP framework

How are organizations different from institutions?

Organizations are groups of people bound together for a common purpose, where as institutions are more rule-like

How can institutions create economic impacts?

1. They can change transaction costs 

2. They can make life difficult, reducing economic performance

If institutions are dysfunctional (unless extreme), what action is most beneficial for societal participants?

Better to play by dysfunctional rules than to work around them because behavior predictability can reduce transaction costs and red tape may actually serve an unknown function

What is a believed requirement for an economy to get rich? Why?

1. Adopt good institutions

2. They make it possible to have more value-creating activities, increasing GDP

How is path-dependency relevant in politics in political analysis for business?

1. The power of certain institutions is determined by existing ones. Even if an actor has a lot of power, their success in an institution is determined by the power enabled by preceding institutions

2. Ex: gun control laws + supreme court

How do you judge interests in AIP?

By what an organization says or does

What are some sources of power

1. Input vs. output legitimacy

2. Financial power

3. Misinformation

4. Reputation

5. International support

6. Nationalism

Why isn’t FDI high in East Asian countries?

1. Political risk

2. Spending vs saving culture

3. High competition

What is the number one killer in global business?

Liability of foreignness

What are some examples of liability of foreignness?

1. cultural: attitudes, tastes, behaviors

2. political: unfamiliarity, geopolitics

3. institutional: business practices, laws, regulations, norms

How do the three interrelated themes of the module interact?

The business environment determines the entry framework and operational issues

What are the main concerns for understanding the context of the global business environment?

1. Cultural differences

2. Business systems analysis

3. Stakeholder analysis and management

4. Global political context

What salient issues exist for entry?

1. Country choice and choice of entry mode

2. Partnerships

What do operational issues concern?

Cross-cultural and partnership management?

What are the three levels for country entry decisions framework?

macro, firm, and industry-level conditions

What do we look at when evaluating macro-level conditions for the entry framework?

1. Shape of the economy: is it stable or sustainable

2. Government: policy, how they behave, reliable, predictable, interventionist

3. Business System: what are the rules of the game in this country

What do we look at when evaluating industry-level conditions for the entry framework?

1. Market growth and size: value creation

2. Competitive situation: value capture

What do we look at when evaluating firm-level conditions for the entry framework?

1. Competencies

2. Resources

3. Assets

What are some patterns associated with power distance?

1. Wide salary range

2. Language and demeanor change in accordance with status

3. No contention of even obvious mistakes of superiors

What is a key point to remember about human capital?

High-quality human capital is scarce in much of the world

What are the 4 strategies for tilting power struggles?

1. take out opponents (reduce actors)

2. mobilize supporters (add actors)

3. Convert opponents to support your cause (change interests)

4. Shift to a different kind of power (change power)

What lens should stakeholder conflict be seen through?

AIP

What is a key counter-measure for stakeholder conflict?

1. early alignment of interests. involve NGOS or other actors in planning/execution

2. Hire a PR person

What is the major trend with globalization now?

Opposition within major economies like the US, China

What does liberalism argue about regimes?

1. The creation and expansion of regimes is the result of actors with sufficient power putting them in place and enforcing them

2. Regimes decline when states, especially powerful ones, lose either interest or power to support them

3. Interests are likely to shift against economic openness when opponents of globalization gain the upper hand in domestic politics

What does realism argue about regimes?

1. Regimes exist because a hegemon (superpower) puts them into place and forces others to comply

2. Regimes decline when the hegemon declines

According to realism, what are the expected outcomes of a hegemon declining?

A challenger catches up and becomes a regional hegemon or it over takes the old hegemon as global hegemon

What has been the trend with US global hegemony?

Declining, firms are investing abroad less than before, trade has been flat for almost 20 years

What are international regimes and what are they designed to do?

sets of institutions designed to sustain international cooperation

What is checked when evaluating the potential for conflict through liberalism?

1. If the countries are western-style democracies. If all are, the prediction is peace, though conflict other than war is possible

2. If the counties have high levels of economic interdependence like FDI

3. Apply AIP

What is checked when evaluating the potential for conflict through realism?

1. Compare military and economic power, include nuclear weapons

2. A change in the balance of power or the emergence of a challenger to a hegemon means conflict is likely

What is checked when evaluating the potential for conflict through institutionalism?

1. Are the countries members of relevant international institutions

2. Are those institutions credible and do people follow them?

3. Conflict is likely if not

What is the framework (steps?) for analyzing partnerships?

1. Strategic value to us (expectations)

2. Partner fit (issues)

3. Negotiation and design (agreement)

4. Implementation (results)

What do we question when thinking of strategic value in the framework for analyzing partnerships?

1. What are the firm’s strategic goals

2. Why a partnership given our own goals

What do we question when thinking of partner fit in the framework for analyzing partnerships?

1. Are the goals of the firms compatible?

2. Are the capabilities complementary?

3. Is there a cultural fit?

4. Do the organizational structures fit?

What do we question when thinking of negotiation and design in the framework for analyzing partnerships?

1. What are the areas of cooperation?

2. What is the interface between the partners?

3. Who is in charge of what?

What do we question when thinking of implementation in the framework for analyzing partnerships?

1. How to integrate operations?

2. How to coordinate during integration and beyond?

3. Where to take the partnership in the future?

What is the typical context of Joint Venture entry into markets?

When a market has high attractiveness and localization pressures

If there’s high market attractiveness and high localization pressure, what should you do?

JV partnership or wholly owned subsidiary like a greenfield or acquisition

What is the difference between a wholly owned subsidiary and JV when it comes to cost?

high cost for wholly owned subsidiary and medium for JV if shared

What is the difference between a wholly owned subsidiary and JV when it comes to time horizon for payoff?

long for green field, medium for acquisition and JV

What is the difference between a wholly owned subsidiary and JV when it comes to financial risks?

high for wholly owned subsidiary and medium for JV

How do you determine a capabilities fit?

Go through the value chain and list each partner’s contributions/capabilities

What belief is liberalism based on?

The international system is not inherently anarchic, and cooperation is possible

What belief is realism based on?

The nature of the international system forces all countries to pursue the same interest: survival. The international system is anarchic—there is no authority keeping order among states

What belief is institutionalism based on?

The world is no longer anarchic but has rules. These may be imperfect, but they are strengthening over time and are shaping the behavior of states

What do the international relations frameworks indicate?

The likelihood of conflict

What should you consider when looking into globalization as an essay topic? (5)

1. Trade: Is it free vs. fair

2. Government relations: government subsidies to challenge distortion of competition like with bombardier

3. Political Influence on economy/stakeholder interest

4. Compliance with WTO if it’s focused on business and trade

5. Culture

What does Japan see as the goal of business?

1. universal male employment

2. stability, welfare, survival, national wealth

What are the means Japanese society considers appropriate for reaching their goals?

1. kaizen - continuous improvement

2. Government role in governing the economy

Is Japan individualistic or group based?

slightly leaning toward collectivist

What are the reference groups in Japan?

1. men derive their identity from companies

2. women: family

What determines hierarchy in Japanese society?

seniority, age, job title, education, gender

Where does Japanese hierarchy originate from?

Confucianism

In Japan, is finance direct, indirect, state-provided, or informal?

Bank-led with a relationship based element where people deal with the same bank for years/decades

What are the advantages and disadvantages of bank-led financial capital/relationships

1. Familiarity and more accurate services

2. A lot of zombie firms because banks bail them out, expectations of working together long into the future so it’s worth dealing with financial failings now. removal of investment would also go against Japan’s goal of business (employment)

Is capital patient in Japan?

Yes

What does the state of human capital look like in Japan?

1. Long-term employment at the same company

2. OTJ training

3. Attendance of university

4. Unions are peace-like and ritualistic. not too aggressive because hurting the company hurts your coworkers

What is the state of social capital in Japan?

Both interpersonal and institutional trust are high

What does ownership look like for companies in Japan?

1. Largely public ownership through stocks and shares, but shareholders don’t have much control because the goal isn’t to maximize shareholder profit

2. De facto management control. Companies exists to benefit employment

What do Networks look like in Japan?

1. vertical keiretsu: just-in-time management strategy which requires reliable suppliers

2. horizontal keiretsu: business groups from the same origin company might own shares in each other and have meetings, cooperation with competitors

3. Institutionalized connection

What does management look like in Japan?

1. Collective decision making

2. High delegation, lower levels deliberate and do their own work

3. Seniority based on age

What are the key points of Japanese history which influenced the modern business structure?

1. Confucianism introduced in Tokugawa period which addresses how to bring order to society at war

   1. Caste structure: Scholars, farmers, craftsmen, merchants

2. Merchants moved their way up the caste system by learning to add value

   1. created a code of ethics, formed guilds

3. External stability issues with spain/portugal control resulted in closed country

4. West made strides with industrial revolution and Japan was behind

5. US arrival in 1850s resulted in forced reopening and eventual coup which restored imperial rule

6. Merchants got an upgrade

7. With americans providing in exchange for Japanese democratization, new model was focusing on economic development with new notion of equal outcomes

What is the realist lens for the China/US dynamic?

China is a challenger to US hegemony and the shift in balance of power is dangerous

What is the liberalist lens for the China/US dynamic?

1. There is no democratic peace

2. There is possibly commercial peace, though it is declining due to deglobalization

3. A lot of things to argue about

What is the institutionalist lens for the China/US dynamic?

1. both sides are using regimes for their own purposes (e.g., Security Council)

2. Long-term, will China accept the existing landscape of regimes or try to change it to its liking?

What are some areas that the US and China conflict on?

Taiwan, Hong Kong, Uyghurs, Trade, International presence, being #1 in the world

Why is institutionalist mediation difficult between the US and China?

1. While both are institutional organization members, they selectively play the game, using veto powers, selectively ignoring institutions

2. China with UNCLOS, US with ICJ

What policy would a liberalist suggest to strengthen US and China relations?

Reinforce interdependence, maybe through trade

What policy would a realist suggest re: US and China?

Get as strong as possible and keep and extend your alliances

What are the possible alignment in new geopolitics given the Trump scenario?

With the US becoming more isolationist, Europe might need to go at it alone, but they need better leadership, more money, and more influence

What is a key part of the conflict between China and the US?

Ukraine. China enables Russia

Can companies stay out of trouble with the divergence between the US and China?

1. Difficult lose-lose situation because you either comply with US rule and opinion and lose china or vice versa (ex: Nike, H&M)

2. Issue linkages: If Germany bans Huawei from 5g, car companies in germany will be banned in China

3. Tech companies providing China with equipment and tech may aid them in war or undermining human rights, they should expect more export restrictions soon

What are some firm options for navigating Sino-US relations?

Choose a sphere of influence, move company to non-aligned state, step up corporate diplomacy on both sides