Principles of Management Ch. 4 Vocab

IMD’s Four Facets of Competitiveness

Economic performance, government efficiency, business efficiency, and infrastructure

Globalization

The trend of the world economy toward becoming a more interdependent system

Global Village

The “shrinking” of time and space as air travel and the electronic media have made it easier for the people around the globe to communicate with one another

Global Economy

The increasing tendency of the economies of the world to interact with one another as one market instead of many national markets

Multinational Corporation

A business firm with operations in several countries

Multinational Organization

A nonprofit organization with operations in several countries

Ethnocentric Manager

Managers who believe that their native country, culture, language, and behavior are superior to all ­others

Parochialism

A narrow view in which people see things solely through their own perspective

Polycentric Manager

Managers who take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alone

Geocentric Manager

Managers who accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective

Why do companies expand internationally?

Availability of supplies, new markets, lower labor costs, access to finance capital, and avoidance of tariffs and import quotas

Outsourcing

Using suppliers outside the company to provide goods and services

Global outsourcing

Also called offshoring; use of suppliers outside the United States to provide labor, goods, or services

Offshoring

Also called global outsourcing; use of suppliers outside the United States to provide labor, goods, or services

Importing

Buying goods outside the country and reselling them domestically

Exporting

Producing goods domestically and selling them outside the country

Countertrading

Bartering goods for goods

Licensing

Company X allows a foreign company to pay it a fee to make or distribute X’s product or service

Franchising

A form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company’s brand name and a package of materials and services

Wholly Owned Subsidiary

A foreign subsidiary, or subordinate section of an organization, that is totally owned and controlled by an organization

Greenfield Venture

A foreign subsidiary that the owning organization has built from scratch

Strategic Allies

Two organizations that have joined forces to realize strategic advantages that neither would have if operating

Free Trade

The movement of goods and services among nations without political or economic obstruction

Trade Protectionism

The use of government regulations to limit the import of goods and services

Tariff

A trade barrier in the form of a customs duty, or tax, levied mainly on imports

Revenue Tariff

Designed simply to raise money for the government, such as a tax on all oil imported into the US.

Protective Tariff

Intended to raise the price of imported goods to make the prices of domestic products more competitive.

Import Quota

A trade barrier in the form of a limit on the numbers of a product that can be imported

Sanction

The trade prohibition on certain types of products, services, or technology to another country for a specific reason

Embargoes

A complete ban on the import or export of certain products

Trading Bloc

Also known as an economic community, it is a group of nations within a geographical region that have agreed to remove trade barriers with one another

North American Free Trade Agreement (NAFTA)

A trading bloc consisting of the United States, Canada, and Mexico

United States-Mexico-Canada Agreement (USMCA)

The United States, Mexico, and Canada renegotiated NAFTA in November 2018, drafting a new policy known as the United States–Mexico–Canada Agreement (USMCA)

European Union (EU)

Union of 27 trading partners in Europe

Most Favored Nation

This trading status describes a condition in which a country grants other countries favorable trading treatment such as the reduction of import duties

Exchange Rates

The rate at which the currency of one area or country can be ­exchanged for the currency of another’s

BRICS

The five major emerging economies of Brazil, Russia, India, China, and South Africa

Cross-cultural Awareness

The ability to operate in different cultural settings

Culture

The shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people. See also Organizational culture

Low-context culture

Culture in which shared meanings are primarily derived from written and spoken words

High-context culture

Culture in which people rely heavily on situational cues for meaning when communicating with others

Hofstede model of four cultural dimensions

Identifies four dimensions along which national cultures can be placed: (1) individualism/collectivism, (2) power distance, (3) uncertainty avoidance, and (4) masculinity/femininity

Individualism/Collectivism (Hofstede)

(Hofstede) How many people prefer a loosely knit social framework in which people are expected to take care of themselves or a tightly knit social framework in which people and organizations are expected to look after

Power Distance (Hofstede)

(Hofstede) The degree to which people accept inequality in social situations

Uncertainty Avoidance (Hofstede)

(Hofstede) Expresses people’s intolerance for uncertainty and high risk

Masculinity/Femininity (Hofstede)

(Hofstede) Expresses how much people value performance-oriented traits or how much they embrace relationship-oriented traits

GLOBE project

A massive and ongoing cross-cultural investigation of nine cultural dimensions involved in leadership and organizational processes

Power Distance

The degree to which a society’s members expect power to be unequally shared

Uncertainty Avoidance

Expresses the extent to which a society relies on social norms and procedures to alleviate the unpredictability of future events

Institutional Collectivism

Expresses the extent to which individuals are encouraged and rewarded for loyalty to the group as opposed to pursuing individual goals.

In-group collectivism

Expresses the extent to which people should take pride in being members of their family, circle of close friends, and their work organization

Gender Egalitarianism

Expresses the extent to which a society should minimize gender role unfairness

Assertiveness

Represents the extent to which a society expects people to be confrontational and competitive as opposed to tender and modest

Future Orientation

Expresses the extent to which a society encourages investment in the future, as by planning and saving

Performance Orientation

Expresses the extent to which a society encourages and rewards its members for performance improvement and excellence

Humane Orientation

Represents the degree to which individuals are encouraged to be altruistic, caring, kind, generous, and fair

Bridging cultural variation gaps through six basic areas:

Language, interpersonal space, communication, time orientation, religion, and law and political stability

Monochronic Time

The standard kind of time orientation in U.S. business; a preference for doing one thing at a time

Polychronic Time

The standard kind of time orientation in Mediterranean, Latin American, and Arab cultures; a preference for doing more than one thing at a time

Expropriation

A government’s seizure of a domestic or foreign company’s assets

Foreign Corrupt Practices Act

Act that makes it illegal for employees of U.S. companies to make “questionable” or “dubious” contributions to political decision makers in foreign nations

Expatriates

People living or working in a foreign country

Three ways to develop your awareness of individual differences comptency

Listen and observe, become aware of context, and choose something basic

Context

The situational or environmental characteristics that influence our behavior