INTB 1203 Exam 1

Globalization

trend away from distinct natural economic units and toward one huge global market

Globalization of Markets

trend moving away from distinct national markets, toward a system where national markets are moving towards one global market

Globalization of Production

trend by firms to disperse parts of their production process across the globe to minimize costs and maximize quality

Factors of Production

inputs into the productive process of a firm including labor, management, land, capital, and technological know-how

GATT (acronym)

General Agreement on Tariffs and Trade

GATT (definition)

international treaty committed to lowering trade barriers and led to the WTO

WTO (definition and acronym)

World Trade Organization, succeeded the GATT

IMF (acronym)

International Monetary Fund

IMF (definition)

Int. institution set up to maintain order in the international monetary system

World Bank

int. institution set up to promote general economic development in the world's power nations

United Nations

int. organization of 193 countries est. 1943, HQ in NYC, promotes peace, security, and cooperation

G20

made up of central bank governers of 19 largest economies, includes EU Union central banks reps, est. 1999

International Trade

occurs when a firm exports goods or services to consumers in another country

FDI (acronym and definition)

Foreign Direct Investment, direct investment in business operations in a foreign country

1960 US economy vs mid 1990

1960 - US was dominant in the world, 1990 - US share of world output had reduced by 50%

Political Economy

the political, economic, and legal systems of a country

Political system

system of government in a nation

Collectivism

a political system that emphasizes collective goals as opposed to individual goals

Socialist

someone who believes government should own means of production for the common good of society

Communists

those who believe socialism can only be achieved through revolution and totalitarian dictatorship

Social Democrats

those committed to achieving socialism by democratic means (feel the Bern?)

Privatization

the sale of state-owned enterprises to private investors

Individualism

an emphasis on the importance of guaranteeing individual freedom and self-expression ('Merica)

Deomocracy

government is by the people, exercised directly or through elected representatives

Totalitarianism

one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited (N. Korea, Hussein's Iraq)

Representative Democracy

a political system which periodically elects individuals to represent them in government

Communist Totalitarianism

a version of collectivism advocation the socialism can only be achieved through totalitarian dictatorship

Theocratic Totalitarianism

political system monopolized by a party that governs according to religious principles (Iran, Saudi Arabia)

Tribal Totalitarianism

political system that represents a particular ethnic group that monopolizes political power (old Kenya, Uganda, and Tanzania)

Right-Wing Totalitarianism

political system where power is monopolized by entity who generally permits individual economic freedom but restricts individual political freedom on grounds that it will lead to the rise of communism (Germany & Italy pre WWII)

Market Economy

economic system in which the interaction of supply and demand determines the quantity of goods and services produced

Command Economy

allocation of resources, and quantity of goods and services produced is controlled by government

Legal System

system of rules that regulate behavior and the processes by which the laws of a country are enforced and grievances redressed

Common Law

system of law based on tradition, precedent, and customs, (gives judges more flexibility to interpret the law for each unique circumstances of a case)

Civil Law

a system of law based on a very detailed set of written laws and orders

Theocratic Law System

law based on religious teachings

Contract

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

CIGS (acronym)

United Nations Convention of Contracts for the International Sale of Goods

CIGS (definition)

set of rules governing certain aspects of contract agreements between firms of different nations

Property Rights

bundle of legal rights granting right of income from a specific resource

Private Action

the theft, piracy, and blackmail, by private individuals or groups

Public Action

the extortion of income by public officials, such as politicians

Foreign Corrupt Practices Act

U.S. law regulating bribes and unethical actions in international trade

Intellectual Property (IP)

ideas (music, books, art, designs) that can be protected by patents, copyrights, and trademarks

Patent

grants inventor exclusive rights of new product or process to manufacture, use, or sell that invention

Copyrights

gives authors exclusive legal rights to publish, disperse and sell written work

Trademarks

designs and names officially registered that designate a firm or its products

World Intellectual Property Orginization

int. org. who sign treaties to agree to protect IP

Paris Convention for the Protection of Industrial Property

int. agreement to protect intellectual property

Product Safety Laws

set certain standards to which a product must adhere

Product Liability

involves holding a firm accountable when their product causes injury, death, or damage

Cross Cultural Literacy

understanding how the culture of a country affects the way business is practiced

Culture

a system of values and norms that are shared among a group of people - together they constitute a design for living

Values

Abstract ideas about what a society believes to be good, right, and desirable

Norms

social rules and guidelines that prescribe appropriate behavior in particular situations

Society

Group of people who share a common set of values and norms

Folkways

routine convention of everyday life (dress code, social manners, neighborly behavior)

Mores

norms seen as central to the functioning of a society and to its social life

Social Structure

the basic social organization of a society

Group

two or more people that share similar identity, have a common expectations of one another's behavior

Social Strata

hierarchical social categories often based on family background, occupation, income

Social Mobility

extent to which individuals can move out of the social strata into which they are born

Caste System

social strata is determined by family background, moving out of strata is usually not possible

Class System

strata is determined family born into, and socioeconomic achievements, therefore mobility between classes is possible

Class consciousness

a tendency for individuals to perceive themselves in terms of their class background

Religion

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

Ethical system

a coherent collection of beliefs about how to behave in society

Uncertainty Avoidance

extent to which cultures socialize members to accept ambiguous situations and to tolerate uncertainty. High uncertainty avoidance place premium of job security, retirement benefits, etc. Low uncertainty avoidance have greater readiness to take risks, less emotional resistance to change

Masculinity

Masculine societies value achievement, power. Sex roles are very distinguished

Femininity

Feminine societies' sex roles are less distinguished

Business Ethics

accepting principles of right or wrong governing the conduct of businesspeople

Ethical Strategy

a course of action that does not violate a company's business ethics

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

convention that established legally binding standards to criminalize bribery of foreign officials

Social Responsibility

the idea that business people should consider 2nd and 3rd order economic consequences when making decisions

Ethical Dilemma

a situation in which there is no ethically acceptable solution

Orginazation Culture

the values and norms shared among an organization's employees

Utilitarian Approaches to Ethics

the moral worth of actions or practices is determined by their consequences (an action is desirable if its leads to the best balance of good consequences over bad consequences) (pinto)

Stakeholders

entities that have interest in the actions and overall performance of a company

Internal Stakeholders

people who work for the business (employees, directors, stockholders)

External Stakeholders

people who have some claim on a firm such as customers, suppliers, and unions

T/F: Media is a primary conveyor of culture

True

What is often cited as the major cause of today's lower trade barrier?

Technology

Barriers to international trade contributed to what major economic downturn?

The Great Depression

T/F: More than 90% of all phone calls, web traffic, and investment is local

True

In the past decade, what country has not seen its % of total world output fall?

China

T/F: A firm chooses to relocate its centers of productions to low-cost locations to increase its pool of knowledge and technology resources

False

T/F: in developed countries, labor leaders cry over the loss of good paying jobs to low wage countries

True

Who is the author of the Globalization of Markets? Who also coined the term globalization?

Theodore Levitt

T/F: the share of global capital formation through FDI of developed countries has increased over the past 50 years

False

As the income per capita increases, how are pollution levels affected?

Pollution decreases (excluding carbon dioxide)

term meaning a country carries out a particular economic activity more efficiently than its competition

Comparative Advantage

T/F: since the fall of communism in Eastern EU, the risk of doing business in the region has fallen dramatically

False

Term used to describe a tendency to trade and produce goods locally

Home bias

North American firms benefited greatly from this legislation. But Latin America is reversing the trend from this agreement

North American Free Trade Agreement (NAFTA)

3 big drivers of Globalization

1. Blending of cultures

2. Companies Outsourcing

3. Technology

4 big blockers of Globalization of Production

1. Formal & informal trade barriers

2. Barriers to FDI

3. Transportation costs

4. Issues with economic and political risk

2 dimensions political systems can be assessed

1. collectivism vs. individualism

2. democratic vs. totalitarian

T/F: it is possible to have a democratic society that emphasizes a mix of collectivism and individualism

True

T/F: there is a global trend of societies shifting from individualism toward collectivism

False