MGMT 425 Toma Test 2

culture

set of values, beliefs, rules, and institutions held by a specific group of people

subculture

-a group of people who share a unique way of life within a larger, dominant culture

-can differ from the dominant in language, race, lifestyle, values, attitudes, or other characteristics

ethnocentricity

belief that one's own ethnic group or culture is superior to that of others

cultural literacy

detailed knowledge about a culture that enables a person to work happily and effectively within it

values

-ideas, beliefs, and customs to which people are emotionally attached

-ex: honesty, freedom, responsibility

attitudes

-positive or negative evaluations, feelings, and tendencies that individuals harbor towards objects or concepts

-

aesthetics

what a culture considers "good taste" in the arts, imagery evoked by certain expressions, and the symbolism of certain colors

Manners

appropriate way of behaving, speaking , and dressing in a culture

customs

habits or ways of behaving in specific circumstances that are passed down through generations

social structure

a cultures fundamental organization, including its groups and institutions, its system of social positions and their relationships, and the process by which its resources are distributed

-3 groups that differ across cultures are social group associations, social status, and social mobility

social group

collection of two or more people who identify and interact with each other

-ex; family, gender

nepotism

trying to find jobs for relatives within their company

social status

the way culture divides its population according to positions within a structure

-three determining factors are family heritage, income, and occupation

social stratification

the process of ranking people into social layers or classes

social mobility

the ease with witch individuals can move up or down a cultures social ladder

caste system

a system of social stratification in which people are born into a social ranking with no opportunity for social mobility

class system

a system of social stratification in which personal ability and actions determine social status and mobility

brain drain

the departure of highly educated people from one profession, geographic region, or nation to another

lingua franca

third or link language understood by two parties who speak different native languages.

-english = #1

body language

language communicated through unspoken cues including hand gestures, facial expressions, physical greetings, eye contact, and the manipulation of personal space

economic development

an increase in the economic well-being, quality of life, and general welfare of nations people

-depends on economic growth and productivity

-two methods are classical and modern

classical

method of economic development based on the following

-GDP/capita

-investments in capital assets

-import substitutions

-balanced growth

-economic welfare

modern

method of economic development based on the following

-progress in all aspects of life

-investment in human assets

-export promotion

-trickle down economic benefits

economic growth

quantifiable increase in the goods and service that a society produces

productivity

the ratio of outputs to inputs

the three ways to classify nations

developed

newly industrialized

developing

developed

classification of nations that is highly indiustrialized and highly efficient, and whose people enjoy a high quality of life

-ex; Australia, Canada, Japan, US

newly industrialized country (NIC)

classification of nations that has recently increased the portion of its national production and exports derived from industrial operations

-ex; Hong Kong, S Korea, Singapore, Brazil, China, Mexico

Developing

classification of nations that has a poor infrastructure and extremely low personal incomes

-ex; Africa, Middle East

emerging markets

newly industrialized countries plus those with the potential to become newly industrialized

technological dualism

use of the latest technologies in some sectors of the economy coupled with the use of outdated technologies in other sectors

-factor of developing countries and NIC's

GDP

the value of all goods and services produced by a domestic economy over a 1-year period

GNP

the value of a nation's income generated from exports, imports, and international operations of its companies

Drawbacks of GDP and GNP

-uncounted transactions

-question of growth

-problem of averages

-pitfalls of value comparison

purchasing power

the value of goods and services that can be purchased with one unit of a country's currency

PPP (purchasing power parity)

-the relative ability of two countries currencies to buy the same "basket" of goods in those two countries

-"basket" = daily use items like apples, rice, soap, toothpaste

-allows us to see what a currency can actually buy in real items

HDI (human development index)

Measure of the extent to which a government equitably provides its people with a long and healthy life, education, and decent standard of living

-UN tool

Economic transition

process by which a nation changes its fundamental economic organization and creates new free-market institutions

obstacles for countries in economic transition

-Managerial expertise

-shortage of capital

-cultural differences

-sustainability

centrally planned economy: Karl Marx

economic system in which the state or government makes economic decisions instead of interaction between consumers and businesses

macro risk

poltical risk that is a threat the activities of all domestic and international companies in every industry

multilateral agreements

treaties concluded among several nations in which they agree to abide by treaty terms even if tensions develop

guanxi

the Chinese term for "personal relationships"

international trade

purchase, sale, or exchange of goods across national borders

mercantilism

-trade theory that states that nations should accumulate financial wealth, in the form of gold by encouraging exports and discouraging imports

-built on trade surplus, government intervention, and colonialism

-1500-1700

trade surplus

condition that results when the value of nation's exports is greater than its imports

trade deficit

condition that results when the value of a country's imports is greater than its exports

zero-sum game

belief that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors

absolute advantage

-trade theory in which nations produce a good more efficiently than any other nation

-also believed that trade should not be imposed upon by tariffs and quotas

-theory does not measure wealth by gold and silver..but by living standards of its people

-Adam Smith 1776

comparative advantage

-trade theory when a country is unable to produce a good more efficiently than other nations but produces the good more efficiently than any other good.

-David Ricardo 1817

factor proportions theory

-trade theory stating that countries produce and export goods that require resources (factors) that are abundant and import goods that require resources in short supply

-resources are broken into two categories; labor and land/capital equipment

-Heckscher-Ohlin early 1900s

International product life cycle

trade theory stating that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through the cycle

-3 stages = new product, maturing product, and standardized product

-Raymond Vernon 1960s

New Trade Theory

trade theory stating that 1. there are gains to be made from specialization and increasing economies of scale 2. the companies first to market can create barriers to entry 3. government may play a role in assisting its home companies

-1970s and 80s

National Competitive Advantage

-trade theory stating that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade based on the elements of factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry

-Michael Porter 1990

4 Step export Strategy

1. identify market

2. match needs to abilities

3. initiate meetings

4. commit resources

entry mode

institutional arrangement by which a firm gets its products, technologies, human skills, or other resources into a market by either 1. exporting, 2. Entry and Operation, or 3. Strategic Alliance

direct exporting

-occurs when a co sells its products directly to buyers in a target market.

-rely on sales reps or distributors

Indirect exporting

-practice by which a co sells its products to intermediaries who then resell to buyers in a target market

-rely on agents, export mgmt co, or export trading co

agent

individual or organization that represents one or more exporters in a target market

EMC (export management company)

company that exports products on behalf of indirect exporters

ETC (export trading co)

company that provides services to indirect exporters in addition to activities related directly to clients' exporting activities

freight forwarder

specialist in export-related activities such as customs clearing, tariff schedules, and shipping and insurance fees

countertrade

practice of selling goods and services that are paid for, in whole or part, with other goods and services

barter

exchange of goods or services directly for other goods or services without the use of money

counterpurchase

the sale of goods or services to a country by a co that promises to make a future purchase of a specific product from that country

offset

agreement that a co will offset a hard-currency sale to a nation by making a hard-currency purchase of an unspecified product from that nation in the future

switch trading

countertrade whereby one company sells to another its obligation to make a purchase in a given country

buyback

the export of industrial equipment in return for products produced by that equipment

documentary collection

export/import financing in which a bank acts as an intermediary without accepting financial risk..used when there is ongoing business relationship between two parties

draft (bill of exchange)

document ordering an importer to pay an exporter a specified sum at a certain time.

-sight - when goods are delivered

-time - check dated on future day

bill of lading

contract between an exporter and a shipper that specifies merchandise destination and shipping costs

letter of credit

export/import financing in which the importer bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document

open account

export/import financing in which an exporter ships merchandise and later bills the importer for its value

Entry and Operations Method

includes....

licensing

franchising

management contracts

turnkey projects

wholly owned

joint venture

manufacturing contract

licensing

contractual entry mode in which a co that owns intangible property grants another the firm the right to use that property for a specified period of time

-exclusive and nonexclusive

franchising

practice by which one company supplies another with intangible property and other assistance over an extended period of time

management contract

one co supplies another with managerial expertise for a specified period of time

turnkey projects

practice by which one company designs, constructs, and tests a production facility for a client firm

wholly owned

facility entirely owned and controlled by a single parent co

joint venture

separate co that is created and jointly owned by two or more independent entities to achieve a common business objective

strategic alliance

relationship whereby two or more entities cooperate to achieve the strategic goals of each for a limited time and purpose

decline of centrally planned economy (4)

1. Failure to create economic value

2. failure to provide incentives

3. failure to achieve rapid growth

4. failure to satisfy consumer needs

decline of mixed economies (1)

move toward privatization

economic system

Structure and procsses that a country uses to allocate its resources and conduct its commercial activities

Mixed Economy

economic system in which land, factories, and other economic resources are rather equally split between private and government ownership.

Market Economy (Adam Smith)

Economic system in which most of a nation’s land, factories, and other economic resources are privately owned either by individuals or businesses.

Privatization 

Policy of selling government-owned economic resources to private operators

Features of a market economy (3)

1. Free choice: gives individuals access to alternative purchase options

2. Free enterprise: gives companies the ability to decide which good and services to produce and markets to compete in

3. Price flexibility: allows most prices to rise and fall to reflect the forces of supply and demand

Centrally Planned Economies are involved in Economic Transition 

There are 4 issues that arise when they partake in this: 

1. Managerial expertise

2. Shortage of capital

3. Cultural differences

4. Sustainability

Major Arguments of Free Trade

Thesis: Free Trade is in the best economic interest of every country:

• leads to higher standards of living in the country

• fosters competition in the economy

• makes the economy more efficient (capitalize on strengths)

Discredits Protectionism:

• Protectionism is both unjust & wasteful

  • Unjust: negatively impacts lower income segments of society

  • Wasteful: breeds waste of scarce economic resources

Major Arguments of Protectionism

At certain times, under certain circumstances, and for a limited time period, some kinds of protectionist trade policies are JUSTIFIED:

• national security or sovereignty

• infant/mature industry protection

• domestic job protection

• antidumping measure

• retaliation against unfair trading practices

Theory

A simplified representation of a complex life phenomenon that:

1. enables me to explain/understand the complex phenomenon

2. enables me to predict/forecast

International Trade Theory (ITT):

1. All theories have the same explanation for WHY trade should take place

2. each have their own Rx (prescription) for HOW trade should take place

Advance payment

export/import financing in which an importer pays an exporter for merchandise before it is shipped

cross licensing

practice by which companies use licensing agreements to exchange intangible property with one another.

Strategic Factors in Selecting an Entry Mode (6)

1. Selecting partners for cooperation

2. cultural environment

3. Political and legal environments

4. market size

5. production and shipping costs

6. international experience

Communication

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

material culture

All the technology used in a culture to manufacture goods and provide services

cultural trait

anything that represents a culture’s way of life, including gestures, material objects, traditions, and concepts.