Globalization Midterm

Globalization

A shift toward a more integrated and interdependent world economy.

Globalization of Markets

The merging of historically distinct and separate national markets into one huge global marketplace.

Globalization of Production

Sourcing goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production.

Factors of Production

Inputs into the productive process of a firm, including labor, energy, land, and capital.

World Trade Organization (WTO)

The organization that succeeded GATT and is responsible for policing the world trading system and ensuring nation-states adhere to the rules established in trade treaties.

International Monetary Fund (IMF)

An international institution created to maintain order in the international monetary system, functioning as a lender of last resort to nations with economic turmoil.

World Bank

An international bank created to promote general economic development, primarily by offering low-interest loans to cash-strapped developing governments.

United Nations (UN)

An intergovernmental organization of 193 member countries committed to maintaining international peace and security, developing friendly relations, and promoting cooperation.

Group of Twenty (G20)

An international forum comprising the finance ministers and central bank governors of the 19 largest economies plus the European Union and the European Central Bank.

Foreign Direct Investment (FDI)

Investment made by a firm to establish business operations or acquire assets in another country outside its home nation.

Moore's Law

The premise that as the cost of manufacturing microprocessors falls, their computing power increases exponentially.

Multinational Enterprise (MNE)

Any business enterprise that maintains active productive activities and operations in two or more countries.

Political Economy

The interdependent political, economic, and legal systems of a country that collectively interact and shape societal functioning.

Collectivism

A political philosophy that prioritizes collective societal goals and the common good over individual freedoms and pursuits.

Socialism

A political-economic system advocating public and state ownership of the basic means of production, distribution, and exchange for the benefit of society as a whole.

Privatization

The transfer and sale of state-owned enterprises and public assets to private investors.

Individualism

A political philosophy stressing that an individual should have freedom in their economic and political pursuits, emphasizing self-expression and private property.

Representative Democracy

A democratic system in which citizens periodically elect individuals from among themselves to represent them and vote on legislative matters.

Totalitarianism

A political system in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing parties.

Theocratic Totalitarianism

A political system in which political power is monopolized by a party, group, or individual that governs strictly according to religious principles.

Tribal Totalitarianism

A political system where a party representing the interests of a specific ethnic group or tribe monopolizes government authority.

Right-Wing Totalitarianism

A political system that grants individual economic freedom but severely restricts political freedom, often to prevent socialist or communist movements.

Market Economy

An economic system where productive activities are privately owned and the price, production, and allocation of goods are determined by supply and demand.

Command Economy

An economic system where the allocation of resources, the quantity of goods and services produced, and their prices are strictly planned by the government.

Mixed Economy

An economic system combining elements of market and command economies, where private enterprise operates alongside state ownership in vital sectors.

Common Law

A legal tradition based on precedent, custom, and historical court rulings, originating in England and prevalent in former British colonies.

Civil Law

A legal system grounded in detailed, comprehensive statutory codes organized by legal scholars, where judges apply written laws rather than interpret precedent.

Theocratic Law

A system of law that is derived directly from religious texts and teachings, most widely exemplified by Islamic law.

United Nations Convention on Contracts for the International Sale of Goods (CISG)

A uniform set of international rules governing the formation and performance of commercial trade contracts between parties in different signatory nations.

Property Rights

The bundle of legal rights that determine the ownership, control, and use of resources, including income derived from those resources.

Foreign Corrupt Practices Act (FCPA)

A U.S. law prohibiting companies from bribing foreign government officials to obtain or retain business, while mandating detailed accounting records.

Patent

A government-granted grant that gives an inventor exclusive legal rights to manufacture, use, or sell an invention for a specified time.

Copyright

Exclusive legal rights granted to authors, composers, artists, and publishers to publish, reproduce, and sell their creative works.

Trademark

A distinctive, registered word, symbol, or design that designates and differentiates the origin of goods or services from competitors.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

A WTO agreement establishing minimum standards for intellectual property regulation, requiring patents of at least 20 years and copyrights of at least 50 years.

Product Liability

A legal framework holding manufacturers and sellers responsible when defective or unsafe products cause personal injury, death, or damage.

Gross National Income (GNI)

An economic statistic measuring the total annual income earned by a nation's residents and businesses, regardless of where production takes place.

Purchasing Power Parity (PPP)

An adjustment applied to national income measures that accounts for differences in relative costs of living across countries to allow direct standard-of-living comparisons.

Human Development Index (HDI)

A United Nations index evaluating a country's development based on life expectancy at birth, educational attainment, and standard of living via income sufficiency.

Innovation

The creation and development of novel products, operational processes, organizational structures, management practices, and strategies.

Entrepreneurs

Commercial pioneers who first introduce, organize, and commercialize innovative new products, technologies, and services.

Deregulation

The formal reduction or removal of government regulatory constraints to enable competitive markets, lift price controls, and allow private enterprise.

First-Mover Advantages

The early economic, brand recognition, and relationship advantages gained by entering a foreign or emerging market ahead of subsequent competitors.

Political Risk

The likelihood that political forces or governance changes will disrupt a nation's business climate and adversely affect firm profitability.

Economic Risk

The likelihood that financial and economic mismanagement within a country will create instability that damages the performance of commercial operations.

Legal Risk

The likelihood that contractual agreements will be opportunistically broken or property rights expropriated due to an unreliable legal framework.

Culture

A shared system of values and norms among a group of people that collectively constitutes a design for living.

Cross-Cultural Literacy

An understanding of how cultural differences between and within nations influence business practices and commercial interactions.

Values

Abstract ideas shared by a group about what is considered good, right, proper, and desirable.

Norms

The established social rules and behavioral guidelines that govern the conduct of individuals toward one another in a society.

Folkways

The routine social conventions and everyday etiquette of social life, violation of which does not typically carry severe moral condemnation.

Mores

Norms that are central to the core functioning of a society and social life, carrying deep moral and ethical weight.

Social Mobility

The extent to which individuals can move out of the socioeconomic stratum into which they were born.

Caste System

A closed, rigid system of social stratification where an individual's social position is fixed by birth and social mobility is virtually impossible.

Class System

A flexible form of social stratification where position is inherited at birth but can be altered through individual achievement, mobility, or fortune.

Class Consciousness

A condition in which people define their personal identity in terms of their class background, influencing social relations and business interactions.

Ethical System

A coherent set of moral principles and values that are applied to guide, evaluate, and shape human behavior.

Power Distance

Hofstede's cultural dimension measuring the degree to which members of a society accept that power is distributed unequally across institutions and organizations.

Uncertainty Avoidance

Hofstede's dimension reflecting the degree to which people within a culture feel threatened by ambiguous or unstructured situations and institute rules to minimize them.

Convergence Hypothesis

The perspective that ongoing globalization, consumer exposure, and modern communications are driving worldwide cultures toward common values and norms.

Ethnocentric Behavior

The belief in the intrinsic superiority of one's own culture, leading to the evaluation of foreign practices solely through home-culture standards.

Ethical Dilemmas

Complex decision-making situations in which none of the available operational or managerial alternatives appears ethically acceptable.

Tragedy of the Commons

A situation where a shared common resource owned by no single entity is overused and depleted by individuals acting in self-interest.

Friedman Doctrine

A straw man ethical philosophy asserting that the sole social responsibility of business is to maximize profits while complying with the law.

Cultural Relativism

A straw man ethical view stating that ethics are culturally determined, requiring businesses to adopt host-country ethics under the maxim 'when in Rome, do as the Romans do.'

Righteous Moralist

A straw man ethical position claiming that a multinational's home-country ethical standards are always the appropriate ones to follow in foreign operations.

Naive Immoralist

A straw man ethical stance stating that if an executive sees other foreign firms violating ethical norms in a host nation, their firm is justified in doing so as well.

Utilitarian Approach to Ethics

An ethical philosophy that measures the moral worth of an action strictly by its consequences, advocating actions that create the greatest good for the greatest number.

Kantian Ethics

Immanuel Kant's ethical philosophy holding that people possess inherent dignity and must always be treated as ends in themselves, never purely as means to an end.

Veil of Ignorance

John Rawls's philosophical device where individuals formulate just rules without knowing their own social class, race, gender, wealth, or abilities.

Difference Principle

John Rawls's principle stating that socioeconomic inequalities are only justified if they result in compensating benefits for the least-advantaged members of society.

Moral Courage

The strength of conviction required for managers and employees to reject profitable business actions that compromise ethical standards.

Noblesse Oblige

The French concept that persons and institutions of high social or economic standing carry an honorable responsibility to act benevolently toward society.

Sustainable Strategies

Business strategies that allow multinational enterprises to operate profitably without compromising environmental health or social responsibility toward stakeholders.

Free Trade

The absence of barriers to the free flow of goods and services between countries.

Mercantilism

An economic philosophy advocating that countries maintain a trade surplus by exporting more than they import.

Absolute Advantage

A country's ability to produce a product more efficiently than any other country.

Comparative Advantage

David Ricardo's theory that countries should specialize in goods they produce most efficiently and trade for others.

Factor Proportions Theory (Heckscher-Ohlin)

The theory that trade reflects differences in national factor endowments like land, labor, and capital.

New Trade Theory

Theory stating that the world market can support only a limited number of firms, highlighting economies of scale and first-movers.

Porter's Diamond of National Competitive Advantage

Four attributes shaping local firm competition: factor endowments, demand conditions, related industries, and firm strategy.

Import Tariff

A tax levied on imports that raises the cost of imported products relative to domestic goods.

Subsidies

Government payments to domestic producers to help them compete against low-cost imports or gain export markets.

Import Quota

A direct restriction on the quantity of a specific good that may be imported into a country.

Local Content Requirement (LCR)

A demand that a specific fraction of a good be produced domestically, benefiting domestic jobs.

Antidumping Policies

Policies designed to punish foreign firms that sell goods below cost, protecting domestic producers.

Infant Industry Argument

An economic argument that new industries should be protected until they become internationally competitive.

World Trade Organization (WTO)

The international organization established in 1995 (succeeding GATT) that regulates world trade and settles trade disputes.