IBT EXAM MIDTERM

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

establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations.

Property

refers to a resource over which an individual or business holds a legal title, that is, a resource that it owns which include land, buildings, equipment, capital, mineral rights, businesses, and intellectual property (ideas, which are protected by patents, copyrights, and trademarks).

Property rights

legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.

Private action

refers to theft, piracy, blackmail, and the like by private individuals or groups.

Public action

occurs when public officials, such as politicians and government bureaucrats, extort income, resources, or the property itself from property holders.

Corruption

is seen and treated as illegal, and when discovered, violators are punished by the full force of the law.

Foreign Corrupt Practices Act

This law makes it illegal to bribe a foreign government official to obtain or maintain business over which that foreign official has authority, and it requires all publicly traded companies (whether or not they are involved in international trade) to keep detailed records that would reveal whether a violation of the act has occurred.

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

it obliges member states to make the bribery of foreign public officials a criminal offense.

Intellectual property

property that is the product of intellectual activity, such as computer software, a screenplay, a music score, or the chemical formula for a new drug.

Patent

grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention.

Copyrights

are the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.

Trademarks

are designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

Trade Related Aspects of Intellectual Property Rights (or TRIPS)

the most recent world trade agreement, signed in 1994 extends the scope of the General Agreement on Tariffs and Trade to cover intellectual property.

Product safety laws

set certain safety standards to which a product must adhere.

Product liability

involves holding a firm and its officers responsible when a product causes injury, death, or damage.

Liability laws

are typically least extensive in less developed nations.

INDONESIA- ASIAS STUMBLING GIANT

Indonesia- a vast country with 220 million people, 17,000 islands and 3,200 miles long.

Spoken language

is the use of words and sounds to communicate ideas, thoughts, emotions, and information through speech.

Unspoken language

means nonverbal communication, or communicating without words.

Formal education

plays a key role in society because it helps individuals learn essential language, conceptual, and mathematical skills needed in a modern society.

Culture

has a strong influence on the workplace, especially for international businesses operating in different countries.

The Power distance

Explains how societies handle inequality in power and authority.

The Individualism versus collectivism dimension

Focuses on the relationship between the individual and the group.

Uncertainty avoidance

Refers to how comfortable a culture is with uncertainty and risk.

The masculinity versus femininity

Looks at gender roles and work values.

Confucian dynamism

This dimension focuses on attitudes toward time, persistence, respect for tradition, social order, saving face, and returning favors.

Cross-Cultural Literacy

One of the biggest risks for a company entering a foreign country is being ill-informed about the local culture.

Ethnocentrism

often leads to disrespect and misunderstanding, and it can damage international business relationships.

Culture influences national competitive advantage

because a country’s values and norms affect the costs of doing business, which in turn impacts global competitiveness.

GNI (Gross National Income)

is the total income earned by a country’s people and businesses in one year, including income from abroad.

PPP (Purchasing Power Parity)

adjusts income figures to reflect differences in cost of living between countries.

Amartya Sen

argues that development should be measured not just by economic output like GNI per capita, but by the real freedoms and opportunities people have.

The Human Development Index (HDI)

is a measure created by the United Nations Development Programme (UNDP) in 1990 to assess how well people are living in different countries, beyond just income or wealth.

Innovation

is the creation of new products, processes, management methods, organizational structures, or business strategies.

Entrepreneurship

is the process of bringing innovations to the market and turning ideas into real economic value.

Economic freedom

allows individuals to make their own business decisions, such as starting a company, investing, or introducing new ideas.

Private ownership

gives individuals and firms control over their resources and ideas.

Profit incentives

motivate entrepreneurs to innovate and compete.

Economic development

refers to improvements in income, health, education, and overall quality of life.

STATE IN TRANSITION

Since the late 1980s, many countries have undergone major political and economic changes.

The Nature of Economic Transformation

The shift toward a market-based economic system often entails a number of steps: deregulation, privatization, and creation of a legal system to safeguard property rights.

Deregulation

involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate.

Privatization

transfers the ownership of state property into the hands of private individuals, frequently by the sale of state assets through an auction.

Legal Systems

A well-functioning market economy requires laws protecting private property rights and providing mechanisms for contract enforcement.

Implications of Changing Political Economy

The long-standing ideological conflict between collectivism and individualism that defined the twentieth century is less in evidence today.

Benefits

the long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth (purchasing power) of consumers in that market, and the likely future wealth of consumers.

First-mover advantages

are the advantages that accrue to early entrants into a market.

Late-mover disadvantages

are the handicaps that late entrants might suffer.

Costs

a number of political, economic, and legal factors determine the costs of doing business in a country.

Political Risk

likelihood that political forces will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a business enterprise.

Economic Risk

likelihood that economic mismanagement will cause drastic changes in a country's business environment that hurt the profit and other goals of a particular business enterprise.

Legal Risk

likelihood that a trading partner will opportunistically break a contract or expropriate property rights.

Overall Attractiveness

The overall attractiveness of a country as a potential market or investment site for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country

Concept Of Culture

Scholars have never been able to agree on a simple definition of culture.

Culture

is the shared values, beliefs, norms, and customs that guide people’s behavior.

Values

are the beliefs and principles that a person or society considers important and right.

Norms

are the rules and expectations in a society that guide how people should behave in different situations.

Folkways

are the routine conventions of everyday life.

Mores

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

Social Structure

refers to how a society is organized and how people relate to one another.

Individual

is the basic building block of social organization.

Group

is the primary unit of social organization in many other societies.

Social Stratification

is the division of society into hierarchical layers or classes based on factors like wealth, education, occupation, or social status.

Religion

is a system of beliefs, practices, and moral codes that guide people’s behavior, values, and attitudes toward life.

Christianity

is the most widely practiced religion in the world.

Islam

dates back to AD 610 when the prophet Muhammad began spreading the word.

Hinduism

began in the Indus Valley in India more than 4,000 years ago, making it the world's oldest major religion. XD

Buddhism

was founded in India in the sixth century BC by Siddhartha Gautama, an Indian prince who renounced his wealth to pursue an ascetic lifestyle and spiritual perfection.

Confucianism

was founded in the fifth century BC by K'ung-Fu-tzu, more generally known as Confucius.

Ethical Systems

can be defined as frameworks within the field of ethics that propose various sets of rational behaviors aimed at promoting stability and flourishing, categorized into consequentialist, deontological, and virtue theories.

Straw men

approach to business ethics, including the Friedman doctrine, cultural relativism, the righteous moralist, and the naive immoralist, are critiqued by scholars for offering inappropriate ethical decision-making guidelines in multinational enterprises.

The Friedman Doctrine

Milton Friedman, in his 1970 article, argues that the sole social responsibility of business is to increase profits while adhering to legal regulations.

Cultural Relativism

is the belief that ethical standards are shaped by culture, meaning businesses should follow the moral practices of the country in which they operate.

The Righteous Moralist

asserts that companies should adhere to their home-country ethical standards in foreign nations, a perspective favored by managers from developed countries.

The Naive Immoralist

suggests that if a multinational manager observes local firms ignoring ethical norms, they should follow suit.

Utilitarian and Kantian ethics

have historically influenced business ethics, with utilitarianism focusing on the consequences of actions to maximize good and minimize harm.

Rights theories

developed in the twentieth century, assert that fundamental human rights transcend national and cultural boundaries, establishing a baseline for morally acceptable behavior.

Universal Declaration of Human Rights (UDHR)

the United Nations Universal Declaration of Human Rights establishes fundamental rights that transcend national and cultural boundaries.

Justice theories

focus on achieving a fair and equitable distribution of economic goods and services.

Implications for Managers

managers in multinational firms face tough ethical decisions related to working conditions, human rights, corruption, and pollution.

Hiring and Promotion

hire people who follow ethical standards and avoid unethical behavior.

Organization Culture and Leadership

build a culture that values ethics.

Employees

Unilever values diversity, trust, respect, and responsibility in the workplace.

Business Integrity

Unilever strictly prohibits bribery and improper advantages in business.

Ethical Standards and Leadership

Unilever enforces high ethical standards by rejecting poor working conditions, child labor, and bribery.

Independent Auditing and Culture

companies like Nike use independent auditors to ensure subcontractors comply with ethical codes.

Ethical Performance Management

for example, General Electric’s former CEO Jack Welch categorized managers based on values and performance, rewarding those with the right values and dismissing those who didn’t align with the company’s core ethics, regardless of skill.

Decision-Making Processes

establishing an ethical culture requires a moral compass.

ETHICS OFFICERS

to ensure that businesses behave ethically, many firms now appoint ethics officers who are responsible for training employees to be ethically aware, integrating ethical considerations into business decisions, and enforcing the company's code of ethics.

MORAL COURAGE

employees working in international business need moral courage to do what is right, even if it means losing money or facing trouble.

Ethics

refers to accepted right and wrong that guide human behavior.

International Business

involves commercial activities, including trade of goods, services, capital, and technology, across national borders, often called globalization, involving firms from small exporters to large multinationals like Amazon, Apple, and Samsung, and encompasses various methods like exporting, franchising, joint ventures, and foreign direct investment to expand markets, reduce costs, and access resources.

Employment Practices

refer to the policies and procedures that govern how companies treat their employees, especially in a global setting.

Human Rights

refers to the basic rights and freedoms of the people such as freedom from slavery, freedom from speech, freedom from association, safe and humane working conditions.

Environmental Pollution

is the introduction of harmful substances or energy (like heat, noise, radiation) into the natural environment (air, water, soil) by human activities, causing undesirable changes that negatively affect ecosystems, wildlife, and human health, disrupting natural processes and balance.

Corruption

refers to the abuse of entrusted power for personal or illicit gain, involving dishonest or fraudulent acts like bribery, fraud, embezzlement, nepotism, influence peddling, and extortion, leading to unfair advantages, wasted resources, and eroded public trust in systems like government, business.

Ethical Dilemmas

managers often face situations where every option has ethical trade-offs.

The Roots of Unethical Behavior

individual, organizational, and social factors frequently contribute to unethical behavior, which is generally motivated by strong pressure to achieve objectives, inadequate leadership, and self-interest.

Personal Ethics

individual moral values are shaped by upbringing, education, and life experiences.

Decision-making processes

poor oversight means there are no checks to catch unethical choices.