IB201 Midterm

Power Distance

Measures how comfortable people are with heirarchy and power differences and explains the degree of formality in communication

Uncertainty Avoidance

Describes how much a society tolerates risk, uncertainty, and ambiguity

Individualism vs. Collectivism

Examines whether a society values individuals or groups more

Masculinity vs. Femininity

Describes whether a society values success or well-being and relationships

Long term vs Short term

Highlights how societies approach goals and business strategies

Indulgence vs Restraint

Examines how much a society allows people to enjoy life and satisfy desires

Globalization

The shift toward a more integrated and interdependent world economy.

Globalization of Markets

The merging of historically distinct and seperate 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 various factors of production.

Factors of Production

Components of production such as labor, energy, land, and capital

General Agreement on Tariffs and Trade (GATT)

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders; led to WTO.

World Trade Organization

The organization that succeeded the General Agreement on Tariffs and Trade and now acts to police the world trading system.

International Monetary Fund

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

World Bank

International organization set up to promote economic development, primarily by offering low interest loans to cash-strapped governments of poorer nations.

United Nations

An international organization made up of 191 countries charged with keeping international peace, developing cooperation between nations, and promoting human rights.

International Trade

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

Foreign Direct Investment (FDI)

Occurs when a firm invests resources in business activities outside its home country.

Moore's Law

The premise that the power of microprocessor technology doubles and its cost of production drops in half every 18 months.

Stock of Foreign Direct Investment

The total accumulated value of foreign-owned assets at a given time.

Multinational Enterprise (MNE)

Any business that has productive activities in two or more countries.

International Business

Any firm that engages in international trade or investment.

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 in public ownership of the means of production for the common good of society.

Communists

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

Social democrats

Those committed to achieving socialism by democratic means.

Privatization

The sale of state-owned enterprises to private investors.

Individualism

An emphasis on the importance of guaranteeing individual freedom and self-expression.

Democracy

Political system in which government is by the people, exercised either directly or through elected representatives.

Totalitarianism

Form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

Representative Democracy

A political system in which citizens periodically elect individuals to represent them in government.

Communist totalitarianism

A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.

Theocratic totalitarianism

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

Gross National Income (GNI)

The yardstick for measuring economic activity of a country, this measures the total annual income of a nation's residents

Purchasing Power Parity (PPP)

An adjustment in gross domestic product per capita to reflect differences in the cost of living

Human Development Index (HDI)

An attempt by the UN to assess the impact of a number of factors on the quality of human life in a country

Innovation

Development of new products, processes, organizations, management practices, and strategies.

Entrepreneurs

Those who first commercialize innovations

Deregulation

Removal of government restrictions concerning the conduct of a business

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

First-Mover Advantages

Advantages accruing to the first to enter a market

Later-Mover Disadvantages

Handicaps experienced by being a late entrant in a market

Political Risk

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

Economic Risk

The likelihood that events, including economic mismanagement, will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a particular business enterprise

Legal Risk

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

business ethics

accepted principles of right or wrong governing the conduct of business people

ethical dilemma

a difficult choice has to be made between two courses of action, either of which entails transgressing a moral principle.

employment practices

child labour, work conditions, safety, wages

human rights

freedom of association, speech, assembly, movement, and freedom from political repression

The Uyghurs

China has been accused of committing crimes against humanity and possibly genocide

environmental pollution

impact on the environment, health and livelihood of residents, cultural impact

corruption

gift giving, bribery, grease payments

moral obligation

the concept of social responsibility refers to business people taking the social benefit into account when making decisions.

Corporate Social Responsibility

social accountability to itself, stakeholders, and. the public

obstructionist stance

a company makes it difficult for customers to raise concerns

defensive stance

companies take the position fo it wasn't their fault and nothing can be done

Accommodative stance

when a company exceed customer expectations

Proactive stance

reaches out to stakeholders in advance

personal ethics

reflects personal ethics, or may be away from their original social context

decision making process

asking the question of if the action if ethical or not

organizational culture

culture influences decision making

unrealistic performance expectations

unrealistic goals that may only be achieved through an unethical manner

leadership

expectations and how they should conduct themselves

societal culture

there are cultural differences among countries including behaviour in specific contexts

straw man argument

an argument that will not stand up to scrutiny

Friedman Doctrine

there are no social obligations, as long as operating within the rules of the law

cultural relativism

firms should adopt the ethics of the cultures in which they operate

grease payment

payments to speed up or ensure the performance of normal government duties

Naive immoralist

argues that a behavior is ethical since everyone else is doing it

Sullivan Principles

A twofold approach to doing business in apartheid South Africa, comprising passive resistance to apartheid laws and attempts to influence the abolition of apartheid laws

Foreign Corrupt Practices Act

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions

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

A OEDC convention that establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective

Cultural Relativism

The belief that ethics are nothing more than a reflection of a culture and that firms should simply adopt the ethics of the cultures in which they operate

Righteous Moralism

The belief that a multinational's homecountry standards of ethics are the appropriate ones for companies to follow in foreign countries

Naive Immoralism

The belief that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either

Kantian Ethics

The belief that people should be treated as ends and never as means to the ends of others.

Rights Theories

A twentieth century ethical approach based on the belief that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

Utilitarian Approaches to Ethics

These hold that the moral worth of actions or practices is determined by their consequences

Just Distribution

A distribution that is considered fair and equitable.

Code of Ethics

A formal statement of the ethical priorities to which a business adheres.

Justice Theories

Ethical approaches that focus on the attainment of a just distribution of economic goods and services

Moral Imagination

Standing in the shoes of a stakeholder and asking how a proposed decision will affect that stakeholder.

Fundamental Rights of Stakeholders

Basic rights of stakeholders, such as the right to information about products and working conditions, that should be considered when business decisions are made.

Noblesse Oblige

A French term referring to the honorable and benevolent behavior required of persons of noble birth.

friedman doctrine

states that the only social responsibility of business is to increase profits, as long as the company stays within the rules of law.

straw man approach

to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision making in a multinational enterprise.

righteous moralist

claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

moral courage

Backing away from a business deal for ethical reasons

rawl's theory of justice

that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage.

Free Trade

The absence of barriers tot he free flow of goods and services between countries

New Trade Theory

The observed pattern of trade in the world economy may be due in part to the ability of firms in a given market to capture first-mover advantages

Mercantilism

Advocates that countries should simultaneously encourage exports and discourage imports

Zero-Sum Game

A situation in which an economic gain by one country results in an economic loss by another

Absolute Advantage

Has this is a product if it is more efficient than any other country at producing it

Constant Returns to Specialization

The units of resources required to produce a good are assumed to remain constant no matter where one is on a country's ppf

Factor Endowments

A country's endowment with resources such as land, labor, and capital

Economies of Scale

Cost advantages associated with large scale production

First-Mover Advantage

Advantages accruing to the first to enter a market

Balance of Payments Account

National accounts that track both payments to and receipts from foreigners