International Business BUSMHR 2000 OSU Midterm 1

Declining trade barriers

better ability to sell overseas

Declining investment barriers for producers means...

better ability to produce overseas

Enhanced communication technologies

better ability to control overseas operations

Enhanced transportation technologies

lowered distance between countries

Producers Arguments for

Globalization

more markets to sell in

Producers Arguments against

Globalization

can go bankrupt due to competition

Environment Arguments for

Globalization

Hardly any

Environment Arguments against

Globalization

Lack of adequate regulations

Consumers Arguments for

Globalization

More products to choose from

Consumers Arguments against

Globalization

Don't know how products are produced

Workers Arguments for

Globalization

Development of better skills

Workers Arguments against

Globalization

Loss of jobs due to competition

Political Systems- USA

Representative Democracy

Political Systems- France

Democratic Socialism

Political Systems-Zimbabwe

Tribal Totalitarianism

Political Systems- Italy in the 1930s

Right-Wing Totalitarianism

Political Systems-China

Communist Totalitarianism

Political Systems-Saudi Arabia

Theocratic Totalitarianism

Economic Systems-Largely determined by supply and demand

Market based

Economic Systems-Dominated by large monopolistic firms

Command

Economic Systems-Government uses incentives/subsidies to get firms to do what it wants

State directed

Economic Systems-Free market with government social welfare programs

Mixed

GNP

Market value of goods and services produced by domestic factors of production home or abroad

GDP

Value of production that occurs within a country's borders

GNI

GDP+GNP

Ming is from a powerful family, and because of this, she will be in an authoritative position in the workplace

Power Distance

Ben has very loose ties with his family and enjoys wearing provocative T-shirts to express a sense of freedom and uniqueness. He shows no interest in joining the family business.

Individualism/Collectivism

Elena has worked at the same company for more than fifteen years. She parks in the same spot every day and values routine and predictability.

Uncertainty Avoidance

Jiro is extremely driven and assertive. His goal is to become the most powerful man in the company.

Masculinity/Femininity

Bill works very hard in his job, and expects to see the reward of his labor quickly.

Time orientation

Key Aspects of Major Religions-Christianity

"Son of God"

Key Aspects of Major Religions-Islam

Pilgrimage to Mecca

One true god, Mohammad was his prophet

5 pillars: praying towards mecca, recite shahadah, give to poor, fast during ramadan, &pil.

Sunni vs. Shi'a Muslims

Leadership must be related to Muhammed in Shi'a

Key Aspects of Major Religions-Hinduism

Moksha (one with god)

Reincarnation

Polytheistic but one original god

Gita is book

Temple

Key Aspects of Major Religions-Buddism

Search for the Middle Path (no extremes)

Enlightenment

Reincarnation

Goal is Nirvana

No God

Confucianism

Ethical system, exists side by side with religions

Cultural Relativism

Firms should behave according to a country's norms

Spiderman Doctrine

With great power comes great responsibility

Noblesse Oblige

Firms should behave in a benevolent manner

Friedman Doctrine

A firms only responsibility is profit maximization

Corporate Social Responsibility

A firm should consider the social consequences of it's actions

Porter's diamond model-Factor Endowments

Includes resources AND lack of resources

Porter's diamond model-Firm Strategy, Structure, and Rivalry

Competition enhances firms capabilities

Porter's diamond model-Demand Conditions

knowledgeable buyers pressure firms to improve their products

Porter's diamond model-Related and Supporting Industries

Beneficial spillover effects can strengthen multiple industries

Trade Theory- Hecksher-Ohlin

Countries should produce goods using their most abundant factors of production

Trade Theory-Mercantilism

Trade helps a country to earn more gold

Trade Theory-Diamond Model

Innovation rules everything

Trade Theory-Comparative Advantage

When each country specializes in what they do best, resources are used more efficiently across the world

MNE/MNC/TNC

Multinational Enterprise/MNCorporation/Trans-National Corporation

Engages in international investments

Home Country

Where MNE is headquartered and controlled

Host Country

Where MNE is doing business outside of the home country

Globalization

Increasing integration of national economies

Who conducts IB?

Individuals

Companies

Govt Bodies

International institutions

Passive IB Investments

Small stock investments in companies

Active IB Investments

Buying or building a plant abroad

Globalization of production

producing different parts in multiple countries for economic advantage

Globalization of markets

Selling to mult. countries for higher revenue base, economies of scale

Effects on national sovereignty

Regulated by WTO and IMF, not required to join but hard to compete if not

Collectivism

concerned with the needs of overall society rather than the individual (welfare, socialism)

Individualism

Freedoms and emphasis people place on own economic self interest

PPP

Purchasing power parity: # of units of currency needed to buy 1$ worth of good or service in US

Quality of life includes these factors

happiness, life expectancy, ed., purch. power, health, ect.

Distrib of income-GINI index

Measures the degree of inequality in the distribution of family income in a country

Human devel. Index

Measures human quality of life, based on life expect., ed., PPP based incomes

Common law

Tradition, precedent, customs, interpreted by court

Civil Law

All laws are codified, written for all contingencies

Theocratic Law

Religious precepts from text, ex: islamic law, banks cant charge interest on loans

Culture

System of values and norms shared among a group of people

What is a Society

Group of people bound together by a common culture

Nation State

Political creation, can have many cultures or societies

Ethnocentrism

Belief that your own country's or culture's ideas are always best

Polycentricism

Local customs should always prevail, adapt to where you are

Geocentricism

Can find good practices around the world, take best ideas and adopt

Maslows hierarchy of needs (low to high)

Physiological, security, affiliation, esteem, self actualization

Foreign Corruption Practices Act of 1977

US Companies cannot pay large bribes to intl. officials for business

OECD Reg. Agency followed suit later, do not allow large bribes but small ones ok