INTB Exam 1

Globalization

the shift toward a more integrated and interdependent world economy

Globalization of production

many firms source goods and services from different locations around the globe

Moore's law

The power of microprocessor technology doubles and its costs of production fall in half every 18 months

Moore's law: data storage

doubles every twelve months

Global institution

monitor, manage, deal with disputes related to companies and governments getting involved

World Trade Organization (WTO)

deals with trade disputes between countries

International Monetary Fund (IMF)

manages currency related issues, deals with fluctuation issues

General Agreement on Tariffs and Trade (GATT)

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

Communist totalitarianism

government leadership advocates for communist/socialist

Theocratic totalitarianism

religious beliefs integrated with laws

Tribal totalitarianism

a political party that represents the interests of a particular tribe monopolizes power

Right-wing totalitarianism

individual economic freedom is allowed but individual political freedom is restricted in the belief that it could lead to communism

Common law

laws based on tradition, results of legal cases/decisions from legal cases

Civil law

laws based on parliament, congress decisions

Theocratic law

laws based on religious beliefs

Foreign Corrupt Practices Act (FCPA)

-Illegal to bribe a foreign government official to secure a business/for a contract

-Excludes facilitating payments and speed money

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

Copyright

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

Gross National Income (GNI)

measures the total annual income received by residents of a nation

Purchasing Power Parity (PPP)

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

Human Development Index (HDI)

A way the United Nations assesses the impact of a number of factors on the quality of human life in a country

-Educational attainment

-Life expectancy at birth

-Weather average incomes based on PPP estimates are sufficient to meet the basic needs of life in a country

Three measures used in the Human Development Index (HDI)

-Totalitarian regimes failed to deliver economic progress to the majority of their populations

-New information and communication technologies (TV, internet, social media)

-Economic advances have led to an increase in successful middle and working classes that push for democratic reforms

Three main reasons for the spread of democracy

Folkways

the routine conventions of everyday life

Mores

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

Social mobility

the extent to which individuals can move up in society

Caste system

social position is determined by the family into which a person is born into; a change in position is unlikely

Class system

the position a person has at birth can be changed through achievements and/or luck

Hofstede's dimensions

a framework for understanding cultural differences

Hofstede's dimensions: Power distance

people are unequal in physical and intellectual capabilities

Hofstede's dimensions: Individualism vs. collectivism

the relationship between the individual and their peers

Hofstede's dimensions: Uncertainty avoidance

the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity

Hofstede's dimensions: Masculinity vs femininity

the relationship between gender and work roles

Long-term vs. short-term orientation

the extent to which a culture programs its citizens to accept delayed gratification of their material, social, and emotional needs

Organization for Economic Co-operation and Development (OECD)

An international organization that works to promote policies that improve the economic and social well-being of people around the world.

The Friedman doctrine

The social responsibility of business is to increase profits as long as the company stays within the rules of law

Sullivan principles

Ethical guidelines for U.S. companies operating in apartheid-era South Africa. As long as they did no harm, US companies were permitted to invest operate in South Africa during the apartheid

Passive resistance

Companies should not comply with apartheid laws in their own operations

Active opposition

companies should work to promote the abolition of apartheid

Consequentialism (teleology)

An act is morally right if the result is desirable or the ends justify the means.

Egoism

Grounded in consequences/benefits/outcomes for the individual.

Utilitarianism

Seeks the greatest good for the greatest number of people/society.

Relativism

Defining one's ethics in terms relative to a certain group (e.g. firms or industries)

Virtue ethics

A set of virtues is deemed valid regardless of the outcomes.

Cultural relativism

Ethical standards vary from culture to culture; ethics are culturally determined

Moral absolutism

A universal standard should apply for business conduct.

Virtue

Means being a certain type of person with a certain mindset, such as trust, self-control, empathy, fairness, and truthfulness.

Ethical relativism

The belief that ethics are relative to the cultural context.

Consequentialist example

Working for a company that builds hospitals and weighing the benefits/results of paying a bribe to obtain a permit

Virtue ethics example

Paying a bribe is a violation of virtues, so they wouldn't pay the government the bribe.

Tariffs

a tax placed on imports that effectively raises the cost of imported products relative to domestic products

Specific tariffs

taxes placed as a fixed charge for each unit of a good imported

E.g. $3 per barrel of oil, 10 cents per orange

Ad valorem tariffs

taxes placed as a proportion of the value of the imported goods

E.g. 8% on a container of bananas (0.8 * $10,000 = $800 tax)

Subsidies

A government payment to a domestic producer that helps them compete against low-cost foreign imports

Import quotas

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

Tariff rate quota

A hybrid of a quota and a tariff where a lower tariff is applied to imports within the quota than to those over the quota.

E.g. allowing the first 5,000 tractors imported at a tariff rate of 10%, any tractors imported above 5,000 would have a tariff rate of 30%

Voluntary export restraint

A quota on trade imposed by the exporting country, typically at the request of the importing country's government.

Local content requirements

A demand that a specific fraction of a good must be produced domestically.

E.g. producing a soft drink in a country having to use the local sugar

Administrative policies

Bureaucratic rules designed to make it difficult for imports to enter a country.

Antidumping policies

Designed to punish foreign firms that engage in dumping

Dumping

Selling goods in a foreign market below their cost of production, or selling goods in a foreign market below their 'fair' market value.