Chapter 10 Flashcards
What brings together people from countries with varying cultures, values, laws, and ethical standards?
Global Business. International businesspeople must understand the values, culture, and ethical standards of their own country, but also must be sensitive to the same in other countries
Define Country cultural values
Are specific to countries, regions, sects or groups
True or false: Success requires understanding the global business environment
True
Everything in our surroundings that is made by people is
National Culture.
- Both tangible and intangible
- Each nation has a cultural belief about acceptable business activities
- Subcultures can be found within many nations
Name one of the four cultural dimensions that impact the business environment
Made by Geert Hofstede, the four are:
- Individualism/collectivism
- Power distance
- Uncertainty avoidance
- Masculinity/femininity
Global common values are shared across most cultures. They are often based on law. True or false?
False - often based on RELIGION and REFLECTED by law.
What are some desirable common values and some undesirable common values?
Desirable:
- Integirty
- Family and Community Unity
- Equality
- Honesty
- Fidelity
- Sharing
- Unselfishness
Undesirable:
- Ignorance
- Pride
- egoism
- selfish desires
- lust
- greed
- adultery
- theft
- deceit
- lying
- murder
- addiction
- slander
- hypocrisy
SRC stands for
the Self-Reference Criterion. Unconscious reference to one’s own cultural values, eperiecnes, and knowledge. Idea that “we” differ from “them”. This is common in international business - we react based on our knowledge grounded in culture or accumulated over our lifetime.
Define Cultural Relativism
Concept that morality varies from one culture to another
Who is Adam Smith and what did he emphasize?
Laissez-Faire capitalism
Who is Milton Friedman?
Government can stimulate the private sector
Risk Compartmentalization happens when
Corporate profit centers are unaware of the consequences of their decisions on the firm as a whole
What things did Keynes and Friedman agree on?
- People have rational preferences among outcomes that can be identified and associated with value.
- Individuals seek to maximize utility; firms seek to maximize profits
- People act independently on the basis of full and relevant information
What was the main ideal of John Maynard Keynes?
Government can stimulate the private sector
What are the two schools of economic thought?
Rational and Behavioral economics
Behavioral economics can be defined as
assumes that humans do not always act rationally due to genetics and learned behavior.
Define Rational economics
Rational economics, which assumes that people are predictable and base their decisions on maximizing utility based on resources
social demovracy, formed in the 40;s as an offshoot of socialism, is defined as
private ownership of property, but a large government.
Bi-Modal Wealth distribution means that
there are many poor people, concentrated wealth at the top, and a small middle class. Also think multinational corporations concentrate control of the global economy to a few companies.
Define socialism, made prevalent by Karl Marx
Socialism - Advocates that wealth and power should be shared across society, based on the amount of work expended in production.
What is an MNC?
Public companies that operate on a global scale without significant ties to any one nation or region. Subject of much ethical debate due to their size and financial power.
The Bretton Woods agreement of 1944 led to the creation of the IMF. What is the IMF?
International Monetary Fund - Makes short-term loans to member countries while providing foreign currencies for its members. Promotes responsible business conduct as well
The UN today comprises of 193 member nations. When was it founded?
- The goal is ti promote world peace, improve relationships between countries, and support better human rights and standards. Today, focuses much on human rights and environmental rights issues.
What does BSR stand for?
Business for Social Responsibility. A globally-based resource system that tracks emerging issues and trends. Also provides information on corporate leadership and best practices, while conducting educational workshops and assisting organizations in developing business ethics tools
Established in 1995, this organization began at the Uruguay round of the General Agreement on Tariffs and Trade (GATT); 159 member and observer nations
the World Trade Organization
- Administers trade agreements, facilitates trade negotiations and settles trade dispute
- Monitors trade policies of member nations
- Addresses economic and social issues of many industries while attempting to reduce their trade barriers
- Provides legally binding ground rules for commerce
- Not all countries agree with the WTO on free trade
See Picture for Ten Principles
slide 21
the set of ten principles promoting human rights sustainibility, and eradication of corruption is known as
the UN Global compact. It’s a collaborate arrangement between businesses, governments, NGO’s, societies, and the UN. There’s voluntary membership, but members report on progress towards goals
True or False: Bribery is illegal everywhere
False - varies by country since it can be a challenge to determine what a bribe is. Most developed countries recognize bribery is not conducive to business. However, companies must determine what constitutes a bribe
The practice of charging high prices for products in domestic markets, while selling the same products in foreign markets at low prices; often below cost
is called
Dumping. Places local firms at a disadvantage. the US has anti-dumping laws in place
One key area of international risk is
- The economic outlook for many Eurozone countries remains weak
- Chinese leadership is promoting nationalism, which could threaten its relationships with other countries
- Emerging markets carry significant risks for international investors
See slide 25 for global business ethics and legal issues
slide 25
Antitrust laws are meant to discourage fair competition
False - encourage fair competition
What is the FCPA?
The U.S. Foreign Corrupt Practices Act (FCPA) prohibits companies from paying foreign officials to keep/obtain business, with exceptions. the UK has the UK Bribery Act that goes much further
Human Rights are codifed in the UN Human Rights Declaration. What are serious issues in this area today?
Health-care issues. Many whether whether health-care is rather a right or a privilege. Also, over a billion people lack access to healthcare globally. Companies are dropping more and more costly employee insurance plans, leaving more people without affordable insurance. Last, patents assign rights to companies who can charge what they wish
An inherent dignity with equal and inalienable rights is known as
Human rights. Includes the foundation of freedom, justice, and world peace
An example of a privacy violation is
- Hacking into people’s personal accounts
- Tracking users through their mobile phone apps
- Company’s use of personal information
Vertical Systems are defined as when
A channel member controls the entrie business system. Can occur when MNCs grow unchecked and create a monoply. These systems reduce competiion and can put small comptitors out of business.
The belief that consumers should dictate the economic structure of society is known as
Consumerism. States that consumed goods at an increasing rate is desirable. Equates personal happiness with purchasing and consuming products.
The minimum wage that workers require to meet basic needs is known as the
Living wage. The minimum wage that workers require to meet basic needs
Executive compensation, a major topic during the last global recession, regards the
Growing global demand for alignment between managerial performance and compensation
International firms today have many global ethical concerns related to labor. Name one
Gender pay equality
Right to join unions
Standards of Living
Ethical decision making is essential to running a successfully operating global business. True or False?
True. Some MNCs have created officers/committees to oversee global compliance issues. Successful implementation of a global ethics program requires extensive employee training.
True or False: Made-to-break (Planned obsolescence) encourages consumers to buy more items
True
Which of the following is based on the assumption that people are predictable and will seek to maximize the utility of their choices relative to their needs and wants?
Rational economics
