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International Business > Chapter 2 & 3 > Flashcards

Chapter 2 & 3 Flashcards

1
Q

A country’s political economy refers to its

A

political, economic, and legal systems

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2
Q

These systems ______ and

_______each other

A

interdependent; interact and influence

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3
Q

A political system is

A

the system of government in

a nation

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4
Q

Political systems can be assessed

A

Collectivism vs Individualism

Democratic vs Totalitarian

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5
Q

m is a system that stresses the

primacy of collective goals over individual goals

A

Collectivism

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6
Q

is a political philosophy that

suggests individuals should have freedom over their economic and political pursuits

A

Individualism

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7
Q 
advocates state (government) ownership of the 
basic means of production, distribution, and 
exchange
A

Socialism

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8
Q

In the early 20th century, socialism split into

________

A

Communists and Social Democrats

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9
Q

communists held that collectivism should be achieved though

A

revolution and totalitarian dictatorship

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10
Q

social democrats worked to achieve collectivism by

A

democratic means

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11
Q

Today, many nations are moving toward

___________ whereby state-owned enterprises are sold to private investors

A

privatization

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12
Q

Individualism stresses

A

Individual freedom, self-expression, and personal responsibility; letting people pursue their own self-interests to achieve the best overall good for society; democratic systems and free markets

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13
Q

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

A

Democracy

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14
Q

What is the most common form of democracy today?

A

Representative Democracy

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15
Q

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

A

Totalitarianism

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16
Q

In most totalitarian regimes

A 
there is widespread political repression
 there are no free and fair elections
 media is censored
 basic civil liberties are denied
 challenges to the regime are prohibited
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17
Q

There are 4 major forms of totalitarianism today

A

Communist; Theocratic, Tribal, Right Wing

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18
Q

advocates achieving socialism through totalitarian dictatorship (ie. China)

A

communist totalitarianism:

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19
Q

political power is
monopolized by a party, group, or individual
that governs according to religious principles
(ie. Iran)

A

theocratic totalitarianism:

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20
Q 
a political party that 
represents the interests of a particular tribe 
monopolizes power (ie. Syria)
A

tribal totalitarianism

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21
Q

individual economic freedom is allowed but individual political freedom is restricted in the belief that it could lead to communism (ie. fascism)

A

right wing totalitarianism:

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22
Q

There are three types of economic systems

A

the market economy, the command economy,

and the mixed economy

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23
Q

refers to the rules, or laws, that regulate
behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained

A

Legal system

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24
Q

A country’s legal system is important because

A

laws regulate business practice
laws define the manner in which business
transactions are to be executed
laws set down the rights and obligations of those
involved in business transactions

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25
Q

There are three main types of legal systems:

A

Common Law, Civil Law, Theocratic Law

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26
Q

Common law

A

based on tradition, precedent,

and custom

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27
Q

Civil law

A
  • based on a very detailed set of

laws organized into codes

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28
Q

Theocratic law

A

based on religious teachings

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29
Q

In a common law state contracts

A

contracts are very detailed

where all contingencies are spelled out

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30
Q

In a civil law state contracts

A

contracts are shorter and much

less specific

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31
Q

establishes a uniform set of rules governing

commercial contracts who have their places of business in different nations

A

United Nations Convention in Contracts for

the International Sales of Goods (CIGS)

32
Q

Property rights are

A

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

33
Q

Property rights can be violated

A

by private action (theft, piracy, blackmail, and the
like by private individuals or groups)
by public action (public officials extort income or
resources from property holders)

34
Q

when a country has a high level of

corruption:

A

Foreign direct investment falls
International trade falls
Economic growth falls

35
Q

The Foreign Corrupt Practices Act

A

limits

corruption for U.S. companies

36
Q

Intellectual property (IP)

A

is property that is the
product of intellectual activity (patents,
copyrights, and trademarks)

37
Q

Product safety laws set

A

certain safety standards

to which a product must adhere

38
Q

Product liability involves

A

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

39
Q

Political, economic, and legal systems of a

country

A

• raise important ethical issues for the practice of
international business
• clearly influences the attractiveness of that country as
a market and/or investment site

40
Q

A country’s political economy influences its

A

level of economic development

41
Q

Higher levels of economic development create a

more favorable

A

environment for international

business

42
Q

One common measure is a country’s economic development

A

gross national income (GNI) per person of population

43
Q

adjustment
allows for a more direct comparison of living
standards in different countries

A

Purchasing Power Parity

44
Q

GNI and PPP data provide a _______ picture of

development

A

static ( it is also important to consider growth rates)

45
Q

Amartya Sen held that development should be

assessed less by material output and more by the

A

capabilities and opportunities that people enjoy

46
Q

The United Nations created the ________ based on life expectancy,
education attainment, and whether average
incomes are sufficient to meet the basic needs
of life in a country

A

Human

Development Index

47
Q

2 Engines of growth for an economy

A

Innovation and Entrepeneur

48
Q

new products, new processes,
new organizations, new management
practices, and new strategies

A

Innovation

49
Q

first commercialize innovative

new products and processes

A

Entrepreneurs

50
Q

creates greater incentives

for innovation and entrepreneurship

A

Market Economy

51
Q

regimes tend to improve long-term

economic growth

A

Democratic

52
Q

economic growth leads to

more

A

Democratic Regime

53
Q

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

A

Political Risk

54
Q

the likelihood that economic
mismanagement will cause drastic changes in a
country’s business environment that adversely
affects the profit and other goals of a business
enterprise

A

Economic Risk

55
Q

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

A

Legal risk

56
Q

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

A

Deregulation

57
Q

transfers the ownership of
state property into the hands of private
investors

A

Privatization

58
Q

that protects property rights

and the machinery to enforce that system

A

Legal system

59
Q

For managers, there are two main implications in international business:

A

the political, economic, and legal systems of a country
raise ethical issues
the political, economic, and legal environment of a
country clearly influences the attractiveness of country
as a market and/or investment site
2

60
Q

In an international market _______ are a function of market size, and current and future consumer purchasing power

A

benefits

61
Q

Three types of cost in international business

A

Political, Economic, and Legal

62
Q

include the cost of paying bribes

or lobbying for favorable or fair treatment

A

Political cost

63
Q

relate primarily to the
sophistication of the economic system, including
the infrastructure and supporting businesses

A

Economic Cost

64
Q

can be higher in countries with
dramatically different product, workplace, and
pollution standards, or where there is poor legal
protection for property rights

A

Legal Costs

65
Q

Advantages accruing to the first to enter a market

A

first-mover advantage

66
Q

Handicaps experienced by being a late entrant in a market

A

Late-mover disadvantages

67
Q

Since the 1980s there has been a move away from

______________ economies and ____________ economies towards ______________

A

Centrally-planned; mixed

Free market

68
Q

Democracy has spread to new countries

because

A

many totalitarian regimes failed to deliver
economic progress to the majority of their
population

new information and communication
technologies have broken down the ability of
the state to control access to uncensored
information

 economic advances of the last quarter 
century have led to the emergence of 
increasingly prosperous middle and working 
classes who have pushed for democratic 
reforms
69
Q

A document that specifies the conditions under which an exchange is to take place and details the rights and obligations of the partners involved

A

Contract

70
Q

Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention

A

Patent

71
Q

The exclusive legal rights f authors, composers, playwrights, artists, and publishers to publish and disperse their work as they wish

A

Copyright

72
Q

The design and names, oftn oficially registered, to which merchants or manufacturers disiginate and differentiate their products

A

Trademarks

73
Q

What is GNI?

A

The total annual income of a nation’s residents

74
Q

An international organization whose members sign treaties to agree to protect intellectual property

A

World Intellectual Property Organization

75
Q

An adjustment to GDP per capita to reflect differences in the cost of living

A

Purchasing Power PArity

International Business (6 decks)

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