Chapter 2&3&4 Flashcards
Challenge for macroeconomists:
Determine what makes some countries relatively wealthy and other countries relatively poor,
And then to implement policies and programs that lead to increasdd prosperity for everyone in all counties.
Foundation of capitalism
+ four additional freedoms of President Franklin Roosevelt
- The right to own a private company
- the right to own a business and keep all profits
- freedom of competition
- freedom of choice
- freedom of speeche and expression
- freedom of worship in your own way
- freedom from want
- freedom from fear
Free market
Benefits & Limitations
Benefits
- allows for open competition among companies
- provide opportunities for poor people to work their way out of poverty
Limitations
-people may let greed drive them
Socialism
Benefits & negative
Benefits
- social equality
- free education
- free healthcare
- free childcare
- longer vacations
- shorter workweeks
- generous sick and leave
Negative
- fee incentives to take risk
- brain drain (country’s best workers leave)
- fewer inventions and innovation because reward isnt as great as in capitalistic countries
Four types of unemployment
-frictional
Takes time to find a job
-structional
Restructuring of firms of mismatch jobskills
-cyclical
Because of recession or similair downturn
-seasonal
Occurs where demands
Four phases of long-term business cycles
-economic boom
-recession
Two of more consecutive quaters of decline in the GDP
-Depression
Severe recession usually with deflation
-recovery
Economy stabilizes and starts growing (to a
Ecobimic boom)
Amount of commitement, control, risk and profit potential
From least to most
Licensing–> exporting –> franchising –> contract manufacturing –> international joint ventures and strategic allicances –> foreign direct investment
international joint venture
Benefits & Drawbacks
Benefits
- shared technology
- shared marketing and management expertise
- entry to market where foreign companies are often not allowed unless their goods are produces locally
Drawbacks
- one can go off his own with new learn techno
- shared technology may become obsolete
- can become too large and isnt flexible anymore and it has to be
SWF
Sovereign wealth funds: investment funds controlled by government holding large stakes in foreign companies
A sound philosophy to adopt in global market is this :
Never assume that what works in one country will work in another
NAFTA
North American free trade agreement:
Agreement that created a free-trade area among the US, Canada and Mexico
3 questions when you face a unethical action
- is it legal?
- is it balanced?
- how will this make me feel about myself
Reasons for business to managing ethically (7)
1 maintain good reputation
2 keep existing customers and attract new ones
3 avoid lawsuits
4 reduce employee turnover
5 avoid government intervention (eg new laws)
6 to please the customer, employees and society
7 TO DO THE RIGHT THING
Compliance-based ethic code
Integrity-based ethic code
Ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers
Ethical standards that define the organization’s guiding values create an environment that supports ethically sound behavior, and stress a shared accountability among employees
6 steps to improve business ethics
1 top managers must adopt and unconditionally support an explicit corporate code of conduct
2 employees must understand that expectations for ethical behavior
3 managers and others must be trained to consider the ethical implications of all business decisions
4 ethic office, where you can whistleblower
5 outsiders (customers, suppliers) must be told about the ethics program
6 enforced with timely action if rules broken
