Chapter 4: Global Management

Question 1

Globalization

Answer 1

The trend of the world economy toward becoming a more interdependent system

Question 2

Global village

Answer 2

The “shrinking” of time and space as air travel and the electronic media have made it easier for the people around the globe to communicate with one another

Question 3

E-commerce

Answer 3

Electronic commerce

The buying and selling of a goods and services over computer networks

Question 4

Global economy

Answer 4

The increasing tendency of the economies of the world to interact with one another as one market instead of many national markets

Question 5

Minfirms operating world wide

Answer 5

Small companies can get started more easily

Small companies can maneuver faster

Question 6

Cross cultural awareness

Answer 6

The ability to operate in different cultural settings

Question 7

Multinational corporation

Answer 7

A business firm with operations in several countries

Question 8

Multinational organization

Answer 8

A nonprofit organization with operations in several countries

Question 9

Ethnocentric managers

Answer 9

Managers who believe that their native country, culture, laugaue, and behavior are superior to all others

Question 10

Parochialism

Answer 10

A narrow view in which people see things solely through their own perspective

Question 11

Polycentric managers

Answer 11

Managers who take the view that native managers in the foreign offices best understand native personnel and practices, and so the home office should leave them alone

Question 12

Geocentric managers

Answer 12

Managers who accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective

Question 13

Why companies expand internationally

Answer 13

1) availability of supplies
2) new markets
3) low labor costs
4) access to financial capital
5) avoidance of tariffs and import quotas

Question 14

Maquiladoras

Answer 14

Manufacturing plants allowed to operate in Mexico with special privileges in return for employing Mexican citizens

Question 15

5 ways to expand internationally

Answer 15

1) global outsourcing
2) importing, exporting, countertrade
3) licensing and franchising
4) joint ventures
5) wholly owned subsidiaries

Question 16

Outsourcing

Answer 16

Using supplies outside the company to provide goods and services

Question 17

Global outsourcing

Answer 17

Also called offshoring

Use of suppliers outside the United States to provide labor, goods, services

Question 18

Importing

Answer 18

Buying goods outside the country and reselling them domestically

Question 19

Exporting

Answer 19

Producing goods domestically and selling them outside the country

Question 20

Counter trading

Answer 20

Bartering goods for goods

Question 21

Licensing

Answer 21

Company x allows a foreign company to pay it a fee to make or distribute ax’s product or service

Question 22

Franchising

Answer 22

A form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company brand name and a package of materials and services

Question 23

Joint venture

Answer 23

Aka strategic alliance

A US firm may form a joint venture with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country

Question 24

Wholly owned subsidiary

Answer 24

A foreign subsidiary or subordinate section of an organization, that is totally owned and controlled by an organization

Question 25

Greenfield venture

Answer 25

A foreign subsidiary that the owning organization has built from scratch

Question 26

Free trade

Answer 26

Movement of goods and services among nations without political or economic obstruction

Question 27

Trade protectionism

Answer 27

The use of government regulations to limit the import of goods and services

Question 28

Elements of trade protectionism

Answer 28

1) tariffs
2) import quotas
3) trade embargo’s and sanctions

Question 29

Tariff

Answer 29

Trade barrier in the form of a customs duty, or tax, levied mainly on imports

Question 30

Import quotas

Answer 30

Trade barrier in the form of a limit on the numbers of a product that can be imported

Question 31

Dumping

Answer 31

Practice of a foreign company’s exporting products abroad at a lower price than the price in the home markets - or even below the costs of production - in order to drive down the price of a competing domestic product

Question 32

Embargo

Answer 32

Complete ban on the import, export of a certain product

Question 33

Sanction

Answer 33

Trade prohibition on certain types of products, services, or technology to another country for a specific reason

Question 34

3 organizations to facilitate international trade

Answer 34

World trade organization

World bank

International Monterey fund

Question 35

Trading bloc

Answer 35

Aka economic community

A group of nations within a geographical region that have agreed to remove trade barriers with one another

Question 36

North American free trade agreement

Answer 36

Trading block consisting of USA, Canada, Mexico

Question 37

European Union

Answer 37

Union of 28 trading partners in Europe

Question 38

Trans pacific partnership

Answer 38

A trade agreement among 12 pacific rim countries

Question 39

Most favoured nation

Answer 39

Trading status describes a condition in which a country grants other countries favourable trading treatment such as the reduction of import duties

Question 40

Exchange rate

Answer 40

Rate at which currency of one area or country can be exchanged for the currency of another’s

Question 41

Culture

Answer 41

Shares set of beliefs, values, knowledge, and patterns of behavior common to a group of people

Question 42

Low context culture

Answer 42

Culture in which shared meanings are primarily derived from written and spoken words

Question 43

High context culture

Answer 43

Culture in which people rely heavily on situational cues for meaning when communicating with others

Question 44

Hofstede model of four cultural dimensions

Answer 44

Identifies four dimensions along which national cultures can be placed

1) individualism / collectivism
2) power distance
3) uncertainty avoidance
4) masculinity / feminity

Question 45

Globe project

Answer 45

Massive ongoing cross cultural investigation of nine cultural dimensions involved in leadership and organizational processes

Question 46

Variations in six cultural areas

Answer 46

1) lanaguage
2) interpersonal space
3) communications
4) time orientation
5) religion
6) law and political stability

Question 47

Monochronic time

Answer 47

The standard kind of time orientation in US business; a preference for doing one thing at a time

Question 48

Polychronic time

Answer 48

The standard king of time orientation in Mediterranean, Latin American, and Arab cultures, a preference for doing more than one thing at a time

Question 49

Expropriation

Answer 49

Governments seizure of a domestic or foreign company’s assets

Question 50

Foreign corrupt practices act

Answer 50

Act that makes it illegal for emplyees of US companies to make questionable or dubious contributions to political decision makers in foreign nations

Question 51

Expatriates

Answer 51

People living or working in a foreign country