Concept Check #1

Question 1

International Business

Answer 1

business (or an individual firm) that engages in international (cross-border) economic activities (or the action of doing business abroad)

Question 2

A Multinational Enterprise (MNE)

Answer 2

a firm that uses foreign direct investment (FDI) to establish or purchase income-generating assets abroad

Question 3

Globaliztion ( leta def)

Answer 3

refers to the broadening and deepening of interactions and interdependences among peoples and countries of the world

Question 4

Localization

Answer 4

refers to the segmentation and contraction of the interactions and interdependences among peoples and countries of the world

Question 5

Gross domestic product (GDP)

Answer 5

total market value of all final goods and services produced within a country in a given period of time, usually a calendar year

Question 6

Gross national income (GNI)

Answer 6

the term used by the World Bank and other international organizations to supersede the GNP term. Like GNP, it means GDP plus (net) income from nonresident, domestically-owned assets

Question 7

broadening

Answer 7

the extension of economic and geographic linkages to encompass virtually all major societies and states

Question 8

deepening

Answer 8

an increase in the frequency and intensity of state and social interaction

Question 9

what is driving the move towards a greater globalization?

Answer 9

Declining trade and investment barriers
Technological change- more companies participating in global commerce
Globalization of markets (convergence of tastes and cultures, prices and wages)
Starbucks around the world
Globalization of production
takes a world to build a Dreamliner

Question 10

segemention

Answer 10

find it

Question 11

contraction

Answer 11

find it

Question 12

The cage distance Framework (Ghemwat)

Answer 12

Cultural distance: different languages, ethnicities, religion
administrative distance: difference in corruption, legal rules
geographical distance: physical remoteness, lack of a common border
economic distance: differences in consumer income, cots, and human and natural resources

Question 13

Glocalization

Answer 13

means that both forces of globalization and localization are taking place at the same time
This tension is the fundamental source of uncertainty in international business, as the world is neither completely globalized nor completely localized

Question 14

Institution

Answer 14

means rules, both formal(regulatory environment) and informal (norms and culture). They provide incentive structure for behaviors

Question 15

An institution based-view

Answer 15

when you enter a new environment either as a manager or as an MNE- you face the disadvantage that comes from know “THE RULES” known as “liability of foreignness”

Question 16

Pillars of institutions

Answer 16

regulative, normative, cognitive

Question 17

regulative(formal)

Answer 17

rules and regulations

Question 18

normative (informal)

Answer 18

don’t do drugs, don’t double dip, don’t wear uggs with a miniskirt

Question 19

cognitive(informal)

Answer 19

world is divided between east and west, democracy is the best form of government

Question 20

institutional weakness= risk

Answer 20

incentive structures are absent, arbitrary, or at least non-transparent
translates into unpredictability and thus risk: political risk, legal risk, financial risk

Question 21

ambiguous institution, unenforced institution, institution al differences,

Answer 21

AI= uncertainty (got fake money ended up in jail)
UI= uncertainty (driving rules, intellectual property)

Question 22

Risks due to different systems

Answer 22

Civil-
Common
Theocratic- vatican city

Question 23

Firms have two basic strategies to exert pressure on politicians: Voice and Exit

Answer 23

voice= lobbying, having their voice heard
exit= firm/company leaving country

Question 24

Culture

Answer 24

norms, values, it’s whats below the surface
“The collective programming of the mind which distinguishes the members of one group or category of people from another” – Geert Hofstede

Question 25

determinants of culture

Answer 25

religion, economics, education, language, political philosophy

Question 26

Low-context cultures

Answer 26

culture in which communication is usually taken at face value (english) swiss german

Question 27

High-context cultures

Answer 27

culture in which communication relies a lot on the underlying unspoken context (asian/ south american) japan, china arab, greece

Question 28

four key contextual cues (edward hall)

Answer 28

1. direct/indirect messages,
2. The Language of Relationships
3. The Language of Time
4. The Language of Space

Question 29

Direct/indirect

Answer 29

Direct / Explicit Language Cultures:

• Germany, German-Switzerland (very direct)
• N. America, Australia/New Zealand, N. Europe, Britain, Flemish Belgium

Less Direct / Explicit Cultures:
-France, Belgium, Southern Europe, Russia, East-Central Europe, Hong Kong, Singapore

Indirect / Implicit Language Cultures:
-Most of Asia, Arab world, Mediterranean region, Latin America, most of Africa

Question 30

Language of relationship

Answer 30

deal focused vs relationship focused
Low context= open to outsiders more, deal focused, face to face= less frequent
high context= less open to outsiders, relationship focused, face to face= more frequent

Question 31

informal vs formal (relationship)

Answer 31

low context= status difference smaller, forms of address more familiar, protocol rituals simpler
high context= status difference larger, forms of address more formal, protocol rituals more elaborate
Less Formal Business Cultures:
Australia, Norway, Denmark, Iceland, USA, Canada, New Zealand
More Formal Business Cultures:
Most of Europe, Mediterranean region, Latin America, Africa, Asia

Question 32

cultural difference in time

Answer 32

mono: do one thing at a time, low context
poly: do multiple things, high context, easily distracted

Question 33

Hofestedes dimensions: power distance

Answer 33

Power distance is higher when:A good working relationship with your direct superior is important
Power Distance is lower when: you are ok with an organizational structure in which certain subordinates have two bosses

Question 34

Indiviualism

Answer 34

Individualism is greater when: Sufficient time for your personal or family life is important
Individualism is lower when: Variety and adventure in the job is important & job security is important

Question 35

Masculinity

Answer 35

Masculinity is greater when:There is a distribution of roles between the sexes & assertive, competitive, decisive
Masculinity is lower when:
There is a sense of modesty and caring for others
relationships, compromise and negotiate

Question 36

uncertainty avoidance

Answer 36

Uncertainty avoidance is higher when:you feel nervous or tense at work and have & an emotional need for rules
Uncertainty avoidance is lower when:
you have a dislike of rules and want a less formalized and standardized work environment

Question 37

Orientation

Answer 37

Long-term orientation is greater when:
you attach more importance to thrift / being economical
Short -term orientation is when:
you attach respect for tradition and ‘saving face’