Exam 1 Flashcards
Any transaction between countries
International Business
What is the world population?
7.4 billion
What is the US population?
324 million
What is China’s population?
1.35 billion
What is India’s population?
1.35 billion
What is the population of Indonesia?
206 million
What are the top 5 most populated countries?
China, India, US, Indonesia, Brazil
What doe GDP stand for?
Gross Domestic Product
What is the world’s GDP?
113.5 trillion
What is the US’s GDP?
18.5 trillion
What is China’s GDP?
21 trillion
What are the top four countries in respect to GDP?
China, US, India, Japan
What does PPP stand for?
Purchasing Power Parity
A more in-depth analysis of what a country makes b/c it compares exchange rates, how much one can buy, standard of living, etc.
PPP
When did the Berlin Wall fall?
1989
What are bilateral and multi-lateral trades?
Trade between two countries; trade between multiple countries
Why is China’s economy interesting and important?
It is an open market, but has a communist government
What are some reasons companies internationalize?
- To expand sales
- To spread cost
- Resources
- Dumping
- Fixed costs
When you send any product overseas to sell at a lower cost than price to make.
Dumping
Dumping creates _______.
Monopolies
How might internationalizing help minimize competitive risk?
- Allows more access to strategic planning
- Michigan vs. Firestone vs. Goodyear
Has international business been growing or declining recently?
Growing
Why has international business been growing?
- Expansion in technology
- Liberalization of cross border movements
- Growth in supporting services
- Increasing in simple global competition
- World politics
- Growing consumer pressure
Modes of International Business:
- Exports and imports (merch services)
- Joint-venture
- Strategic alliance
Why do companies not usually actively approach internationalizing?
Lack of knowledge about how to do it.
What is an example of a conservative country?
Malaysia
_____ is equalitarian while _____ uses a class system
US ; India
What is an example of a country that is performance based?
Britain
What is an example of a country that emphasizes inclusion?
China
What is an example of a country that downsizes based on seniority vs. performance?
Germany
_____ is socially oriented, _____ is about relationships.
Germany ; China
______, _______, and _______ considers age important, _____ doesn’t.
Japan, Middle East, most of Asia ; US
What is paternalism and what are some example countries?
A society where the males rule.
- China
- India
- Japan
Which countries focus on nuclear families
US, China, Italy, India
What is power distance?
Refers to the way in which power is distributed and the extent to which the less powerful accept that power is distributed unequally.
What does a high power distance mean?
That the boss is the boss, and there is a distinct hierarchy in who communicates with who.
What are some examples of countries with low power distance?
Dutch, Netherlands, Scandinavia
What are some examples of countries with high power distance?
Russia, China, India
How do people talk in a high distance vs low distance culture?
horizontally vs. laterally
What are some examples of individualist countries?
US, Australia, UK
What are some examples of collectivist countries?
China (#1), Japan, Asia in general, previously communist nations
Valuing the individual differences and self-expression
Individualism
Valuing the group above all else. Country, community, company, family
Collectivism
Are individualist or collectivist nations better at teamwork?
Collectivist
Are individualist or collectivist nations better at innovation?
Individualist
What types of innovation exist?
New-to-the-world vs. Improvement
Example of a new-to-the-world innovating country, and an improvement innovating country
US ; Japan
Why were additional studies done only after 1989 on risk-taking behaviors?
We didn’t have the access before
A society’s tolerance for the uncertain and ambiguous
Uncertainty Avoidance
What are examples of countries with high uncertainty avoidance?
Greece (#1), Japan, Portugal
What are examples of countries with low uncertainty avoidance?
UK, US, Hong Kong, Denmark, Sweden, India
What kind of impact does uncertainty avoidance have on business?
- Entrepreneurs
- More precise about rules
Willingness to trust strangers
Trust
What are examples of countries with low trust?
China and other previously communist nations
What are examples of countries with high trust?
US, Norway
Why do some countries tend to trust more than others?
Because they can afford to. They often have a legal system that will stand behind you.
Whether you believe you will make a difference in life or a company.
Self-efficacy
What are examples of countries with low self-efficacy (fatalism)?
Russia, Hungary, other previously communist nations
What are examples of countries with high self-efficacy?
US, UK
_____ directly relates to self-efficacy
Work ethic
What are examples of countries with low accountability?
Previously communist nations
The concept that some countries either think about the future vs. the here and now.
Future orientation
What are examples of countries with low future orientation?
Europe, care more about vacation and raises vs. retirement
What are examples of countries with high future orientation?
Japan and China, care more about retirement packages
Which countries tend to not be sharing?
Previously communist nations
What is the difference between low and high context countries?
Low-context only want the facts, and high-context want a focus on relationship building before business.
What are examples of low context countries?
US, UK, Dutch, Germans
What are examples of high context countries?
Asia, Russia, Latin, South America, Middle East, India
What is being monochronic vs. polychronic information processing?
Polychronic cultures can multi-task
What is an example of a monochonic country?
Asia
What is an example of a polychonic country?
US
Tips for speaking with non-English native speaking
- Avoid slang
- Speak slowly
- Less wordy
- No innuendos such as sarcasm
- Use pictures
- Try to get people to repeat back
Characteristics of feminine nations
- More socially inclined
- Nurturing and thoughtful
- Socialism-leaning
- ex. Scandinavians
Characteristics of masculine nations
- Assertive and aggressive
- Competitive
- ex. US, Switzerland, Austria, Japan
Dangers of stereotyping
- It doesn’t feel good
- It could be illegal
- Damages company reputation
- Means you’re not hiring the best people
- Reduces your competitiveness
- Culture influencing recruitment
Culture influencing recruitment
- All interviewing questions must relate to job
- Model interview questions for each culture
Does culture influence training techniques?
Yes, some countries don’t train their employees to do some things..
How did Schein improve upon Hofsted’s work?
- Adding more dimensions
- Made judgements about which are good and which are bad
Ideal Management Employee
Schein observes 500 of the best business people and noticed a pattern
Nature of reality and trust: Authoritative vs. Pragmatic
More pragmatic business people are better
What is pragmatic?
What is said vs. who said it
Nature of human nature (what does the manager BELIEVE is human nature?): Evil vs. Good and Fixed vs. Mutable
Business people who believe in good and mutable are better
Nature of human relationships: Group Oriented vs. Individualistic and Authoritative vs. Collegial/Participative
Middle of group oriented and individualistic is best, same for authoritative and collegial
Time Orientation: Past vs. Present vs. Near Future
Business people who focus on the near future are better
CD Info and Communication: Low Connected vs. Fully Connected
Business people who are fully connected are better
Is building a long term (permanent) business process for managing change a worthwhile endeavor?
Yes;
- Change management is a big part os international business
- Tried-and-true methods exist
Factors for building a long term business process for managing:
- Value Systems
- Cost Benefit Analysis
- Participation
- Reward Sharing
- Opinion Leaders
- Timing and Pace
Cost Benefit Analysis of Change
Tally up the money, pros and cons, of change. If cost outweighs the benefits don’t turn in. Always do one.
What is interesting about the Russia article?
- BRIC Nations
- Oligarchy
- Barter System (counter trade)
- Emotional Negotiations
- High Power Distance (seal/stamp)
Why does it matter that China is still communist?
- You can be kicked out without any assets, at any time.
- They track your social life and give you a score which will effect what you and buy, sell, etc.
Why do we care about China?
- Competitive business relations
- # 1 recipient nation of Foreign Direct Investment
- Level of intellectual property theft helps GDP grow about 6%
- World’s largest expat population (living outside China)
- Affluent
Potential Business Consequences of Different Political Environments
- Government Intervention (Yukos Oil)
- Civil Disorder (ex. kidnapping)
- Boycotts and Embargos (Iran Trade)
Individualistic vs. communitarian systems
Individualistic expect less from government (pull yourself up by your bootstraps) vs. a government and business relationship
What are some communitarian countries?
Russia, China, Japan, South Korea
Political Trends
- Democracy, less totalitarian
- Improved communication techniques
Legal Concerns Around the World
- Starting up a business
- Enforcing contracts
- Hiring and firing
- Bankruptcy laws
- Bonuses
- Product safety
- Liability laws
- Intellectual property laws
Example of an international IP problem?
Knock-offs
- Liability
- Safety
How to fight knock-offs
- Make your own
- Educate others
International problems faced by companies:
- Sometimes no experience in previously communist areas
- Materials
- Supplies
- Shortages
- Public backlash at home
- Transport
- Training and translation
Why is international business worth the fight?
Developing economies have the most people and the most growth potential
What is a market economy?
Economy decides prices and what will be made
What are the factors of production that should be considered when considering location of a new facility in the world?
- Human Resources (labor)
- Physical Resources
- Knowledge Resources
- Infrastructure (ports, airports, energy, communication)
- Capitol Resources (debt, equity, venture)
What are the three types of capitol resources?
- Debt (loans)
- Equity (shares)
- Venture (individual investment)
GDP is…
Everything produced on a country’s soil, not based on ownership just production
- Japanese production in the US adds to US GDP
GNI is…
Ownership money
- Japanese production in the US adds to Japan’s GNI)
Four Country Groups
- Established Market Economies (EMEs) (66% of world GDP)
- Transitioning Economies (TREs) (10% of world GDP)
- Emerging Economies (EECs) (20% of world GDP)
- Poor Economies (3% of world GDP)
Examples of EME countries
Germany, US, England, France, Japan, Australia, Canada
Examples of TRE countries
China, Russia, Hungary, Czech Republic, Poland, Ukraine, Vietnam, Slovakia
Examples of Poor/Fronteir countries
Islands, much of Asia
Supply and demand determine what’s made, who makes it, and how many are made
Market Economy
Prices, who make it, and how many are made are all set.
Command/Centrally Planned Economy
In between Market and Command Economy (majority)
Mixed Economy
Number of units of a country’s currency required to buy the same amount of goods and services in THAT market, that $1 would buy in the US
Purchasing Power Parity (PPP)
Economic Environmental Factors
- PPP
- Inflation, exchange rates, surplus, deficit
What weakens currency?
- Relative inflation rate goes up
- Our external (trade) deficit goes up
- Our international deficit (budget) goes up
What does it mean when our international deficit goes up?
We’re spending more than we’re making
What does it mean when our external deficit goes up?
We’re importing more than we’re exporting
What is relative inflation?
Inflation relative to our trading partners.
- i.e. the British pound to the US dollar
What Strengthens Currency?
- Raise interest rates
- Reduce our external trade deficit
- Reduce our international deficit
What does it mean to raise interest rates?
The price of money. Makes money worth less, so people will buy less.
What negatively impacts exports? Neg vs. Pos?
Rising currency exchange rates.
- Neg: Makes imports more expensive, increases in price can result in sales decreases
- Pos: Anything we export will seem like more money
What does the World Bank do?
Developmental assistance to the poorest of the poor
What assistances does the World Bank provide?
- People: basic health, education
- Environmental Protection
- Supporting/Encouraging Private Business
- Government Ability to Deliver Quality Services
- Stable Economic Environment
- Social Development and Infrastructure to Reduce Poverty
What does IMF stand for and what do they do?
- International Monetary Fund ; 182 Member Nations
- International Monetary Cooperation
- Exchange Rate Stability
- Orderly Exchange Arrangements
- Fosters Economic Growth and Employment
- Temporary Relief to Ease Payment
What does WTO (World Trade Org) do?
- Promotes Free Trade
- Focus of Negotiation Process:
- Removing Barriers
- Protection of IP Rights
- Grants “Normal Trade Relations”
- Enforcement
