Exam 1: Chapters 1 - 5

Question 1

International business Final

Answer 1

A business whose activities are carried out across national borders. This definition includes not only international trade and foreign manufacturing, but also the growing service industry in areas such as transportation, tourism, advertising, construction, retailing, wholesaling, and mass communications

Question 2

Multi domestic company Final

Answer 2

An organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences.

Question 3

Global company Final

Answer 3

An organization that attempts to standardize and integrate operations worldwide in most or all functional areas.

Question 4

Explain the difference between controllable and uncontrollable forces.

Answer 4

The external forces are commonly called uncontrollable forces. Management has no direct control over them. External forces consist of the following: Competitive, Distributive, Economic, Socioeconomic, Financial, Legal, Physical, Political, Sociocultural, Labor, And Technological
Controllable Forces-management does have some control are the internal forces-such as the factors of production (capital, raw materials, and people) and the activities of the organization (personnel, finance, production, and marketing)

Question 5

Define self-reference criterion

Answer 5

Unconscious reference to the manager’s own cultural values, when judging others in a new and different environment

Question 6

Define economic globalization

Answer 6

The tendency toward an international integration of goods, technology, information, labor, and capital, or the process of making this integration happen.

Question 7

List the five drivers of globalization. Final

Answer 7

Political-the progressive reduction of barriers to trade and foreign investment by most governments and privatization of much of the industry in formerly communist nations

Technological- vast advancements

Market- become global customers

Cost- globalize product lines to reduce development, production, and inventory costs

Competitive- more competition

Question 8

Explain how entering foreign markets can increase profits by:

Answer 8

Providing greater revenue:
Firms are able to obtain greater revenue by simultaneously introducing products in foreign markets and in their domestic markets as they move toward greater globalization

Lower the cost of goods sold:
Increasing total sales by exporting not only will reduce research and development costs per unit, but also will make other economies of scale possible. Inducements also help which are reduced taxes or subsidies for R&D

Question 9

Firms often enter foreign markets to protect markets, profits, and sales. How does this relate to each of the following?

Following customers overseas

Answer 9

Following customers overseas Follow principal accounts overseas to prevent competitors from gaining access to those accounts. Guaranteed customer base

Question 10

Firms often enter foreign markets to protect markets, profits, and sales. How does this relate to each of the following?

Lack of foreign exchange

Answer 10

First sign is a delay in payment by importers

Question 11

Firms often enter foreign markets to protect markets, profits, and sales. How does this relate to each of the following?

Protectionism

Answer 11

When a government sees that local industry is threatened by imports, it may erect import barriers to stop or reduce these imports

Question 12

Firms often enter foreign markets to protect markets, profits, and sales. How does this relate to each of the following?

Acquiring technology

Answer 12

Foreign firms invest in the United States for the acquisition of technology and management know-how

Question 13

List 4 advantages for a firm to first export to its country’s major trading partners.

Answer 13

The business climate in the importing nation is relatively favorable
Export and import regulations are not insurmountable
There should be not strong cultural objections to buying that nation’s good.
Satisfactory transportation facilities have already been established

Question 14

Define mercantilism

Answer 14

The accumulation of precious metals as an activity essential to a nation’s welfare.

Question 15

Explain absolute advantage with an example. Final

Answer 15

The ability to produce goods most efficiently by having either a natural or acquired advantage, Corn from Nebraska and Oil from Saudi Arabia

Question 16

Explain comparative advantage with an example.

Answer 16

Nations specialize in the production of a few products and trade with others to supply the rest of their needs

Question 17

Define exchange rate.

Answer 17

To convert from foreign to domestic currency

Question 18

Describe the resource endowment theory.

Answer 18

Abundance of resources

Question 19

List the 4 stages of the international product life cycle from a US perspective.

Answer 19

U.S. Exports, Foreign production begins, foreign competition in export markets, Import competition in the United States

Question 20

List the 3 main advantages to regional clusters.

Answer 20

Advantages associated with pooling of a common labor force so that staffing requirements can be met quickly, even with unexpected fluctuations in demand. -Gains from the development of specialized local suppliers whose operations and skills can be coordinated with the needs of the buyers. -Benefits that result with the geographic regions from the sharing of technological information and corresponding enhancement of the rate of innovation.

Question 21

List and describe the 4 forces in Porter’s Diamond Model. Final

Answer 21

Demand conditions, Factor conditions, Related and supporting industries, Firm strategy, structure, and rivalry.

Question 22

Portfolio investment

Answer 22

The purchase of stocks and bonds solely for the purpose of obtaining a return on the funds invested.

Question 23

Foreign direct investment

Answer 23

Investors participate in the management of the firm in addition to receiving a return on their money

Question 24

Explain why historically trade precedes FDI.

Answer 24

Engaging in foreign trade is typically less costly and less risky than making a direct investment into foreign markets. Can expand the business in small increments rather than through the considerably greater amounts of investment and market size that a foreign production facility requires

Question 25

List and describe the 3 kinds of advantages of the eclectic theory.

Answer 25

Ownership Specific—extent to which a firm has an advantage through ownership of tangible and intangible that are not availabe to other firms and can be transferred abroad. Location Specific—must have specific characteristics or an economic, social, or political nature that will permit the firm to profitably exploit its advantages by locating to that marked rather than serving the market through exports. Internalization—receiving resources or funds from an internal source.

Question 26

Explain why the UN is considered largely an informal organization.

Answer 26

The UN operates with voluntary agreements which makes it an informal institution.

Question 27

List and describe the 5 organs of the UN.

Answer 27

The General Assembly acts by adopting resolutions that express the will of the member-nations. The UN Security Council has responsibility for maintaining international peace and security. The Economic and Social Council is concerned with economic and social issues, including trade, transport, industrialization, economic development, population growth, children, housing, women's rights, racial discrimination, illegal drugs, crime, social welfare, youth, the human environment, and food. The International Court of Justice makes legal decisions involving disputes between national governments and gives advisory opinions. The Secretariat is the UN's staff.

Question 28

Describe the IMF. Final

Answer 28

Establish rules for international monetary policies and their enforcement and the World Bank to lend money for development projects. It helps Nations secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.

Question 29

Describe the World Bank.

Answer 29

It functions as a nonprofit cooperative for its member-nations, able to pass on its ability to borrow funds at low rates to developing nations.

Question 30

Describe the WTO. Final

Answer 30

An organization that intends to supervise and liberalize international trade. The organization deals with regulation of trade between participating countries by providing a framework for negotiating and formalizing trade agreements and a dispute resolution aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments

Question 31

Describe the OED

Answer 31

Group of developed countries (34) dedicated to promoting economic expansion in its member-nations.

Question 32

Free trade area

Answer 32

Area in which tariffs among members have been eliminated, but members keep their external tariffs.

Question 33

Customs union

Answer 33

Collaboration that adds common external tariffs to an FTA.

Question 34

Common market

Answer 34

Customs union that includes mobility of services, people, and capital within the union.

Question 35

Complete economic integration

Answer 35

Integration on both economic and political levels.

Question 36

What is NAFTA?

Answer 36

(North American Free Trade Agreement) Agreement creating a free trade area among Canada, Mexico, and the United States.

Question 37

List the members of Mercosur.

Answer 37

Argentina, Brazil, Paraguay, and Uruguay.

Question 38

European Parliament

Answer 38

EU legislative body whose members are popularly elected from member-nations.

Question 39

Council of the European Union

Answer 39

Group that is the EU's primary policy-setting institution.

Question 40

European Commission

Answer 40

European Commission Institution that runs the EU's day-to-day operations.

Question 41

European Central Bank

Answer 41

Institution that sets and implements EU monetary policy.

Question 42

European Court of Justice

Answer 42

Court that rules on issues related to EU policies.

Question 43

Define culture.

Answer 43

The sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations. & Individual worldviews, social rules, and interpersonal dynamics characterizing a group of people set in a particular time and place.

Question 44

Define ethnocentricity.

Answer 44

Belief in the superiority of one's own ethnic group.

Question 45

Explain high- and low-context cultures. Final

Answer 45

High Context: communication tends to be implicit and indirect Low Context: communication tends to be direct and to-the-point.

Question 46

Describe: Monochronic Final

Answer 46

Having to do with linear time, sequential activities.

Question 47

Describe: Polychronic Final

Answer 47

Having to do with simultaneous activities; multi-tasking.

Question 48

Describe these cultural dimensions from Hofstede: Individualism-Collectivism

Answer 48

Measures the degree to which people in the culture are integrated into groups. Highly collectivistic: strong, cohesive in-groups that look after them in exchange for loyalty. Highly individualistic: loosely connected and look after themselves and their immediate family.

Question 49

Describe these cultural dimensions from Hofstede: Power Distance

Answer 49

Extent to which members of a society expect and accept power to be distributed unequally.

Question 50

Describe these cultural dimensions from Hofstede: Uncertainty Avoidance

Answer 50

A society's comfort with uncertainty. | "ultimately refers to man's search for Truth"

Question 51

Describe these cultural dimensions from Hofstede: Masculinity-Femininity

Answer 51

Describes the distribution of roles between the genders. "Women's roles across cultures differ less than do men's, and that men's values among countries vary considerably, from very assertive and competitive and maximally different from women's values on the one side, to modest and caring and similar to women's values on the other."

Question 52

Describe these cultural dimensions from Trompenaars: Universalism vs. Particularism

Answer 52

Universalism: Condition in which concepts apply to all. Particularism: Condition in which context determines what concepts apply.

Question 53

Describe these cultural dimensions from Trompenaars: Neutral vs. Affective

Answer 53

Describes the culture's rules for display of emotions. People in neutral cultures tend to withhold emotional expressions, while people in affective cultures are much more expressive. (unemotional vs. emotional)

Question 54

Describe these cultural dimensions from Trompenaars: Specific vs. Diffuse

Answer 54

Life divided into public and private vs. life undifferentiated.

Question 55

Describe these cultural dimensions from Trompenaars: Achievement vs. Ascription

Answer 55

Basis of social status and reward, with status being related to either who a person is or what a person does. Achievement cultures are meritocracies that reward what you do. Ascription consider who a person is by family lineage or age, or other attributes.

Question 56

List the 5 major world religions.

Answer 56

Christianity, Islam, Buddhism, Hinduism, and Judaism.

Question 57

What is nonverbal communication? Give an example.

Answer 57

Nonverbal communication: the unspoken language, can often tell businesspeople something that the spoken language does not—if they can understand it. Gestures are a common form of cross-cultural communication. An example is the thumbs-up gesture. Although this sign is a positive gesture, in some countries it has a negative/vulgar connotation.

Question 58

List unconventional sources of oil.

Answer 58

Oil sands, oil-bearing shale, coal, heavy oil, and natural gas.

Question 59

What are the main advantages and disadvantages of nuclear power?

Answer 59

``` Advantages: Generate little pollution in normal operation Low carbon emissions Contributes to energy self-sufficiency Disadvantages: Waste material Accidents Radiation ```

Question 60

What is the Kyoto Protocol? Final

Answer 60

The Kyoto Protocol, the United Nations Framework Convention on Climate Change, calls for nations to work together to reduce global warming by reducing their emissions of the gasses that contribute to it, carbon dioxide first among them. To date, the United States is the only industrialized country that has signed and not ratified the Kyoto Protocol.

Question 61

Define environmental sustainability.

Answer 61

Environmental sustainability rests on the commitment of business to operate without reducing the capacity of the environment to provide for future generations.

Question 62

Define stakeholder theory.

Answer 62

It calls for managers to identify and consider the network of tensions caused by competing demands within which any business exists. Stakeholder theory forces a business to address underlying values and principles. It “pushes managers to be clear about how they want to do business, specifically, what kind of relationships they want and need to create with their stakeholders to deliver on their purpose

Question 63

Define triple-bottom-line accounting.

Answer 63

Here, the company measures its social and environmental performance in addition to its traditional economic performance.

Question 64

Explain the difference between renewable and non renewable energy sources.

Answer 64

Nonrenewable energy resources, like coal, nuclear, oil, and natural gas, are available in limited supplies. This is usually due to the long time it takes for them to be replenished. Renewable resources are replenished naturally and over relatively short periods of time.

Question 65

Historically, how have waterways been important to business?

Answer 65

Historically, navigable waterways with connections to the ocean have been important because they have permitted the low-cost transportation of goods and people from a country's coast to its interior, and today they are the only means of access from the coasts of many developing nations. Significant because it provides inexpensive access to interior markets. Before the construction of railways, water transport was the only economically practical carrier for bulk goods moving over long distances. Water transport increased even after the building of railroads

Question 66

Explain how mountains and deserts have affected business.

Answer 66

Mountains are barriers that tend to separate and impede exchange and interaction, whereas level areas (plains and plateaus) facilitate exchange and interaction, unless climate makes exchange unlikely, as in the Sahara and Gobi Deserts. The extent to which mountains serve as barriers depends on their massiveness, ruggedness, and transecting valleys.

Question 67

What problems are created when a country has regions that speak different languages. FINAL

Answer 67

Spaniards - Catalan - This creates the wide range of problems that are found wherever there are language differences. In Catalonia and the Basque country, Spanish-speaking managers do not attain the empathy with their local employees that they do in other parts of Spain, and sales representatives who speak the local language are more effective. These language differences increase promotional costs if, to be more effective, companies choose to prepare their material in Euskara, Catalan, and Spanish.

Question 68

Explain how population density affects business.

Answer 68

International managers know that in more densely populated nations, marketing and distributing their products costs less because population centers are closer, communication systems are better, and more people are available for employment. They are aware that the populations in Canada, Australia, and Brazil are highly concentrated in a relatively small area, because of deserts, tropical rain forests, and, in Canada's case, the shield.