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D301 International Business > Exam 2 > Flashcards

Exam 2 Flashcards

1
Q

Political System

A

The complete set of institutions, political organizations, and interest groups,

The relationships among institutions, and the political norms and rules that govern their functions

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2
Q

Individualism

A

primacy of the rights and role of the individual

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3
Q

Collectivism

A

primacy of the rights and role of the community

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4
Q

Political Ideology

A

ideas that expresses the goals, theories, and aims of a sociopolitical program

Most modern societies are pluralistic

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5
Q

pluralistic

A

different groups champion competing political ideologies

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6
Q

Democracy

A

participation by citizens in the decision-making process

Five types: Parliamentary, Liberal, Multiparty, Representative, Social

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7
Q

Fundamental Features of Democratic Political Systems

A 
Freedom of opinion
Citizen power and civic responsibility
equality in opportunity & treatment
free, fair, regular elections
majority rule
court system to uphold rights
government abides by laws
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8
Q

Totalitarianism

A

Restricts decision making to a few individuals

Types: Authoritarianism, Fascism, Secular totalitarianism,
Theocratic totalitarianism

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9
Q

Engines of democracy

A

deliver economic progress

Improved communication technology

improved standards of living

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10
Q

Political Risk

A

The risk that political decisions or events in a country negatively affect the profitability or sustainability of an investment

Types:
Procedural
Distributive
Catastrophic

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11
Q

Legal System

A 
The mechanism for creating, interpreting, and enforcing the laws in a specified jurisdiction
Types:
Common law
Civil law
Theocratic law
Customary law
Mixed systems
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12
Q

Operational concerns for management

A

Starting a business
Entering and enforcing contracts
Hiring and firing local workers
Closing down the business

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13
Q

Strategic concerns for management

A 
Product safety and liability
Marketplace behavior
Product origin
Legal jurisdiction
Arbitration
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14
Q

Intellectual property

A

Intangible property rights that are a result of intellectual effort
Intellectual property rights refer to the right to control and derive the benefits from writing, inventions, processes and identifiers
Local attitudes play a large role in piracy

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15
Q

Why Managers must understand the economic environments of a country

A

To estimate the attractiveness of a country

To make investment and operational decisions

To predict how trends and government policy will affect firm performance

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16
Q

OPEC

A

Organization of the Petroleum Exporting Countries (OPEC) is a group of thirteen countries made up of Algeria, Angola, Ecuador Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

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17
Q

Gross National Income (GNI)

A

the market value of all final goods and services produced by a country’s domestically-owned firms in a given year

Measures the income generated by:
Total domestic production (e.g. Coca-Cola in U.S.) +
International production activities of national companies (e.g. Coca-Cola in another country)

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18
Q

Gross National Product (GNP)

A

the market value of all final goods and services produced by a country’s domestically-owned firms in a given year, plus the income earned by its citizens abroad, minus the income earned by foreigners from domestic production.

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19
Q

Gross Domestic Product - GDP

A

Is the value of all goods and services produced within a nation’s borders over one year

no matter whether domestic or foreign-owned companies make the product. (e.g. Toyota production in U.S. counts for U.S. GDP)

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20
Q

Purchasing Power Parity

A

Local Cost of Living

the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market that one unit of income would buy in another country.

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21
Q

What is the importance of the GNI per capita for managers?

A

It allows them to remove the effects of demography in assessing a country’s relative growth. It adjust for population to determine purchasing power.

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22
Q

What is the importance of the GNI growth rate for managers?

A

identifies countries that will allow a business to expand

it measures the value of all production in the domestic economy together with the money they receive from other countries

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23
Q

What is the importance of the GNI Purchasing Power Parity for managers?

A

Compare countries in the same standards

It allows them to compare countries with using an implicit foreign exchange rate that reflects the same purchasing power per unit of currency in different countries

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24
Q

Human Development Index

A

Provides a measure that incorporates both:
economic
social variables

Is designed to capture long-term progress rather than short-term changes

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25
Q

life expectancy at birth

A

Human Development Index that measures Longevity

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26
Q

adult literacy rate

A

Human Development Index that measures Knowledge

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27
Q

GNI per capita

A

Human Development Index that measures Standard of Living (PPP USD)

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28
Q

Features of an Economy

A

Inflation, Unemployment, Debt, Inc. Distribution, Poverty, & Balance of Payments (BOP)

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29
Q

Inflation

A

a measure of the increase in the cost of living

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30
Q

Unemployment rate

A

Is a measure of the number of workers that want to work but do not have jobs

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31
Q

Consequences of Unemployment rate

A

Low economic growth
Social pressures
Political uncertainty

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32
Q

Debt

A

sum total of a government’s financial obligations

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33
Q

Internal Debt

A

when the government spends more than it collects in revenues

Effect Investors and Companies

34
Q

External Debt

A

when government borrows money from foreign lenders.

Effect economic growth

35
Q

Income distribution

A

a description of the fractions of a population that are at various levels of income

36
Q

Poverty rate

A

state of having little or no money, few or no material possessions, and little or no resources to enjoy a reasonable standard of life

37
Q

Balance of Payments

A

Records a country’s international transactions among, companies, governments, and/or Individuals

Inflows less outflows

38
Q

trade surplus

A

the value of exports exceeds the value of imports

39
Q

trade deficit

A

the value of imports exceeds the value of exports

40
Q

Economic System

A

It is the set of structures and processes that guides the allocation of scarce resources and shapes the conduct of business activities in a nation

strong predictor of a nation’s present economic performance and its future economic prospects.

41
Q

Spectrum of Economic Systems

A

Centrally-planned Free-market
N. Korea China Brazil Japan USA
Cuba Russia India Germany Canada
Vietnam S. Korea France UK

42
Q

Free-market (capitalistic)

A

Economy built upon the private ownership and control of the factors of production

US, Canada, UK

43
Q

Command Economy

A

Economy built upon government ownership and control of the factors of production

N. Korea, Cuba, China, Russia, Vietnam

44
Q

Mixed Economy

A

Economic decisions are largely market-driven and ownership is largely private, but significant government intervention is still evident

Brazil, India, S. Korea, Japan, Germany, France

45
Q

Economic Freedom Index

A

Estimates the degree to which a government intervenes in the areas of free choice, free enterprise, and market-driven prices

Classifies countries as:

	- free
	- mostly free
        - moderately free
	- mostly unfree
	- repressed
46
Q

Economic Transition

A

government’s ability:

to liberalize economic activity

to reform business practices

to establish legal and institutional frameworks.

47
Q

Economic Transition Process

A

Privatization, Deregulation, Property Rights, Fiscal and monetary reform, & Antitrust legislation

48
Q

Privatization

A

the sale and/or legal transfer of government-owned resources to private individuals and/or entities

49
Q

Deregulation

A

the relaxation or removal of restrictions on the free operation of markets and business practices

50
Q

Property rights

A

the protection of real (tangible) and intellectual (intangible) property

51
Q

Fiscal and monetary reform

A

the reliance upon market-oriented instruments to achieve macroeconomic stabilization, the setting of strict budgetary limits, and the use of market-based policies to manage the money supply

52
Q

Antitrust legislation

A

laws designed to maintain and promote market competition, i.e., to prohibit the anticompetitive behavior of monopolies

53
Q

benefits of doing business influenced by

A

the size of the market, the wealth of consumers, and the openness, the stability, and the growth potential of the economy

54
Q

power of economic analysis

A

identifying the best possible indicators and then understanding how they work both in isolation and interactively.

55
Q

What are the main important points on the paper “Dreaming with BRICs”?

A

The list of the world’s ten largest economies may look quite different in 2050.

There is a chance that in less than 40 years (from 2003) the BRICs economies together could be larger than the G6 in US dollar terms.

Of the current G6, only the Us and Japan may be among the six largest economies in US dollar terms in 2050.

The largest economies in the world will not be the richest when measured by GNI per capita.

56
Q

Group Debate - Toni King - Ethics Dilemma for Labor Conditions

A

Different cultures have different ideas of what is acceptable for labor conditions. May cause conflict.

Labor Issues: Wage, hrs, child labor, conditions

Child labor - 215m children worldwide age 5-17 work fulltime

Developed countries have laws & regulations, yet developing countries have little to none.

Some of worst factory conditions in Cambodia

57
Q

MNEs

A

Multinational Enterprises

58
Q

An organization must satisfy in order to survive

A 
shareholders
employees
customers
suppliers
society
59
Q

The Economic Impact of the MNE

A

Balance-of-Payments effects:
Net import effect
Net capital flow

Growth and Employment effects:
Home-country losses
Host-country gains
Host-country losses

60
Q

Evaluating the impact of FDI Home Country

A

FDI outflows may create jobs abroad at the expense of jobs in the home country.

61
Q

Why Companies Care About Ethical Behavior

A

Instrumental in achieving two objectives:
To develop competitive advantage
To avoid being perceived as irresponsible

62
Q

Cultural relativism

A

ethical truths depend upon the groups subscribing to them; thus, intervention in local issues and traditions by outsiders is clearly unethical.

63
Q

Cultural normativism

A

universal standards of behavior that everyone should follow; thus, non-intervention in local violations of global standards is clearly unethical

64
Q

Non-governmental organizations (NGOs)

A

actively monitor and publicize corporate practices in order to: educate managers about the environmental and economic consequences of corporate operations and practices and increase shareholder value

65
Q

The Legal Foundations of Ethical Behavior

A

Legal justification for ethical behavior may not be sufficient because not everything that is unethical is illegal
The law is a good basis because it embodies local cultural values
Laws will become similar in different countries

66
Q

Civil law countries

A

tend to have a large body of law dealing with business operations

67
Q

common law countries

A

rely more on precedent than statutory regulations.

68
Q

The Insufficiency of the Legal Argument

A

Everything that is legal is not necessarily ethical.

The law is slow to develop in emerging areas of concern.

The law is often based on moral concepts that cannot be separated from legal concepts.

The law may need to be tested by the courts.

The law is inefficient in terms of achieving ethical behavior at a minimum cost.

69
Q

Extraterritoriality

A

the extension by a government of the application of its laws to the foreign operations of its domestic firms

70
Q

Externalities

A

the by-products of activities that affect the well-being of people and/or the environment

71
Q

Bribery

A

consists of payments, or promises to pay cash or something else of value, to public officials and/or other people of influence

72
Q

U.S. Foreign Corrupt Practices Act of 1997

A

outlaws the payment of bribes by U.S. firms to foreign officials, political parties, party officials, or party candidates

applies to firms registered in the U.S. and to any foreign
firms that are quoted on any U.S. stock exchange

was extended in 1998 to include bribery by foreign firms operating in U.S. territory

73
Q

Multilateral Efforts to Confront Bribery

A
  • Transparency International’s Business Principles for -Confronting Bribery (2003)
  • The OECD’s Convention on Combating Bribery of -Foreign Public Officials in International Business Transactions (1997)
  • The revised OECD Guidelines for Multinationals
  • The ICC’s Rules of Combat to Combat Extortion and Bribery (1999)
  • The UN Convention Against Corruption (2003)
74
Q

Sustainability

A

meeting the needs of the present without compromising the ability of future generations to meet their own needs, while taking into account what is best for people and for the environment

75
Q

Kyoto Protocol

A

signed in 1997, the Protocol is an extension of the UN Framework Convention on Climate Change that obligates signatory countries to reduce their greenhouse gas emissions to 5.2 percent below 1990 levels between 2008 and 2012

76
Q

Ethical Dilemmas and Pharmaceutical Sales

A

High priced during patent period, legal generic products not produced until after patent period is up, poor countries an however, produce or import generic drugs, the International Finance Facility for Immunization produces bonds for vaccines

77
Q

Tiered pricing for pharmaceutical sales

A

consumers in industrial countries pay market prices for products, while consumers in developing countries pay lower (subsidized) prices.

78
Q

Child Labor Issues

A

Those who argue in favor of child labor claim that in many instances, children are better suited to perform certain tasks than adults, and that if the children were not employed, they would in fact be worse off.

While some firms simply avoid operating in countries where child labor is used, other firms work to establish responsible operating policies in those locales.

79
Q

Ethical Trading Initiative

A

a British-based organization that focuses on the ethical employment practices of MNEs. Members include representativesfrom companies and trade union organizations

80
Q

Corporate Codes of Ethics

A

set global policies that must be complied with wherever the firm operates

communicate the code to all employees within the organization, and to all suppliers, subcontractors, and customers

ensure that its policies are carried out in all instances

report results to its stakeholders

D301 International Business (5 decks)

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