Globalization and Society

Question 1

Things for MNCs to consider when doing business abroad

Answer 1

• What is right and wrong might differ by country
• Relativism vs. normativism (universal standard for behavior)
• What is legal in home country vs. host country
• Problem of extraterritoriality (impacts sovereignty)
• *SOCIETAL VIEWS ARE IMPACTED BY ALL OF THESE

Question 2

PizzaPatron video

Answer 2

• Huge debate and push-back because pizza chain started accepting Mexican pesos
• Caused by national sovereignty issues, xenophobia, employment concerns, ethnocentrism,discirmination

Question 3

MNC Stakeholders

Answer 3

• Host & home country governments
• Customers
• Employees
• Local communities
• NGOs and environmental groups
• Suppliers
• Shareholders
• *In the LONG-RUN the aims of all the stakeholders must be met or the firm may not survive

Question 4

Governmental reaction or as Foreign Direct Investment

Answer 4

Actions as MNC makes a fdi can be be positive or negative actors

Question 5

Balance of Payments Effect (BOP)

Answer 5

B = (m-m1) + (x-x1) + (c-c1)
B = result of actions
m = import dispacement
m1 = import stimulus
x = export stimulus
x1 = export reduction
c = capital inflow
c1 = capital outflow
Overall positive effect minus overall negative effect

Question 6

Import displacement

Answer 6

Replacing previously imported goods with domestic goods, this is the amount we are saving my reducing imports (displacing their production)

Question 7

Import stimulus

Answer 7

Sometimes this action (import displacement) could involve stimulating more imports (other products or related products)

Question 8

export stimulus

Answer 8

and action that causes an increase in exports (positive, increase to wealth)

Question 9

export reduction

Answer 9

By exporting more of a product, there could be unintended decreased exports of other products

Question 10

If net import effect is positive…

Answer 10

Means that FDI results in substitution of local products for imported goods

Question 11

If net import effect is negative…

Answer 11

Means an increase in imports

Question 12

If net export effect is positive…

Answer 12

the FDI results in generation of exports

Question 13

If net export is negative…

Answer 13

it results in a decline of exports

Question 14

If net capital flows is positive…

Answer 14

the FDI results in capital inflows to build plants and capacity

Question 15

If net capital flows is negative…

Answer 15

It results in outflows to repatriate profits back to the home country

Question 16

Net capital flows are _____ to assess because…

Answer 16

Difficult, because of the inward flow of investment funds and outward flow of remitted earning from that investment

Question 17

Why should a firm doing business abroad monitor the host country’s balance of payments account?

Answer 17

Might signal corrective actions by the local government

• import restrictions
• export requirements
• local content regulations
• ownership restrictions
• foreign exchange restrictions

Question 18

Corruption

Answer 18

The abuse of entrusted power for private gain

Citizens depend on the integrity of people in positions of authority

Question 19

What is wrong with corruption?

Answer 19

Lower economic growth and income levels, erodes the authority of the government, damage the reputation of the country and MNEs from there, COSTLY

Question 20

Efforts to control corruption?

Answer 20

NGOs (Transparency International, industry-wide efforts, company-wide efforts

Question 21

Exploitive

Answer 21

Views differences in wages, working conditions and living standards as exploitive opportunities

Question 22

Transactional

Answer 22

Engages in law-abiding, non-exploitive commercial interactions and transactions

Question 23

Responsive

Answer 23

Acts in a way that is sensitive and responsive to the needs of the immediate stakeholders

Question 24

Transformative

Answer 24

Commits to leading initiatives to bring life enhancing changes to broader society