Study Guide Session 1 Flashcards
What makes competing in international markets more challenging?
- Currency
- Different Language
- Different Culture
- Different time zones
- Laws
- Political Hostility
- Tax and Tarriff – taxes and keeping the money in the countries
- Disntance
- Competitive factors and wages
What makes international markets enticing?
- Imports are cheaper
- Increase markets to new customers
- Companies are building standardized products worldwide creating a world market
What is driving globalization?
- Internet and phone service is free
- Technology
- Political Institution cooporation
Overview the CAGE globalization framework.
Identifies Cultural, Administrative, Geographic and Economic differences between countries that companies should address when crafting international strategies.
Overview Hofstede’s cultural framework and how it is useful in a business context.
- Studies power distance (Acceptance of Disparity in power)
- Uncertainty avoidance (Risk Tolerance)
- Individualism Vs Collectivism (Wheather the individual or the groups success is more important)
- Long term/ short term orientation (Concerend about the future vs here and now)
Overview Trompenaars’s cultural framework and how it is useful in a business context.
What distinguishes people from one culture compared to another
- Universalism vs Particularism
- Individualism vs communication
- Specific vs diffuse
- Neutral vs emotional
- Achievement vs ascription
- Sequential time vs synchronous time
- Internal direction vs Outer direction
Overview the three types of cultural insensitivity that we discussed.
- The inability of a person to accept or to become aware of cultural differences. Insensitivity leads to miscommunication, increased stress for all parties involved, and an increased risk of unsuccessful business outcomes.
- Self - reference criterion - is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one’s own company, culture, or country know best how to do things.
- Parochialism – limited or narrow outlook especially focused on a local area. The
- Ethnocentrism – the view that a person’s own culture is central and other cultures are measured in relation to it.
Overview the main cultural barriers that make cross-cultural communication difficult.
- The requirement that we reorient our mind-set and most importantly our expectations in order to accurately interpret the gestures, attitudes, and statements of the people we encounter from other cultures
- Language barriers
- Proximetics – distance between two people
- Polycronic -many things at the same time.
What are proxemics and kinesics?
- Proxemitics – Physical space to convey messages – Intimate space, Personal space, social distance, public distance
- Kenesics – Body movement and facial expressions
What are the differences between high-context and low-context cultures?
- High Contex (Japaneese)- Infer information from the message by the gestures – They convey heavily on non-verbal communication.
- Low Context - Rely on content and explicity spell out information. They want it direct. Want it written out and they are direct. - Relationship builds on friendship, honor and hospility/ People
What are the qualities to look for in a potential expat?
- Must have the skills to perform the job
- Strong relationships with HQTRs
- Motivational State – don’t want to send someone who doesn’t want to go
- Family situation, kids, spouses
- Language Skills
What is the law of one price and why is it often violated?
• Identical product must have an identical price in all countries when expressed in a common currency. – example – milk should be the same price everywhere, but it rarely is, because of taxes & government, labor, supply and demand, availability, logistics
What is PPP and how does the Big Mac Index relate to it?
- Purchasing power parity- has the relative ability for two countries currencies to buy the same basket of goods. Looking at the relative expense of a country. The cost of living is different.
- An economic theory that adjusts the exchange rate between countries to ensurethat a good is purchased for the same price in the same currency
- The Big Mac index helps to visualize it
What are the Fisher and International Fisher effects?
- Ni =ri+inflation
- International Fisher effect - When you have 2 countries and one country’s inflation goes up much higher that expected,
- Mexico – expected inflation – from 5% to 8%
Overview the effects of inflation.
• If money is injected into an economy that is not producing greater output, a greater amount of money is spent on a static amount of products. Demand for products soon outstrips their supply, prices rise, and inflation then erodes purchasing power.
