Test 1- Other

Question 1

Multinational enterprise (MNE)

Answer 1

a firm that engages in foreign direct investment (FDI) by directly investing in, controlling, and managing value-added activities in other countries.

Question 2

2 parts of global business

Answer 2

1. international (cross border) business activities by the foreign firm
2. domestic business activities

Question 3

Most Important Emerging Economies (BRIC)

Answer 3

Brazil Russia India China

Question 4

Triad Countires

Answer 4

North America

Western Europe

Japan

Question 5

Institution-based view

Answer 5

• Success/failure is enabled/constrained by institutions
• focuses on external environment
• institutions = rules of the game
• Formal rules (laws) and informal rules ( values)

Question 6

Resource-based view

Answer 6

focuses on internal resources and capabilities and how they overcome the odds against them in foreign markets

Question 7

Globalization

Answer 7

• the close integration of countries and peoples of the world
• pendulum view (not recent or one directional, process similar to a swing of a pendulum

Question 8

Instutions

Answer 8

• humanly devised constraints that structure human interaction
• not static -constrain what is acceptable
• key role is to reduce uncertainty (to reduce transaction costs

Question 9

3 institutional pillars

Answer 9

1. Regulatory:
   - primary support pillar for formal institutions
   - coercive power of the governments.
2. Normative
   - support pillar for informal institutions
   - how values, beliefs, and actions of other relevant players (ie norms) influence the behavior of focal individuals and firms
3. Cognitive
   - support pillar for informal institutions
   - internalized values and beliefs that guide behavior

Question 10

Institution based view 2 core propositions

Answer 10

1. Managers and firms rationally pursue their interest and make choices within institutional constraints
2. In situations where formal constraints are unclear or fail, informal constraints play a larger role in reducing uncertainty and providing consistency

Question 11

3 major aspects of informal institutions

Answer 11

1. Culture
2. Ethics
3. Norms

Question 12

Culture

Answer 12

the collective programming of the mind which distinguishes the members of one group of people from another

Question 13

4 components of Culture

Answer 13

1. language
2. religion
3. social structure -the way a society organizes its members–with rigidity or flexibility
   - Social stratification: hierarchical arrangement of individuals into social categories
   - social mobility: degree to which members from a lower social category can achieve a higher status
4. education

Question 14

3 ways to understand cultural differences

Answer 14

1. Context: the underlying background upon which social interactions take place.
   - Low context cultures: communication is usually taken at face value without much reliance on unspoken context (ie US and the west)
   - high context cultures: communication relies heavily on
2. Cluster: groups similar cultures together
3. Dimension approaches

Question 15

Dimension approach’s 5 dimensions

Answer 15

1. Power distance: the extent to which less powerful members within a country expect and accept that power is distributed unequally
2. Individualism vs. collectivism: -individualism: perspective that the identity of an individual is fundamentally his/her own. -collectivism: identity is primarily based on his/her collective group
3. Gender differentiation- traditional gender roles or not
4. Uncertainty avoidance: extent to which members in different cultures accept ambiguous situations and tolerate uncertainty. effects resistance to change
5. Long term vs. Short term orientation -long: emphasizes perseverance and savings for the future -short: prefer quick results and instant gratification

Question 16

Ethics

Answer 16

principles, standards, and norms of conduct governing individual and firm behavior

Question 17

Ethical realtivism

Answer 17

when in Rome, do as the Romans do. Follow the ethics of the country you are in

Question 18

Ethical Imperialism

Answer 18

belief that “there is only one set of ethics and we have it.”

Question 19

Ethics: 3 middle of the road approachs

Answer 19

1. respect for human dignity and basic rights should determine the absolute minimal ethical thresholds for all operations around the world
2. respect for local traditions suggest cultural sensitivity
3. respect for institutional context calls for a careful understanding of local institutions

Question 20

Foreign Direct Investment (FDI)

Answer 20

investing in, controlling, and managing value-added activities in other countries.

Question 21

Gross Natioanl Product

Answer 21

Measured as the sum of value added by resident firms, households, and government operating in an economy

Question 22

Gross Domestic Product

Answer 22

Total market value of all final goods and services produced withing a country in a given period of time

Question 23

Gross national income

Answer 23

GDP plus income form nonresident sources abroad

Question 24

Purchasing Power Pariety

Answer 24

Adjustment made to the GDP to reflect difference in the cost of living

Question 25

Liability of foreignness

Answer 25

Inherent disadvantage that foreign firms experience in host countries because of their nonnative status.

Question 26

Semiglobalization

Answer 26

strategy that suggest that barriers to market integration at borders are high bt not high enough to completely insulate countries from each other

Question 27

2 types of nongovernment organizations (NGOs)

Answer 27

1. advocacy - environmentalists, human rights activists, consumers, etc. that raise awareness, acceptance and knowledge by lobbying, press work and activist events
2. operational
   - design and implementation of development related projects that may stress service delivery or participation; whether religious or secular; whether more public or private-oriented
   - can be community based, national or international

Question 28

global economy =

Answer 28

sum national economies (GDPs) + sum of all economic interactions (Trade flows of goods or services (~25 trillion), Human flows (migration of workers, tourist, etc.), and Capital flows (Foreign Direct Investment,

Question 29

3 Types of Economies

Answer 29

1. Market: Characterized by the “invisible hand” of market forces; government takes a hands-off, or laissez faire approach
2. Command: Government taking the “commanding height” in the economy;
   - all factors of production are government- or state owned and controlled,
   - all supply, demand, and pricing are planned by the government
3. Mixed: Elements of both market economy and command economies