Week 2

Question 1

What is the CAGE Framework?

Answer 1

1. Cultural distance
2. Administrative & Political distance
3. Geographic distance
4. Economic distance

Question 2

Are shorter distances always preferred?

Answer 2

No — if a firm is efficiency seeking, it would look to expand into a country that has lower costs than it currently has.

Question 3

What are some limitations of using key economic indicators to estimate market size?

Answer 3

1. GDP — fails to account for the degree of income inequality in society
2. Poverty Ratio — likely underestimating the true poverty level
3. Unrecorded Transactions — e.g. transfer payments, government services
4. Statistical problems
5. Segments more representative — e.g. urban vs. rural
6. Purchasing Power — e.g. Big Mac Index

Question 4

What is TPP?

Answer 4

Trans-Pacific Partnership

Question 5

What is AEC?

Answer 5

ASEAN Economic Community

Question 6

What is RCEP?

Answer 6

Regional Comprehensive Economic Partnership

Question 7

What is FTAAP?

Answer 7

Free Trade Area of Asia Pacific

Question 8

What’s the difference between Nominal and Real Exchange Rates?

Answer 8

• Nominal tells us the amount of domestic currency needed to purchase foreign currency
• Real tells us how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.

Question 9

What’s the difference between hard and soft currencies?

Answer 9

• Hard is developed countries that have a strong industrial economy accompanied by a stable government
• Soft is a value that fluctuates, predominantly lower, as a result of the country’s political or economic uncertainty

Question 10

What are the components of National Culture?

Answer 10

1. Symbols and rituals
2. Stories
3. Norms
4. Customs
5. Beliefs & values

Question 11

How does an individual adapt to cultural differences?

Answer 11

1. Ethnocentric — judge other groups relative to their own ethnic group or culture, especially with concerns for language, behaviour, customers and religions
2. Ethnorelative — no one culture is superior to the other; recognizes differences between cultures, and believe in adaptability and accommodation

Question 12

What are some ways to overcome Cross-Cultural Risk?

Answer 12

• Attribution training
• Culture awareness training
• Interaction Training
• Experiential training

Question 13

What is the success of overcoming cultural risks dependent on?

Answer 13

1. Cultural distance
2. Host country appearance
3. Hidden cultural attitudes