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Questions and Answers
What is a pro of globalization?
What is a pro of globalization?
What does Foreign Direct Investment (FDI) refer to?
What does Foreign Direct Investment (FDI) refer to?
In a command economy, the government allows free competition and privatization.
In a command economy, the government allows free competition and privatization.
False
A __________ enterprise is any business that has productive activities in two or more countries.
A __________ enterprise is any business that has productive activities in two or more countries.
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What are the three types of economic systems?
What are the three types of economic systems?
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What is the primary goal of a market economy?
What is the primary goal of a market economy?
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Which of the following is NOT a type of legal system?
Which of the following is NOT a type of legal system?
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Totalitarianism allows for opposing political parties to function freely.
Totalitarianism allows for opposing political parties to function freely.
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Match the following economic concepts with their descriptions:
Match the following economic concepts with their descriptions:
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What is globalization?
What is globalization?
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Which of the following are pros of globalization? (Select all that apply)
Which of the following are pros of globalization? (Select all that apply)
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Which of the following are cons of globalization? (Select all that apply)
Which of the following are cons of globalization? (Select all that apply)
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What is foreign direct investment (FDI)?
What is foreign direct investment (FDI)?
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Define multinational enterprise (MNE).
Define multinational enterprise (MNE).
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What are the three types of economic systems?
What are the three types of economic systems?
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Common law is more flexible than civil law.
Common law is more flexible than civil law.
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What does GDP stand for?
What does GDP stand for?
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What is purchasing power parity (PPP)?
What is purchasing power parity (PPP)?
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Study Notes
Globalization
- Sourcing goods from different countries to leverage cost and quality differences in factors of production.
- Pros: Increased trade leads to more jobs, opens opportunities in developing areas, raises living standards, promotes communication, collaboration, and knowledge-sharing.
- Cons: Jobs move to cheaper labor areas, poverty persists, globalization cultivates fear, individuals may need to freelance, start their own businesses, or accept lower wages to stay employed.
International vs. Domestic Business Management
- Managing an international business is more complex due to differences in:
- Country-specific regulations
- Wider range of problems - more intricate
- Government-imposed limitations
- Currency conversions
Key Concepts
- Containerization: Using standardized containers for shipping goods to reduce the need for break-bulk shipping.
- Foreign Direct Investment (FDI): Investing in business activities outside of a company's home country.
- Multinational Enterprise (MNE): A business operating in two or more countries.
### Political Systems
-
Dimensions:
- Collectivism: Emphasizes collective goals over individual goals.
- Individualism: Individuals should have freedom in economic and political pursuits.
- Democracy: Government by the people, directly or via elected representatives.
- Totalitarianism: One person or party holds absolute control, prohibiting opposing political parties.
Economic Systems
-
Types:
- Market Economy: Private ownership of all productive activities, with production determined by supply and demand. Government promotes fair competition.
- Command Economy: Government plans and allocates goods, services, quantity, and prices for societal benefit. All businesses are state-owned.
- Mixed Economy: Some sectors privately owned, some government owned. Government may intervene in struggling firms vital for national interests.
### Legal Systems
-
Types:
- Common Law: Based on tradition, precedent, and custom. More flexible than others. (Example: England).
- Civil Law: Based on detailed laws organized into codes. Less adversarial than common law.
- Theocratic Law: Based on religious teachings, most common is Islamic law.
Economic Development Measures
- GDP (Gross Domestic Product): Measures the total value of finished goods and services produced within a country's borders in a specific time period.
- PPP (Purchasing Power Parity): Adjusts GDP for price differences between countries, providing a better comparison of living standards.
- HDI (Human Development Index): Combines life expectancy, education, and income per capita to create a broader measure of development.
### Political Economy
- The interplay of political, economic, and legal systems within a country.
Globalization
- Sourcing goods globally aims to take advantage of varying costs and quality of production factors.
Pros of Globalization
- More trade potentially leads to more jobs.
- Open borders can offer opportunities for developing regions.
- May contribute to a higher standard of living by improving health, welfare, and workplace safety conditions.
- It can foster communication, collaboration, and knowledge sharing between countries.
Cons of Globalization
- Jobs can shift to lower-cost regions.
- Poverty can be exacerbated.
- Globalism might create a culture of fear.
- Individuals could be forced to freelance, start their own businesses, or accept lower wages to maintain employment.
Managing International Businesses
- Managing international businesses differs from managing domestic businesses due to:
- Country differences: Each country has a unique set of characteristics.
- A wider range of problems: International business problems are more complex.
- Government limitations: Businesses must operate within the legal framework imposed by governments.
- Currency conversions: Transactions often necessitate currency exchange.
Key Concepts
- Containerization: This refers to the loading and shipping of goods in standardized containers on ships. It has significantly reduced the need for traditional break-of-bulk shipping.
- Foreign Direct Investment (FDI): A firm invests in business activities outside its home country.
- Multinational Enterprise (MNE): A business that operates in two or more countries.
Political Systems
- Collectivism: Prioritizes collective goals over individual goals.
- Individualism: Emphasizes individual freedom in economic and political pursuits.
- Democracy: Government is by the people, either directly or through elected representatives.
- Totalitarianism: One individual or political party holds absolute control over all aspects of life, and opposing parties are prohibited.
Economic Systems
- Market Economy: All productive activities are privately owned. Production is determined by supply and demand, requiring free and unrestricted supply.
- Command Economy: Government plans and controls goods and services, including their quantity and price. All businesses are state-owned.
- Mixed Economy: This system features a blend of privately owned and government-owned sectors.
Legal Systems
- Common Law: Rooted in English tradition, precedents, and customs; more flexible than other legal systems.
- Civil Law: Based on detailed written codes that organize laws; less adversarial than common law.
- Theocratic Law: Based on religious teachings; a notable example is Islamic law.
Key Concepts
- Political Economy: Refers to the interplay of political, economic, and legal systems of a country.
- Contract Law: Deals with legal agreements between parties.
- Property Rights: Concerns ownership and rights to assets.
- Corruption: Refers to dishonest or unethical conduct by individuals or organizations.
- Product Safety and Liability: Covers issues related to the safety and risks associated with products.
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Description
Explore the complexities of globalization and its impact on business management. This quiz covers pros and cons, key concepts like containerization and foreign direct investment, and the differences between international and domestic business management. Test your knowledge and understanding of these vital concepts in the global economy.
