Globalization Overview Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which statement reflects the concept of restraint?

Desires and impulses need to be controlled. (correct)

People are encouraged to express their emotions openly.

Leisure time is prioritized over responsibilities.

Indulging one's desires is considered a virtue.

What does the term 'universalism' suggest about the approach to rules and relationships?

Rules are flexible based on circumstances.

Laws and rules hold high importance regardless of personal connections. (correct)

Individual circumstances dictate the application of rules.

Relationships are prioritized over rules.

In the individualism vs. communitarianism dimension, which perspective emphasizes group importance?

Communitarianism promotes personal freedoms.

Individualism discourages social relationships.

Communitarianism prioritizes the welfare of the group over individual goals. (correct)

Individualism values personal achievement and autonomy.

Which of the following best characterizes the sequential approach to time?

Time is viewed as linear with a focus on organizing activities separately. Signup and view all the answers

How does ascription differ from achievement in terms of personal worth?

Ascription associates worth with societal roles rather than actions. Signup and view all the answers

Which type of risk involves changes such as government takeover of corporate assets?

Country risk Signup and view all the answers

What defines a geocentric international staffing approach?

Hiring the best candidates regardless of nationality Signup and view all the answers

Which legal system primarily relies on written laws without considering past judicial decisions?

Civil law Signup and view all the answers

What is the main goal of management development assignments for expatriates?

To provide exposure to foreign business practices Signup and view all the answers

Which stage of the international assignment cycle is focused on evaluating an expatriate's effectiveness abroad?

Expatriation Signup and view all the answers

What is often a challenge for parent country nationals (PCNs) assigned as expatriates?

Difficulty with local business customs Signup and view all the answers

Which aspect of Colombian culture impacts business negotiations the most?

Emphasis on face-to-face meetings and personal relationships Signup and view all the answers

What phase of culture shock refers to the feeling of anxiety regarding unfamiliar behaviors in a new culture?

Culture shock Signup and view all the answers

What is a potential disadvantage of hiring host country nationals (HCNs) as expatriates?

Limited strategic perspective for global integration Signup and view all the answers

What does the repatriation process primarily focus on for expatriates returning to their home country?

Transitioning the expatriate back into the corporate headquarters Signup and view all the answers

What best describes the concept of cultural risk?

An event where cultural misunderstandings threaten human value or activity Signup and view all the answers

Which approach uses one's own culture as a standard for judging others?

Ethnocentrism Signup and view all the answers

Which of the following best represents a born global firm?

A multinational corporation that starts in multiple countries from inception Signup and view all the answers

What is a significant disadvantage of being a first mover in a market?

Increased risk and uncertainty Signup and view all the answers

What is the primary function of a franchise in international business?

To provide a local firm the right to operate under an established name Signup and view all the answers

Which mode of entry involves sharing ownership and responsibilities between parties?

Joint venture Signup and view all the answers

What advantage does a second mover gain when entering a market?

Reduced risk and more time for evaluation Signup and view all the answers

What does foreign direct investment typically enable a company to achieve?

Strategic ownership for market influence Signup and view all the answers

What is a characteristic of a wholly owned subsidiary?

May be established through greenfield investment or merger Signup and view all the answers

How can cultural distance impact international business?

It increases the degree of unfamiliarity with the local culture. Signup and view all the answers

In political risk, what can act as a primary concern for multinational corporations (MNCs)?

Potential loss of operations and profitability Signup and view all the answers

Which of the following political systems is characterized by individuals claiming absolute power without accountability?

Authoritarianism Signup and view all the answers

What is typically a goal of MNCs when dealing with political objectives?

Create a favorable trade environment and open access to markets Signup and view all the answers

What is the primary driver of globalisation?

Reduction of global investment/trade barriers Signup and view all the answers

Which of the following waves of globalisation was marked by the establishment of GATT?

1948-1970s Signup and view all the answers

Levitt predicted a market characterized by what feature?

A single global market with standardized products Signup and view all the answers

What is an International Firm defined as?

A firm engaged in trade activities with no FDI component Signup and view all the answers

Which economic benefit of globalisation negatively impacts low-skilled workers in high-cost countries?

Gains for technological sector workers Signup and view all the answers

What is one environmental consequence of globalisation?

Firms relocating to avoid strict pollution legislation Signup and view all the answers

What describes 'Liability of Foreignness'?

Additional costs incurred by a firm operating abroad Signup and view all the answers

In Hall’s Context Typology, which culture emphasizes personal relationships and slow negotiations?

High context culture Signup and view all the answers

What is referred to by 'Indulgence vs. Restraint' in Hofstede’s Dimensions?

The degree of value placed on personal happiness versus social norms Signup and view all the answers

Which option best explains the term 'Uniformity' in globalisation?

Standardized products sold everywhere Signup and view all the answers

What is an advantage of Multinational Corporations (MNCs)?

Increased operational flexibility and lower costs Signup and view all the answers

How does 'Customisation' differ from 'Uniformity' in global markets?

Adaptation of products to meet local preferences Signup and view all the answers

Which of Hofstede’s dimensions reflects the acceptance of hierarchical differences in society?

Power Distance Signup and view all the answers

Why might a host country benefit socially from foreign direct investment (FDI)?

Improved standards of living and technology transfer Signup and view all the answers

Study Notes

Topic 1: Globalization

Globalization is the growing interconnectedness of firms, governments, and individuals
Waves of globalization:
- 1830-1890s: Growth of rail/ocean transport, rise in manufacturing
- 1900-1930s: Emergence of MNCs and electricity/steel production
- 1948-1970s: Establishment of GATT and increased demand for consumer products
- 1980-2006: Technological advancements and rise of SMEs
- 2007-: Rise of digital technology
Drivers of globalization: Reduction of global investment/trade barriers, technological advancements, and industrialization.
Levitt (1983) predicted a single global market for standardized products.
Economic benefits of globalization:
- Gains for manufacturing workers in technological sectors and workers in new manufacturing regions
- Negative for low-skill workers in high-cost countries
- Technological diffusion: Adoption of new technologies
Environmental effects: Firms relocate to avoid strict pollution legislation. Host societies gain jobs, technology, and industrialization while home countries receive FDI growth and increased corporate profit.
Social impact drawbacks: Host societies become vulnerable to location shifts and environmental degradation. Home countries lose low-skilled jobs.
International firm: A firm engaged in trade activities with no FDI component.
MNC: A large company with substantial resources. It performs activities through subsidiaries and affiliates in multiple countries.
Competitive advantages of MNCs: Lower production costs, price stability, product quality, and flexibility of logistics.
Case study: Ireland
- 70% of manufacturing output is produced by MNCs
- Second most effective globally for FDI
- IDA Ireland: agency responsible for the attraction and retention of inward FDI
Globalization of production: allows companies to break down manufacturing processes into stages, located in most advantageous locations
Uniformity: Identical product everywhere, easily manageable and cost effective.
Customization: Products tailored to different preferences.

Topic 2: Culture

Liability of foreignness: Additional costs for overseas firms compared to local firms.
National culture: Shared sense of belonging, language, history, and ethnic groups.
Hall's Context Typology of Cultures:
- High context: Establishing social trust first, emphasis on relationships, slow and ritualistic negotiations.
- Low context: Business-oriented discussions, performance valued, efficient negotiations.
Hofstede's Dimensions of Culture:
- Power distance: Extent to which hierarchical differences are accepted.
  - High: Tall hierarchies, centralization (India/Brazil).
  - Low: Less centralization, smaller wage differentials (Sweden/Norway).
- Uncertainty avoidance: Extent to which members of a society tolerate ambiguity.
  - High: More rules and structures, standardization (Portugal/France).
  - Low: Fewer rules, more variability (UK/USA/Ireland).
- Individualism/Collectivism: Importance of self vs. group.
  - Collectivism: Loyalty and group interests (Colombia/Mexico).
  - Individualism: Individual interests (UK/USA).
- Motivation towards achievement: Degree to which a society is driven by competitiveness, achievement, and success.
- Long-term Orientation: Cultural attitude towards time.
  - Low: Societal change viewed with suspicion, honoring traditions
  - High: Pragmatic approach, long timeframes
- Indulgence vs. Restraint: Extent to which people control their desires/impulses.

Topic 3: Internationalisation

Internationalization: Exploring, understanding, and managing cultural differences, political, and legal environments.
Born global firms: Conduct business in multiple countries from inception.
Factors considered when internationalizing: Location, resource availability, language/cultural differences, product standardization, market entry options.
Proactive vs. Reactive expansions:
- Proactive: Future-oriented, driven by opportunity.
- Reactive: Responding to a deterioration in the competitive position.
First Movers:
- Advantages: Market share, loyalty, cost advantages.
- Disadvantages: Expenses, high risk, uncertainty.
Second Movers:
- Advantages: Lower risks, larger time frame, evaluating options, lower R&D costs.
Exporting:
- Direct: Firm produces and sells to foreign markets directly
- Indirect: Firm outsources to intermediaries.
- Export house: Buys products from the firm and resells.
- Buying house: Finds sellers.
Countertrade: Exchange goods or services for payment in another form.
Transfer related modes
- Licensing
- Franchising
Strategic alliances: Cross-border partnerships for shared interests and resources.
Wholly owned subsidiaries: Complete ownership, achieved through Greenfield (new facilities) or Brownfield (existing facilities) investments, or mergers/acquisitions.
Mergers and acquisitions: Combining previously separate organizations, gaining access to resources and competencies.

Topic 4: Political and Legal Context

Political environment: Government, political parties, interest groups, public opinion.
Political systems: Authoritarianism, democracy, monarchy, communism, theocracy.
Legal issues for MNCs: Rule of origin laws, competition, patents, product liability, and anti-trust laws.
Political risk: Potential loss to operations due to political/legal system changes.
- Types of risk: Ownership (governance changes), operational (rules changes), transfer (impacts on resources transfers).
Legal environment: Laws and regulations affecting businesses, common law, civil law, and theocratic law.
Country risk: Legal systems, political systems, sanctions, boycotts, and terrorism.

Topic 5: Expatriation

Expatriates: Employees working outside their home country for a period.
Types of assignments: Management development, business development, technical assignments.
International assignment cycle: Recruitment and selection, hiring, preparation/training, expatriation, repatriation
Culture shock / repatriation; dealing with the effects and handling the transition when returning home
Cultural context in Colombia: High context, collectivism, relaxed deadlines, religious background
Expatriate issues: Familiarity challenges, language barriers, cultural differences.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on the various aspects of globalization, including its waves, drivers, economic benefits, and environmental effects. This quiz covers key historical developments and their impact on the interconnectedness of firms, governments, and individuals.