Sociology Chapter 3: Culture and Society
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Questions and Answers

Corruption improves economic efficiency by ensuring resources are allocated effectively.

False (B)

The Tripartite Free Trade Area (TFTA) was signed by 26 African countries in 2015 to promote free trade.

True (A)

Bribery refers to the legal transfer of goods across borders.

False (B)

A customs union allows member countries to maintain their own trade policies towards non-members.

<p>False (B)</p> Signup and view all the answers

Economic unions involve unified fiscal and monetary policies among member countries.

<p>True (A)</p> Signup and view all the answers

Piracy is a practice that involves operating within the bounds of intellectual property laws.

<p>False (B)</p> Signup and view all the answers

Countries in a political union merge into a single political unit with coordinated policies.

<p>True (A)</p> Signup and view all the answers

Corruption can result in increased business costs due to the necessity of paying bribes.

<p>True (A)</p> Signup and view all the answers

Unethical decisions are less likely to arise when ethics are taken into account.

<p>True (A)</p> Signup and view all the answers

The Friedman Doctrine suggests businesses should prioritize ethical behavior over profits.

<p>False (B)</p> Signup and view all the answers

Building an organizational culture that values ethical behavior is crucial for promoting ethical actions.

<p>True (A)</p> Signup and view all the answers

Kantian Ethics emphasizes treating people merely as means to an end.

<p>False (B)</p> Signup and view all the answers

Moral courage requires rejecting unethical decisions, even if they are financially beneficial.

<p>True (A)</p> Signup and view all the answers

Corporate Social Responsibility (CSR) requires businesses to primarily focus on profit maximization.

<p>False (B)</p> Signup and view all the answers

Corruption can be exacerbated by factors such as poverty and weak legal systems.

<p>True (A)</p> Signup and view all the answers

The concept of 'veil of ignorance' is part of Justice Theories and suggests making decisions without knowing your social status.

<p>True (A)</p> Signup and view all the answers

The European Union was established primarily to address post-World War II economic challenges and promote peace.

<p>True (A)</p> Signup and view all the answers

Trade diversion occurs when cheaper goods from outside a trade area replace expensive domestic products.

<p>False (B)</p> Signup and view all the answers

Brexit refers to the UK voting to remain in the EU in 2016.

<p>False (B)</p> Signup and view all the answers

The Euro is currently the sole currency used by 19 EU countries.

<p>True (A)</p> Signup and view all the answers

NAFTA is a trade agreement that includes only the U.S. and Canada.

<p>False (B)</p> Signup and view all the answers

Mercosur is a trade agreement that includes only Brazil and Argentina.

<p>False (B)</p> Signup and view all the answers

ASEAN promotes trade and cooperation among ten Southeast Asian countries.

<p>True (A)</p> Signup and view all the answers

The Trans-Pacific Partnership (TPP) involves only countries from Asia.

<p>False (B)</p> Signup and view all the answers

Transportation costs and trade barriers can limit exporting activities.

<p>True (A)</p> Signup and view all the answers

Licensing is completely risk-free as it does not involve sharing proprietary knowledge.

<p>False (B)</p> Signup and view all the answers

Foreign Direct Investment (FDI) is often favored when control over operations and technology is critical.

<p>True (A)</p> Signup and view all the answers

Dunning’s Eclectic Paradigm includes factors such as market size and corporate reputation.

<p>False (B)</p> Signup and view all the answers

Pragmatic nationalism advocates for FDI only if the benefits outweigh its costs.

<p>True (A)</p> Signup and view all the answers

Foreign MNEs have less economic power than local competitors in host countries.

<p>False (B)</p> Signup and view all the answers

Outward FDI solely results in increased exports for the home country.

<p>False (B)</p> Signup and view all the answers

FDI can positively impact a host country's balance of payments by reducing imports.

<p>True (A)</p> Signup and view all the answers

Governments can encourage outward FDI by providing $800 loan programs and eliminating double taxation.

<p>True (A)</p> Signup and view all the answers

The World Trade Organization (WTO) aims to restrict FDI and create complex regulations for foreign investment.

<p>False (B)</p> Signup and view all the answers

Cutco Corporation primarily uses a direct selling model consisting of a sales force made up of high school students.

<p>False (B)</p> Signup and view all the answers

Firms entering foreign markets should prioritize markets with minimal trade barriers and low inflation.

<p>True (A)</p> Signup and view all the answers

Licensing is the only entry strategy that firms can utilize when entering foreign markets.

<p>False (B)</p> Signup and view all the answers

Cutco Corporation started as a product for the Wear-Ever Aluminum division of Alcoa.

<p>True (A)</p> Signup and view all the answers

Managerial implications of FDI suggest that firms should avoid assessing their bargaining power with host governments.

<p>False (B)</p> Signup and view all the answers

One of the critical decisions for firms entering foreign markets is determining the appropriate scale of entry.

<p>True (A)</p> Signup and view all the answers

Foreign direct investment (FDI) occurs when a firm invests in operations within the same country.

<p>False (B)</p> Signup and view all the answers

Burberry shifted its strategy in Japan by ending its licensing agreement with Sanyo Shokai.

<p>True (A)</p> Signup and view all the answers

FDI flow represents the total value of foreign-owned assets at any given time.

<p>False (B)</p> Signup and view all the answers

Protectionism encourages foreign direct investment (FDI) by creating a more open market.

<p>False (B)</p> Signup and view all the answers

Greenfield investments are typically faster and less risky than acquisitions.

<p>False (B)</p> Signup and view all the answers

The U.S. has been the largest source of foreign direct investment since the end of World War II.

<p>True (A)</p> Signup and view all the answers

Developing nations like China and Latin America have recently attracted less FDI compared to developed countries.

<p>False (B)</p> Signup and view all the answers

The Eclectic Paradigm helps explain why firms undertake FDI at the same time in the same industry.

<p>True (A)</p> Signup and view all the answers

Flashcards

Organizational Culture

A company's shared beliefs and values regarding ethical behavior, influencing how employees act and make decisions.

Friedman Doctrine

The belief that a business should focus solely on maximizing profits within legal boundaries.

Righteous Moralist

Acting ethically by following the moral standards of your home country, even when doing business abroad.

Utilitarianism

An ethical theory that emphasizes maximizing benefits for the largest number of people.

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Kantian Ethics

Treating individuals as ends in themselves, not merely as means to achieve an objective.

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Corruption

Practices like bribery, smuggling, and money laundering that involve misusing public office for personal gain.

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Moral Courage

The ability to make ethical decisions even when faced with pressure or temptation.

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Corporate Social Responsibility (CSR)

The belief that companies should contribute positively to society and the environment beyond profit-making.

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Economic Impact of Corruption

Corruption hurts economic growth by discouraging foreign investment, making it harder for businesses to operate, and creating inefficiencies in the market.

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Free Trade Area

A free trade area is a group of countries that remove trade barriers between themselves, but each country maintains its own policies for trade with countries outside the agreement.

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Customs Union

A customs union is a group of countries that removes trade barriers between members and adopts a common trade policy for all countries outside the union.

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Common Market

A common market allows for the free movement of goods, services, labor, and capital between member countries, in addition to the benefits of a customs union.

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Economic Union

An economic union involves free trade, common policies, a shared currency, and coordinated fiscal and monetary policies.

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Benefits of Regional Integration

Regional integration can lead to greater economic growth and stability, as well as increased political influence on the global stage.

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Bribery

Bribery involves offering money or gifts to influence a person's decisions, often to obtain an unfair advantage.

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Money Laundering

Money laundering is the process of concealing the illegal origins of money through a series of financial transactions, making it appear legitimate.

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Trade Diversion

When economic integration leads to cheaper goods from inside the trading bloc replacing more expensive goods from outside the bloc.

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Trade Creation

When regional economic integration leads to a decrease in transaction costs and an increase in trade between member countries.

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Single Currency

A single currency used by a group of countries, aiming to reduce transaction costs and promote economic stability.

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Regional Trade Bloc

An organization that promotes trade and cooperation among its member countries, often working to reduce tariffs and promote trade agreements.

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Brexit

A situation where a country chooses to leave a larger economic or political union, like the UK leaving the EU.

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Single Market

A type of regional economic integration where member countries agree to harmonize policies, including regulations and standards, leading to a unified market.

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National Sovereignty

A major challenge to regional integration where countries may fear losing control over their own policies and decisions.

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Foreign Direct Investment (FDI)

A company invests directly in new operations in a foreign country, becoming a multinational enterprise (MNE).

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FDI Stock

The total value of all foreign-owned assets in a country at a specific point in time.

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FDI Flow

The amount of FDI invested over a specific period, like a year.

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Greenfield Investments

Setting up entirely new operations in a foreign country, like building factories or creating new facilities.

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Acquisitions

Acquiring an already existing company in a foreign country to gain immediate control.

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Exporting

Companies produce goods in their home country and sell them abroad, avoiding direct investment in the foreign market.

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Licensing

Granting a foreign entity the right to produce and sell your products in exchange for a royalty fee.

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Eclectic Paradigm

A theory that explains FDI by considering internal factors like a firm's competitive advantage and external factors like the attractiveness of a foreign market.

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Home-Country Policies

Government actions to encourage or restrict foreign direct investment (FDI) by domestic companies.

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Host-Country Policies

Government actions to encourage or restrict foreign direct investment (FDI) by foreign companies.

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Entry Modes for Foreign Markets

Strategies for entering foreign markets, including exporting, licensing, joint ventures, and wholly owned subsidiaries.

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Evaluating Foreign Markets

Evaluating a foreign market's potential, including political stability, economic conditions, and market size, to determine suitability for entry.

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Basic Entry Decisions

Deciding which specific countries to enter, when to enter, and how much to invest in each market.

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Ideal Foreign Market Characteristics

This involves examining factors such as political stability, free market systems, low inflation, and low private sector debt.

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Less Favorable Market Characteristics

Factors that can make a foreign market less attractive for investment, such as political instability, mixed economies, and financial instability.

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Strategic Rivalry and FDI

Companies invest in other countries to compete with rivals in multiple markets, like Coke and Pepsi battling globally.

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The Eclectic Paradigm

This theory explains why companies invest overseas, combining ownership advantages, location advantages (like cheap labor), and internalization advantages (keeping control over operations).

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Radical view on FDI

This view sees multinational corporations as tools of powerful nations, exploiting weaker countries.

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Free Market view on FDI

Foreign direct investment is beneficial and should be governed by the principle of comparative advantage.

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Pragmatic Nationalism

This viewpoint looks at the advantages and disadvantages of foreign investment and allows it only if the benefits outweigh the costs.

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Resource Transfer Effect of FDI

FDI brings new resources, like capital, technology, and expertise, which can boost local industries.

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Employment Effect of FDI

FDI can create jobs, potentially improving employment rates.

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Competition and Growth Effect of FDI

FDI can help a country's economy grow by stimulating competition and lowering prices.

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Study Notes

Chapter 3: Differences in Culture

  • Culture is shared values and norms guiding a group's behavior.
  • Values are core beliefs shaping norms.
  • Norms are social rules for behavior; folkways are everyday customs, while mores are essential rules for societal well-being.
  • Society is a group sharing common values and norms; a nation-state can contain multiple cultures.
  • Culture is influenced by politics, economics, social structures, religion, language, and education.

Social Structure and Stratification

  • Social structure is the organization of a society.
  • Individualism vs. group orientation: Western cultures prioritize individual achievement; non-Western cultures emphasize teamwork and loyalty (e.g., Japan).
  • Social stratification divides societies into classes based on family, occupation, and income, affecting business practices.

Religion and Ethical Systems

  • Religion shapes culture and business through beliefs and practices.
  • Christianity emphasizes hard work and capitalism.
  • Islam supports business but prohibits interest.
  • Hinduism focuses on spiritual achievement; the caste system may limit job mobility.
  • Buddhism encourages spiritual growth and entrepreneurship.
  • Confucianism stresses loyalty, honesty, and respect, benefiting business relationships.

Language

  • Language significantly affects communication and business.
  • English is the leading business language, followed by Mandarin, French, and Arabic.
  • Unspoken language (nonverbal communication, like gestures and facial expressions) varies across cultures.

Education

  • A country's education system impacts its labor force and business environment, affecting national competitiveness.

Hofstede's Cultural Dimensions

  • Geert Hofstede identified five cultural dimensions explaining cultural differences:
    • Power Distance: Degree of inequality acceptance.
    • Individualism vs. Collectivism: Focus on individual or group goals.
    • Uncertainty Avoidance: Comfort with uncertainty.
    • Masculinity vs. Femininity: Emphasis on competition or nurturing.
    • Long-Term vs. Short-Term Orientation: Focus on long-term or immediate goals.
    • A sixth dimension, Indulgence vs. Restraint, was later added.

Cultural Change

  • Culture evolves slowly, often with economic growth.
  • Rapid change can lead to social unrest.

Chapter 4: Ethics, Corporate Social Responsibility, and Sustainability

  • Ethics, CSR, and sustainability are key in international business.
  • Ethical strategies align with ethical standards
  • Ethical issues in international business include employment practices (e.g., sweatshop labor), human rights (e.g., freedom of speech), environmental pollution, and corruption (e.g., bribery).

Philosophical Approaches to Ethics

  • Philosophical perspectives on ethics include straw men (Friedman doctrine, cultural relativism, righteous moralist, and naïve immoralist), Utilitarian, Kantian (treat people as ends, not means), rights (emphasize human rights, e.g., Universal Declaration of Human Rights), and justice (fair distribution of resources.

Ethics and Corruption

  • Corruption involves using public office for private gain.
  • Common corrupt practices include bribery, smuggling, money laundering, and piracy.
  • Corruption leads to economic distortions, reduced growth, higher business costs, inefficiency, environmental harm, and reduced tax revenue.

Chapter 8: Regional Economic Integration

  • Regional economic integration (e.g., the EU, NAFTA, ASEAN) creates trade blocs, promotes more trade and investment, increases political power, but can lead to costs like higher cost for certain groups, loss of national sovereignty.

Chapter 7: Foreign Direct Investment (FDI)

  • FDI is when a firm invests directly in foreign operations.
  • FDI trends show consistent growth, with emerging economies attracting increasing investment.
  • Types of FDI include Greenfield investments (establishing new operations) and acquisitions.
  • Factors influencing FDI choices include location-specific advantages, externalities, and political ideology (perceptions of MNEs as tools of domination).
  • Benefits of FDI to the host country include resource transfer effects, employment creation, and increased competition.
  • Costs to the host country include potentially adverse effects on competition, balance of payments, and loss of sovereignty.
  • Similarly, benefits to the home country include capital inflow, job creation, and learning from foreign markets. But costs to the home country involve outflow of capital and potential job loss.

Chapter 10: Entering Developed and Emerging Markets

  • Firms enter foreign markets through various strategies, including:
    • Exporting
    • Licensing or franchising
    • Joint ventures
    • Wholly owned subsidiaries
  • Factors influencing entry strategy choices include:
    • The firm's resources and capabilities.
    • Entry barriers, cost and risks, and political, economic, and financial conditions.
    • The firm's competitive advantages, level of control, and customer focus.
  • Key decisions relate to which markets to enter, when, and the appropriate scale of entry.

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Chapter 3: Differences in Culture PDF

Description

Explore the key concepts of culture, social structure, and stratification in this quiz. Understand how values and norms shape societal behavior and influence business practices. Delve into the differences between individualistic and collectivist cultures, and examine the role of religion in ethical systems.

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