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Questions and Answers
Corruption improves economic efficiency by ensuring resources are allocated effectively.
Corruption improves economic efficiency by ensuring resources are allocated effectively.
False
The Tripartite Free Trade Area (TFTA) was signed by 26 African countries in 2015 to promote free trade.
The Tripartite Free Trade Area (TFTA) was signed by 26 African countries in 2015 to promote free trade.
True
Bribery refers to the legal transfer of goods across borders.
Bribery refers to the legal transfer of goods across borders.
False
A customs union allows member countries to maintain their own trade policies towards non-members.
A customs union allows member countries to maintain their own trade policies towards non-members.
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Economic unions involve unified fiscal and monetary policies among member countries.
Economic unions involve unified fiscal and monetary policies among member countries.
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Piracy is a practice that involves operating within the bounds of intellectual property laws.
Piracy is a practice that involves operating within the bounds of intellectual property laws.
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Countries in a political union merge into a single political unit with coordinated policies.
Countries in a political union merge into a single political unit with coordinated policies.
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Corruption can result in increased business costs due to the necessity of paying bribes.
Corruption can result in increased business costs due to the necessity of paying bribes.
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Unethical decisions are less likely to arise when ethics are taken into account.
Unethical decisions are less likely to arise when ethics are taken into account.
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The Friedman Doctrine suggests businesses should prioritize ethical behavior over profits.
The Friedman Doctrine suggests businesses should prioritize ethical behavior over profits.
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Building an organizational culture that values ethical behavior is crucial for promoting ethical actions.
Building an organizational culture that values ethical behavior is crucial for promoting ethical actions.
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Kantian Ethics emphasizes treating people merely as means to an end.
Kantian Ethics emphasizes treating people merely as means to an end.
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Moral courage requires rejecting unethical decisions, even if they are financially beneficial.
Moral courage requires rejecting unethical decisions, even if they are financially beneficial.
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Corporate Social Responsibility (CSR) requires businesses to primarily focus on profit maximization.
Corporate Social Responsibility (CSR) requires businesses to primarily focus on profit maximization.
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Corruption can be exacerbated by factors such as poverty and weak legal systems.
Corruption can be exacerbated by factors such as poverty and weak legal systems.
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The concept of 'veil of ignorance' is part of Justice Theories and suggests making decisions without knowing your social status.
The concept of 'veil of ignorance' is part of Justice Theories and suggests making decisions without knowing your social status.
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The European Union was established primarily to address post-World War II economic challenges and promote peace.
The European Union was established primarily to address post-World War II economic challenges and promote peace.
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Trade diversion occurs when cheaper goods from outside a trade area replace expensive domestic products.
Trade diversion occurs when cheaper goods from outside a trade area replace expensive domestic products.
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Brexit refers to the UK voting to remain in the EU in 2016.
Brexit refers to the UK voting to remain in the EU in 2016.
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The Euro is currently the sole currency used by 19 EU countries.
The Euro is currently the sole currency used by 19 EU countries.
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NAFTA is a trade agreement that includes only the U.S. and Canada.
NAFTA is a trade agreement that includes only the U.S. and Canada.
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Mercosur is a trade agreement that includes only Brazil and Argentina.
Mercosur is a trade agreement that includes only Brazil and Argentina.
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ASEAN promotes trade and cooperation among ten Southeast Asian countries.
ASEAN promotes trade and cooperation among ten Southeast Asian countries.
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The Trans-Pacific Partnership (TPP) involves only countries from Asia.
The Trans-Pacific Partnership (TPP) involves only countries from Asia.
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Transportation costs and trade barriers can limit exporting activities.
Transportation costs and trade barriers can limit exporting activities.
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Licensing is completely risk-free as it does not involve sharing proprietary knowledge.
Licensing is completely risk-free as it does not involve sharing proprietary knowledge.
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Foreign Direct Investment (FDI) is often favored when control over operations and technology is critical.
Foreign Direct Investment (FDI) is often favored when control over operations and technology is critical.
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Dunning’s Eclectic Paradigm includes factors such as market size and corporate reputation.
Dunning’s Eclectic Paradigm includes factors such as market size and corporate reputation.
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Pragmatic nationalism advocates for FDI only if the benefits outweigh its costs.
Pragmatic nationalism advocates for FDI only if the benefits outweigh its costs.
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Foreign MNEs have less economic power than local competitors in host countries.
Foreign MNEs have less economic power than local competitors in host countries.
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Outward FDI solely results in increased exports for the home country.
Outward FDI solely results in increased exports for the home country.
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FDI can positively impact a host country's balance of payments by reducing imports.
FDI can positively impact a host country's balance of payments by reducing imports.
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Governments can encourage outward FDI by providing $800 loan programs and eliminating double taxation.
Governments can encourage outward FDI by providing $800 loan programs and eliminating double taxation.
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The World Trade Organization (WTO) aims to restrict FDI and create complex regulations for foreign investment.
The World Trade Organization (WTO) aims to restrict FDI and create complex regulations for foreign investment.
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Cutco Corporation primarily uses a direct selling model consisting of a sales force made up of high school students.
Cutco Corporation primarily uses a direct selling model consisting of a sales force made up of high school students.
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Firms entering foreign markets should prioritize markets with minimal trade barriers and low inflation.
Firms entering foreign markets should prioritize markets with minimal trade barriers and low inflation.
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Licensing is the only entry strategy that firms can utilize when entering foreign markets.
Licensing is the only entry strategy that firms can utilize when entering foreign markets.
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Cutco Corporation started as a product for the Wear-Ever Aluminum division of Alcoa.
Cutco Corporation started as a product for the Wear-Ever Aluminum division of Alcoa.
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Managerial implications of FDI suggest that firms should avoid assessing their bargaining power with host governments.
Managerial implications of FDI suggest that firms should avoid assessing their bargaining power with host governments.
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One of the critical decisions for firms entering foreign markets is determining the appropriate scale of entry.
One of the critical decisions for firms entering foreign markets is determining the appropriate scale of entry.
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Foreign direct investment (FDI) occurs when a firm invests in operations within the same country.
Foreign direct investment (FDI) occurs when a firm invests in operations within the same country.
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Burberry shifted its strategy in Japan by ending its licensing agreement with Sanyo Shokai.
Burberry shifted its strategy in Japan by ending its licensing agreement with Sanyo Shokai.
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FDI flow represents the total value of foreign-owned assets at any given time.
FDI flow represents the total value of foreign-owned assets at any given time.
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Protectionism encourages foreign direct investment (FDI) by creating a more open market.
Protectionism encourages foreign direct investment (FDI) by creating a more open market.
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Greenfield investments are typically faster and less risky than acquisitions.
Greenfield investments are typically faster and less risky than acquisitions.
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The U.S. has been the largest source of foreign direct investment since the end of World War II.
The U.S. has been the largest source of foreign direct investment since the end of World War II.
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Developing nations like China and Latin America have recently attracted less FDI compared to developed countries.
Developing nations like China and Latin America have recently attracted less FDI compared to developed countries.
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The Eclectic Paradigm helps explain why firms undertake FDI at the same time in the same industry.
The Eclectic Paradigm helps explain why firms undertake FDI at the same time in the same industry.
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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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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.
