Political Systems & Economies (PDF)

A political system that emphasizes collective goals over individual goals: Collectivism Public ownership of the means of production for the common good: Socialism The idea that an individual should have freedom in economic and political pursuits; the interests of the individual should take precede...

A political system that emphasizes collective goals over individual goals: Collectivism Public ownership of the means of production for the common good: Socialism The idea that an individual should have freedom in economic and political pursuits; the interests of the individual should take precedence over the interests of the state: Individualism One person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties: Totalitarianism The idea that government is by the people, exercised either directly or through elected representatives: Democracy Democracy and individualism go hand in hand, as do the communist version of collectivism and totalitarianism. Generally permits individual economic freedom but restricts individual political freedom, including free speech, on the grounds that it would lead to the rise of communism: Right-wing Totalitarianism Monopolized by a party, group, or individual that governs according to religious principles: Theocratic Totalitarianism A party, group, or individual that represents the interests of a particular tribe monopolizes political power: Tribal Totalitarianism Socialism can be achieved only through a totalitarian dictatorship: Communist Totalitarianism A command economy can be characterized by a government that plans the goods and services and quantity and price of goods, businesses that are state owned, and a lack of incentives for individuals to look for better ways to serve needs. A mixed economy can be characterized by some privately owned sectors and some government owned sectors; furthermore, were once common in the developed world, but less so now. A market economy can be characterized by all productive activities being privately owned, production determined by supply and demand, and the role of government is to encourage vigorous free and fair competition. Legal systems refer to rules that regulate behaviors, the process of enforcing laws, the process through which justice is served. Common law (Precedence), Civil law (Codes), Theocratic law (Religion) Property is best defined as: A resource that an individual or business owns Legal rights over the use to which a resource is out and over the use made of any income that may be derived from that resource can be defined as: Property Rights Copyrights: Exclusive legal rights of authors, composers, playwrights, artists, and publishers Patent: Inventors exclusive rights for a defined period Intellectual Property: Property that is the product of intellectual activity, such as computer software, a screenplay, and a music score World Intellectual Property Organization: International organization whose members sign treaties to protect intellectual property The Globalization of Markets is defined as "the merging of historically distinct and separate national markets into one huge global marketplace". With this given, select which of the following are possible outcomes of globalization of markets: Falling barriers to cross-border trade and investment, Benefits for small and large companies, and Products that serve universal needs are global, such as oil The Globalization of Product is defined as "sourcing goods to take advantage of differences in cost and quality of factors of production." With this given, select which of the following are possible outcomes of globalization of production: Transportation Costs, Challenge of coordinating globally dispersed supply chain, Formal and informal barriers to trade Select the five main international institutions that are needed to help manage, regulate, and police global marketplace: General Agreement on Tariffs and Trade, International Monetary Fund, United Nations, World Bank, World Trade Organization Which global institution is often seen as the "lender of last resort" and in return for loans, requires nations to adopt specific economic policies to stabilize and grow their economies? International Monetary Fund Which global institution is a center for harmonizing the actions of nations and cooperates in solving international problems and in promoting respect for human rights? The United Nations Which global institution is focused on making low interest loans to cash strapped governments in poor nations that wish to undertake significant infrastructure investments? The World Bank Which global institution works to police the world trading system and facilitates multinational agreements among members? The World Trade Organization International trade is when a firm exports goods or services to consumers in another country, while FDI is when a firm invests resources in business activities outside its home country. Between 1960 and 2020, the value of the world economy increased 19 times, while the value of international goods increased 9.7 times. Trades in goods and services and the value of foreign direct investment have all been growing faster than world output: True Development of the microprocessor is the single most important innovation since World War II: True An implication of the globalization of production: Locating production in geographically separate locations has become more economical An implication of the globalization of markets? Cultural distance has been reduced, leading to some convergence of consumer tastes and preferences Critics argue that the gap between the rich and the poor nations has gotten wider due to: Totalitarian governments Managing international business differs from managing rely domestic business because: One must find ways to work within limits imposed by government, transactions involve converting money into different currencies, wider and more complex range of problems Culture is a system of values and norms shared among a group of people and that when taken together constitute a design for living. Furthermore, a society is a group of people sharing a common set of values and norms. Values are ideas about what a group believes to be good and right, while norms are social rules and guidelines that prescribe appropriate behavior in particular situations. Values are ideas about what a group believes to be good, right, and desirable. Norms are social rules that govern people's actions toward one another. A set of moral principles that are used to guide and shape behavior: Ethical system Which religion does not emphasize wealth creation or support the caste system; furthermore, stresses spiritual growth? Buddhism Which religion prohibits the payment or receipt of interest and has many pro-free enterprise principles? Islam Mandarin is the mother tongue of the largest number of people, but English is the most widely spoken language in the world. English is becoming the language of international business. The three values of Hinduism --loyalty, reciprocal obligations, and honesty-- may all lead to lowering the cost of doing business in Hindu societies. False Unspoken language and personal space are examples of factors that vary amongst different cultures, which makes it important to know in business. True Routine conventions in everyday life, such as appropriate dress codes and good social manners: Folkways Norms seen as central to functioning of society, such as laws against theft: StandardsAccording to Hofstede's Results, western nations tend to score higher on individualism and low on power distance.Uncertainty avoidance measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating uncertainty.what are the principals of the freidman doctrine?Ethics, corporate social responsibility, and sustainability are “social” issues that arise frequently in international business.Ethics are the core starting point.Business ethics are the accepted principles of right or wrong that govern the conduct of businesspeople.Ethical strategy refers to a strategy, or course of action, that does not violate a company’s business ethics. U.S. Foreign Corrupt Practices Act (FCPA): ○ Regulates conduct of international business in the taking of bribes and other unethical actions. ○ Amended to allow for “facilitating payments.” ○ Convention on Combating Bribery of Foreign Public Official in International Business Transactions: Makes the bribery of foreign officials a criminal offense. Ethical dilemmas are situations in which no alternatives seem ethically acceptable. Six determinants of ethical behavior: Personal ethics.Decision-making processes.Organizational culture.Unrealistic performance goals.Leadership.Societal culture.Organizational CultureValues and norms shared among an organization’s employees.Some organizational culture may not encourage people to think through ethical consequences of decisions.Societal CultureCultures that emphasize individualism and uncertainty avoidance are more likely to stress ethical behavior than cultures where masculinity and power distance are emphasized. Straw Men Offer inappropriate guidelines for ethical decision making.The Friedman Doctrine: Nobel Prize–winning economist Milton Friedman said “the social responsibility of business is to increase profits,” so long as the company stays within the rules of law. When in Rome, do as the Romans do.The righteous moralist: Home-country standards of ethics should be followed in foreign countries. Typically associated with managers from developed nations. Criticized for its proponents going too far. The naïve immoralistIf a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. Utilitarian approaches to ethics: The moral worth of actions or practices is determined by their consequences. Actions are desirable if they lead to the best possible balance of good consequences over bad consequences. Best decisions are those that produce the  greatest good for the greatest number of people Drawbacks:Difficult to measure benefits, costs, and risks of the action. Fails to consider justice.Kantian ethics: Based on the philosophy of Immanuel Kant. People should be treated as ends and never purely as means to the ends of others.People have dignity and need to be respected. Contemporary moral philosophers view Kantian ethics as incomplete.System has no place for moral sentiments such as sympathy or caring.Rights Theories Human beings have fundamental rights and privileges that transcend national borders and cultures. Moral theorists argue that fundamental human rights form the basis for a moral compass that managers should use in ethical decision making. Universal Declaration of Human Rights. Adopted by the United Nations and ratified by almost every country. Lays down principles that should be adhered to irrespective of the culture. We have the right to free speech and must respect the free speech of others. Obligations fall on more than one class of moral agents—any person or institution that is capable of moral action. ○ Includes governments and corporations. ustice Theories Focus on the attainment of a just distribution of economic goods and services. A just distribution is a distribution of goods and services that is considered fair and equitable John Rawls argued that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage. ○ Impartiality is guaranteed by veil of ignorance. ○ Difference principle. Hire and promote people with a strong sense of personal ethics. Businesses can give potential employees psychological tests and check with prior employers regarding ethical behavior. Prospective employees should investigate the ethical climate in an organization prior to taking a position. Articulate values that place a strong emphasis on ethical behavior. Emphasize the importance of a code of ethics. Implement a system of incentives and rewards that recognize people who engage in ethical behavior and sanction those who do not. Put decision-making processes in place that require people to consider the ethical dimension of business decisions. Does the decision fall within the accepted values of standards that typically apply in the organizational environment?  Is there a willingness to see the decision communicated to all stakeholders affected by it? Would people close to me (family members, friends, colleagues) approve of the decision? Step 1: Identify which stakeholders a decision would affect and in what ways. ○ Internal stakeholders. ○ External stakeholders. Stakeholder analysis involves moral imagination—standing in the shoes of the stakeholder and asking how a proposed decision might impact that stakeholder. Five-step process to think through ethical problems continued Step 2: Determine whether a proposed decision would violate the fundamental rights of any stakeholders. Step 3: Establish moral intent—place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. Step 4: Engage in ethical behavior. Step 5: Audit decisions to make sure they are consistent with ethical principles. Institute ethical officers to: ○ Assess the needs and risks that an ethics program must address. ○ Develop and distribute a code of ethics. ○ Conduct training programs for employees. ○ Establish and maintain confidentiality of employees. ○ Comply with government laws and regulations. ○ Monitor and audit ethical conduct. ○ Take action, where appropriate. ○ Periodically reviewing and updating the code of ethics. Enables managers to walk away from a decision that is profitable but unethical. Gives an employee the strength to say no to a superior who instructs employee to pursue actions that are unethical. Gives employees the integrity to go public to the media and blow the whistle on persistent unethical behavior in a company. With power comes the social responsibility to give something back to the societies that enable multinationals to grow and prosper. Advocates argue that businesses need to recognize their noblesse oblige. Power can be used in a positive way to increase social welfare, which is ethical, or used in a manner that is ethically and morally suspect. Sustainable strategies help the firm make good profits without harming the environment while acting in a socially responsible manner to stakeholders. Core idea: Organization’s actions do not exert a negative impact on the ability of future generations to meet their own economic needs and actions impart long-run economic and social benefits on stakeholders. Use precautionary principle when assessing a course of action. Do not precipitate or participate in a situation that results in a tragedy of the commons