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57 Cards in this Set

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Foreign Direct Investment (FDI)
direct investment in business operations in a foreign country; active, hands-on involvement
Foreign Portfolio Investment (FPI)
investment in foreign financial instruments; passive, hands-off involvement
General Agreement on Tariffs and Trade (GATT)
international agreement developed by UN in 1947, signed by 23 major economic powers in 1948 that committed signatories to lowering trade barriers, founded WTO in 1994
globalization
trend away from distinct national economies toward one worldwide economy
globalization of markets
moving away from national markets isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into a single global market
globalization of production
trend by firms to locate each part of its productive process to wherever they can take advantage of differences in cost and quality
international business
any firm that engages in international trade or investment
multinational enterprise (corporation) (MNE or MNC)
a firm that owns business operations in more than one country
stock of FDI
the total accumulated value of foreign-owned assets at a given point in time
flow of FDI
amount of FDI that has taken place over a given period of time (most commonly, one year)
World Trade Organization
successor organization to GATT, a self-standing institution chartered with authority to adjudicate trade disputes between nations and render a decision by which both parties must abide
Division of Labor
the way various tasks are apportioned within a social grouping
Civil law
a system of law based on a very detailed set of written laws and codes
collectivism
either a philosophy or a political system embodying the notion that collective goals are primary and individual goals are expendable
command economy
an economic system based on the premise of central planning, whereby the government mandates what goods must be produced and what services supplied
common law
a system of law based on tradition, precedent, and custom, often within the context of a constitution outlining basic rights and principles
communism
an atheistic, materialist, collectivist philosophy manifested in a political system that does not recognize individual rights, private property in the means of production, and thus has a command economy
contract
an agreement that specifies mutually agreed upon terms for an exchange (a quid pro quo)
copyright
the granting, by law, of exclusive rights for authors, composers, artists, and publishers to profit from their creative efforts
democracy
political system characterized by the principle of majority rules
deregulation
a policy of reducing what are believed to be needlessly costly, counterproductive government restrictions and controls on business
economic risk
the possibility that changes in the business climate outside a business' control in a foreign country
Human Development Index
a more advanced way of comparing standards of living between countries than merely citing income per capita figures. Measured 3 ways:
1. life expectancy at birth
2. educational attainment
3. whether average incomes are adequate enough to pay for basic needs
individualism
political philosophy holding that individual rights should be protected from gov't encroachments
legal risk
the possibility that a foreign business partner will opportunistically break a contract or violate your intellectual property rights
market economy
aka the private property order; in which prices and the quantities of goods and services produced are a function of supply and demand decisions made voluntarily by private owners of property
mixed economy
an economy where some sectors feature private ownership and free-market mechanisms, while other sectors have significant government ownership (or control) and planning
patent
the granting of exclusive rights to the manufacture, use, or sale of a newly-invented or discovered procss or product
political risk
the likelihood of a political changed causing drastic changes in a country's business environment
privatization
the sale of state-owned enterprises to private investors
purchasing power parity (PPP)
an adjustment to the raw measure of GDP (gross domestic product)per capita income to reflect differences in cost of living
socialism
the political system characterized by government ownership of the means of production
theocracy
rule by religious authorities claiming to be fulfilling God's laws
totalitarianism
political system in which the government has power to govern every aspect of the lives of citizens
trademarks
the granting of exclusive rights to specific designs, names, and images used to differentiate or identify their company or product
caste system
a system of social stratification in which social position is determined by the family into which a person is born and is stuck there
cross-cultural literacy
understanding how the culture of a country affects the way business is practiced
ethnocentric behavior
acting on the belief in the superiority of one's own ethnic group or culture, or showing disregard or contempt for foreign cultures
guanxi
Chinese word: literally, "relations," but in a business context it refers to having connections
mores
norms seen as central to the functioning of a society
norms
social rules and guidelinesfor what behavior is appropriate in a given situation
values
abstract ideas about what is believed to be good, right, desireable
Geert Hofstede
Dutch social scientist who studied cultural difference that affect they was individuals behave in business contexts. 5 variables:
1. power distance
2. individualism
3. masculinity
4. uncertainty avoidance
5. long term vs. short term orientation
Cultural relativism
the belief that firms should adopt the ethical norms prevalent in the culture where they are operating
ethical dilemma
a situation in which there is no ethically acceptable solution
facilitating payments
aka "speed money" or "grease payments," these are "tips" that foreigners customarily insist upon receiving in order to expedite things, rather than bribes to win contracts
Foreign Corrupt Practices Act
1977 law in the US outlawing the bribing of foreign government officials to gain business
organization culture
the values and norms that are shared by the organization's employees
righteous moralist
one who claims that a MNE's home-country ethical standards should be followed in foreign countries
social responsbility
the idea that businesspersons should consider the social consequences of their business activities
utiliarian ethics
the belief that the morality of deeds and policies are determined by their consequences
Ethnocentric staffing policy
a MNE's staffing policy that fills all key management positions with parent-country nationals
expatriate failure
the premature departure of an expat from a host country
expatriate manager
a manager working in a country other than his own
geocentric staffing policy
a staffing policy in which the best people are sought for key jobs regardless of nationality
human resources management (HRM)
the activites an organization carries out to use its personnel effectively
polycentric staffing policy
a staffing policy in which host-country nationals are chosen to manage subsidiaries in their own country, while parent-country nationals occupy key positions at HQ