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30 Cards in this Set
- Front
- Back
y do MNEs and host gov compete?
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- animosity b/t host gov and MNEs home government
- host gov support for domestic firms - MNEs wants control over resources that host gov owns |
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what is the formula used to describe the relationship a MNE has with its host government
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coopetition = cooperation + competition
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political behavior
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the acquisition, development, securing and use of power in relation to other entities
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sources of bargaining power for the home government
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- ability to provide incentives
- control a large portion of the market or rare resources |
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ways in which the home gov can support their MNEs
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- apply political or diplomatic pressure
- impose barriers on foreign competitiors |
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why does an MNE want to cooperate w/ host gov?
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- access to resources
- establish a sense of legitimacy - benefit from stable infrastructure |
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ways to deal w/ political risk
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- buy locally
- do your homework (learn b4 u go) - communication (acquire host gov contacts) - form partnerships w/ firms in host country - proactive lobbying |
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why do host gov want to cooperate w/ MNEs?
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- jobs for economy
- increase sense of urgency for FDI - downturn in economic stability |
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what determines who wins b/t MNEs and host governments?
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the bargaining power of either side
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are MNEs subject to all the legal systems that they operate in?
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yes, interpretations may vary
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sources of MNEs bargaining power against host gov
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- technologically advanced products the host gov doesnt have
- employment - tax revenue - complex management requirements - home government |
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do patents in one country cover the company in all countries and what types of patents are there?
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- no just in that one
- first to file and first to invent |
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3 types of political risk and whatre they
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1- ownership--> threat to the ownership from nationalization or seizure
2- operational--> threats that gov impose for "changing the rules of the game" 3- transfer--> impediments to the transfer of production factors |
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3 types of legal systems
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- common law--> cases based on precedent
- civil law--> cases based on rules/laws - theocratic law--> cases based on religious code |
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political risk
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the probability of disruption on an MNEs operations due to political forces or events
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explain low power distance?
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smaller wage differentials, minimized distance b/t blue & white collar workers, less centralization
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hetero-stereotypes
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how others see us
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implications of high femininity
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- more equality b/t sexes
- emotions & compromise rewarded - family life is central interest |
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5 dimensions of Hofstede's cultural figure
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1- masculinity/femininity
2- long-term orientation 3- individualism/collectivism 4- uncertain avoidance 5- power distance |
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elements of low uncertainty avoidance
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- more risk-taking
- less structure - more variability in practices |
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types of currency management systems and explain
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- independent float--> adjusts freely according to the laws of S & D
- managed float--> promotes an orderly pattern of exchange rates changes & eliminates volatility - fixed rate--> a par value is set to make the home currency relatively constant w/ respect to others (buy or sell their own currency) - crawling peg--> establishing limits against which the currency can deviate around |
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whatre some components of low long-term orientation?
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- instant gratification preferred
- more worried about current profits - shorter planning horizon - more flexibility in change |
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what does high power distance involve?
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highly structurized, many supervisors, tall organizational pyramids
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PPP
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exchange rates are determined by the cost of a certain basket of goods thruout different countries
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auto-stereotypes
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how we see ourselves differentiated from others
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characteristics of culture
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- shared
- intangible - confirmed by others |
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what does lingua franca mean?
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a language that widely used by many people outside its native speakers
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difference b/t direct & indirect quote
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- direct quote is the amount of home currency it take to buy one unit of foreign
- indirect quote is the of foreign currency it take to buy one unit of home currency |
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ethnocentric
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how we perceive others based on our own beliefs (culture & upbringing)
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what does high individualism involve?
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- practices encourage individual initiative
- work is just "work" |