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114 Cards in this Set

  • Front
  • Back
the shift toward a more integrated and interdependent world
Globalization of markets
the merging of historically distinct and separate national markets into one huge global marketplace
Globalization of production
sourcing goods and services from locations around the globe to take advantage of national differences in the cost and quality of various factors of communication
Factors of production
components of production such as labor, land, energy, and capital
General Agreement on Tariffs and Trade (GATT)
international treaty that committed signatories to lowering barriers to the free flow of goods across national borders; led to WTO
World Trade Organization (WTO)
the organization that succeeded the GATT and now acts to police the world trading system
International Monetary Fund
international institution set up to maintain order in the international monetary system
World Bank
international organization set up to promote economic development, primarily by offering low-interest loans to cash-strapped governments of poorer nations
United Nations
an international organization made up of 191 countries charged with keeping international peace, developing cooperation between nations, and promoting human rights
International Trade
occurs when a firm exports goods or services to consumers in another country
Foreign Direct Investment (FDI)
Occurs when a firm invests resources in business activities outside its home country
Moore's Law
the premise that the power of the microprocessor technology doubles and its cost of production drops in half every 18 months
Stock of Foreign Direct Investment
the total accumulated value of foreign-owned assets at a given time
Multinational Enterprise (MNE)
any business that has productive activities in 2 or more countries
International Business
any firm that engages in international trade or investment
Political economy
the interdependent combination of a country's political, economic, and legal systems
Political System
the system of government in any nation
a political system that stresses the primacy of collective goals over individual goals
the political system that believes in state ownership of a country's means of production. distribution, and exchange so that all can benefit
those who believe that socialism can only be realized through violent revolution and totalitarian dictatorship
Social Democrats
those who believed in achieving socialism through democratic means
the sale of state-owned enterprises to private investors
the philosophy than an individual should have freedom in his or her economic and political pursuits
a political system in which government is by the people, exercised either directly or through elected representatives
a political system in which on person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties
Representative democracy
a democracy in which citizens periodically elect individuals to represent them in government functions; more modern view of democracy
Communist totalitarianism
a version of collectivism advocating that socialism can only be achieved through a totalitarian dictatorship
Theocratic totalitarianism
a political system in which political power is monopolized by a party, group, or individual that governs according to religious principles
Tribal totalitarianism
a political system in which a party, group, or individual that represents the interests of a particular tribe monopolizes political power.
Right-Wing Totalitarianism
a political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism
Market Economy
an economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced
Command Economy
an economic system in which the government plans the allocation of resources, including determination of what goods and services should be produced and in what quantity
Mixed Economy
an economic system in which certain sectors are left to private ownership and free market mechanisms, while other sectors have significant government ownership and government planning
Legal system
rules that regulate behavior and the processes by which laws of a country are enforced and through which redress of grievance is obtained
Common law
a system of law based on tradition, precedent, and custom, which is flexibly interpreted by judges as it applies to the unique circumstances of each case
Civil law systems
a system of law based on a detailed set of written laws and codes
Theocratic Law System
A system of law based on religious teachings
a document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved
Contract Law
the body of law that governs contract enforcement
United Nations Convention on Contracts for the International Sale of Goods (CIGS)
a set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of business in different nations
Property rights
the bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource
Private Action
theft, piracy, blackmail, and the like by private individuals or groups
Public Action
the extortion of income or resources from property holders by public officials such as politicians and government bureaucrats
Foreign Corrupt Practices Act
US law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions
Intellectual Property
property that is the product of intellectual activity
a legal device that grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention
exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and dispose of their work as they see fit
designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products
World Intellectual Property Organization
an international organization whose members sign treaties to agree to protect intellectual property
Paris Convention for the Protection of Industrial Property
the oldest international treaty concerning protection of intellectual property, which has been signed by 169 nations
Product Safety Laws
laws that set certain safety standards to which a product must adhere
Product Liability
Involves holding a firm and its officers responsible when a product causes injury, death, or damage to its users
Gross National Income (GNI)
the yardstick for measuring economic activity of a country, this measures the total annual income of a nation's residents
Purchasing Power Parity (PPP)
An adjustment in gross domestic product per capita to reflect differences in the cost of living
Human Development Index (HDI)
an attempt by the UN to assess the impact of a number of factors on the quality of human life in a country
development of new products, processes, organizations, management practices, and strategies
those who first commercialize innovations
the process of removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate
First-mover advantages
advantages accruing to the first to enter a market
Late-mover disadvantages
handicaps experienced by being a late entrant to a market
Political Risk
the likelihood that political forces will cause drastic changes in a country's business environment that will adversely affect the profit and other goals of a particular business enterprise
Economic Risk
the likelihood that events, including economic mismanagement will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a particular business enterprise
Legal Risk
the likelihood that a trading partner will opportunistically break a contract or expropriate intellectual property rights
How was China affected by the mortgage crisis in the US?
The Bank of China's shares fell 5.4% a day after it reported holding almost $9.7 billion in securities backed by subprime mortgages.
Industrial and Commercial Bank of China also suffered at the hands of investors - its shares fell 2.4%
How did the US mortgage crisis affect Germany?
Landesbank Sachsen Girozentrale has been sold to a rival because of its bad mortgaged backed securities along with other banks suffering losses
What is the problem at the moment between the US, India, and Russia?
India wants to develop and enhance its military systems. Currently, India has military productive relations with Russia, and the older business people like their Russian business partners. However, the US hopes to become a part of this huge economic project. The US offers an array of benefits, like being connected with the rest of Europe. The younger business people seem to want to work with the US more.
How does Japan see a new entente with India?
Japan is pushing for a much stronger partnership with India. They hope to discuss with their Indian counterparts everything from open skies agreements to Buddhism. Japan hopes that an allied India and Japan could help hedge against China's growth.
How is Nokia dealing with globalization of production and selling?
Nokia is catering its designs and functionality of its phones to each country it does business in. Each country has different standards on design and fashion and functionality.
How is Sony Ericsson heavily immersed in globalization at the moment?
Flint quits as Sony's president and the Japanese Hideki Komiyama will succeed him. In Japan it is more normal to have older execs than it is in the US and western Europe. The change comes at a critical time for Sony, amid intensifying competition.
In the Lou Dobbs video about China engaging in International Business with Seagate (hard drives), what is the case he raised and what are its implications?
He raised a case for national security because there is encoding on the disks
In the Lou Dobbs video, what was the problem with Mattel?
The paint that the manufacturers were using in China had lead in it; don't blame the US
How is Cirque de Soleil an international business?
-recruits from all over the world
-sourcing talent and moving shows made easier by globalization
What are the causes of globalization?
-political (changes in government)
What are the changes in the world economy?
-barriers to cross-border trade?
-barrier to cross-border investment?
-problems associated with distance?
-problems associated with time zones?
-problems associated with language?
-problems associated with culture?
What is the most common type of market to be merging (globalizing) today?
Who/what are the key agents on the supply side?
What is the debate surrounding globalization (what are the things that people believe it will have an impact on, and thus debate over whether it should and what that impact should be)?
The impacts on the following:
-national sovereignty
In terms of the article, "Building a Modern Arsenal in India," how have history, geography, economics, politics, law, and business all been influencing/influenced?
History: the past relations of countries in question and what that may mean for the future
(eg Russia and India being a nuclear power)
Geography: India is surrounded by a lot of water of which 70% of petroleum products are shipped through; Indian Ocean for world market
Economics: India is fastly growing and its people have more disposable income
Politics: country relations between the three countries involved; Some people in India thinking that the US may want to hinder their growth, and then past ties between India and Russia
Law: India doesn't just want to buy, they also want to make, so they are looking for partnerships
Business: A lof of defense industries want to do business there; competition between US firms and international firms and then competition among home countries in India
In the Lou Dobbs video about the tech industry in the US, what is the problem?
There is a movement of people to high-tech positions; because of this, companies want to hire the cheapest labor, and a lot of it comes from immigrants with H1V temporary visas (they will work for less than Americans); so the businesses want these visas extended, while the American workers don't want all of the jobs to be taken. Toss-up: Give more Americans higher paid jobs and force companies to deal with the higher wages, or allow companies to hire foreign, cheaper labor leaving less jobs for Americans
What is discussed in the Nokia article and what country is Nokia from?
How to design phones for different preferences of different people in different nations/regions.

Nokia from Finland
Why is the political environment important?
It influences how business is conducted domestically and internationally
Who are the major players in the political environment?

What about individuals as players?
-International Government Orgs (UN, NATO, WTO)
-International Non-Government Orgs (Red Cross, Amnesty International, Green Peace, Peace Corps)

Individuals - people like George Soros who are currency traders
What are the political factors to business?
-Political systems
-Interest groups
-Political risk
What does a political do as defined in our notes? And what does it imply?
It integrates various parts of society into a variable, functioning unit
(implies a sort of order/predictability)
What is an ideology?
the systematic and integrated body of constructs, theories, and aims that constitute a sociopolitical system (how it should work)
_______ societies are those in which a variety of ideologies exist.
What are the 2 extremes on the ideological spectrum and what are the 2 extremes on the political spectrum?
Ideological: individualism and collectivism

Political: Democracy and totalitarianism
What are the factors for evaluating freedom?
A-- Political rights
1) Fair and competitive elections
2) Power for elected reps
3) Ability to organize politically
4) Safeguards on rights of minorities
B-- Civil Liberties
1) Freedom of the press
2) Equality under the law for all
3) Personal social freedoms
4) Freedom from government corruption
What kinds of forms of democracy are there?
- Presidential
- Parliamentary
- Other various forms
What are the 2 main subsets of totalitarianism?
Secular and Theocratic
What are the subsets of secular totalitarianism?
1- right-wing (authoritarianism and fascism)
2- tribal
3- communism (both political and economic)
What is theocratic totalitarianism?
religious leaders and officials are also political leaders (Iran)
In the video on China and Microsoft software, what was the problem?
China was not respecting Microsoft's intellectual property rights. At the same time, China is trying to get into the WTO and needs the US's approval, but approval will only be given if they strengthen their intellectual property laws
What is the impact of the political system on management decisions?
The political process affects international business through regulation of domestic and cross-border transactions.

Managers need to understand the critical functions that a government performs in the economy.
What are the causes of political risk?
-opinions of political leadership (lobby to change or change by decree)
-civil disorder (Pakistan)
-external relations
What is the relationship between external relations and risk?
They are inversely related.
The worse the relations are, the higher the risk, and vice versa.
What are the 7 steps in developing a political strategy?
1- Identify the issue
2- Define political aspects
3- Assess potential political actions of other companies and special interest groups
4- Identify important institutions and key individuals that can have an impact
5- Formulate strategies
6- Determine impact of implementation
7- Select the most appropriate strategy and implement it
How does the Wall Street Journal on China present China (first part of the movie?)
It shows how China's modernization is happening relatively quickly. Businesses from other nations (Hitachi and Nescafe) are making foreign direct investments in China implying that China's political environment is more open to allowing foreign companies to come in and do business. The movie showed much constuction, and it also showed how the standard of living is increasing (women shopping and dancing with their disposable income.) We are starting to see a shift from a command economy to a mixed economy.
In the movie -ISMs, what did Adam Smith propose in the Wealth of Nations?
By serving themselves, citizens will best serve society. there is an invisible hand that guides people to do what is best for society by doing what is best for themselves.
What are the different types of legal systems? Which are religious and which are secular?
-Common law
-Civil Law
-Theocratic law

Common and civil are secular and theocratic is religious
What are 3 forms of intellectual property protection?
patents, copyrights, and trademarks
What are the impacts of law?
- local business for home and host country
- national law
- international law
What are the key legal issues in international business?
Trade and investment regulation
Intellectual property protection
Financial flows regulation
Reporting requirements
Ownership regulation (what % can a foreign company own in another country)
Contractual relationships
International treaties
Dispute resolution
What is the difference between the GNP/GNI and the GDP?
The market value of final goods and services produced by domestically owned factors of production is the GNP/GNI and The market value production that takes place within a country’s borders by domestic and foreign factors is the GDP.

SO all in all, GNP/GNI is just domestically, but GDP is domestic and international
What are the key economic factors?
General Framework
Economic Stability
Capital Markets (market for stocks [equity], loans [debt], and bonds)
Factor Endowments
Market Size
Economic Infrastructure (institutions/mechanisms with which to do business)
What are the 2 different types of location specific advantages? (and then what are included in each?)
Factor conditions and demand conditions.

Factor conditions:
-human resources
-physical resources (geography)
-knowledge resources
-capital resources

Demand conditions:
World Bank data is classified by __________
What is the importance of grouping by region?
-Similar economic conditions
-Mirrors the way companies organize their firm geographically
What are the key macro-economic factors?
Economic Growth
Debt (mortgage, credit)
Deficits (gvt debt - spending more than they bring in)
Private Property/Privatization
Income Distribution (you want there to be a large middle-class)
Level of Economic Development (agriculture, factory, services)
Major Industries
Role of Government
How are countries somewhat defined by their economic system?
Market - consumer determined by supply and demand driven
Command - gvt determined
Mixed- consumer and gvt determined
What is fiscal policy?
bringing in money (taxes) and spending money (subsidies, military, etc)
What is monetary policy?
the determining of the supply of money and the determining of the interest rate
What advice does Allen Greenspan give about currency?
What is most criticized of Greenspan? What is his rationale?
his tax cuts; he did it because he thought the surplus would get too large; he was in favor of a tax-cut, not the BUSH tax cut.
Over the long run, Greenspan believes our problem will not be the interest rate but,