International Business Midterm - Part 2

Front 1

CH3
How do international firms evaluate/monitor and forecast political environments?

Back 1

- They study how gov officials exercise authority, pass policies, regulate enterprise, and punish wrongdoers.
- Monitor how politicians are elected and replaced.
- Asses whether the rule of law or the rule of man prevails in legal systems.
- Gauge whether freedom is a practical idea or wishful abstraction. - On the basis of these insights, they forecast business scenarios.

Front 2

What is the fundamental goal of a political system?

Back 2

To intergrate the elements of society. Intergrate different groups into a functioning, self-sustaining, self-governing society. (focus is on the structural dimensions and power dynamics of its prevailing government)

Front 3

What does the political system define?

Back 3

The institutions, organizations and interest groups along with the political norms and rules that govern the activities of political actors.

Front 4

What is the test of a political system?

Back 4

uniting a society in the face of divisive viewpoints.

Front 5

Individualism VS Collectivism

Back 5

Individualism: individual freedom, self-expression, personal independence. Unalienable rights, life liberty & pursuit of happiness.
Collectivism: Priority is the goals of the group not individual. The whole is greater than the sum of its parts. Self-sacrifice, subordination of one's interests to those of others.

Front 6

What is Political Ideology?

Back 6

- It is the system of ideas that expresses the goals, theories, and aims of a sociopolitical program, thereby stipulating how society ought to function and outlining the methods by which it will work.
- It encapsulates the doctrine of political behavior and change and outlines the procedures for converting ideas into actions.

Front 7

What does Pluralism mean?

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Pluralism holds the belief that there are multiple opinions about an issue, each of which contains part of the truth, but none that contain the entire truth.

Front 8

What are the Conditioning Factors of a Non-market Environment?

Back 8

- location of tax payments and regulations
- location of power
- location of key decision makers

Front 9

What are some examples of Business Political Behavior?

Back 9

-options increased internationally
---number of environments
---enlist help of one government against another
---pressure in one may affect operations elsewhere

-public issues management
-volatility & transparency of rules
-government paralysis

Front 10

How do we define the Strategic Objectives?

Back 10

(1)- Market Power
competitive versus anti-competitive power
(2)- Legitimacy
value congruence
(3)- Efficiency
reduce costs
raise competitors’ costs
alteration of societal values
appearances of compliance

Front 11

Define Political Risk

Back 11

The risk that political decisions or events in a country will negatively affect the profitability or sustainability of an investment.

Front 12

What are the primary types of political risk? (most disruptive to least)

Back 12

1. Catastrophic
2. Distributive
3. Procedural
4. Systemic

Front 13

Why do companies operate in seemingly high political risk areas?

Back 13

- Qualitative evaluation
- Different tolerances for risk
- Expected returns versus risk
- Portion of assets put at risk

Front 14

How do you deal with Political Risk?

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- Different means for different types of political risk
- Dynamics of risk (ex ante & ex post)
- Choosing locations within countries
- Unbundling of resources
- Collaborative arrangements
- Building allies

Front 15

Define Legal Systems:

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- Specifies the rules that regulate behavior of individuals and companies, the processes by which the laws of a country are enforced, and the procedures used to resolve grievances.
- Share 3 Components- Constitutional Law, Criminal law, Civil and commercial law.

Front 16

What are the different types of legal systems?

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- Common Law (U.S, Australia)
Based on tradition and judicial precedents
- Civil Law (Most countries)
Uses existing legal and procedural codes to resolve disputes.
- Theocratic Law (Muslim countries)
Religious doctrine, precepts, and beliefs to define the legal environment. Legal Authority in the hands of religious leaders.
- Customary Law (Africa)
Norms of behavior practiced over a long period. Philosophical traditions. (very rare)
- Mixed System (Nigeria, Pakistan)
Two or more of the preceding legal systems.

Front 17

What are some Operational/ Strategic Concerns (long term issues) ?

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- Product safety & liability
- Marketplace behavior
- Product origin
- Legal jurisdiction
- Arbitration
- Protection of intellectual property rights

Front 18

What are some Operational Concerns (day-to-day operations)?

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- Starting a business
- Entering and enforcing contracts
- Hiring and firing local workers
- Closing down the business

Front 19

What is Intellectual property?

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The general term for creative ideas, innovation expertise, or intangible insights that give owners a competitive advantage

Front 20

What do International Property Rights refer to?

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The right to:
- control and derive the benefits from writing (copyright), inventions (patents), processes (trade secrets), and identifiers (trademarks).

Front 21

What are the benefits and costs of Piracy?

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(+)
> consumers may get good quality at low price
> nations do not have to use hard currencies
(-)
> consumers may get shoddy or dangerous quality
> companies lose revenue
> less incentive to create new intellectual property
> companies spend on surveillance, prevention, and destruction

Front 22

What are some unresolved problems regarding Chapter 3?

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- nonmembers of agreements
- lengths for protection validity
- gray market
- difficult enforcement
- generic differences by country
- amount of change necessary
- views on what is covered
- use of names on different products

Front 23

What are the two standards that anchor assessment of a political system?

Back 23

The degree to which it emphasizes Individualism VS Collectivism
The degree to which it is Democratic VS Totalitarian.

Front 24

Political officials and agencies have an extensive role in a individualistic society?
T/F

Back 24

False,
They have an extensive role in a collectivist society.

Front 25

What does a demographic government protect?

Back 25

- Personal and political rights
- Civil liberties
- Fair and free elections
- Independent courts of law

Front 26

Totalitarianism refers to?
(Low political freedom)

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The power of the few over the many. Ruling political authority exercises control over aspects of life, the individual is subordinated to the state, and political and cultural expression is suppressed.

Front 27

Recent data on the spread of democracy indicates what?

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It indicates a situation of freedom stagnation and possible resurgence of forms of totalitarianism.

Front 28

Rule of Law VS Rule of Man

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Rule of law endorses systematic and objective laws applied by public officials. Rule of Man holds that legal rights derive from the will of the individual who commands the power to impose them.

Front 29

Why do managers study economic environments?

Back 29

To estimate how market trends influence the performance of their companies.

Front 30

A country's economic policies serves as?

Back 30

As a leading indicator of government’s goals and its planned use of economic tools and market reforms.

Front 31

Economic development:

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Economic development directly impacts citizens, managers, policymakers, and institutions.
As individuals and societies, we want to know how well were are doing relative to others.

Front 32

What is the definition of Economic System? List the 3 different types

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- A mechanism that deals with the production, distribution and consumption of goods and services.
- Market Economy
- Command economy
- Mixed economy

Front 33

List some of the features of an economy:

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- Inflation
- Unemployment
- Debt
- Income Distribution
- Poverty
- Labor Costs
- Productivity
- Balance of payments

Front 34

Book
What are the key economic forces?

Back 34

- Price Stability
- Capital Markets
- Factor endowments
- Market Size
- Public policy

Front 35

Methods / Ways of Classifying countries:

Back 35

- Per capita Gross Domestic Product, Gross National Income, income
- Purchasing price parity
- Social indicators
--- Quality of life
--- Human development
- Wealth per capita
- Satisfaction
- Competitiveness

Front 36

What is GNI?

Back 36

Gross National Income - the broadest measure of economic activity for a country.

Front 37

What is GNP?

Back 37

The total value of all final goods and services produced within a nation in a particular year.

Front 38

What is GDP?

Back 38

Gross Domestic Product - The Total market values of goods and services produced by workers and capital within a nation's borders during a given period- usually one year.
(GDP + Export/Imports income + international operations = GNI)

Front 39

What are the conditions related to Economic Level?

Back 39

- Population growth
- Education
- Commodity dependence
- Global trade
- External debt
- Market size
- Labor skills
-Unemployment / underemployment
- Sickness & malnutrition
- Supply problems
- Political risk
- Market fluctuation

Front 40

What is PPP & what does it do?

Back 40

Purchasing Power Parity - provides a method of measuring the relative purchasing power of different countries' currencies for the same basket of goods and services.

Front 41

What is the Human Development Index?

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Using 3 Measures: Longevity, Knowledge, Standard of living. HDI combines indicators of real purchasing power, education, and health to more comprehensively measure economic development.

Front 42

What is Green economics (green measures)?

Back 42

Green economics holds that a country's economy is a component of, and dependent on, the natural world within which it resides.

Front 43

Inflation

Back 43

a measure of the increase in the cost of living.