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29 Cards in this Set
- Front
- Back
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US approach |
Maximizing shareholder value |
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Germany Approach |
Company goals as serving Stakeholders |
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Asian MIX |
Tight regulation of the financial sector and a developmental state |
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Gross National Income |
The yardstick for measuring economic activity of a country this measures the total annual income of a nation's residents GNI may be misleading as it doesn't account for differences in living |
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PPP |
An adjustment in gross domestic product per capita to reflect differences in the cost of living |
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Black/shadow economy |
large amounts in economic activity that be unrecorded |
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HDI |
Influenced by Sen that saw development as also political process of freedom where people may participate in the important decisions made for the community AN attempt by the UN to assess the impact of a number of factors on the quality of human life in a country life expectancy at birth, , educational attainment and average incomes as based on PPP to meet minimum requirements |
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Innovation |
Development of new products, processes, organizations, management practices and strategies Often product of economic activity Strong legal protection of property rights is another requirement in a business environment - minimizes expropriation Many theorize the need for democracy, but some states have achieved it without |
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Entrepreneurs |
Those who first commercialize innovation Provides much dynamism of economy Require market economy - contain large incentives to develop innovations |
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Undemocratic states that achieved growth without democracy |
China South Korea Taiwan Singapore Hong Kong |
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Economic Progress Begets Democracy |
Although argument can be made that democracy is not necessary for growth, growth leads to democracy |
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Geography and Economic development |
Sachs argues that favorable geography tends to create a desire for market based economies Unfavorable conditions from the environment or being landlocked may also inhibit development |
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Education |
Higher eduction = higher development HDV |
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The Spread of Democracy |
Free (88) Partly Free (59) Not free (48) |
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Three main reasons for the spread of democracy |
1st many totalitarian regimes failed to deliver economic progress to a vast bulk of population 2nd new information and technologies 3rd economic advances have led to prosperous middle class and working class that push for more democracy |
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Rise of fundamentalism |
Response to the alienation produced by modernization |
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Heritage foundation 10 indexes |
Extent to which the government intervenes in the economy, trade policy, the degree to which property rights are protected, foreign investment regulation, taxation rules, freedom for corruption and labor freedom |
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Deregulation |
Removal of government restrictions concerning the conduct of a business Types of deregulation - removing price controls, thereby allowing prices to be set by the interplay of demand and supply, abolishing laws regulating the establishment and operation of private enterprises and relaxing or removing restrictions on direct investment by foreign enterprises and international trade |
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Privatization |
transfers the ownership of state property into the hands of private individuals Seen as a way to stimulate gains in economic efficiency by giving opportunity for profits Helped US balance trade slightly Benefits minimized by subsidies and protection |
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Legal Systems and market economy |
Must protect property rights and contract reenforcement Needs to be functioning smoothly requires time Will be hard for past communist countries |
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Benefits |
The long-run monetary benefits of doing business area function of size of market, the present wealth of consumers and the likely future wealth of consumers First mover advantages Late-mover advantages Country's economic system property rights regime and market size reasonably good predictors |
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Costs |
Number of political, economic and legal factors determine costs of doing business in a country Paying off powerful political groups to gain market entry Need sophistication of a country's economy (infrastructure and supporting industries) Strict legal factors can be hurtful too (food safety, product safety) |
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Risks |
Political Risk Economic Risk Legal Risk |
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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 Greater in countries experiencing social unrest and disorder or in countries where the underlying nature of a society increases the likelihood of social unrest |
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Political Risk indicators |
More likely in countries with more than one ethnic nationality Where competing ideologies are battling for political control |
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Economic Risk |
Countries where economic mismanagement has created high inflation and falling living standards Or in countries that straddle the fault line between civilization May lead to political risk |
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Economic Risk Indicators |
Inflation level of country Level of business and government debt in the country |
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Legal Risk |
The likelihood that a trading partner will opportunistically break a contract or expropriate intellectual property rights |
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Overall Market attractiveness |
Economic development, political stability and likely future economic growth rates Benefit-cost-risk-trade-offs is likely to be most favorable in politically stable developed and developing nations that have free market systems and no dramatic upsurge in either inflation rates or private sector-debt |
