3101 International Business Exam 1 (Chapters 1-8)

Front 1

Globalization

Back 1

_________the shift toward a more integrated andinterdependent world economy

Front 2

General Agreement on Tariffs and Trade(GATT)

Back 2

__________Internationaltreaty that committed signatories to lowering barriers to the free flow ofgoods across national borders and led to the WTO.

Front 3

World Trade Organization (WTO)

Back 3

___________Theorganization that succeeded the General Agreement on Tariffs and Trade (GATT)as a result of the successful completion of the Uruguay Round of GATT

Front 4

International Monetary Fund (IMF)

Back 4

____________Internationalinstitution set up to maintain order in the international monetary system.

Front 5

World Bank

Back 5

___________Internationalinstitution set up to promote general economic development in the world'spoorer nations.

Front 6

United Nations (UN)

Back 6

____________An international organization made up of 193 countries headquartered in New York City, formed in 1945 to promote peace, security, and cooperation.

Front 7

G20

Back 7

__________Established in 1999, the G20 comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.

Front 8

What is driving globalization?

Back 8

Declining barriers to the free flow of goods, services, and capital after WWII

Front 9

Multinational enterprise (MNE)

Back 9

__________any business that has productive activities intwo or more countries

Front 10

Two factors seem to underlie the trend towardglobalization

Back 10

1. decliningtrade barriers

2. changes in communication, information, andtransportation technologies

Front 11

Managing an international business is differentfrom managing a domestic business for at least four reasons:

Back 11

(a) countries are different,

(b) the range of problems confrontedby a manager in an international business is wider and the problems themselvesmore complex than those confronted by a manager in a domestic business,

(c) managers in an internationalbusiness must find ways to work within the limits imposed by governments'intervention in the international trade and investment system,

(d) international transactionsinvolve converting money into different currencies.

Front 12

Collectivism

Back 12

____________isan ideology that views the needs of society as being more important than theneeds of the individual. Collectivism translates into an advocacy for stateintervention in economic activity and, in the case of communism, a totalitariandictatorship.

Front 13

Individualism

Back 13

___________isan ideology that is built on an emphasis of the primacy of the individual'sfreedoms in the political, economic, and cultural realms. Individualismtranslates into an advocacy for democratic ideals and free market economics.

Front 14

democracy

Back 14

___________citizens periodically elect individuals torepresent them, and political freedoms are guaranteed by a constitution.

Front 15

totalitarian

Back 15

___________political power is monopolized by a party,group, or individual, and basic political freedoms are denied to citizens ofthe state.

Front 16

market economy

Back 16

___________pricesare free of controls, and private ownership is predominant.

Front 17

command economy

Back 17

_________prices are set by central planners, productiveassets are owned by the state, and private ownership is forbidden.

Front 18

mixed economy

Back 18

____________has elements of both a market economy and acommand economy

Front 19

Political economy

Back 19

_____________how the political, economic, and legal systems of a country are interdependent

Front 20

Political System

Back 20

_______the system of government in a nation

Front 21

Legal system

Back 21

__________the rules that regulate behavior along with the processes by which the laws areenforced and through which redress for grievances is obtained

Front 22

Common law

Back 22

__________basedon tradition, precedent, and custom

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Civic law

Back 23

___________based on detailed set of laws organized intocodes

Front 24

Theocratic law

Back 24

_______________law is based on religious teachings

Front 25

Property rights

Back 25

___________the legal rights over the use to which aresource is put and over the use made of any income that may be derived fromthat resource

Front 26

Gross national income (GNI)

Back 26

_________per person measures the total annual incomereceived by residents of a nation

& can be misleading because it does not consider differences in the cost ofliving

Needto adjust GNI figures using purchasing power parity (PPP)

Front 27

Human Development Index(HDI)

Back 27

Ø life expectancy at birth

Ø educational attainment

Ø whether average incomes aresufficient to meet the basic needs of life in a country

Front 28

Culture

Back 28

__________asystem of values and norms that are shared among a group of people and thatwhen taken together constitute a design for living

Front 29

values

Back 29

__________are abstract ideas about what a group believesto be good, right, and desirable

Front 30

norms

Back 30

____________are the social rules and guidelines thatprescribe appropriate behavior in particular situations

Front 31

Society

Back 31

______________a group of people who share a common set ofvalues and norms

Front 32

Religion

Back 32

___________shared beliefs and rituals that are concernedwith the realm of the sacred

Front 33

Ethical systems

Back 33

___________a set of moral principles, or values, that areused to guide and shape behavior

Front 34

Geert Hofstede

Back 34

___________studiedhow culture relates to values in the workplace. He isolated four dimensionsthat he claimed summarized different cultures: power distance, uncertaintyavoidance, individualism versus collectivism, and masculinity versusfemininity.

Front 35

Language

Back 35

_____________isone defining characteristic of a culture. It has both spoken and unspokendimensions. In countries with more than one spoken language, we tend to findmore than one culture.

Front 36

Free trade

Back 36

______________a situation where a government does notattempt to influence through quotas or duties what its citizens can buy fromanother country or what they can produce and sell to another country

Front 37

Mercantilism

Back 37

___________

Ø suggeststhat it is in a country’s best interest to maintain a trade surplus -to exportmore than it imports

Ø views trade as a zero-sumgame

Ø onein which a gain by one country results in a loss by another

Front 38

Adam Smith

Back 38

____________arguedthat a country has an absolute advantage in the production of a product when itis more efficient than any other country in producing it

Front 39

comparative advantage

Back 39

____________countriesshould specialize in the production of those goods they produce mostefficiently and buy goods that they produce less efficiently from othercountries

Front 40

First Mover Advantage

Back 40

___________advantages accruing to the first to enter a market.

Front 41

Porter

Back 41

__________identifiedfour attributes that promote or impede the creation of competitive advantage

Ø Factorendowments

Ø Demandconditions

Ø Relatingand supporting industries

Ø Firmstrategy, structure, and rivalry

Front 42

Krugman

Back 42

___________argues that a strategic trade policy aimed atestablishing domestic firms in a dominant position in a global industry is abeggar-thy-neighbor policy that boosts national income at the expense of othercountries.

Front 43

Trade barriers

Back 43

__________act as a constraint on a firm's ability todisperse its various production activities to optimal locations around theglobe. One response to trade barriers is to establish more productionactivities in the protected country.

Front 44

Radical View

Back 44

_________argues that the multinational enterprise (MNE)is an instrument of imperialist domination. They see the MNE as a tool for ex

Front 45

Dunning

Back 45

_________has argued that location-specificadvantages are of considerable importance in explaining the nature anddirection of FDI. According to Dunning, firms undertake FDI to exploit resourceendowments or assets that are location specific.