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29 Cards in this Set
- Front
- Back
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What are the determinants or culture? Provide some examples |
1. Political and Economic Philosophies 2. Social Structure 3. Religion 4. Language 5. Education |
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(Determinants of Culture) Social Structure Examples |
- Society's basic societal organization - Western societies focus more on individual Positive: Increased entrepreneurship Negative: Increased manager mobility - Asian more on group Positive: Better cooperation and performance of group Negative: Discourages managers and workers to move from company to company (decreased dynamism and entrepreneurship) |
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(Determinants of Culture) Political and Economic Philosophies Examples |
Type of political system (collectivism, socialism, communism, individualism) - Type of government (totalitarian vs democratic) - Type of economic system (market, command, mixed) |
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What is the connection between religion and ethical systems? Do they have any implications for business? Explain and provide examples. |
- Religion is a system of shared belief - Ethical systems are a set of moral principles, or values, that are used to guide and shape behavior - Most ethical systems are a product of religion - Different religion shape attitudes toward work and entrepreneurship and the degree to which the religious ethics affect the cost of doing business in a country |
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(Determinants of Culture) Religion Examples |
1. Christianity Hard work, wealth creation, frugality 2. Islam Supportive of business, but different (mudarabaha: no interest, shares profit; murabaha: bank buys, firm buys later at increased price) 3. Hinduism Valued by spiritual achievements. Promotion may not be important due to employee's caste 4. Buddhism Stresses spiritual growth and afterlife, but no caste system
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(Determinants of Culture) Language Examples |
- Knowledge of local language is beneficial - Failure to understand nonverbal cues of another culture can lead to failure Thumbs-up in America is good, but obscene in Greece |
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(Determinants of Culture) Education |
- Important in determining a nation's competitive advantage - Values and norms taught through education - Good index of what products will do well Illiterate country will not sell many books |
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Hofstede 4 Dimensions of Culture |
1. Power Distance 2. Individualism vs. Collectivism 3. Uncertainty Avoidance 4. Masculinity vs. Femininity |
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(Hofstede 4 Dimensions of Culture) Power Distance |
- How a society deals with the fact that people are unequal in physical and intellectual capabilities Low: less inequalities |
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(Hofstede 4 Dimensions of Culture) Individualism vs. Collectivism |
- The relationship between the individual and his fellows |
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(Hofstede 4 Dimensions of Culture) Uncertainty Avoidance |
The extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguty Higher: Stress for clear instructions from amangers Lower: Take more risks, okay with change |
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(Hofstede 4 Dimensions of Culture) Masculinity vs. Femininity |
- The relationship between gender and work roles Masculine: exercise of power, more differentiation between men and women |
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Issues with Hofstede 4 Dimensions of Culture |
- Made the assumption there is a one-to-one relationship between culture and nation-state - Study may have been culturally bound (done by Westerners) - Used IBM as sole source of information - Culture is not static
- Good as starting point for understanding how cultures differ, but not necessarily accurate |
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What are the implications of cultural differences for international business? |
1. Need to develop cross-cultural literacy 2. Connection between culture and national competitive advantage 3. Connection between culture and ethics in decision making |
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(Implications of culture differences for international business) Cross-Cultural Literacy |
- Adaptation to conform with value systems and norms of that culture - Ethnocentrism negative - Americans are usually informal with calling people by first names; Germans will call by first name if invited to - Americans in a hurry, Arabs may see that as pushy and rude |
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(Implications of culture differences for international business) Culture and National Competitive Advantage |
- Value systems and norms influence the cost of doing business in that country - Japan's group emphasis and high level of trained engineers has given them a competitive advantage - American entrepreneurship emphasis has given them an advantage - Suggests which countries will be viable competitors and also helps choosing location of facilities (ex. one has social stratification) |
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(Implications of culture differences for international business) Culture and Ethics |
- Employment practices may be different, doesn't mean you can just exploit them - Pollution - Corruption |
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What are ethical dilemmas? Why do they exist? Provide some examples. |
- Situations in which none of the available alternatives seem ethically acceptable - They exist because many real-world decisions are complex, difficult to frame, and involve consequences that are difficult to quantify - 12 year old breadwinner girl who wants to work at factory |
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Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase "When in Rome, do as Romans do"? How well does that approach hold up ethically? |
- Belief that ethics are nothing more than the reflection of a culture and accordingly, a firm should adopt the ethics of the culture in which it is operating - In its extreme, it says if a country supports slaves, it is okay to have slaves - Extreme form does not hold up well, but limited can (legal speed money) |
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What are the ways in which international business and its managers can ensure that ethical issues are considered in business decisions? |
- Pre-hire tests - Do not promote anyone who has displayed unethical behavior - Code of ethics - Build culture based on high value of ethics |
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Explain Ricardo's theory of competitive advantage. Use examples to explain. |
Countries should specialize in the production of goods that it produces more efficiently and buy the goods that it produces less efficiently from other countries, even if this means buying goods from other countries that it could produce more efficiently. |
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What are the four attributes that are discussed in Porter's diamond. Explain importance of each briefly |
1. Factor Endowments 2. Demand Conditions 3. Relating and supporting industries 4. Firm strategy, structure, and rivalry |
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Discuss the two main forms of FDI. Provide specific examples. Explain the pros and cons of each briefly. |
1. Greenfield investment 2. Mergers and acquisitions |
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What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely to choose? |
Greenfield investment involved the establishment of a new operation in a foreign country. M&A is less risky, quicker to execute, increases efficiency of acquired unit More likely to choose M&A |
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FDI Host country benefits |
1. Resources transfer effects 2. Employment effects 3. Balance of payments effects 4. Effects on competition and economic growth |
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FDI Host country costs |
1. Subsidiaries of foreign MNEs may have greater economic power 2. Foreign subsidiary imports a substantial number of inputs 3. Perceived loss of sovereignty |
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FDI Home country benefits |
1. Inward flow of foreign earnings 2. Employment effects 3. Gains from learning valuable skills |
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FDI Home country costs |
1. Balance of payments can suffer 2. Employment can be negatively effected |
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Explain Product Life Cycle theory. Use examples to explain |
As products mature, both the location of sales and the optimal production location will change, affecting the flow and direction of trade - mature industries leave the US for low cost assembly locations |
