Man 3600 Exam 1

Front 1

Which of the following is not a major type of international business activity for typical manufacturers?
a. Portfolio investments (capital)
b. Export
c. Import
d. Foreign Direct Investment (FDI)
e. All of the above are not major international business activities

Back 1

Portfolio investments (Capital)

Front 2

5. All of the following are COSTS of global business EXCEPT:
a. Lowered price of goods for consumers
b. Exporting jobs to emerging countries
c. Technology leaking
d. Loss of power and sovereignty for hosting countries

Back 2

Lowered price of goods for consumers.

Front 3

12. Which of the following statements is NOT true according to a video clip on Nike shown or
discussions we had in class?
a. Nike seems to have paid wages above local minimum/running wages.
b. Nike had legally acceptable but ethically questionable business practices in other countries
such as using child labors.
c. Nike’s issues can be easily taken care of as long as their business practices overseas are
legally sound and acceptable.
d. The issues Nike faced can be resolved by long-term plans that recognize their
responsibilities as a corporate citizen in the international markets.
e. All of the above are true.

Back 3

c. Nike’s issues can be easily taken care of as long as their business practices overseas are
legally sound and acceptable

Front 4

Global Business

Back 4

Performance of trade and investment activities by firms across national borders.

Front 5

Globalization

Back 5

ongoing economic integration and growing interdependency of countries worldwide

Front 6

FDI (Foreign Direct Investment)

Back 6

An internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant, and equipment

Front 7

Multinational Enterprise

Back 7

A large company with substantial resources that performs various business activities through a network of subsidaries and affiliates located in multiple countries.

Front 8

Portfolio Investment

Back 8

Passive ownership of foreign securities such as stocks and bonds for the purpose of generating financial returns.

Front 9

Reasons for doing international business

Back 9

Larger Market, Gain knowledge of technology, exposure, spread risk by diversifying market presence, if one country economy goes down then can depend on other market presence.

Front 10

Major international business activities for a typical firm

Back 10

Exporting, importing, and Direct Investment (the ownership or control of a company in another country)

Front 11

U.S. trade relationships with major trade partners

Back 11

Trade with the Pacific Rim, Japan and China
• Trade with Canada and Mexico
• The continuous, long-term U.S. trade deficit

Front 12

Benefits of (need for ) international business at the economy level

Back 12

Good for job creation, bring in wide range of products and services to a country, expand consumer choices, exert pressure on domestic products to improve standard of living, allows for economies of scale, allows firms to hone their competitive skills abroad

Front 13

Current U.S. trade position

Back 13

Increasing deficit. Imports increasing more rapidly than imports

Front 14

What is “business ethics”?

Back 14

Business ethics include practices and
behaviors that are good or bad

Front 15

Costs of international business

Back 15

Critics say it increases the wealth of
corporations and investors at the
expense of the poor, and does other
damage to society in general
• Exporting Jobs
• Wage rates of unskilled workers in
advanced countries
• Countries – MNE dependent
• Loss of control and sovereignty

Front 16

Ethics and its relationship with economics and laws

Back 16

Workplace practices
– Child labor
– Wages
– Work schedule
• Human rights
– Treating employees
• Environmental policy
– Somebody has to pay for it
• Corruption
– Bribing is not illegal in every country
• Exercising power of MNCs
– Negotiating with local gov’t and employees

Front 17

Common ethical issues in international business

Back 17

Challenges as MNCs make their decisions
in and for different business environments
– Cultural systems (Values, virtues, etc…)
– Political systems (Corruption and bribing)
– Legal systems (Minimum wages)
– Economic development
• Something that is ethical and totally
accepted in one country may not be
necessary the case in other countries.

Front 18

US Foreign Corrupt Practices Act

Back 18

US Foreign Corrupt Practices Act (FCPA)
Bribery Provisions
The 5 basic elements of the FCPA are that . . .
1. Anyone subject to U.S. jurisdiction
2. who, with corrupt ___________,
3. makes a payment (or does some act in furtherance of
an offer, promise, gift or authorization of the giving of
anything of value)
4. to a foreign “official”

Front 19

Definition of culture

Back 19

The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.

Front 20

Acculturation

Back 20

Acculturation is the
process of adjusting and
adapting to a specific
culture other than one’s
own. It is one of the keys
to success in international
operations.

Front 21

Elements of culture

Back 21

Language (verbal and nonverbal), religion, values and attitudes, manners and customs, material elements, aesthetics, education, social institutions, time orientation

Front 22

Language

Back 22

Verbal

Front 23

Religions including world major religions and their impact on the followers’ life

Back 23

Religion impacts international business in
shaping the attitudes, values, and beliefs of a
culture
• The Major World Religions

Front 24

Values & attitudes

Back 24

____Values__
are shared beliefs
norms that have
internalized by
_Attitudes__
are evaluations
of alternatives
based on these
values.
Bureaucratic Japanese
would think buying foreign
products is

Front 25

Manners & Customs

Back 25

Using left-hand to eat in some
culture where it is the “toilet hand”
• General Mills’ Betty Crocker cake
mix in Japan
• Campbell’s soup packaged in
Mexico for large families
• Johnson & Johnson

Potential problem areas for global firms arise
from an insufficient understanding of:

Front 26

Material culture

Back 26

Material culture is manifested in
• Economic infrastructure
• Social infrastructure
• Financial infrastructure
• Marketing infrastructure
• Cultural convergence

Front 27

Aesthetics

Back 27

Good taste is expressed
through colors, form, and
music.
• The meanings of colors and
symbols vary from country
to country.
• Example: the color of
mourning in the US and
Europe vs. that of Asia

Time dictates expectations about planning,
scheduling, profit streams, and what constitutes
tardiness in arriving for work and meetings.

Front 28

Education

Back 28

• Assessing the educational level of
a culture

Front 29

Social institutions (stratification, reference groups, etc)

Back 29

Kinship relationships

Front 30

High vs. low context cultures

Back 30

____High Context___ Culture

Front 31

Hofstede’s five dimensions of culture (definitions, how they could affect IB activities, etc)

Back 31

1. Individualism versus collectivism refers to
whether a person primarily functions as an
individual or within a group.
2. Power distance describes how a society
deals with inequalities in power that exist
among people.
3. Uncertainty avoidance refers to the extent to
which people can tolerate risk and uncertainty
in their lives.
4. Masculinity versus femininity refers to a
society’s orientation based on traditional male
and female values.

Front 32

Power Distance

Back 32

Power distance describes how a society
deals with inequalities in power that exist
among people.

Front 33

Individualism vs. Collectivism

Back 33

• ___Individualist__ societies: ties among people are relatively loose;
each person tends to focus on his or her own self-interest;
competition for resources is the norm; those who compete best are
rewarded financially.

Front 34

Uncertainty Avoidance

Back 34

refers to the extent to
which people can tolerate risk and uncertainty
in their lives.
High uncertainty avoidance societies create institutions that
minimize risk and ensure financial security; companies
emphasize stable careers and produce many rules to regulate
worker actions and minimize ambiguity; decisions are made
slowly because alternatives are examined for potential outcomes.

Front 35

Masculinity vs. Femininity

Back 35

refers to a
society’s orientation based on traditional male
and female values.
Masculine cultures value competitiveness, assertiveness,
ambition, and the accumulation of wealth; both men and women are
assertive, focused on career and earning money, and may care little
for others.
• Examples- Australia, Japan. The U.S. is a moderately masculine
society; as are Hispanic cultures that display a zest for action,
daring, and competitiveness.
• In business, the masculinity dimension manifests as self-confidence,
proactiveness and leadership.
• Feminine cultures emphasize nurturing roles, interdependence
among people, and caring for less fortunate people- for both men
and women.
• Examples-Scandinavian countries- welfare systems are highly
developed, and education is subsidized.

Front 36

Long-term Orientation

Back 36

Hofstede added a fifth dimension -- long-term vs. short-term
orientation -- which was not identified in his earlier study. This
dimension describes the degree to which people and organizations
defer gratification to achieve long-term success.
• Long-term orientation tends to take the long view to planning and
living, focusing on years and decades.
• Examples- traditional Asian cultures-China, Japan, and Singapore,
which partly base these values on the teachings of the Chinese
philosopher Confucius (K’ung-fu-tzu) (500 B.C.), who espoused:
long-term orientation, discipline, loyalty, hard work, regard for
education, esteem for the family, focus on group harmony, and
control over one’s desires.
• Short-term orientation - the U.S. and most other Western
countries.

Front 37

Types of cultural knowledge

Back 37

• Cultural knowledge can be defined by
the way it is acquired:

Front 38

Cultural training methods

Back 38

Internal education programs that increase
cultural sensitivity

Front 39

Culture shock and its stages

Back 39

A condition of confusion and anxiety that results from
living in an alien culture for an extended period.
• Often akin to mental depression that appears one day
for reasons not understood by the sufferer.
• Usually occurs only after the person has been in the
foreign country for a few months and the “excitement” of
living abroad has worn off.
• Experienced by most people who live abroad for
extended periods.
• Results from the stress overload caused by the barrage
of jarring and dis-orienting incidents. “Like being
Especially difficult in high stress settings like big cities or
very foreign cultures.
• Can be minimized if the person knows the local
language and culture well.
• Tourists don’t get it; Expatriates may avoid it if their lives
are very structured and protected.
• People almost always get over it; But many give up and
go home early.
• May be the single greatest cause of failed overseas
assignments.
Initial euphoria

Front 40

Self Reference Criterion

Back 40

Recognition of differences

Front 41

Characteristics of culture

Back 41

Cultures are never right or wrong, better or worse, just
different
• Culture changes at a glacial pace
• Culture is very complicated
• Culture and language are perfectly intertwined
• There is such variety in culture that, given the same
problem to solve, ten different nationalities are capable
of producing ten very different solutions
• When in doubt, just imitate the locals.

Front 42

Ethnocentrism

Back 42

• “…regarding one’s culture
as superior to others”

Front 43

Characteristics of culturally matured person

Back 43

• Objective
• Tolerant of cultural differences
• Flexible in your dealings / Able to “do
as the Romans do”
• Knowledgeable of cultures, history,
global economic and social trends
• Humble about your own culture

Front 44

Reverse Culture Shock

Back 44

Readjustment to home country culture

Front 45

Ethics and Corporate Social Responsibility in International Business

Back 45

Operating a business in a manner that meets or exceeds the ethical, legal, commercial, and public expectations of stakeholders (customers, shareholders, employees, and communities)