FVC1 Flashcards
5 major dimensions of national culture as they apply to HRM throughout the world (11)
1 power distance - degree of equal authority given to society and its workplace. Egletarian/low power distance is casual.
2 uncertainty avoidance - taking things seriously or not
3 individualism vs collectivism
4 masculinity vs femininity - assertiveness/dominance
5 long-term vs short-term
most important issue in the field of international HRM (11)
gov regulations related to border security
globalization def (1)
the socio-economic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries, which could lead to increased economic growth and geo-political integration and interdependence among nations of the world.
emerging market economies def (ch1)
countries that have been moving toward more open trade and free-market policies
trend of globalization in developed/developing countries (ch1)
world’s center of economic gravity is shifting toward emerging market economies and globalization is no longer synonymous with “Westernization”
decoupling def (ch1)
a fundamental global shift in which developing economies that were once dependent upon industrialized countries for economic advancement, begin to solidly grow based on their own underlying economic strengths rater than the ups and downs of the world’s richest countries
primary lesson for developing country with regard to economic growth and stability (ch1)
diversify export-oriented market to ensure that a global economic slump doesn’t impact the country’s economy as badly
multi-polar world def (ch1)
- sustainable decoupling process leads to this
- a world economy in which the engines of growth could comprise the US, European Union, China, India, Brazil, Russia, and S Africa rather than the US alone
3 institutions that coordinate global trade (ch1)
1 International Monetary Fund/IMF - purpose is to organize currency exchange rates and encourage members to eliminate foreign exchange restrictions, oversees the international monetary system which coordinates monetary exchange and allows countries to purchase from one another. Keeps an eye on trends and advises countries to facilitate financial stability
2 the World Bank - Primary goal was to aid the reconstruction of Europe after WWII, major role now is to aid in reconstruction of economies to make them efficient, works to bridge the digital divide between countries (developed/developing), works to eradicate disease.
3 World Trade Organization/WTO - began as General Agreement on Tariffs and Trade (GATT), works on liberalization of the trading system (removing barriers), gets participating countries to sign legal agreements to encourage fair trade,
In addition to help from the WTO, IMF, and World Bank, countries need institutions that support these 4 things (ch1)
1 a democratic system of gov
2 free markets
3 an independent judiciary
4 a free press
institution def and 3 important roles (ch1)
rules, enforcement mechanisms, and organizations that support market transactions
1 channel info about market conditions, goods, services, and participants
2 define property rights and contracts, determine who gets what and when
3 promote competition and innovation in markets
adaptive institution def and 2 key factors(ch1)
gov orgs that create strong incentives for private investment and operate under a system of checks and balances that function best in a democratic gov
1 accountability
2 transparency
transparency internationals def and bottom 3 countries (ch1)
Berlin-based, anticorruption organization
1 Nigeria
2 Iraq
3 Afghanistan
digital era def (ch1)
period of transformation in which internet and wireless technologies are a part of every day life
digital divide def (ch1)
perceived economic gap between countries or people with easy access to digital tech and those with limited or no access
demographic of next billion Internet users compared to 1st billion (ch1)
next billion will be in developing countries
3 reasons why text messaging will likely predominate emerging economies’ mobile phone usage
1 cell phones send texts
2 users know what it costs to text, and
3 web based access requires fancier handsets and may not always be supported by cell companies
sustainable development def (ch1)
development that meets the needs of the present without compromising the ability of future generations to meet their own needs whether environmentally, socially, or economically
corporate social responsibility/CRS role in business (ch1)
many global companies will only do business with companies that have CRS policies in place
who are the real losers of globalization (ch1)
countries that have not been able to seize the opportunities and participate in the process
*Central Asia, Africa, North Korea
3 ways international trade benefits consumers (ch2)
1 a greater amount of choice in the availability of goods and services
2 lower prices for goods and services consumed
3 higher living standards
BRIC def (ch1)
Brazil, Russia, India, and China
developing and rapidly growing economies
Mercantilism def and its drawback (ch2)
a theory of international trade that supports the premise that a nation could only gain from trade if it had a trade surplus
*surplus reduced prices and make exporters poorer
what broke through Mercantilism (ch2)
Adam Smith educating about absolute and comparative advantages
2 theories that expand on comparative advantage and discuss exploitation of abundant resources of nation for export (ch2)
1 Heckscher-Ohlin (H-O) Theory - comparative advantage of nation is contributed to its factor endowments: Land, labor, capital, and technology.
2 Factor price equalization theory - when factors are free to move among trading nations, efficiency increases, which leads to superior allocation of production of goods and services
4 group characteristics of firms and countries in Porter’s model about import/exports
*2 additional variables outside the diamond that play an important role in the competitiveness of nations (ch2)
1 factor conditions - quality
2 demand conditions - high domestic demand results in innovation and in turn specialization of trade
3 related supporting industries - more of them results in greater success
4 firm strategy, structure, and rivalry
*chance and government
trade policy def (ch2)
all gov actions that seek to alter the free flow of merchandise or services from or to a country
2 types of import tariffs/custom duties (ch2)
1 specific - import tax that assigns a fixed amount per physical unit
2 ad valorem - tax on imports levied as a constant percentage of monetary valure
preferential duties def (ch)
low tariff rates applied to specific imports coming from certain countries, especially in the developing world
*designed to help developing countries
3 types of non-tariff trade restrictions (ch2)
1 import quotas/quantitative restrictions (QRs)
2 voluntary export restraint/VER - nation temporarily limits exports to allow competitors in the importing country to become more efficient
3 domestic content provisions - require certain % of value of import be domestically sourced
managed trade def (ch2)
refers to agreements, sometimes temporary, between countries that aim to replace global market or economic forces with gov actions to determine trade outcomes.
*hit socio-economic or geo-political goals
4 types of managed trade in the socio-economic category (ch2)
1 countertrade - agreement to export and import equal value of goods between countries (0 net change)
2 export cartels - natural-resource rich countries joining together to control export volume and prices, such as the Organization of Petroleum Exporting Countries/OPEC
3 infant industry argument - protects country getting late start into industry to help boost them into global business
4 questionable labor practices and environmental considerations - Imports from violating countries may be taxed or restricted
3 reasons that geo-political managed trade strategies sacrifice some economic efficiency for the greater good of the country (ch2)
1 national security - high tech equipment or weapons is only traded to allies
2 protection of critical industries - such as the automotive industry
3 international commerce - enforcement of embargoes (such as the US has with Cuba)
regional integration def (ch3)
includes a multitude of economic and/or political steps that may be taken by member states of a union to increase their global competitiveness
- especially helpful for smaller countries
- need to undertake spatial transformations to be successful
spatial transformation def (ch3)
allow efficient geographic distribution of economic activities within and among countries
5 steps of regional integration (ch3)
1 two or more countries create a free-trade area while keeping external tariffs
2 creation of customs union in which all free trade member countries adopt common external tariff with nonmember countries
3 creation of common market of single market - flow of investment to countries that need capital
4 economic and monetary union - creation of common social programs and coordinated macroeconomics policies
5 creation of political union - common defense against foreign threats
3 categories that are essential for successful regional integration (ch3)
1 institutions that unify the markets
2 infrastructure that efficiently connects these markets
3 lower economic barriers to facilitate trade
3 fundamentals of an appropriate approach for small countries to benefit from regional integration (ch3)
1 start small - start with a small and well defined area
2 think global - help countries communicate and get transport access to other countries
3 compensate the least fortunate - provide money for those developing but not as advanced as others yet
3 categories of regional integration blocs (from an economic geography perspective ) (ch3)
1 regional blocs close to major world markets - advantage if close due to quick transport of perishable goods
2 remote regions with large local markets - with solid infrastructure can prosper and gain access to world markets
3 remote regions with small local markets
What is the most highly evolved example of regional integration in the world and at what stage is it? (ch3)
EU, headquartered in Brussels, Belgium
fourth stage of process
reasons why Turkey hasn’t been admitted to the EU (ch3)
- most of it is not geographically in Europe
- it is a poor country
- it is predominantly Muslim with a large population and would gain sway with voting rights
- human rights issues with Turkish Kurds
Introduction of the Euro (ch3)
- part of Maastricht Treaty of 1992
- meant to integrate EU economies
- EU members must be approved to use euro
Info about NAFTA (ch3)
North American Free Trade Agreement
- Canada, US, and Mexico
- eliminates all trade barriers
- protection of intellectual property rights
- creation of institutions to address potential problems
Info about ASEAN 2 objectives (ch3)
Association of south East Asian Nations
*has the larges and most prolific free trade network in the world
1 accelerate economic growth, social progress, and cultural development in the region
2 promote regional peace and stability through the rule of law in relationship among countries in the region
Info about regional integration in Latin America (ch3)
- Latin American Free Trade Agreement/LAFTA never got off the ground because they couldn’t agree on details
- some counties made the Andean group and agreed on external tariffs and investing in more rural countries
- MERCOSUR group created common market
- US attempted to make Free Trade Area of the Americas/FTAA but it fell through due to Venezuela’s president thinking there were ulterior motives
- DR-CAFTA - DR and Central American Free Trade Agreement signed in 2005
Balance of Payments/BOP def and 2 major components (ch4)
statement of account that summarizes all transactions between the residents of one country and the rest of the world for a give period of time, usually a year
1 the current account - net balance
2 the financial account - shows how current account balance is financed
4 subaccounts of the current account of BOP (ch4)
1 trade/goods balance - net imports/exports
2 services balance - again, net imports/exports
3 income balance - net investment income from abroad/or paid to foreighers
4 net transfers - net payments between countries
3 subcategories of the financial account of BOP (ch4)
*1 US-owned assets abroad
*2 foreign-owned assets in the US
3 net financial derivatives
*greatly affected by foreign direct investment/FDI (investment in physical capital abroad) and security investments
foreign exchange market/forex def and 3 largest markets (ch4)
network of international banks who work with exporters and importers and currency traders.
1 London
2 New York
3 Tokyo
independent floating exchange rate system def and 3 country examples (ch4)
in a free-market-oriented foreign exchange market, major currency values are determined by the demand for a supply of currencies
1 US dollar
2 euro
3 yen
managed floating exchange rate system def (ch4)
currency’s value depends partly upon demand and supply in the foreign exchange market, and partly on active gov intervention in the foreign exchange market (by means of central bank purchases and sales of its own currencies to manage currencies)
fixed exchange rate systems def (ch4)
countries conduct bulk of their international transactions with a few major trade partners and for this reason link their currencies to those of the partners
3 forex market types (ch4)
1 spot - currencies on real time basis for immediate delivery. Bank profits on bid-ask spread for converting.
2 forward - arranges cost of something paid for later with current exchange rate
3 futures markets
Bretton Woods Agreement def (ch4)
established global currency system based on gold standard with US dollar pegged at a fixed rate of exchange to gold in an effort to control inflation
- established IMF to ensure stability of international monetary system
- US dollar became overvalued and was adjusted with Smithsonian Agreement
- 1974 us relinquished the dollar-gold exchange standard
- 1976 Jamaica Agreement reformed monetary order - no more gold standard, special drawing right/SDR is weighted basket of currencies
Flexible exchange rate system info (ch4)
- emerged in 1971
- rate tied to supply and demand
- central banks intervene in forex by buying or selling currency to manipulate value
float and dirty float currency def (ch4)
- float - minimal gov intervention and is market determined
* dirty float - varying degrees of gov intervention
dollarization def (ch4)
use the dollar or some other foreign currency together with, or instead of, a domestic currency
hard vs soft currencies (ch4)
1 hard - leading world currencies of developed countries, including US dollar, European euro, Japanese yen, and British point sterling
2 emerging market countries’ currencies that are less stable in value than hard currencies and are sometimes pegged to hard currency values
law of one price def (ch4)
identical good should sell for the same price in diff countries according to local currencies
arbitrage def (ch4)
buying goods in a lower priced market and selling them in a higher priced market to make profit
purchasing power parity (PPP) def (ch4)
theory stating that a basket of goods should have approximately the same prices across diff countries
Big Mac Index def (ch4)
calculation using the cost of a McD’s sandwich to assess the relative values of currencies
inflation’s relationship to currency value and PPP (ch4)
inflation will cause people to buy another country’s goods, selling their currency and purchasing from that country. This will cause the value of their currency to drop (due to excess supply) and the other currency to appreciate (due to demand)
interest rate parity/IRP def (ch4)
theory stating that interest rates on bonds in diff countries should be the same, as investors would buy and sell these bonds to make arbitrage profits until its condition holds
uncovered interest rate parity def (ch4)
principle implying that the expected future spot exchange rates and spot exchange rates set interest rates on bonds in diff countries equal to one another
culture def and 4 characteristics of culture (ch5)
learned behavior; a way of life for one group of people living in a single, related, and independent community
1 it is not inherited but taught
2 it is impossible to change an entire country’s culture
3 firm is responsible to ascertain cultural importance in other countries
4 firms must recognize and adjust to cultural environment (known as acculturation)
8 aspects of society that culture impacts (ch5)
1 language - verbal and non-verbal communication, use backward translation to be cautious with ads
2 religion
3 values (beliefs or philosophies) and attitudes (opinions)
4 manners and customs - the way a society does things
5 material elements - result of technology; best demonstrated by economic, social, financial, and marketing infrastructures
6 aesthetics - color, form and music are important
7 education
8 social institutions - reference groups (church, school, work, friends, etc.), may have high or low level of social stratification (upper/lower class divide)
5 culture levels/dimensions according to Hofstede (ch5)
1 individualism vs collectivism 2 power distance - egalitarianism/equality vs authority 3 masculine vs feminine 4 uncertainty avoidance 5 time orientation - long or short-term
4 additional cultural variables according to Trompanaars (ch5)
1 universalism (rules ) vs. particularism (relationship)
2 neutral vs emotional - expression
3 specific (single role expectation) vs diffuse (multiple role expectation)
4 achievement vs ascription - rewards based on performance or birthright
6 regional clusters of countries based on the Global Leadership and Organizational Behavior Effectiveness/GLOBE survey (ch5)
1 Germanic Europe - most in favor of uncertainty avoidance
2 Eastern Europe - least risk averse
3 Southern Asia - higher power distance
4 Arabic
5 Latin Europe
6 Anglo - highest institutional collectivism
what behavior must be considered when crossing cultural boundaries (ch5)_
variations in management styles
democracy vs totalitarianism (ch6)
- democracy - vote by people. Athenian democracy was everyone gathering to vote on everything, representative means you vote on parties to make decisions, constitutional have ceremonial monarch in representative system
- totalitarianism - individuals govern without support or consent of citizens
which is more influential on global business in a country, political system or economic ideology (ch6)
economic ideology
types of economic ideologies (ch+6)
1 communism - gov owns and controls all major factors of production, collectivist (China is larges country operating this way)
2 socialism - gov plays strong role in economy and may own stakes in certain businesses, more collective than individual (European countries are example), highest unemployment rates in the world.
3 capitalism - businesses are privately owned with strong individualism (US)
economic risk def (ch6)
economic problems or mismanagement in a given country that will have a meaningfully negative impact on the conduct of business in that country
Ex: currency depreciation, militant labor unions, corruption, and economic risks related to political risks
political risk def, micro and macro (ch6)
1 political risks - risks that political forces or problems in a given country will have meaningfully negative impact upon the conduct of business in that country
2 micro - only affects a certain industry or set of firms in a given country
3 macro - affects all business in a given country
ex: terrorism
2 insurance policies for risk of doing business overseas (ch6)
1 Terrorism Risk Insurance Act of 2002- insurance policy to cover loss of investor due to terrorist attack
2 overseas private investment corporation/OPIC - insurance available to US firm sold by US gov for business in other countries
corruption and private corruption/public defs (ch6)
1 corruption - situation where businesses are able to illegally alter relevant private and/or public decision making through bribes, kickbacks, etc.
2 private - involves other private businesses or groups (ex: racketeering). Can be difficult to detect and define.
3 public - practice of making illegal payment to gov officials, etc to obtain gov contracts.
Foreign Corrupt Practices Act/FCPA def and 2 parts (ch6/7)
law in US prohibits US companies from corrupting foreign gov officials to win contracts
1 anti-bribery provision
2 requirement to maintain an adequate internal control system
3 primary kinds of legal systems in countries throughout the world (ch6)
1 civil law - based on a comprehensive listing of legal rules in sets of written codes of law. Little room for judicial “interpretation” (ex: Germany)
2 common law - legislative bodies enact less specific legal rules, so judges and courts have authority to interpret rules (ex: US with free speech)
3 theocratic law - based on religious document (ex: Islamic law in Iran and Saudi Arabia)
criminal law def (ch6)
establishes which violations of a nation’s laws are crimes punishable by possible incarceration (adultery, drinking, smoking pot, etc)
contract law def (ch6)
body of law governing legally enforceable agreements between parties to engage in economic exchange
*advised to obtain local attorney’s help to write contracts involving foreign jurisdictions
tax law def (ch6)
addresses gov levying of taxes upon individuals and corporations
*many US corps moved operations to tax haven countries (countries with little or no tax transparency to illegally avoid US taxes)
product safety law def (ch6)
establishes standards of product safety to which the manufacturers and sellers of products are to be held
caveat emptor vs caveat venditor def (ch6)
emptor - buyer beware
venditor - seller beware (US lands in this category)
dispute settlement law def (ch6)
law that governs how disputes in global business will be settled
litigation and arbitration def (ch6)
- litigation - bring case to public or gov-run court to settle
- arbitration - alternative dispute resolution process where neutral party decides
intellectual property def (ch6)
creative product of intellectual activity
3 types of intellectual property rights (ch6)
1 patents - excludes others from selling, making, or using the invention for a certain period of time (allows temp monopoly)
2 trademarks - distinctive phrase, name, word, etc owned by a business
3 copyrights - exclusive legal right that authors, artist, etc have to publish their work
genericized trademark def (ch6)
so well known, title is used (kleenex, google, etc.)
3 philosophical principles regarding ethincs (ch7)
1 the imperative principle - do the right thing/lying is wrong
2 the utilitarian principle - do what produces the greatest good
3 the generalization argument - combo, do what is right, but filter it to consider consequences