Drivers of Globalization

Question 1

What are the drivers of Globalization

Answer 1

1. Cultural exchange 2. Improved transport 3. Low barriers to trade and investment 4. Technological changes

Question 2

What are the 4 risks of internationalization

Answer 2

1. Cross cultural 2. Political 3. Currency 4. Commercial

Question 3

Why do nations trade?

Answer 3

We need to trade because we have goods and services that countries need, and they have goods and services that we need.

Question 4

Difference between foreign direct investment and portfolio investment

Answer 4

Foreign is physical presence abroad and portfolio is more equity securities and investment

Question 5

What is international trade?

Answer 5

If money is being moved cross border it is international trade.

Question 6

What is free trade

Answer 6

International trade without any restrictions avert of legal.

Question 7

What is Mercentalism

Answer 7

Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy.

Question 8

what are the barriers to free trade?

Answer 8

Natural factors transportation costs, rough terrains
- drastically coming down but still substantial

History difficulty in moving or closing industries, even inefficient ones.
- resistance against reduction of government support and even privatisation.

Trust in international relations

Question 9

Criteria for country selection when engaging in a foreign market

Answer 9

Criteria for country selection when engaging in a foreign market

• market attractiveness
• distance (cultural, administrative, geographical, economic)
• country risk- (India/ government mostly authoritarian, politicians corrupt etc.)

Question 10

4 basic legal systems

Answer 10

Com law- based on legal precedents
Civil law- legislative in origin, codified and clearly written
Religious law- based on religion
Mixed- mixed

Question 11

What determines political risk

Answer 11

Factors that influence:

Type of governments

• from democracy to dictatorship (dictatorships are good as minimal government and legislative change, however, can be risky etc. Sadam)
• are democracies really less risky, they at least need to answer to people

Question 12

What is a Multinational strategy

Answer 12

Multinational marketing is the process of advertising and selling products and services to customers around the world.

Question 13

What is a transnational strategy

Answer 13

transnational businesses carry out commerce across international boundaries. The transnational model is invested in foreign assets and operations, making them effectively tied to each nation in which they do business..

e.g Maccas

Question 14

Cultural Environment factors and their meanings

Answer 14

monochronic (punctuality and schedules)

polyconic (more laid back, completing heaps of tasks at once)

Question 15

what is Polycentric

Answer 15

host country mindset

Question 16

What is Geocentric

Answer 16

no national boundaries

Question 17

What is an MNC

Answer 17

Multionational corporations - a business which has facilities and other assets in at least one other country other than its home country

Question 18

what is comparative advantage

Answer 18

the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.

Question 19

What is liability of foreigness

Answer 19

the costs that firms operating outside their home countries experience above those incurred by local firms.

Question 20

What is Guanxi

Answer 20

The idea that social connections and relationships should be based on mutual benefits.

Question 21

Factor endowment theory is

Answer 21

The belief that each country should produce and export products that intensively use relatively abundant factors of production and important goods that use scarce factors of production.

Question 22

The international product life cycle theory is composed of three stages

Answer 22

Introduction stage, maturity stage, standardisation stage.

Question 23

What is the most complex, and simplest entry mode for a firm looking to expand internationally

Answer 23

FDI, exporting.

Question 24

What are the essentials of successful global firms?

Answer 24

Strategy and visionary leadership

Question 25

What does the phrase, "Globalisation of markets" mean

Answer 25

The ongoing economic integration and growing interdependency of countries worldwide

Question 26

What are the two types of international flows?

Answer 26

● Portfolio investment | ● Foreign direct investment (FDI)

Question 27

WHY do firms internationalise (list a few)

Answer 27

- Seek opportunities for growth through market diversification - Earn higher margins and profits - Gain new ideas about products, services and business methods - Serve key customers better that have relocated abroad - Be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in product sourcing - Gain access to lower-cost or better-value factors of production - Develop economies of scale in sourcing, production, marketing and R&D - Confront international competitors more effectively, or thwart the growth of competition in the home market - Invest in a potentially rewarding relationship with a foreign partner

Question 28

what is Socialisation?

Answer 28

● Socialisation is the process of learning the rules and behavioural patterns appropriate to one’s society

Question 29

What is Acculturation

Answer 29

the process of adjusting/adapting to a culture other than one’s own

Question 30

E.g of Monochronic countries

Answer 30

Young countries (i.e. Australia, US) are relatively focused on the present, tend to have a monochronic orientation of time (people are focused on schedules/punctuality)

Question 31

E.g of polychronic countries

Answer 31

Other cultures have a polychronic perspective on time – instead of performing single tasks serially, people are inclined to do many things at once (members are easily distracted)

Question 32

What is Hofstede’s Dimensions of National Culture

Answer 32

● The 6 cultural dimensions included: 1. Individualism vs. Collectivism 2. Power distance 3. Uncertainty avoidance 4. Masculinity vs. Femininity 5. Long vs. Short-term Orientation 6. Indulgence vs. Restraint

Question 33

what is Relativism

Answer 33

● – the belief that ethical truths are not absolute, but differ from group to group

Question 34

what is Normativism

Answer 34

The belief that ethical standards are universal, and firms/individuals should seek to uphold them around the world

Question 35

What is Individualism versus Collectivism?

Answer 35

● Refers to whether a person primarily functions as an individual, or within a group ● In individualistic societies, each person emphasises his/her own self-interest, competition for resources is the norm, individuals who compete best are rewarded ⇒ E.g. Australia, Britain, Canada, US ● In collectivist societies, ties among individuals are important, business is conducted in a group context, life is a fundamentally cooperative experience, conformity and compromise help maintain harmony ⇒ E.g. China, Japan, South Korea

Question 36

What is Power distance

Answer 36

● Describes how a society deals with inequalities in power that exist among people ● High power distance societies exhibit big gaps between the weak and powerful ⇒ In firms, top management tends to be autocratic, giving little autonomy to lower-level employees) ⇒ E.g. Guatemala, Malaysia, Philippines and several Middle East countries ● Low-power distance societies have small gaps between the weak and powerful ⇒ Firms tend toward flat organisational structures, with relatively equal relations between managers and workers) ⇒ E.g. Scandinavian countries instituted various systems to ensure socioeconomic equality

Question 37

What is Uncertainty avoidance

Answer 37

● Refers to the extent to which people can tolerate risk and uncertainty in their lives ● High uncertainty avoidance societies create institutions to minimise risk and ensure security ⇒ Firms emphasise stable careers and regulate worker actions, decisions are made slowly (due to controls in place) ⇒ E.g. Belgium, France, Japan ● In low uncertainty avoidance societies, managers are relatively entrepreneurial and comfortable with risk ⇒ Firms make decisions quickly, people are comfortable changing jobs (more relaxed) ⇒ E.g. Ireland, Jamaica, US

Question 38

What is Masculinity vs. Femininity?

Answer 38

● Refers to a society’s orientation based on traditional male and female values ● Masculine cultures value competitiveness, ambition, assertiveness, and the accumulation of wealth ⇒ Both men and women are assertive, focused on career and earning money ⇒ E.g. Australia, Japan ● Feminine cultures emphasise nurturing roles, interdependence among people, and caring for less fortunate people (for both men and women) ⇒ E.g. Scandinavian countries, where welfare systems are highly developed, and education is subsidised

Question 39

what is Long vs. Short-term Orientation

Answer 39

● Describes the degree to which people and organisations defer gratification to achieve long-term success ● Long-term orientation emphasises the long view in planning and living, focusing on years and decades ⇒ E.g. traditional Asian cultures, such as China, Japan and Singapore, which base these values on the teachings of Confucius (500 B.C.) ⇒ He espoused long-term orientation, discipline, hard work, education and emotional maturity ● Short-term orientation is typical in the US and most other Western countries

Question 40

What is Indulgence vs. restraint

Answer 40

● Describes the degree to which people in a society attempt to control their impulses and desires ● Members of indulgent societies allow relatively free gratification of their basic and natural human desires related to having fun and generally enjoying life ⇒ E.g. Denmark, Mexico and the US score high on indulgence ● Restrained societies believe that such gratification should be curbed and regulated by strict norms ⇒ E.g. China, Iraq and South Korea

Question 41

Who participates in International business

Answer 41

1. Focal Firm 2. Distribution channel/intermediary channel 3. facilitator 4. Government

Question 42

What is cultural pitfall?

Answer 42

Sterotyping and bagging out others

Question 43

What are low context cultures

Answer 43

Communication is direct, specific legal contracts

Question 44

What are High context cultures

Answer 44

Non-verbal language or indirect language, develop a sense of relationship

Question 45

What are the 5 ethical standard approaches

Answer 45

1. Utilitarian approach – the best ethical action is one that produces the most good or the least harm, produces the greatest balance of good over harm for stakeholders 2. Rights approach – the best action protects and respects the moral rights of everyone involved, must preserve human dignity 3. Fairness approach – the best action treats everyone equally and fairly (e.g. fair wages, acceptance of diversity) 4. Common good approach – the best action emphasises the welfare of the entire community/nation, contributing to the quality of life for all affected people, respect and compassion is the basis of decision-making 5. Virtue approach – the best action emphasises virtues that provides for the full development of our humanity (e.g. truth, courage, compassion, love)