Forces of localisation

Question 1

What are the challenges of economic differences - LICs?

Answer 1

Different habits, irregular incomes, weak banking, unskilled work force

Question 2

Why are different habits a challenge?

Answer 2

People may not want to go far to purchase goods - either they buy in bulks or they go regularly

Question 3

Why is irregular incomes a challenge?

Answer 3

If people don’t have money, they won’t be able to pay for a membership or buy goods

Question 4

Why is weak banking a challenge?

Answer 4

If people bring cash, they have a limit to how much they can spend as opposed to credit cards

Question 5

Why is unskilled workforce a challenge?

Answer 5

If people don’t have knowledge, they cannot work, they do not have money

Question 6

What is micro finance?

Answer 6

Provides small loans to entrepreneurs. Borrowers typically use the loans for trade, animal husbandry, etc…

Question 7

What is group lending?

Answer 7

A small group who needs loans, so they get it together but if one of the people can’t pay back, then everyone gets cut off

Question 8

What is cross-cultural literacy?

Answer 8

Understanding of how cultural differences across and within nations can affect the way in which a business is practiced - navigating how different cultures are

Question 9

What is culture?

Answer 9

Values and norms that are shared within people and can constitute a design for living

Question 10

What is society?

Answer 10

Group of people that share a set of values and norms

Question 11

What are values?

Answer 11

Abstract ideas about what is good, right and desirableW

Question 12

What are norms?

Answer 12

Social rules that govern the actions of people toward one another

Question 13

Types of norms?

Answer 13

Formal - rules humans follows eg. speed limit
Informal - unwritten rules

Question 14

What are folkways?

Answer 14

Routine conventions of everyday life - which side to drive on
If you laugh about it being violated then it is folkway

Question 15

What are mores?

Answer 15

Norms that are central to society functioning
If you want to tell someone about violating them then it is a more

Question 16

What influences culture?

Answer 16

Religion
Education
Political philosophy
Economic philosophy
Language
Social structure

Question 17

What is social structure?

Answer 17

Individually driven and group driven

Question 18

What is individually driven structures?

Answer 18

Emphasized in western countries
Encourages job switching
Fosters managerial mobility

Question 19

What is group structure?

Answer 19

Emphasized in non-westernized countries
Cooperation and team work
Creativity is suppressed

Question 20

What is social strata?

Answer 20

Hierarchical social categories often based on family background, occupation and income

Question 21

What is social mobility?

Answer 21

Extent to which individuals can move out of the strata into which they are born

Question 22

What is caste system?

Answer 22

Social position is determined by the family into which the person is born

Question 23

What is the class system?

Answer 23

Position a person has by birth can be changed through achievement/lucl

Question 24

Why is class important for a firm?

Answer 24

Caste systems would expect lower salaries but class systems would expect raises, bonuses, etc.

Question 25

Why are expressions important for firms?

Answer 25

Communication is needed - consumer reviews

Question 26

What is religion?

Answer 26

A system of shared beliefs and rituals that are concerned with the realm of the sacred

Question 27

What is the ethical system?

Answer 27

A set of moral principles that are used to guide and shape behaviour

Question 28

What are the 5 dimensions of Hofstede's cultural dimensions?

Answer 28

Power distance, Individualism/collectivism, masculinity/femininity, uncertainty avoidance, long-term orientation

Question 29

What is power distance?

Answer 29

Extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally

Question 30

What is individualism?

Answer 30

Degree to which individuals are integrated into groups

Question 31

What is masculinity/femininity?

Answer 31

Masculinity side shows a society is more aggressive, heroism

Question 32

What is long-term orientation?

Answer 32

Fostering virtues orientated towards future rewards

Question 33

What are disadvantages of the cultural dimensions?

Answer 33

Does not measure culture at a sub-level, does not include each country, not everyone answers it correctly

Question 34

What are geographic differences?

Answer 34

Location, time, distance, climate, infrastructure

Question 35

Why is it important for firms to know the origin?

Answer 35

HICs and LICs have reputations so if something is made in china seems of less quality than made in italy

Question 36

What is a multinational?

Answer 36

A firm that owns business operations in more than 1 country

Question 37

Why is the world less globalized as we think?

Answer 37

Market liberalization, tech change and new strategies

Question 38

What are some global uncertainties and why is it important for MNCs?

Answer 38

Distance - are markets more globally integrated or no Governance - will nations cooperate to develop effective global governance Security - how strongly will governments intervene in businesses to ensure national security Morality - how strongly will governments intervene in business activity to support non-market values

Question 39

What is the CAGE framework?

Answer 39

Cultural differences, administrative differences, geographic differences, economic differences

Question 40

What are cultural differences and why is it important for MNCs?

Answer 40

Different languages, religions, values If companies don't adapt, they could lose the business due to these differences - there can be arguments, etc.

Question 41

What are administrative differences and why is it important for MNCs?

Answer 41

Differences in corruption, legal rules If MNCs break the rules then they put the company at a risk

Question 42

What are geographical differences and why is it important for MNCs?

Answer 42

Physical remoteness, lack of common border MNCs need to be able to trade, use the ports and need transportation

Question 43

What are economic differences and why is it important for MNCs?

Answer 43

Consumer incomes, costs, natural resources MNCs look for natural resources and cheap labour - if there are lower consumer incomes then lower wages

Question 44

What is common law?

Answer 44

Based on tradition, precedent and custom

Question 45

What is civil law?

Answer 45

Very detailed and codified set of laws

Question 46

What is theocratic law?

Answer 46

Based on religious teachings

Question 47

What are the challenges of a weak state?

Answer 47

Political risk, legal risk

Question 48

What are some political risks?

Answer 48

War, revolution, labor unrest

Question 49

What are some legal risks?

Answer 49

Corruption, court system, contract enforcement

Question 50

What is the opacity index?

Answer 50

Determines the risk premium/discount that US-based investors demand due to lack of transparency

Question 51

What are the opportunities of institutional differences?

Answer 51

Companies may exploit differences in state regulations - countries with weaker regulations often have lower labour and production costs Continue to attract investments - countries with the least regulation attract greater investment