Global Markets
What is the meaning of globalization?
The increasing integration of the world economy and the world's countries.
Multinational Corporation
Which investment theory explains FDI through the combination of ownership, location, and internalization advantages?
Eclectic Theory or Dunning's Theory
Explain the difference between a high-context and low-context culture, and provide an example of each.
Low-Context: words conveyed explicitly, e.g. USA
High-Context: words & discussion conveyed together, e.g. Japan
The acronym MNC stands for ____ ____.
Multinational Corporation.
What is flight capital, and why does the United States attract so much of it?
Money sent out of politically or economically unstable countries seeking a safe haven for their assets; political stability, military strength, U.S. dollar serves as invoicing currency for 1/2 of all international transactions
The average income per person in a country
What is the difference between Classical and Modern trade theories?
Classical theories are county-based; Modern theories are firm-based
Which of Hofstede's Six Dimensions describes the relative importance of the interests of the individual vs. the interests of the group, and what are the two extremes?
Social Orientation; Individualism & Collectivism
The nations referred to as the "four tigers" are ____, ____, ____, and ____.
*BONUS: Why are they called the Four Tigers?
South Korea, Taiwan, Singapore, and Hong Kong
*BONUS: They have shared Chinese heritage; A.K.A. newly industrialized countries (NICs) or newly industrialized economies (NIEs).
World economies can be described based on these three (3) types of markets.
1. Underdeveloped
2. Emerging
3. Developed
This law is based on a detailed codification of permissible and nonpermissible activities; world's most common form of legal system.
Civil Law
This theory contends that success in international trade comes from the interaction of four country- and firm-specific elements: factor conditions; demand conditions; related and supporting industries; and firm strategy, structure, and rivalry.
Porter's Theory of National Competitive Advantage
Name all five (5) elements of culture.
1. Social Structure
2. Language
3. Communication
4. Religion
5. Values & Beliefs
A(n) ___ is a comprehensive sanction against all commerce with a foreign country.
Embargo
Define political risk and name & describe the three different (3) types.
Political Risk: change in the political environment that may adversely affect the value of a firm.
1. Ownership Risk: confiscation or expropriation of property
2. Operation Risk: threat to operations
3. Transfer Risk: inability to shift funds
The process by which people understand a foreign culture and modify and adapt their behavior to make it compatible with that culture.
Acculturation
Describe the difference between absolute advantage and comparative advantage.
Absolute Advantage: export/import of goods and services that are more productive
Comparative Advantage: export/import of goods and services that are more relatively productive
Name the approach to social responsibility:
"Top managers in several foreign affiliates of Astra, a Swedish firm, were accused of a host of improprieties ranging from sexual harassment to the diversion of company resources for personal use. When these problems first began to surface, top officials in Sweden denied any wrongdoing before they even bothered to conduct an investigation."
Obstructionist Stance
The three components of triple bottom line are ___, ___, and ___.
Earn profits & create value for shareholders; protect the natural environment; enhance the general welfare of society
What does each letter in the CAGE framework stand for, and what is it used for?
C = Cultural Distance, A = Administrative Distance, G = Geographic Distance, E = Economic Distance; used for understanding the operating challenges facing international businesses because of national differences
This is a set of obligations that a corporation undertakes to protect and enhance society.
Corporate Social Responsibility (CSR)
What is the Product Life Cycle theory, and what are the three (3) stages?
Traces the evolution of international production, trade, and investment decisions; 1) New Product, 2) Maturing Product, and 3) Standardized Product
Ethics in a cross-cultural and international context is characterized by these three (3) behaviors.
1. Behavior of Organization toward Employees
2. Behavior of Employees toward Organization
3. Behavior of Organization & Employees toward other Economic Agents
The four (4) approaches to managing social responsibility across borders are _____, _____, _____, and _____.
Obstructionist, Defensive, Accommodative, and Proactive
Why is the Middle East called the "cradle of civilization?"
It's the origin of the world’s earliest farms, cities, governments, legal codes, and alphabets.
Economic philosophy based on the belief that a country’s wealth is measured by its holdings of gold and silver.
Merchantilism
Leontief's Paradox is based on which classical trade theory?
*BONUS: What are the two (2) observations of the theory?
Relative Factor Endowments or Hecsher-Ohlin Theory
*BONUS: 1) Factor endowments (or types of resources) vary among countries; 2) Goods differ according to the types of factors that are used to produce them.
What is a corporate social audit?
A formal and thorough analysis of a firm's social performance.
The two types of international investments are ____ and ____.
*BONUS: What is the difference between them?
Foreign Domestic Investment (FDI); Foreign Portfolio Investment (FPI)
*BONUS: FDI = active control over property, assets, or foreign companies; FPI = passive control over stocks, bonds, & other financial assets