- Information
- AI Chat
D270 Midterm Review Guide
Global Business Analysis (BUS-D270)
Indiana University Bloomington
Preview text
The D270 Comprehensive Midterm Review Guide Know this information and you fuck up the midterm 2 Chapter 1 Globalization Globalization The widening and deepening of interdependent relationships among people from different nations. International Business Any commercial transaction between 2 or more countries The Forces Behind the Current Extent of Globalization 1. Increase in and application of technology Improvements in transportation and communication networks 2. Liberalization of trade and resource movements 3. Development of services that support international business activities Banking, transportation, etc. 4. Growing consumer pressures Consumer demand for foreign products and on MNC behaviors 5. Increased global competition Companies companies that start out with a global focus because of their international experience 6. Changing political situations and government policies 7. Expanded cooperation WTO, IMF, NAFTA, EU, treaties, and agreements Positive aspects of globalization (as decided the class): 1. Specialization leads to lower costs and higher availability 2. Strengthening of political relationships 3. Spreading of culture 4. Lower 5. Sustainability Negative aspects of globalization (as decided the class): 1. Higher income inequality 2. Poor labor 3. Losing employment to outsourcing 4. Lower quality 5. Security issues 6. Environmental stress Three major negatives of globalization 1. Threats to national sovereignty Sovereignty a freedom to and without externally imposed restrictions Small countries feel threatened and overly dependent Cultural homogeneity threatens uniqueness 2. Environmental Stress Depletion of change 3. Growing income inequality and stress Greater division between rich and poor Threat of job loss leads to personal stress Factors affecting globalization 4 Merchandise exports and imports tangible products goods that are respectively sent out of and brought into a country. For most countries, the export and import of goods are the major sources of international revenues and expenditures. Service Exports and Imports international nonproduct sales and purchase o Travel, transportation, banking, insurance, and the use of assets such as trademarks, patents, and copyrights Turnkey Operation projects performed under contract and transferred to owners when operational Companies also receive fees from management contracts arrangements in which they provide personnel to perform management functions for another, such as management of theme parks in France and Japan Companies also receive royalties from licensing agreements where they allow others to use some assets such as trademarks, patents, copyrights, or expertise. Companies also receive royalties from franchising, a contract in which a company assists another on a continuous basis and allows use of its trademarks. Investments o Foreign Direct Investment (FDI) the investor takes a controlling interest in a foreign company o Joint Venture When two or more companies share ownership of an FDI, the operation is a joint venture o Portfolio Investment A noncontrolling financial interest in another entity. It consists of shares in or loans to a company (or country) in the form of bonds, bills, or notes purchased the investor. Types of International Organizations o Collaborative arrangements Denotes working together o Strategic alliance refers either to an agreement that is of critical importance to a partner or one that does not involve joint ownership o Multinational Enterprise (MNE) usually signifies any company with foreign direct investments UN uses the term transnational company (TNC) Institutions systems of established and prevalent social rules that structure social interactions o Language, money, law, systems of weights and measures, table manners, and firms are all institutions The Floating Subsidiary Dilemma When an international manager is pulled both their home country and host country (business and government), and has multiple conflicting demands 5 Chapter 2 The Cultural Environment Culture Norms based on attitudes, values, beliefs of a group of people The Determinants of Culture Religion, Political Philosophy, Economic Philosophy, Education, Language, Social Structure National culture is: o Acquired (not inherited) o Gradual (shaped slowly over time and not readily apparent) o Ethnocentric (insiders are at the center of the map) o Shared (insiders develop a similar way of seeing the world) o Hard to change (old habits die hard), Relative (neither right nor wrong just different) o Same process across groups (but with different norms and meanings) GlobeSmart Cultural Profile Dimensions: o Independence vs. Interdependent individual work vs. collaborative work o Egalitarianism vs. Status Everyone treated equally vs. behavior based on status o Risk vs. Certainty Speed over thoroughness vs. thoroughness over speed o Direct vs. Indirect Say what you mean and mean what you say vs. take care how something is said o Task vs. Relationship Move quickly to business vs. before business can take place Culture as Capital when Selling Abroad o Domestic Approach: Price Product Sale o Cross National Approach: Reasonable Price Reasonable Product Trust Sale The Platinum Rule: Do unto others as like done unto them Core Values An values that are so strong that they are not negotiable Peripheral Values Less dominant and more pliable values of an individual Someone who has internalized more than one national culture because of having dual or multiple citizenships, parents, or spouses from another country, or lived abroad at an impressionable age. Cultural Collision When contact among divergent cultures creates problems (DF) Culture People are primarily (RF) Culture Less compulsion to wrap things up, put dealings with friends ahead of business dealings Sources of Cultural Change 7 Uncertainty Avoidance A trait of being uncomfortable with ambiguity Future Orientation Denotes a willingness to delay gratification in order to reap more in the future Culture people generally regard only firsthand information that bears directly on the subject at hand as firsthand information Culture People tend to understand and regard direct information as pertinent Monochromic Culture People normally prefer to work sequentially, such as finishing transactions with one customer before dealing with another Polychromic Culture People are more comfortable when multitasking, such as simultaneously with multiple customers who need service. Idealism Cultures which prefer to establish overall principles before they try to resolve small issues Pragmatic Culture Cultures in which people focus more on details than on abstract principles Silent Language Messages exchanged through a host of nonspoken and nonwritten cues Culture Shock The frustration that results from having to absorb a vast array of new cultural cues and expectations Reverse Culture Shock When people return to their country, having become partial to aspects of life abroad that are not options back home. Polycentric Organization Believes it should act abroad like companies there. Ethnocentric Organization Reflects the conviction that own practices are superior to those of other countries. Geocentric Organization Integrates home and host country practices as well as introducing some entirely new ones. Chapter 3 The Political and Legal Environments Facing Business Political System the structural dimensions and power dynamics of the government that o 1) Specify institutions, organizations, and interest groups and o 2) Define the norms and rules that govern political activities 8 The Government should not interfere in business affairs (individualistic approach) Individualism Individual freedom, and personal independence are supreme o The direct opposite of collectivism o Central tenet: Individual economic and political freedoms are the ground rules on which society is based Collectivism Collective goals are more important than individual goals o Individual rights are sacrificed for the good of the majority o In the modern world collectivism is expressed through socialism or communism Political Ideology encapsulates the doctrine of political behavior and change. It outlines the procedures for converting ideas into actions. Political Freedom The degree to which fair and competitive elections occur, the extent to which individual and group freedoms are guaranteed, the legitimacy ascribed to rule of law, and the existence of freedom of expression Democracy Government is the people, exercised either directly or through elected representatives o Elected representatives are held accountable through safeguards o Types: representative, multiparty, parliamentary, social o Advantages: People prefer to have choice over personal and economic decisions People prefer freedom over control of their behavior o Disadvantages: Difficult for individuals and groups to achieve national agreement National policy can be slow and cumbersome to implement Totalitarianism One exercises absolute control over all spheres of human life (competing political parties are banned) o Types: Authoritarian, fascist, secularist, dictatorship, theocratic, tribal o Authoritarian parties often rely on shadowy politics, skewed elections, and nefarious secret agencies o Advantages: Can permit fast and efficient national policy formation because there is no need to debate decisions Enlightened and benevolent leaders can make good decisions in the national interest o Disadvantages: The needs of individuals and private enterprises are subordinate to those of the state Leaders can make poor decisions and may be corrupted power Comparative Measures of Freedom 10 Political and economic freedom should guide the system Rule of law, property rights, and human rights are sacred Trade policy can be used to advance political and human rights o Beijing Consensus: Champion of one party system approved officials protect the people and have their consent Authoritarian capitalism should guide the system Benevolent persuasion vs. iron fist to enforce action Economic development and trade are used to create growth and harmonious society separate from politics Do not judge other systems nor be judged Political Risk The risk that political decisions, events, or conditions change a business environment in ways that force investors to accept lower rates of return o Primary types of political risk, from most to least disruptive are: Systemic Political Risk influencing the macro business environment, affects the operation of all firms Procedural Political Risk Institutes impediments that constrain the flexibility of local operations Distributive Political Risk Gradually eliminates the local property rights of foreign companies Catastrophic Political Risk Devastates the business environment for all companies Legal System Specifies the rules that regulate behavior, the processes that enforce laws, and the procedures that resolve grievances Three components to legal systems: o Constitutional law to guarantee open and just political order o Criminal law to protect the social order specifying what conduct is criminal, and prescribing punishment to those who breach standards o Civil and commercial law to ensure the fairness and efficiency of business transactions stipulating private rights and specific remedies in order to regulate conduct between individuals organizations Legal Environment System Types o Common Law Developed judges through the decisions of courts Relies on tradition, precedent and usage o Civil Law Starts with systematic codification of laws. Judges find and apply established laws to current disputes (strictly). May not be easily modified. o Theocratic Law Based on the inspirations and instructions of religious teachings o Customary Law Based on norms and accepted behavior that gain legitimacy through practice Reflects the wisdom of daily experience 11 o Mixed System Applies when a country uses 2 or more system types cumulatively or interactively. Key Points of Legal Systems o Managers cannot expect home country legal system to apply abroad o How the court system works and role of judges will differ greatly o Any type of business agreement will be fraught with risk o Legal system will definitely impact and negotiations o On legal issues, managers should work hard to rely on good, reputable local service providers Rule of Man The ruler and the rule are synonymous, whether the ruler is an individual or single party. o The ruling party is not usually subject to checks and balances Rule of Law Governmental Authority is legitimately exercised in accordance with written and publically disclosed laws that have been appropriately adopted and enforced in an established procedure. o No individual is above the laws Operational and Strategic Concerns from the Political and Legal Environment o Starting a business o Entering and enforcing contracts o Local worker relations hiring and firing, health and safety standards, workweek o Closing down the business o Country of origin and local content o Marketplace behavior rules of operation and competition practices o Product safety o Legal jurisdiction o Intellectual property rights and protection clause a clause in contracts that stipulates whose laws, when necessary, govern dispute regulation o Used commonly in contracts Intellectual Property (IP) The creative ideas, innovative expertise, or intangible insights that create a competitive advantage for an individual, company, or country o Primary safeguard is an intellectual property right (IPR) grants the registered owners of inventions, literary and artistic works, and symbols, names, images, or designs the right to determine the legal authority who may use the property and under what circumstances
D270 Midterm Review Guide
Course: Global Business Analysis (BUS-D270)
University: Indiana University Bloomington
This is a preview
Access to all documents
Get Unlimited Downloads
Improve your grades
