Globalization
refers to the extent to which trade and investments, information, social and cultural ideas, and political cooperation flow between countries
Global Mindset
the ability of managers to appreciate and influence individuals, groups, organizations, and systems that represent different social, cultural, political, institutional, intellectual, and psychological characteristics (Cognitive Dimension, Psychological Di
Cognitive Deminsion
knowing about the global environment and global business, mentally understanding how cultures differ, and having the ability to interpret complex global changes
Psychological Dimension
emotional and affective aspect. This includes a liking for diverse ways of thinking and acting, a willingness to take risks, and the energy and self-confidence to deal with the unpredictable and uncertain
Social Dimension
the ability to behave in ways that build trusting relationships with people who are different from oneself
Multinational Corporation (MNC)
no precise definition; typically receives more than 25 percent of its total sales revenues from operations outside the parent's home country
Bottom of the Pyramid (BOP) Concept
proposes that corporations can alleviate poverty and other social ills, as well as make significant profits, by selling to the world's poorest people; refers to the more than 4 billion people who make up the lowest level of the world's economic "pyramid,
Market Entry Strategies
Exporting, licensing, and direct investing; alternative ways to sell products and services in foreign markets
Exporting
company maintains its production facilities within the home nation and transfers its products for sale in foreign countries
Global Outsourcing
also called offshoring, means engaging in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies
Licensing
corporation (the licensor) in one country makes certain resources available to companies in another country (the licensee); resources include technology, managerial skills, and patent or trademark rights
Franchising
occurs when a franchisee buys a complete package of materials and services, including equipment, products, product ingredients, trademark and trade name rights, managerial advice, and a standardized operating system
Direct Investing
the company is involved in managing the productive assets, which distinguishes it from other entry strategies that permit less managerial control
Joint Venture
company shares costs and risks with another firm, typically in the host country, to develop new products, build a manufacturing facility, or set up a sales and distribution network
Wholly Owned Foreign Affiliate
over which the company has complete control; may provide cost savings over exporting by shortening distribution channels and reducing storage and transportation costs
Greenfield Venture
means that a company builds a subsidiary from scratch in a foreign country
International Management
management of business operations conducted in more than one country (Economic, Legal-Political,Sociocultural)
Economic Development
differs widely among the countries and regions of the world; Countries can be categorized as either developing or developed
Infrastructure
physical facilities, such as highways, airports, utilities, and telephone lines, that support economic activities
Political Risk
defined as the risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments
Political Instability
includes riots, revolutions, civil disorders, and frequent changes in government
Ethnocentrism
refers to a natural tendency of people to regard their own culture as superior and to downgrade or dismiss other cultural values
Hofstede's Value Dimensions
Dutch scientist identified four dimensions of national value systems that influence organizational and employee working relationships;
Power distance, uncertainty avoidance, individualism, masculinity/femininity; later found fifth dimension of long/short
Power Distance
people accept inequality in power among institutions, organizations, and people; Low power distance means that people expect equality in power
Uncertainty Avoidance
members of a society feel uncomfortable with uncertainty and ambiguity and thus support beliefs that promise certainty and conformity; Low uncertainty avoidance means that people have great tolerance for the unstructured, the unclear, and the unpredictabl
Individualism
reflects a value for a loosely knit social framework in which individuals are expected to take care of themselves
Collectivism
preference for a tightly knit social framework in which individuals look after one another and organizations protect their members' interests
Masculinity
stands for preference for achievement, heroism, assertiveness, work centrality (with resultant high stress), and material success
Femininity
values of relationships, cooperation, group decision making, and quality of life
Long-term Orientation
found in China and other Asian countries, includes a greater concern for the future and highly values thrift and perseverance
Short-term Orientation
found in Russia and West Africa, is more concerned with the past and the present and places a high value on tradition and meeting social obligations
High-context Culture
people are sensitive to circumstances surrounding social exchanges. People use communication primarily to build personal social relationships; meaning is derived from context�setting, status, and nonverbal behavior�more than from explicit words; relations
Low-context Culture
people use communication primarily to exchange facts and information; meaning is derived primarily from words; business transactions are more important than building relationships and trust; and individual welfare and achievement are more important than t
Cultural Intelligence
person's ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses
GATT (General Agreement on Tariffs and Trade)
signed by 23 nations in 1947; set of rules to ensure nondiscrimination, clear procedures, the negotiation of disputes, and the participation of lesser-developed countries in international trade; boldly moved the world closer to global free trade by callin
EU (European Union)
EEC evolved into a 28 nation EU; added 10 new members from central and eastern Europe
NAFTA (North American Free Trade Agreement)
went into effect on January 1, 1994, merged the United States, Canada, and Mexico into a single market
A company in this stage may get resources (import) or sell products (export) in many different countries, but it is based primarily in one country.
International Stage
This strategy involves licensing an entire business to a person or organization in another country.
Franchising
This strategy involves purchasing a foreign company and operating it under the umbrella of the parent company in a different country.
Wholly owned foreign affiliate
This agreement, originally created in 1947, laid the foundation for WTO. It dramatically cut tariffs among participating countries, promoting trade between them.
GATT
This dimension measures whether people are comfortable with ambiguous situations.
Uncertainty Avoidance
People who are classified by Hofstede as having this national value tend to be modest and caring.
Femininity
In this type of society, business transactions are more important than building relationships and trust.
Low-context culture
A global outsourcing strategy is ____ risky than a joint venture strategy when entering the global market.
less
Jerzy has the idea the one way of expanding would be to purchase Leon's already profitable shoe store in Spain. Doing so will be costly, but it will give him an outlet for selling his shoes, and he will be able to maintain complete control over how the sh
Acquisition
In thinking about it, Jerzy realizes that he and Leon could create a shoe manufacturing facility in Spain. Doing so would certainly require a large outlay of money, but Jerzy thinks that with his expertise in shoe design and Leon's expertise in navigating
Joint Venture
Jerzy knows that he will have to expand his operations if he wants to produce enough shoes for an international market. He has heard that there are shoe dyers in the Ukraine who will work for much lower prices than dyers in his town charge. Jerzy is consi
Global Outsourcing
The designation of developing versus developed is based in part on a country's _____.
per capita income
One of the biggest advantages of doing business in less-developed countries is the:
Low cost of labor
Quality of life is important at Social Science Systems. All employees are eligible for child care, elder care or pet care services, and employees can take as many vacation days as they need, as long as they get their work done. Employees regularly coopera
High Femininity
In Allegra Systems, all of the managers wear suits and ties, while all of the employees wear casual dress. Managers are asked to speak first in every meeting, and employees rarely contradict what they say.
High Power Distance
Ivana's Images has a reputation for being the best in the business. Sure, Ivana is difficult to work with - you wouldn't want her on your team - but she can do layout and design faster and better than anyone else. Ivana likes to work by herself, and she i
High Individualism
The WTO was proposed during the Uruguay Round of the GATT.
True
According to NAFTA, the US must pay duties on all items that it ships to Mexico.
False
The goal of the EU is to integrate the markets of France, England, Spain and Russia.
False
One result of globalization is that countries, businesses, and people become more interdependent.
True
Vladimir is a manager at an automotive plant in the United States. His company has realized it needs to think globally since the whole world is a source of business and has struck a deal with an automotive supplier in Brazil to buy 15% of their parts at a
Globalization
Developing a global mindset requires managers to possess all these traits except:
Partial in their point of view
Benjamin has accepted a management position overseas in Japan. He is excited about this opportunity and has been learning about the Japanese culture and the complexities of how his current environment will change. Recently he has returned from a trip to J
He is using the cognitive and social dimensions.
Brazil has had slow economic growth over the last few years, but is still one of the fastest-growing emerging economies in the world.
True
Lenovo, the world's largest PC maker, is redefining the meaning of a Chinese company. They are blending the best of Eastern philosophy and culture with the best of Western business and management thinking. Lenovo's top managers now come from 14 different
He can employ people form non-Indian cultures to bring different perspective to his company.
A primary concern that Americans have about globalization is that:
they dislike the number of domestic jobs that have been offshored to other countries.
Nestl� SA gets most of its sales from outside its "home" country of Switzerland. Its 280,000 employees are spread all over the world and more than half of the company's managers are non-Swiss. Nestl� has hundreds of brands and production facilities or oth
They can become a geocentric company and favor no specific country.
What type of business arrangement can be the easiest and most cost-effective way for a company to enter the international arena?
Exporting
Oliver's doctor in Nevada has decided to run several tests on him. The test results are then sent to India to be read by a doctor there because it costs less to analyze them in India. Isabelle has decided to go into business for herself and has been able
Isabelle is using franchising, and Oliver is using offshoring.
When a U.S. company risks the loss of its assets in a foreign country due to actions by the host government in that country, this is called:
Political Risk
Bangladesh native Iqbal Quadir realized that connectivity equals productivity. He also knew his impoverished homeland was one of the least connected places on Earth. He collaborated with a fellow countryman to create Village Phone, which allows entreprene
The infrastructure is making economic development possible.
In a __________, people use communication primarily to exchange facts and information.
Low-context culture
Jiyaing is an HR manager at a research firm in China, and her company has decided to open a branch in the United States. Jiyaing has been assigned to assist the HR department in the new branch as they become familiar with the company's policies. Jiyaing w
Jiyaing needs to develop low-context culture.
NAFTA is a trade agreement between Canada, the United States, and Mexico. Which of the following is not one of the intended outcomes of this agreement?
Higher unemployment in the US
Raoul owns a dry goods store in Germany and is part of the European Union (EU) that uses the euro as currency. His business had steadily grown due in large part to the ability to easily export his products to other countries until the global recession beg
He can consider how to expand his company and how he would pay employees.
Where do KFC and Pizza Hut have the best culture and growth?
China