International Mngt Test One {Ch 1-4}

globalization

trend away from distinct national economic units and toward one huge global market.

globalization of markets

moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market.

globalization of production

trend by individual firms to disperse parts of the productive processes to different locations around the globe to take advantage of national differences in the cost and quality of factors of production.

factors of production

inputs into the productive process of a firm, including labor, management, land, capital, and technological know-how.

General Agreement on Tariffs and Trade (GATT)

International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and let to the WTO.

World Trade Organization (WTO)

Organization that succeeded the GATT as a result of the successful completion of the Uruguay Round of the GATT negotiations.

International Monetary Fund (IMF)

international institution set up to maintain order in the international monetary system.

World Bank

international institutional set up to promote general economic development in the world's poorer nations.

United Nations

An international organization made up of 191 countries and headquartered in NYC; formed in 1945 to promote peace, security, and cooperation.

International Trade

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Moore's Law

The power of microprocessor technology doubles and its the cost of production falls in half every 18 months.

Multinational Enterprise (MNE)

A firm that owns business operations in more than one country.

Political Economy

The political, economic, and legal system of a country.

Collectivism

A political system that emphasizes collective goals over individual goals.

Socialism

A political philosophy advocating substantial public involvement though government ownership, in the means of production and distribution.

communist

those who believe that socialism can only be achieved through revolution and totalitarian dictatorship.

social democrats

those committed to achieving socialism by democratic means.

privatization

the sale of state-owned enterprises to private investigators.

individualism

an emphasis on the importance of guaranteeing individual freedom and self expression.

democracy

policy system in which government is by the people, exercised either directly or through elected representatives.

totalitariaism

form of government in which one person or political party exercises absolute power and control over all human spheres of human life and prohibits opposing political parties.

representative deomcracy

political system in which citizens periodically elect individuals to represent them. If elective representatives fail to perform this job adequately, they will be voted out of office at the next election.

communist totalitarianism

a version of collectivism advocating that socialism can be achieved only through totalitarian dictatorship. (China, Vietnam, North Korea)

Theocratic totalitarianism

a political system in which political power is monopolized by a party, group, or individual that governs according to religious principals. (Middle East and Islam)

Tribal totalitarianism

a political system in which a party, group, or individual that represents the interests of a particular tribe (ethnic group) monopolizes political power. Still very prevalent in Africa.

right-wing totalitarianism

political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, frequently on the groups that it would lead to

market economy

an economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.
production is not planned by anyone. if demand for a product exceeds supply, prices rise, signaling producers to produce mor

command economy

an economy where the government plans the amounts of goods and services the company will produce, and the prices at which they will be sold.
objective of this type of an economy is for the government to allocate the resources for the "good of the society

mixed economy

Certain sectors of the economy are left to private ownership and free market mechanisms while other sectors are significant state ownership and government planning.
Governments also tend to take into state ownership troubled firms whose continued operatio

legal system

system of rules that regulate behavior and the processes by which the laws are enforced and through which redress of grievances is obtained.
a county's laws regulate business practices, define the manner in which business interactions are to executed, and

Common Law

A system of law based on tradition, precedent, and custom.Tradition refers to the country's legal history, precedent to cases that have come before the courts in the past, and custom to the ways in which laws are applied to certain situations.
There is a

civil law systems

based on a detailed set of laws organized into codes. Tends to be less adversarial because rather than interpreting tradition, precedent, and custom they are based on detailed legal code.
judges under this law have less flexibility than those under other

Theocratic Law System

Law based on religious teachings. (Islam)

public action

The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats.
This could be done through legal mechanisms like levying taxes, requiring expensive licenses or permits from property holders, ta

private action

the theft, piracy, blackmail, and the like by private individuals or groups.
although this is common in lots of countries, a weak legal system allows for a much higher level of criminal action in some than others. (Russia and the Mafia)

Foreign Corrupt Practices Law

US law regulating behavior regarding the conduct of international business in the taking of bribes and any other unethical behavior. Came about in the 1970's following revelations that companies had bribed gov't officials in foreign countries in an attemp

Organization for Economic Cooperation and Development {OECD}

An association of the world's 30 most powerful economies, adopted the Convention on Combating Bribery in Foreign Public Officials in International Business Transactions. The convention obliges member states to make he bribery of foreign public officials a

Intellectual Property

products of the mind, such as computer software, a screenplay, a music score, or the chemical formula for a new drug; can be protected by patents, copyrights, and trademarks.

Purchasing Power Parity

An adjustment in gross domestic product per capita to reflect differences in the cost of living.
Both this and GNI give a static picture of development.

Entrepreneurship

One can conclude that if a country's economy is to sustain long-run economic growth, the business environment must be conductive to the consistent production of the product and process innovations and to entrepreneurial activity.
Market economy creates gr

Ethical System

a set of moral principals or values that are used to guide and shape behavior.

Christianity

most widely practiced religion in the world.
monotheistic
Roman Catholic, Orthodox, Protestantism

Protestant Work Ethic

investing; face individuals significantly more freedom to develop their own relationship with God.

Islam

2nd largest religion in the world
Muhammad -- monotheistic
no distinction btw church and state.

Economics -- Islam

Muslim countries are most likely to engage in international business if it is consistent with Islamic ethics.
In certain countries where fundamentalism is on the rise, hostility toward Western-owned businesses are likely to increase.

Hinduism

Indian subcontinent--750 million adherents. Not linked to a specific person or deity.
reincarnation (rebirth into a different body); karma=the spiritual progression of each person's soul. This is affected by the way someone lives their life. You can achie

Buddhism

founded in India in 6th century BC by Siddhartha Gautama. He became Buddha, meaning the enlightened one.

Confucianism

Kung Fu-tzu more generally known as Confucius. This is the official ethical system of China. Unlike religions, Confucianism is not concerned with the supernatural and has little to say about the concept of a supreme being or an afterlife.
Loyalty to one's

Power Distance
1) high 2) low

Theory of how society deal with the fact that people are unequal in physical and intellectual capabilities.
1)found in countries where they let inequalities grow over time into inequalities of power and wealth.
2)cultures that try and play down the inequa

Individualism

in these societies the ties between individuals were loose and individual achievement and freedom were highly valued.

Collectivists

everything is for the collective good.

uncertainty avoidance

Extent to which different cultures socialize their members into accepting ambiguous situations and tolerating uncertainty.
1) Strong needs for rules and regulations; the manager was expected to issue clear instructions and subordinates' initiatives were t

know masculine vs feminine

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Foreign Corrupt Practices Act

a US law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.
act outlawed the paying of bribes to foreign government officials for new business.
amended to allow "facilitating payments"-

Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions

OECD convention that obliges member states to make the bribery of foreign public officials a criminal offense.
Excludes facilitating payments made to expedite routine gov't action from the convention.