Introduction to International Business Study Guide Midterm
Introduction to International Business Study Guide Midterm INBS 250
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This 4 page Study Guide was uploaded by Maria Notetaker on Wednesday September 28, 2016. The Study Guide belongs to INBS 250 at Montclair State University taught by Nahra in Spring 2015. Since its upload, it has received 15 views. For similar materials see Introduction to International Business in International Business at Montclair State University.
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Date Created: 09/28/16
MIDTERM Friday, March 6, 2015 11:31 AM Political system the system of government in a nation; role that is being played in a country for the marketplace Individualistic [concept] o System is built on basis that people want democratic system that gives people freedoms and rights to sell goods and services in the marketplace to grow jobs and economy o An individual should have freedom in his own economic and political pursuits o Competition was going to be the main factor in eliminating fading companies (Aristotle) o Democratic systems freedom of opinion, expression & press, freedom to organize, free elections, etc. [on ppt] Collectivist [concept] o Society does not believe in the importance of the individual; expect individual to give up their rights/privileges so society as a whole can benefit (gov. controls certain entities and so do private sectors) o Stresses the primacy of collective goals over individual goals o Today, collectivism is equated with socialists (Karl Marx) / communism ModernDay Socialism Communism socialism can only be achieved through violent revolution and totalitarian dictatorship (form of gov. where one person/party exercises absolute control of human life and choose how resources will be allocated) [4 types of totalitarianism] Social democrats socialism is achieved through democratic means Economical systems Market Economies democratic system ; private sectors own all resources ; allows individuals and companies to own resources in the country, produce goods and services and sell them in the marketplace. Supply and demand will determine the prices; marketplace decides who survives and who fails o Role of gov. is only to protect consumers by making agencies (ex. FDA, EDC, etc.) Command economies tied to collective belief system ; gov. owns all resources, they decide what will be produced, wages, etc. ; not interested in competition or being efficient Mixed economies combination of market and command economies ; gov. may select certain industries and decide to control and run them (ex. Japan). Factors Affecting the Communication Process o Spoken language o Written language o Silent language Elements of Culture Power distance: members accept the unequal distribution of power among individuals o In the US, the different layers all share the power in making decisions. o Lower score=lower levels can make decisions and implement decisions/sales o Higher score= lower levels need to go to boss to implement decisions/sales Individualism/Collectivism o Individualism: desire for personal freedom; people look after themselves and immediate family Higher IDV score = more individual o Collectivism: dependence on organization and a need for safe environment; people belong to groups that look after them in exchange for loyalty Lower IDV score = more collective Uncertainty Avoidance: how people deal with risks and making decisions based on unknown o Less likely they will take a chance unless they know the outcome o The higher the UAI score, the less likely they are to take risks (for ex: Japan) Cultural values and consumer behavior = Masculinity vs femininity: degree to which dominant values in a society emphasize assertiveness o Masculinity achievement of organizational rewards o Femininity spending time with family, taking time off Why is free trade beneficial? Free trade: gov. opens up borders and allows importing/exporting growth in the economy more export than import to have a surplus. When we export, we bring in cash to economy (will have a deficit). When we import, we are taking cash out of the economy How do govs intervene in markets? Tariffs: taxes levied on imports that raise the cost of imported products (the friendlier we are with a country, the lower their tariffs) o Specific tariffs: fixed charge for each product o Ad valorem tariffs: percentage we add on a specific product Subsidies: money gov. gives back to specific industries so they can sell the product at a cheaper price (form taxpayers) o Main ex: farming Import Quotas: limit of number of units you can import during the period of one year o Tariff rate quotas o Quota rent Voluntary Export Restraints: "try to limit yourself to that amount we gave you, if you go over the quota, we stop your shipments" Local content requirements: demand that some specific fraction of a good be produced domestically; have to buy raw materials from local market so it will create jobs and industries Administrative Policies: rules and regulations gov. come up with to restrict access to market (to make it easy or complicated for companies to do business) o Policies hurt consumers by limiting choice Antidumping policies (countervailing duties): cannot sell product less than manufacturing or cost of production o Dumping= selling goods in a foreign market below costs of production or selling goods in a foreign market below their "fair" market value Why do govs. intervene in markets? To protect jobs To protect important industries that are related to the security of the country o Ex: steel: US is keeping it because it would impact the wellbeing of the country; don't want other countries to gain technology that will harm us Retaliation for unfair foreign competition: when govs take or threaten to take specific actions, other countries may remove trade barriers; if threatened gov does not back down, tensions can escalate and new trade barriers can be enacted To protect consumers from "dangerous" products: limit "unsafe" products To further the goals of foreign policy: good relationships instead of bad To protect human rights of individuals through trade policy actions * To protect the environment * *common in industrial countries, not developing countries 3 types of regional trade agreements; Free trade area: (1) eliminate tariffs amongst members only [over a period of years to give companies a time to adapt] (2) eliminate trade barriers Customs unions: 2 or more countries unify their customs systems [2 or more countries will have the same import tariffs] Common market: allow free flow of capital (you can move your money into another country without any restrictions) and free flow of labor
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