BUS 206 Midterm Study Guide
BUS 206 Midterm Study Guide BUS 206
Popular in Principles of International Business
Popular in Business
verified elite notetaker
Test Prep (MCAT, SAT...)
verified elite notetaker
One Day of Notes
verified elite notetaker
verified elite notetaker
One Day of Notes
verified elite notetaker
verified elite notetaker
This 7 page Study Guide was uploaded by agreto57 on Monday February 29, 2016. The Study Guide belongs to BUS 206 at University of Miami taught by Chei Hwee CHUA in Summer 2015. Since its upload, it has received 228 views. For similar materials see Principles of International Business in Business at University of Miami.
Reviews for BUS 206 Midterm Study Guide
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 02/29/16
BUS 206 Part 2 (Written) I. Week 1 Globalization: is the ongoing process that deepens and broadens the relationships and interdependence among countries. This term sometimes refers to the integration of world economies through the reduction of barriers to the movement of trade, capital, technology, and people. International Business: is a mechanism to bring about globalization. It includes all business transactions, private and governmental, including sales, investments, and transportation that involve two or mote countries. More opportunity to be more competitive and profitable IB operates differently then domestic business Expand sales Acquire resources Diversify or reduce risk Factors contributing to rapid growth of IB 1. Increase in and expansion of technology Reducing costs and speeding up transactions Advances in communication and transportation 2. Liberalization of crossboarder trade and resource movements Reduced restriction Greater variety of goods for citizens Competition spurs domestic producers to become more efficient They hope to induce other countries to lower their barriers 3. Development of services that support international business 4. Growing consumer pressures Consumers are more informed about foreign products and services an are better able to afford more luxury items. More able to comparison shop and find better deals 5. Increased Global competition Companies continually look abroad to increase market share and reduce costs. Clustering: which helps them to become quickly aware of foreign opportunity and to gain easier access to the resources needed to move internationally 6. Changing Political Situations Governments are spending more resources on the improvement of infrastructure which increases the ease of transporting goods and resources 7. Expanded Crossnational corporations Reciprocal advantages To attack problems jointly that one country acting alone cannot solve To deal with area of concern that lie outside the territory of any nation Arguments against Globalization Creates winners and losers: creating a greater supply of lowskilled, Lowcost labor Threatens national sovereignty: many countries fear multilateral agreements will diminish its sovereignty and freedom It can dilute local culture Makes corporate monitoring and holding companies accountable more difficult It can create environmental stress II. Week 2 Political Risks: The risk that political decisions or events in a country negatively affect the profitability or sustainability n an investment o Political risk that MNC’s may be exposed to: 1) Systematic: Risks that affect all firms in that particular country 2) Procedural: Reflects the costs of getting things done because of such problems as government corruption, labor disputes, and/or a partisan judicial system (Each day, people, products, and funds move from point to point in the global market. Each move creates a procedural transaction between the units involved, whether units of a company or units of a country. Political actions sometimes create frictions that interfere with these transactions. Procedural risk reflects the costs of getting things done because of such problems as government corruption, labor disputes, and/or a partisan judicial system) 3) Distribution: Reflects revisions in such items as tax codes, regulatory structure, and monetary policy imposed by governments in order to capture greater benefits from the activities of foreign firms (— As foreign investors generate more profits in the local economy, the host country may begin to question the distributive justice of the rewards of operating in its market. In other words, as the business grows more successful, officials may question whether they are receiving their “fair” share of the growing profits. Distributive risk reflects revisions in such items as tax codes, regulatory structure, and monetary policy imposed by governments in order to capture greater benefits from the activities of foreign firms. ) 4) Catastrophic: include those random political developments that adversely affect the operations of all firms in a country (includes random political developments that adversely affect the operations of every company in a country. Typically, it arises from specific flash points, such as ethnic discord, illegal regime change, civil disorder, or insurrection. It disrupts the business environment in a way that affects every firm in the country. If such disruptions spiral out of control, they devastate companies and nations.) o Four ways to manage political risk 1) Avoidance: avoid investment or with drawl investment from a risky location ( 2) Adaptation: accommodate the risk (equity sharing, participative management localization, and development assistance ( Adaptation is accommodating the risk. Use adaptation when the risk in a given country is relatively low or when a highrisk environment is worth the potential returns. There are four primary forms of adaptation. Equity sharing is sharing equity with a local partner, such as through a joint venture. Participative management means actively involving nationals. Localization is transforming the subsidiary into a national firm. Development assistance refers to involvement in host country infrastructure development) 3) Dependency: Keep the subsidy and host nation dependent on the parent film (input control, market control, Position control, and staged contribution) (Dependency is keeping the subsidiary and host nation dependent on the parent firm. There are four approaches to dependency. Input control involves keeping control of raw materials, technology, and know how. Market control is keeping control of the means of distribution. Position control is keeping control of key management positions. Staged contribution involves successively increasing contributions to the host nation.) 4) Hedging: Minimizing losses (use political risk insurance and/or local debt financing) ( Hedging is minimizing losses, such as through the use of political risk insurance and/or local debt financing. Local debt financing is borrowing money from the host nation.) III. Week 3 o Four important tasks that negotiations need to do when preparing for negotiation 1) Identify interests and priorities Opens up a range of options Increases the probability of finding common ground between parties (facilitates agreement) Leads to greater satisfaction with negotiation process and outcome 2) Identify resources and capabilities Allows you to know exactly what you have to offer to your counterpart Reduces the chance that you may miss out on offering something that your counterpart desires and would be wiling to give you attractive concessions in return Benefits of identifying your counterparts resources and capabilities Allows you to know if what your counterpart has is what you want 3) Identify Objects Motivate you to perform better (results) Provide instant measure during active negotiating Protect you from making too many concessions (and limit counterparts flexibility) but easily lead to competitive , positional bargaining and to atomizing rather than bonding the issues 5) Identify your “BATNA” (Best Alternative To a Negotiation Agreement) A good batna strengthens your negotiation power Batnas tell you when to accept and when to reject an agreement o Quality of communication Experience (QCE) in negotiation 1) Strive for CLARITY in communication check for shared definition and understanding of the situation clarify terms and meaning use active listening express your own ideas clearly When there is more clarity 2) be RESPONSIVE to others overtures respond to questions and requests quickly Reciprocate and adapt to the counterparts behavioral patters and norms Engage in tradeoffs with counterpart Express empathy with the emotions expressed by counterparts and respond to concerns 3) Enhance the COMFORT level of the negotiation Friendly and noncontentious atmosphere and interaction oWhat can one do during the negotiation to achieve better negotiation outcomes? Game plan 1: Distributive game plan (competitive) Goal: maximize own share of pie Typical game: demands decline rapidly, then slowly concessions are reciprocated Strategy: be “tough” Make an extreme initial offer Do not concede first Argue forcefully for own positions Conceal information Make few concessions, exaggerate their value Typical Game plan 2: Integrative game plan (collaborative) Goal: maximize size of pie and joint gain Typical game: Exchanges of comparative information noncontentious actions Strategy: Be firm but conciliatory Set realistic high aspirations Share information (develop trust) Communicate clearly Create opinions meeting both parties interests If necessary, lower aspirations then continue search o How and when does ones breadth and Depth of MCE’s influence one negotiation outcome? ? IV. Week 4 o Culture shock: A state of disorientation and anxiety about not knowing how to behave in unfamiliar culture o Four Stages: a. Honeymoon stage – The stage when the expatriate has positive attitude and expectations, is excited, and has tourist feeling. This may last up to several weeks b. Irritation and Hostility – The crisis stage where cultural differences result in problems at work, at home, and in daily life. May feel homesick and disoriented and may not lash out at everyone. Many people do not make it past this stage c. Gradual Adjustment – Recovery period in which the expatriate learns to understand and predict patterns of behavior, uses the language, and deals with daily activity, family starts to accept new life d. Biculturalism – Stage in which the expatriate grows to accept and appreciate local people and practices, and is able to function effectively in the two cultures. Many expatriates do not get the fourth stage. They operate acceptable at the third stage o Cultural Adaptation Curve V. Week 5 o Hofstede’s cultural value dimensions framework: a. Power Distance: High vs. Low – The extent to which the less powerful members of a society accept and expect that power is distributed unequally High Power Inequality is fundamentally good Everyone has a place; some are high, some are low Most people should depend on a leader The powerful are entitled to privileges The powerful should not hide the power (See chart on slide 13) b. Individuals/Collectivism: Individualism – A preference for a looselyknit social framework in which individuals are expected to take care of themselves and their immediate families only Individual achievement is ideal People need not to be emotionally dependent on organizations or groups Collectivism: A preference for a tightlyknit framework in society in which individuals can expect their relatives or family members of a particular in group to look after them in exchange for unquestioning loyalty A society’s position on the dimension is reflected in whether peoples selfimage is defined in terms of “I” or “we” Ones identity is based on groups membership Group decision making is best (See chart on Slide 15) c. Uncertainty Avoidance: High vs. Low – The extent to which the members of a society feel uncomfortable with uncertainty and ambiguity Conflict should be avoided Deviant people and ideas should not be tolerated Laws are very important and should be followed Experts and authorities are usually correct Consensus is important (See chart on slide 17) d. Masculinity/Femininity High Masculinity Gender roles should be clearly distinguished Men are assertive and dominant Machismo or exaggerated maleness in men is good People – especially men – should be decisive Work takes priority over other duties, such as family Advancement, success and money are important (see chart on slide 19) e. Confucian Dynamism Long term oriented Patience – e.g. People are more willing to delay gratification by investing Long term relationships Strong social norms Short Term Oriented Making a “quick buck” Change Opportunism (see chart on slide 21) o Leadership style and basis of employees evaluation/Promotion that are suitable for cultures based on all 5 dimensions (high and low) See charts on PowerPoint VI. Week 6 o Non – Verbal Communication Body motions (kinesics): The way people communicate via body movement – e.g. posture, gestures, and facial expressions Touching (Haptics): Hugging and kissing on he cheeks, touching while conversing with each other. E.g. Asian cultures usually emphasize no touching behavior, while Latin American cultures tend to emphasize the importance of touching Use of Space (Proxemics): The way people use physical space to convey a meaning. Slide 16 a. Intimate distance is used for very confidential communication b. Personal distance is used for talking with family and close friends c. Social distance is used to handle most business transactions d. Public distance is used when calling across the room or giving talk to a group Time (Chronomics): The way time is used in a culture. At the extremes cultures can be – Monochromatic: The things are done in linear fashion Schedules matter Time is something that is controlled and should be used wisely E.g. USA, UK, Europe, Canada, Australia Polychromic: People tend to do several things at the same time Personal involvement more important than getting things done on time Keeping t schedule is less important than personal relation E.g. Latin America, Middle East
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'