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World Trade Organization |
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like GATT, primary responsibility is policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. |
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International Monetary Fund |
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Created in Bretton Woods, New Hampshire, established to maintain order in the international monetary system |
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World Bank |
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set up to promote economic development… more political |
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International trade |
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occurs when a firm exports goods or services to consumers in another country |
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FDI |
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occurs when a firm invests resources in business activities outside its home country |
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Moore’s Law |
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predicts that the power of microprocessor technology doubles and its cost of production falls in half ever 18 months...cost of global communications plummets which lowers the costs of coordinating and controlling a global organization |
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Multi-national Enterprise |
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any business that has productive activities in two or more countries |
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Stock of foreign direct investment |
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total cumulative value of FDI |
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GATT |
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as business activity transcended national borders… institutions were needed to help manage, regulate, and police the global marketplace. |
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Political economy |
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used to stress that the political, economic, and legal systems of a country are interdependent |
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Modern Socialists |
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state ownership of the means of production, distribution, and exchange and fully compensated workers for their labor |
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Social Democrats |
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achieve socialism through democratic means |
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Privatization |
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selling state owned enterprises to private investors |
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Totalitarianism |
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form of government in which one person or political party excercises absolute control over all spheres of human life and prohibits opposing political parties |
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Communist Totalitarianism |
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most common form of totalitarianism |
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Theocratic Totalitarianism |
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found in states where political power is monopolized by a party, group, or individual that governs according to religious principles |
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Tribal Totalitarianism |
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Political party that represents the interests of a particular tribe monopolizes power |
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Right- wing Totalitartianism |
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permits some individual economic freedom but restricts individual political freedom aka. Fascism |
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Market Economy |
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All productive activities are privately owned and production is determined by supply and demand |
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Command Economy |
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Government plans the goods and services that a country produces, the quantity in which they are produce, and the prices at which they are sold. |
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Legal System |
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a country refers to the rules, or laws that regulate behavior along with the processes by which the laws are enforced and through which redress for grievances is obtained |
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Common Law |
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Based on tradition, precedent, and custom |
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Civil Law System |
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Based on a detailed set of laws organized into codes |
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Theocratic law system |
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one in which the law is based on religious teachings |
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Contract Law |
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the body of law that governs contract enforcement |
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Common law contracts |
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very detailed contingencies due to the fact that common law tends to be ill specified |
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CGIS |
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established uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in differing nations |
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Violation of these right happen in two different ways |
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Private action- theft, piracy, blackmail by private individualsPublic action- when public officials such as politicians and government |
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Foreign Corruptions Act |
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Makes it illegal to bribe a foreign government official to obtain or maintain business over which that foreign official has authority |
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Patent |
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grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention |
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Copyrights |
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the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit |
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Values |
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abstract ideas about what a group believes to be good, right, and desirable |
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Trademarks |
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designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products |
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World Intellectual property organization |
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signed a treaty to protect intellectual property |
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GNI |
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used as a yardstick to measure economic activity |
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Purchasing Power Parity |
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it allows for a more direct comparison of living standards in different countries…. Based in U.S. |
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Deregulation |
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involves removing legal restrictions to the free play of markets , the establishment of private enterprises, and the manner in which private enterprises operate |
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Norms |
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the social rules and guidelines that prescribe appropriate behavior in particular situations |
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Society |
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Group of people who share a common set of values and norms |
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Folkways |
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routine conventions of everyday life |
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Mores |
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norms that are seen as central to the functioning of a society and to its social life |
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First degree social structure |
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individual as opposed to the group |
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Second degree social structure |
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society is stratified into classes or castes |
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Social Strata |
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societies that are stratified on a hierarchical basis into social categories |
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Group |
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an association of two or more individuals who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other’s behavior |
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Social Mobility |
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refers to the extent to which individuals can move out of the strata into which they are born |
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Caste System |
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is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individuals life |
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Class System |
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a less rigid form of social stratification in which social mobility is possible |
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Class Consciousness |
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refers to a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with members of other classes. |
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Ethical systems |
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refer to a set of moral principles or values, that are used to guide and shape behavior |
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Power Distance |
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Dimension focused on how a society deals with the fact that peiople are unequal in physical and intellectual capabilities |
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Uncertainty avoidance |
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dimension measured the extent ot which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty |
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Sullivan Principles |
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Businesses from parent companies operating in foreign countries should do everything they can so that their employees have human rights within their place of employment |
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Tragedy of commons |
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when individuals overuse a resource held in common by all, but owned by no one, resulting in its degradation |
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Foreign Corrupt Practices Act |
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Outlawed the paying of bribes to foreign government officials to gain business |
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Noblesse oblige |
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give something back to the societies that have made their success possible |
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Ethical dilemma |
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situations in which none of the available alternatives seems ethically acceptable |
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Cause of unethical behavior |
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pressure from the parent company to meet unrealistic goals that managers can attain only by cutting corners or acting in an unethical manner
Straw Men for business ethicsFriedman doctrine |
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Friedman doctrine |
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says company can increase profits if they stay within the boundaries of the law… but laws vary from country to country |
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Cultural relativism |
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ethics are nothing more than the reflection of a culture |
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Righteous Moralism |
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belief that a multinational’s home country standards of ethics are the appropriate ones for companies to follow in foreign countries |
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Naïve immoralism |
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Belief that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either |
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Utilitarian approach to ethics |
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hold that the moral worth of actions or practices is determined by their consequences |
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Kantian Ethics |
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hold that people should be treated as ends and never purely as means to the ends of others |
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Rights theories |
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recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures |
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Mercantilism |
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the main tenet of mercantilism was that it was in a country’s best interests to maintain a trade surplus, to export more than it imported |
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Flaw of Mercantilism |
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it viewed trade as a zero- sum game |
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Adam Smith |
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wrote wealth of nations to attack mercantilism |
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Absolute advantage |
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the production of a product when it is more efficient that nay other country in producing it |
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Comparative advantage |
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David Ricardo states it makes sense for a country to specialize in the production of those goods that it produces most efficiently and to buy the goods that it produces less efficiently |
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Factor Endowments |
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Refers to the extent to which a country is endowed with such resources as land, labor, and capital |
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Heckscher-Ohlin Theory |
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predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce |
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Product-Life Cycle theory |
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by Raymond Vernon, based on the observation that for most of the twentieth century a large proportion of the world’s new products has been developed by U.S. firms and sold first in the U.S. Market |
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Specific Tariffs |
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levied as a fixed charge for each unit of good imported |
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ad-velorum |
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levied as a proportion of the value of an imported good |
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Subsidy |
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government payment to a domestic producer |
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Import quota |
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direct restriction on some good that may be imported into the country |
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Tariff rate quota |
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lower tariff rate is applied to imports within the quota |
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Voluntary export restraint |
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quota on trade imposed by exporting country typically at the request of the importing government |
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Quota rent |
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extra profit producers make when supplies are artificially limited by an import quota |
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Primary reason for government intervention |
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special interests |
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Infant industry argument |
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government should support new industries until they have grown strong enough to meet international competition |
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Strategic trade policy |
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government can raise national income if it can somehow ensure that the firm or firms that gain first-mover advantages in an industry are domestic rather than foreign enterprises |
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Protectionism |
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having high levels of subsidies to protect domestic industries |
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