BUSI 303 Final Ch 1-6

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World Trade Organization
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.
International Monetary Fund
Created in Bretton Woods, New Hampshire, established to maintain order in the international monetary system
World Bank
set up to promote economic development… more political
International trade
occurs when a firm exports goods or services to consumers in another country
occurs when a firm invests resources in business activities outside its home country
Moore’s Law
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
Multi-national Enterprise
any business that has productive activities in two or more countries
Stock of foreign direct investment
total cumulative value of FDI
as business activity transcended national borders… institutions were needed to help manage, regulate, and police the global marketplace. 
Political economy
used to stress that the political, economic, and legal systems of a country are interdependent
Modern Socialists
state ownership of the means of production, distribution, and exchange and fully compensated workers for their labor
Social Democrats
achieve socialism through democratic means
selling state owned enterprises to private investors
form of government in which one person or political party excercises absolute control over all spheres of human life and prohibits opposing political parties
Communist Totalitarianism
most common form of totalitarianism
Theocratic Totalitarianism
found in states where political power is monopolized by a party, group, or individual that governs according to religious principles
Tribal Totalitarianism
Political party that represents the interests of a particular tribe monopolizes power
Right- wing Totalitartianism
permits some individual economic freedom but restricts individual political freedom aka. Fascism
Market Economy
All productive activities are privately owned and production is determined by supply and demand
Command Economy
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.
Legal System
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
Common Law
Based on tradition, precedent, and custom
Civil Law System
Based on a detailed set of laws organized into codes
Theocratic law system
one in which the law is based on religious teachings
Contract Law
the body of law that governs contract enforcement
Common law contracts
very detailed contingencies due to the fact that common law tends to be ill specified
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
Violation of these right happen in two different ways
Private action- theft, piracy, blackmail by private individualsPublic action- when public officials such as politicians and government
Foreign Corruptions Act
Makes it illegal to bribe a foreign government official to obtain or maintain business over which that foreign official has authority
grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention
the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit
abstract ideas about what a group believes to be good, right, and desirable
designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products
World Intellectual property organization
signed a treaty to protect intellectual property
used as a yardstick to measure economic activity
Purchasing Power Parity
it allows for a more direct comparison of living standards in different countries…. Based in U.S.
involves removing legal restrictions to the free play of markets , the establishment of private enterprises, and the manner in which private enterprises operate
the social rules and guidelines that prescribe appropriate behavior in particular situations
Group of people who share a common set of values and norms
routine conventions of everyday life
norms that are seen as central to the functioning of a society and to its social life
First degree social structure
individual as opposed to the group
Second degree social structure
society is stratified into classes or castes
Social Strata
societies that are stratified on a hierarchical basis into social categories
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
Social Mobility
refers to the extent to which individuals can move out of the strata into which they are born
Caste System
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
Class System
a less rigid form of social stratification in which social mobility is possible
Class Consciousness
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.
Ethical systems
refer to a set of moral principles or values, that are used to guide and shape behavior
Power Distance
Dimension focused on how a society deals with the fact that peiople are unequal in physical and intellectual capabilities
Uncertainty avoidance
dimension measured the extent ot which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty
Sullivan Principles
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
Tragedy of commons
when individuals overuse a resource held in common by all, but owned by no one, resulting in its degradation
Foreign Corrupt Practices Act
Outlawed the paying of bribes to foreign government officials to gain business
Noblesse oblige
give something back to the societies that have made their success possible
Ethical dilemma
situations in which none of the available alternatives seems ethically acceptable
Cause of unethical behavior
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
Friedman doctrine
says company can increase profits if they stay within the boundaries of the law… but laws vary from country to country
Cultural relativism
ethics are nothing more than the reflection of a culture
Righteous Moralism
belief that a multinational’s home country standards of ethics are the appropriate ones for companies to follow in foreign countries
Naïve immoralism
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
Utilitarian approach to ethics
hold that the moral worth of actions or practices is determined by their consequences
Kantian Ethics
hold that people should be treated as ends and never purely as means to the ends of others
Rights theories
recognize that human beings have fundamental rights and privileges that transcend national boundaries and  cultures
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
Flaw of Mercantilism
it viewed trade as a zero- sum game
Adam Smith
wrote wealth of nations to attack mercantilism
Absolute advantage
the production of a product when it is more efficient that nay other country in producing it
Comparative advantage
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  
Factor Endowments
Refers to the extent to which a country is endowed with such resources as land, labor, and capital
Heckscher-Ohlin Theory
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
Product-Life Cycle theory
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
Specific Tariffs
levied as a fixed charge for each unit of good imported
levied as a proportion of the value of an imported good
government payment to a domestic producer
Import quota
direct restriction on some good that may be imported into the country
Tariff rate quota
lower tariff rate is applied to imports within the quota
Voluntary export restraint
quota on trade imposed by exporting country typically at the request of the importing government
Quota rent
extra profit producers make when supplies are artificially limited by an import quota
Primary reason for government intervention
special interests
Infant industry argument
government should support new industries until they have grown strong enough to meet international competition
Strategic trade policy
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
having high levels of subsidies to protect domestic industries