UIOWA MANAGEMENT EXAM 2
Forces for Internationalization - ANSWER Globalization - the tendency of firms to
expand sales, manufacturing, and ownership to new markets in other countries
-modern communication technology
-air travel
-corporate globalism
Pros and Cons of globalization - ANSWER Pros:
-productivity grows
-living standards increase
-inflation is less likely (cheap)
-innovation (new ideas)
-access to new markets and new customers
-export jobs pay more
Cons:
-Americans lose jobs
-fear of losing jobs
-competition for american companies
-pay cut
-service and white collar job in danger
Internationalization Process - 5 big options - ANSWER Stage 1: Exporting - selling
domestically produced products to customers in foreign countries
,Stage 2: Cooperative contracts - an agreement in which a foreign business owner
pays a company a fee for the right to conduct that business in his or her country
Stage 3: Strategic alliances - an agreement in which companies combine key
resources, costs, risks, technology, and people
Stage 4: Wholly owned affiliates - foreign offices, facilities, and manufacturing
plants that are 100% owned by the parent company
New Global Ventures - new companies that are founded with an active global
strategy and have sales, employees, and financing in different countries
2 types of cooperative contracts - ANSWER Licensing - an agreement in which a
domestic company, the licencor, receives royalty payments for allowing another
company, the licensee to produce the licencor's product, sell its service, or use its
brand name in a specified foreign market
Franchising - a collection of networked firms in which the manufacturer or
marketer of a product or service, the franchiser, licenses the entire business to
another person or organization, the franchisee
Problem at Mustang Jeans - ANSWER deals with international business, does
business the "american way", which turns off foreign business leaders
-the cultural imperative
-culture barriers and norms prevented american man and Japanese man from doing
business together
High context cultures - ANSWER Cultures in which nonverbal and situational
messages convey meaning
-relationship more important than terms
Low context cultures - ANSWER Cultures in which words convey primary
meaning
-nonverbal messages are secondary
-the terms of the deal are more important than building a business relationship
Hofstede's dimensions - ANSWER -long-term vs. short-term orientation
,-uncertainty avoidance
-masculinity vs. femininity
-individualism vs. collectivism
-power distance
long-term vs. short-term orientation - ANSWER addresses whether cultures are
oriented to the present and seek immediate gratification or to the future and defer
gratification
uncertainty avoidance - ANSWER the degree to which people in a country are
uncomfortable with unstructured, ambiguous, unpredictable situations
masculinity vs. femininity - ANSWER the difference between highly assertive and
highly nurturing cultures
individualism vs. collectivism - ANSWER the degree to which societies believe
that individuals should be self-sufficient
power distance - ANSWER the extent to which people in a country accept that
power is unequally distributed in organizations and society
indulgence vs. restraint - ANSWER addresses the degree to which a society allows
relatively free gratification of basic drives related to enjoying life and having fun
vs. strict social norms that regulate and suppress gratification of needs and wants
Tariff - ANSWER a direct tax on imported goods; increase cost of imported goods
relative to that of domestic goods
Non-tariff trade barriers - ANSWER non tax methods of increasing the cost or
reducing volume of imported goods; 5 types:
1. quotas - a limit on the number or volume of imported products
2. voluntary export restraints - imposed limits on number or volume of products
exported to a particular country; exporting country imposes
, 3. government import standard - a standard ostensibly established to protect the
health and safety of citizens but in reality is often used to restraint imports
4. subsidies - government loans, grants and tax deferments given to domestic
companies to protect them from foreign competition
5. customs classification - assigned to imported products by government officials
that affects the size of the tariff and the imposition of import quotas
why do managers need to know about tariffs and trade? - ANSWER free trade
agreements create new business opportunities, they also intensify competition and
addressing that competition is the managers job
Characteristics of attractive foreign business climate - ANSWER access to a
growing market; 2 factors:
-purchasing power (high is favorable) - relative cost of a standard set of goods and
services in different countries
-foreign competitors (determined by the number and quality of companies that
already compete in foreign market)
preparing for an international assignment - ANSWER language and cross-cultural
training; 3 methods:
1. documentary training - focuses on identifying specific critical differences
between cultures
2. cultural simulations - practice adapting to cultural differences
3. field experiences - places trainees in ethnic neighborhood for 3-4 hours to talk to
residents about cultural differences
what is a mongrel and why is it a good thing (zachary article) - ANSWER a person
confident in multiple cultures
effective missions - ANSWER Briefly define the organization's purpose for
stakeholders in a way that is enduring, inspirational, clear, and consistent with
Forces for Internationalization - ANSWER Globalization - the tendency of firms to
expand sales, manufacturing, and ownership to new markets in other countries
-modern communication technology
-air travel
-corporate globalism
Pros and Cons of globalization - ANSWER Pros:
-productivity grows
-living standards increase
-inflation is less likely (cheap)
-innovation (new ideas)
-access to new markets and new customers
-export jobs pay more
Cons:
-Americans lose jobs
-fear of losing jobs
-competition for american companies
-pay cut
-service and white collar job in danger
Internationalization Process - 5 big options - ANSWER Stage 1: Exporting - selling
domestically produced products to customers in foreign countries
,Stage 2: Cooperative contracts - an agreement in which a foreign business owner
pays a company a fee for the right to conduct that business in his or her country
Stage 3: Strategic alliances - an agreement in which companies combine key
resources, costs, risks, technology, and people
Stage 4: Wholly owned affiliates - foreign offices, facilities, and manufacturing
plants that are 100% owned by the parent company
New Global Ventures - new companies that are founded with an active global
strategy and have sales, employees, and financing in different countries
2 types of cooperative contracts - ANSWER Licensing - an agreement in which a
domestic company, the licencor, receives royalty payments for allowing another
company, the licensee to produce the licencor's product, sell its service, or use its
brand name in a specified foreign market
Franchising - a collection of networked firms in which the manufacturer or
marketer of a product or service, the franchiser, licenses the entire business to
another person or organization, the franchisee
Problem at Mustang Jeans - ANSWER deals with international business, does
business the "american way", which turns off foreign business leaders
-the cultural imperative
-culture barriers and norms prevented american man and Japanese man from doing
business together
High context cultures - ANSWER Cultures in which nonverbal and situational
messages convey meaning
-relationship more important than terms
Low context cultures - ANSWER Cultures in which words convey primary
meaning
-nonverbal messages are secondary
-the terms of the deal are more important than building a business relationship
Hofstede's dimensions - ANSWER -long-term vs. short-term orientation
,-uncertainty avoidance
-masculinity vs. femininity
-individualism vs. collectivism
-power distance
long-term vs. short-term orientation - ANSWER addresses whether cultures are
oriented to the present and seek immediate gratification or to the future and defer
gratification
uncertainty avoidance - ANSWER the degree to which people in a country are
uncomfortable with unstructured, ambiguous, unpredictable situations
masculinity vs. femininity - ANSWER the difference between highly assertive and
highly nurturing cultures
individualism vs. collectivism - ANSWER the degree to which societies believe
that individuals should be self-sufficient
power distance - ANSWER the extent to which people in a country accept that
power is unequally distributed in organizations and society
indulgence vs. restraint - ANSWER addresses the degree to which a society allows
relatively free gratification of basic drives related to enjoying life and having fun
vs. strict social norms that regulate and suppress gratification of needs and wants
Tariff - ANSWER a direct tax on imported goods; increase cost of imported goods
relative to that of domestic goods
Non-tariff trade barriers - ANSWER non tax methods of increasing the cost or
reducing volume of imported goods; 5 types:
1. quotas - a limit on the number or volume of imported products
2. voluntary export restraints - imposed limits on number or volume of products
exported to a particular country; exporting country imposes
, 3. government import standard - a standard ostensibly established to protect the
health and safety of citizens but in reality is often used to restraint imports
4. subsidies - government loans, grants and tax deferments given to domestic
companies to protect them from foreign competition
5. customs classification - assigned to imported products by government officials
that affects the size of the tariff and the imposition of import quotas
why do managers need to know about tariffs and trade? - ANSWER free trade
agreements create new business opportunities, they also intensify competition and
addressing that competition is the managers job
Characteristics of attractive foreign business climate - ANSWER access to a
growing market; 2 factors:
-purchasing power (high is favorable) - relative cost of a standard set of goods and
services in different countries
-foreign competitors (determined by the number and quality of companies that
already compete in foreign market)
preparing for an international assignment - ANSWER language and cross-cultural
training; 3 methods:
1. documentary training - focuses on identifying specific critical differences
between cultures
2. cultural simulations - practice adapting to cultural differences
3. field experiences - places trainees in ethnic neighborhood for 3-4 hours to talk to
residents about cultural differences
what is a mongrel and why is it a good thing (zachary article) - ANSWER a person
confident in multiple cultures
effective missions - ANSWER Briefly define the organization's purpose for
stakeholders in a way that is enduring, inspirational, clear, and consistent with
