Globalization and International Business: Impacts and Cultural Differences
Globalization and International Business
Impact of Globalization on National Economies
Globalization has resulted in individual national economies becoming more interdependent.
Globalization of Markets and Production
Globalization of Markets
Which of the following statements, if any, is NOT TRUE regarding the globalization of markets? All
Globalization of Production
Which of the following statements, if any, is NOT TRUE regarding the globalization of production? All
Drivers of Globalization
Decline in Trade Barriers
The globalization driver of declining trade barriers has resulted in an increase in international trade and foreign direct investment (FDI).
Technological Innovation
Which of the following, if any, is NOT considered a factor of production? All
All of the following represent major technological advances associated with the globalization driver of technological innovation.
Transportation Technology
Containerization falls under the globalization driver of transportation technology.
Benefits and Criticisms of Globalization
Benefits
One of the virtues (benefits) of globalization is that it stimulates economic growth. True
Globalization may expand and contract, but it is unlikely to go away. True
Criticisms
One of the major criticisms associated with globalization is that it threatens a country’s national sovereignty. What does that mean exactly?
Individual countries lose the freedom and flexibility to make and implement decisions that are believed to be in that country’s own best self-interest. Pressure is applied by external forces to make decisions for self-interest.
- Example: Iran and nuclear weapons
- Loss of cultural homogeneity – losing pastimes and undermining traditional ways of life.
Other than the criticism that globalization brings about a decrease in national sovereignty, list one other criticism of globalization. Job loss
International Business Activities
Outsourcing
When a U.S. company contracts with a foreign company to perform a specific value-chain activity, it is referred to as outsourcing.
Regardless of what value chain activities are being outsourced, outsourcing is an example of the Services Export and Import category of international business activity.
When a U.S. company contracts with a foreign company to perform one or more of its value chain activities, that U.S. company has no ownership interest in the foreign company. True
Merchandise Export and Import
Boeing is a U.S. company that has doors for its aircraft landing gear manufactured by a company in Singapore and wing flaps manufactured by a company in Italy. Bringing the doors and wing flaps into the U.S. from Italy falls under the Merchandise Export and Import category of international business activity.
Service Import
When Nike contracts to have their products manufactured by foreign companies, from a U.S. perspective, Nike’s activity described here is Service Import.
Commonly Outsourced Activities
List the two primary value chain activities most commonly outsourced by U.S. companies.
- Customer support
- Manufacturing
Offshoring and Foreign Direct Investment
Offshoring by a U.S. company is an example of a Foreign Direct Investment type of international business activity.
Subsidiaries and Joint Ventures
In a subsidiary, the company owns 100% of a foreign operation. True
In a joint venture, ownership interest is typically equal between/among venture partners. False
Cultural Differences and International Business
Cultural Risk
Which of the following refers to the understanding of how cultural differences can affect the profitability of a company? Cultural risk
Which of the following statements is true about culture? Cultures are different and present cultural risk.
Cross-Cultural and Intra-Cultural Differences
Define cross-cultural and intra-cultural differences.
- Cross-cultural differences: Differences in culture that exist between two countries.
- Intra-cultural differences: Differences in culture that exist within the same country’s culture.
Cultural Diversity and Homogeneity
A country that is described as being culturally diverse means that there are very few intra-cultural differences. False
Globalization has brought about an increase in cultural diversity, making it hard for countries to maintain homogeneity. True
Social Structure
In terms of social structure, there are two dimensions that help identify cross-cultural differences. What are the two dimensions?
- Collectivism vs. Individualism
- Castes or Classes
Social Mobility
Social mobility is more likely to occur in a caste system vs. in a class system. False
Religion and Ethics
Which of the following is NOT one of the 4 predominant religions in the world? Judaism
Most ethics are the product of religious beliefs. True
Ethnocentric Attitude
All of the following are true of an ethnocentric attitude EXCEPT: The attitude is appropriate in helping to manage cultural risk.
Education and Cultural Differences
All of the following are true regarding education, EXCEPT: All
U.S. and Japan: A Case Study in Cultural Differences
What is the primary cross-cultural difference between the U.S. and Japan? The U.S. is individualistic and Japan is collectivistic.
Debbie clearly exhibited a polycentric attitude.
According to the video “American Game, Japanese Rules,” support the statement that Steve Hammond exhibited an ethnocentric attitude by indicating one thing he said/did that is indicative of an ethnocentric attitude. “They play stupid.”
Don Spiro exhibited a geocentric attitude. Don Spiro was convinced by offers in Japan and adapted to be able to succeed.
Reverse Engineering and Cultural Differences
Reverse engineering is a manifestation of cross-cultural differences between the U.S. and Japan. False
Manifestation of Cultural Differences in Baseball and Business
How did the primary cross-cultural difference manifest in baseball and in business?
- Baseball: In baseball, they play for ties and expand the strike zone, only winning by one or two games.
- Business: They value partnership, believing that everybody makes money or nobody makes money. They practice collectivism instead of individualism. “Everyone makes money or nobody makes money” is the rule in Japan. Old relationships are more valuable than better quality and price.
Cross-Cultural Literacy
Cross-cultural literacy means having an understanding of how cross and intra-cultural differences affect the way business is conducted. True
Best Buy’s Failure in China
All of the following were reasons why Best Buy failed in China EXCEPT: Consumers did not have the purchasing power to buy the company’s products.
eBay’s Failure in China
eBay failed in China primarily because they did not appreciate the advantage Chinese customers placed on the instant messaging feature offered by TaoBao, eBay’s Chinese competitor. True
Managerial Mobility and Social Structure
There is a higher degree of managerial mobility within group-oriented societies.
Social Stratification in the U.S.
In the context of social structure, U.S. society is characterized by a low degree of social stratification.
Class Consciousness
Class consciousness refers to a condition by which people tend to perceive themselves in terms of their class background, which in turn shapes their relationships with members of other classes.
Hofstede’s Cultural Dimensions Model
Overall, Hofstede’s research focused on how a society’s culture affects the values found in the workplace. True
According to Hofstede’s Cultural Dimensions model, high power distance cultures were found in societies that tried to play down inequalities of power and wealth as much as possible. False
According to Hofstede, which of the following is NOT a characteristic of masculine cultures? There is little differentiation between men and women in the same job.
According to Hofstede’s Cultural Dimensions Model, the U.S. ranks higher on masculinity. True
List one country that ranks low on masculinity. Sweden
Virtues of Globalization
All of the following are virtues (benefits) of globalization EXCEPT: All of the above are virtues of globalization.
Technological Innovation and the Microprocessor
The single most important technological innovation has been the development of the microprocessor.
Outsourcing and International Business
____ is when a U.S. company contracts with a foreign company to perform a specific value chain activity. Outsourcing
Categories of International Business
There are 3 broad categories of International Business. List them.
- Merchandise Export and Import
- Service Export and Import
- Investment
Ownership Interest in Outsourcing
When a U.S. company contracts with a foreign company to perform one or more of its value chain activities, that U.S. company has no ownership interest in the foreign company. True
Definition of Culture
Culture is a system of values and norms that are shared among a group of people that constitute a way of life.
Geocentric Attitude
Define what is meant by a geocentric attitude. Please do not provide an example.
Geocentric: Corresponds to a moderate degree of cultural sensitivity and literacy. It is not about adopting/exhibiting sensitivity towards differences that are convenient or you agree with.
Nonverbal Communication: Personal Space
Which of the following statements best defines the nonverbal aspect of communication of personal space? It is the comfortable amount of physical distance between you and someone you are talking with.
The Internet and the Economy
The internet is considered to be the “backbone” of the economy? (T/F) True