Review
Management Test 425
David C. Wyld, Professor of Management
Test 1
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Review for Test 1 M anagement 425 Chapters 1-4
Here are some hints as to what topics you will see on the first exam. Of course, youre responsible for all the chapters, but these topics will be on the test for sure. Good luck in your studying! Chapter 1 What are some of the impediments that make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe? ty What have technological innovations facilitated? Know what the World Trade Organization and the World Bank do. Many of the world's poorer nations suffer from economic stagnation. What holds t hem back? What did a study by the OECD find about income levels in OECD countries? Who leads and how big is the antiglobalization effort? What has been the impact on the world economy of the advent of commercial jet t ravel? Are barriers to cross-border trade and investment are generally declining or rising i n todays world economy? How do you define a company as being an international business? What makes managing an international business more complex than managing a strictly domestic firm? Why do firms outsource jobs? How is outsourcing viewed politically (or in popular opinion)?
Chapter 2 What factors cause the costs of doing business in a country to be higher? o Cultural practices, education and skill level of population, stages of economic development and political systems o Political systems: the system of government in a nation which are assessed 2
according to 2 dimensions= Collectivism vs. Individualism Democratic vs. Totalitarianism BIG AREA: K now the definitions and basic beliefs of (as well as variations upon and examples of countries where these are found or originated): o Totalitarianism A form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties. Communist version of collectivism and totalitarianism go hand in hand. Example: China has moved toward greater individual freedom in the economic sphere, but the country is still ruled by a totalitarian dictatorship that constrains political freedom Citizens are denied all the constitutional guarantees on which representative democracies are built, political repression is w idespread, free and fair elections are lacking, media are heavily censored, basic civil liberties are denied, and those who question the r ight of rulers to rule are imprisoned or executed. 4 forms: Communist totalitarianism :version of collectivism advocating t hat socialism can be achieved only through totalitarian dictatorship o China, Vietnam, Laos, North Korea, Cuba Theocratic: where a party, group or individual that governs according to religious principles monopolizes political power. o Islam = Saudi Arabia, Iran Tribal: when a political party that represents interests of a particular tribe monopolizes the power o African countries= Zimbabwe, Uganda, Kenya, Tanzania Right-wing: generally permits some individual economic f reedom but restricts individual political freedom; common feature is an overt hostility to socialists or communist ideas; govt. usually backed by military o Found in South Korea, Singapore, Taiwan, o Communism
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Those who believe socialism can be achieved through revolution and totalitarian dictatorship Usually associated with collectivism and totalitarianism o Socialism A political philosophy advocating substantial public involvement, through government ownership, in the means of production, distribution and exchange o Capitalism Belief that ownership of the means of production belongs in the hands of individuals and private businesses. o Individualism An emphasis on the importance of guaranteeing individual freedom and expression Traced to Greek philosopher Aristotle Individual economic and political freedoms are the ground rules on which a society should be based Individualism means democratic political systems and free market economies o Collectivism An emphasis on collective goals as opposed to individual goals o Democracy Political system in which govt. is by the people, exercised either directly or through elected representatives Usually associated with individualism Most modern democratic states practice representative democracy where citizens periodically elect individuals to represent them Know the definitions of and be able to differentiate between: o Patents Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention o Copyrights Exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and dispose of their work as they see fit. o Trademarks Designs and names, often officially registered, by which merchants or
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manufacturers designate and differentiate their products o Licenses Licensing occurs when a firm licenses the right to produce its product, use its product, use its production processes, or use its brand name or trademark to another firm. In return for giving the licensee these rights, the licensor collects a royalty fee on every unit the licensee sells. Know the definitions and be able to differentiate between: o Legal risk The likelihood that a trading partner will opportunistically break a contract or expropriate intellectual property rights o Economic risk The likelihood that events, including economic management, will cause drastic changes in a countrys business environment that adversely affect the profit and other goals of a particular business enterprise. o Product risk o Environment risk Know the definitions of and be able to differentiate between common and civil law. o Common Law: based on tradition, precedent and custom o Civil Law: based on detailed set of laws into organized codes What is the relationship between supply and demand in a market economy? o Market Economy: the allocation of resources is determined by the invisible hand of the price system; all productive activities are privately owned. o Production is determined by the interaction of supply and demand and signaled to producers through the price system. o If demand exceeds supply, prices will rise, signaling producers to produce more o If supply exceeds demand, prices will fall, signaling producers to produce less o For a market to work in this manner, supply must not be restricted by monopolization of a market What is the HDI? What factors are incorporated in it? o Human Development Index which is used to measure the quality of human life in different nations o It is measured by:
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Life expectancy at birt h Educat ional attainment Whether average incomes are sufficient to meet t he basic needs of life i n a country What is t he relat ionship between economic freedom and economic growth? o The rate of economic progress in a country seems to depend on t he extent to w hich t hat country has a well-funct ioning market economy in which property r ights are protected What are internat ional perspectives on property rights? o What is t he im pact of polit ical payoffs on t he costs of doing business in a country? o The costs of doing business in a country tend to be greater where polit ical p ayoffs are required to gain access, where infrast ructure is lacking or u nderdeveloped, and where adhering to local laws and regulat ions is costly. o The risk of doing business in a count ry tend to be greater in count ries t hat a re polit ically unstable, are subject to economic m ismanagement, and lack of l egal system to provide adequate safeguards in t he case of contract or p roperty rights violat ions.
Chapter 3 BIG AREA: K now the definitions of and be able to differentiate between: o Norms: are the social rules and guidelines that prescribe appropriate behavior in particular situations; include folkways and mores o Values (and Value System): are abstract ideas about what a group believes to be good, right and desirable. Values provide context within which a societys norms are established and justified and form the bedrock of culture. o Society: refers to the group of people who share a common set of values and norms. o Culture: is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living. o The values and norms of a culture are the evolutionary product of anumber of factors at work in a society including religion, political and economic philosophies, education and social structure. Does Western society tends to emphasize the individual or the group? o The focus is on the individual and individual achievement is common. This contributes to the dynamism of the US economy, and high level of
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entrepreneurship. Know the definitions of and be able to differentiate between a class and a caste system? o A 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 the individuals lifetime. o A class system is a form of open social stratification in which the position a person has by birth can be changed through his or her achievement or luck. What is meant by class consciousness? o It is a condition where people tend to perceive themselves in terms of their class background, and this shapes relationships with others. o In cultures where class consciousness is high, the way individuals from different classes work together may be very prescribed and strained. Know what is meant by upward mobility. How has this been regarded in Britain (the United Kingdom) historically? Is culture a static or evolving concept? o Culture evolves over time, although changes in value systems can be slow and painful for society. Know the definitions of and be able to recognize examples of: o Beliefs o Folkways: the routine conventions of everyday life o Mores: norms that are seen as central to the functioning of society & its social life. o Rites What is the largest of the world's major religions? o Christianity In what parts of the world are Christians found? o Throughout Europe, the Americas , any country settled by Europeans. Know the basic definitions and be able to differentiate between Hofstede's dimensions. o Power distance: focuses on how society deals with the fact that people are unequal in physical and intellectual capabilities. o Individualisn vs. collectivism: focuses on the relationship between the individual and his or her fellows o Uncertainty avoidance: measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating
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o What o What What
ambiguity Masculinity vs. fem ininit y: looks at t he relat ionship between gender and w ork roles is meant by a society's social st ructure? The basic social organizat ion of a societysa is meant by Guanxi ? is a mudarabah contract?
Chapter 4 What is meant by the Friedman doctrine? Know the formal definition of business ethics? What is meant by the utilitarian approach to business ethics? What are some of the criticisms of this approach? What is meant by an ethical dilemma? What was the Apartheid system in South Africa? Who are stakeholders? Who constitute the internal and external stakeholders of a company? How clear are the ethical obligations of multinational corporations? Is what is considered a normal business practice in one country always considered ethical in others? Why or why not? What is the formal definition of organizational culture? What are the basic tenets of The Foreign Corrupt Practices Act? What is grease money?
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