International Business EXAM 1

International Business EXAM 1
Name: Phạm Thị Thu Hương
1. Give examples if operational conflicts that could occur in a cross- cultural context because of
different attitudes towards:1) time, 2) individualism. Give a country or region that would be
different from the US for each of the two variables. (2.5 points).
- About time: it includes two types of people: monochronic and polychronic
A monochronic orientation to time—a rigid orientation in which people are focused on
schedules, punctuality, and time as a resource
A polychronic perspective on time: it is relatively unimportant, and managers consider time
commitments flexible. They do not strictly follow the clock and schedules. They put more value
on relationships and spending time with people.
For example, the idea of being late versus keeping time for the summit, for example, may differ
widely between a Latin American businessman and a North American businessman; the Latin
American might far less tolerant of the North American’s late arrival. However, the North
American might be offended by a Latin American insistence on punctuality or on getting right
down to business; the North American would generally prefer talking with colleagues first and
would not want to cut a conversation short to make an appointment.
- About individualism: measures the degree that people prefer to act as individuals or are more
dependent on a strong group.
The USA is one of the most individualistic cultures in the world. They are more likely to
prioritize themselves over a group
For example, the Japanese have developed social structures, institutions, and customs for
avoiding or reducing conflicts. The Japanese (collectivists) indicated a strong preference for
avoiding tactics and were most concerned with maintaining social relationships and preferred
avoidance tactics, whereas the Americans (individualists) showed a strong use of assertive tactics
in conflict situations, with a greater concern for attaining justice for themselves and reported a
preference for assertive tactics
2. Explain how politics and laws influence business. (2.5 points).

Managers must be able to navigate difficult regulations and practices and avoid unethical
or questionable conduct.
- The political and legal context may present opportunities for companies. Preferential
subsidies, government incentives, and protection from competition reduce business costs
and influence strategic decision making. Many governments encourage domestic
investment from foreign MNEs by offering tax holidays and cash incentives to employ
local workers.
- Political or legislative actions can harm business interests, such as laws that are
unexpectedly strict or result in unintended consequences. Many laws favor host-country
interests—that is, interests in foreign countries where the firm has direct operations
Therefore, country risk refers to exposure to potential loss or to adverse effects on company
operations and profitability caused by developments in national political and legal environments.
A political system is a set of formal institutions that constitute a government. A legal system is a
system for interpreting and enforcing laws. Adverse developments in political and legal systems
increase country risk. These can result from events such as a change in government or the
creation of new laws or regulations.
3. What is an ethical dilemma? Give an example of an ethical dilemma that MNEs encounter
abroad. Why should ethical behavior be a part of a manager’s everyday activities? (2.5 points).
- An ethical dilemma are situations in which none of the available alternatives seems ethically
acceptable. Managers often face situations where the appropriate course of action is not clear.
They exist because real world decisions are complex, difficult to frame, and involve various
consequences that are difficult to quantify.
- For example, Sara is a manager and visits a factory an affiliate owns in Colombia, only to
discover the use of child labor in the plant. Upon studying the problem, she learns that child
labor is accepted in many developing economies even though girls are vulnerable and may be
abused or exploited, and work prevents children from attending school, which would improve
their prospects for a better life. There are more than 50 million children working in India alone.
However, you also learn that without their children’s income, families often go hungry. Without
the children’s income, their families might go hungry, or the children could turn to illicit activity
such as street crime.
- Ethical behavior should be a part of a manager’s everyday activities because:
• It is simply the right thing to do.
• It is often prescribed within laws and regulations. Violating laws and regulations has obvious
legal consequences.
• Customers, governments, and the news media demand ethical behavior. Firms that commit
ethical blunders attract unwanted attention from opinion leaders.
• Ethical behavior is good business, leading to enhanced corporate image and selling prospects
4. Explain tariffs, nontariff trade barriers, investment barriers, and government subsidies. What
are their main characteristics? How do they differ? (2.5 points).
- Tariffs are tax imposed on imported products.
They are assessed as a percentage of the value of the imported product.
 A revenue tariff is intended to raise money for the government.
 A protective tariff aims to protect domestic industries from foreign competition.
 A prohibitive tariff is one so high that no one can import any of the items
- Nontariff trade barriers: government policies or measures that restrict trade without imposing
a direct tax or duty. They include quotas, import licenses, local content requirements,
government regulations, and administrative or bureaucratic procedures.
It includes:
 Quotas restrict the physical volume or value of products that firms can import into a
country.
 Local content requirements require manufacturers to include a minimum of local value
added—that is, production that takes place locally
 Government regulations and technical standards are another type of nontariff trade
barrier.
 Administrative or bureaucratic procedures that hinder the activities of importers or
foreign firms
- Investment barriers: These restrictions hinder the ability of foreign firms to invest in some
industry sectors or acquire local firms. The restrictions are also present in industries in which the
government has major holdings, such as oil and key minerals.
 Currency controls restrict the outflow of widely used currencies, such as the dollar, euro,
and yen, and occasionally the inflow of foreign currencies. Controls can help conserve
especially valuable currency or reduce the risk of capital flight.
 FDI and ownership restrictions: Rules that limit the ability of foreign firms to invest in
certain industries or acquire local firms.
- Government subsidies: Monetary or other resources that a government grants to a firm or
group of firms, usually intended to encourage exports or facilitate the production and marketing
of products at reduced prices, to ensure that the favored firms prosper
 Countervailing duty: Tariff imposed on products imported into a country to offset
subsidies given to producers or exporters in the exporting country
 Dumping: Pricing exported products at less than their normal value, generally less than
their price in the domestic or third-country markets, or at less than production cost
 Investment incentive: Transfer payment or tax concession made directly to foreign firms
to entice them to invest in the country.

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International Business EXAM 1

Name: Phạm Thị Thu Hương

2. Explain how politics and laws influence business. (2.5 points).

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