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BUSINESS POLICY Mid-term Examination 1

1. In the Brander and Krugman article “A ‘Reciprocal Dumping’ Model of
International Trade” the authors make the paradoxical argument that there may
be benefits for two countries to trade with each other even if they are trading the
same exact products. In other words, producers and consumers will be better off
if these producers trade rather than selling to their own domestic markets.
Explain why this paradox may be true and in what types of situations—for
example but not limited to—product type, locations of trading partners, demand,
Sometimes two companies in two countries produce the same thing and export them
to each other – this is called reciprocal dumping. Sometimes this is done do drive out
competition and because it increases the overall welfare of the economies. This is
only worth it when the international transportation costs are less than the domestic
shipping costs. For example, it’s easier to get something from Maine to Canada than
from Maine to California.
2. According to the textbook and the discussion in class, we noted that managers
should know the language of their workers, understand their attitudes, and
understand their needs. Why is each important? Which is the most important and
Managers are ultimately there to guide the organization toward accomplishing a goal.
Without knowing the language of their workers, understanding their attitudes, and
understanding their needs, this cannot be done. Without the manager understanding the
language, nothing will get done. This goes beyond language barriers such as Japanese
and English, to barriers in the jargon of the everyday work. Someone who is trained in
marketing will not necessarily understand one of the finance or accounting people. It is
important that all of the divisions can interact in order to coordinate certain things, and
a manager is usually the one to facilitate that. It is important to understand employees
attitudes because culturally, everyone comes from different places. According to the
behavioral approach, production increases through the understanding of people. You
need to know what motivates people in order to have greater organizational success.
Understanding needs are important for the same reasons. In addition, Maslow’s
hierarchy of needs shows that needs higher up are irrelevant until the needs below are
reached. An employee, who struggles everyday to feed his family, will not necessarily
care about the certificate of achievement. The most important for an organization to
run smoothly is to understand the language. That is the first step towards
understanding everything else and making sure the business is ran seamlessly and

This focuses on attaining goals and is where managers outline exactly what organizations must do to be successful – it is essential to getting he right things done. What are the arguments for and against performing social responsibility activities.  Example: If your goal is to increase sales. compare and find new ways to improve. profitability and growth go hand-in-hand with responsible treatment of employees.  Example: Going back to employees and make sure they know what they’re doing and helping them in any areas that help is needed Controlling: gathering information to measure performance. Corporate social responsibility is the managerial obligation to take action that protects and improves both the welfare of society as a whole and the interest of the organization. It creates a mechanism to put plans into action. Define Corporate Social Responsibility. Take a side on this and support your position. you first need to map out the necessary steps. Planning: involves choosing tasks that must be performed to attain organizational goals. At the end of the day.  Example: Give each employee or section a different job in the plan – some in marketing. The ultimate purpose of influencing is to increase productivity. which is just any direction that helps the organization move toward goal attainment. outlining how the tasks must be performed. The tasks should be organized so that the output of individuals contributes to the success of departments. it’s not your money you are spending – it’s the shareholders. Pro: The business is a subset of society and must therefore help maintain and improve the overall welfare of society. 4. Explain why they are important in the functioning of an organization and give specific examples of each. determining whether the organization should be modified to meet standards. I do believe that it is the shareholders’ money that the company is using. This might include things like increasing advertisements. etc. and from this. Identify and define the four management process functions. and indicating when they should be performed. comparing performance to pre-established performance standards. putting things on sale. and the community. and it leads to revenue growth. Con: Making managers responsible for profit and the betterment of society is a conflict of interest. Organizing: assigning the tasks developed under the planning function to various individuals or groups.  Example: Go back and see if sales are increased and evaluate it. customers. etc. which is the success of the organization.3. I think it is necessary for companies to have a balance. It’s an ongoing process – continually gather info. and although it . Influencing: guiding the activities of organization members in appropriate directions.

The golden rule: act in a way you would expect others to act toward you  Pro: People generally want to be treated well so will in turn. The utilitarian principle: act in a way that results in the greatest good for the greatest number of people  Pro: The majority of people are being benefited  Con: The minority is being overlooked. 5. Creating an ethical environment in the workplace is a major challenge. and accept more autocratic than democratic. if you are doing it at the expense of your shareholders. If not by actively helping a charity out. giving them jobs and a livelihood. expect. On the other hand. you will end up with no company at all. treat others well  Con: Everyone cares about different things – what is offensive to one person may not be so someone else 2. Why is it important to understand these different dimensions when managing an international/global business? Power distance: the degree to which a society promotes an unequal distribution of always nice to help others. . universal rules of behavior are pretty standard and require people to act nicely  Con: Rules of behavior are different everywhere – it may be offensive in another country 4. companies employ many people. The legal test: Is the proposed action or decision legal?  Pro: It ensures that every decision is legal  Con: Not all legal things are the morally correct thing to do 5. Solely by existing. What are the “pros and cons” of each. 1. however. they should at least do preventative measures and not hurt the environment. What are Hofstede’s dimensions of culture? Identify and define each. Identify and define each. even if their point makes more sense 3. The TV test: ask: “Would I feel comfortable explaining to a national TV audience why I took this action?”  Pro: most people would be embarrassed to disclose a bad decision they made to the entire world  Con: Some people would be totally fine with it 6. Name at least five (5) rules or principles that managers might want to institute in their organizations. every company must somehow contribute at least a little to society. Kant’s categorical imperative: act in such a way that the action taken under the circumstances could be a universal law or rule of behavior  Pro: Generally. Countries that highly promote power distance have citizenry that tends to emphasize.

Individualism and collectivism: the degree to which people in a society operate primarily as individuals or within groups. Individuals have to be able to understand how to turn a new technology . they are more likely to identify potential entrepreneurial opportunities. they are more likely to dismiss or ignore new info and overlook potential opportunities. Masculinity and feminity: the extent to which a culture emphasizes traditional masculine or feminine values. while traditional feminine values place a high worth on factors like caring for others and increasing the quality of life. When they don’t have this. What are the determinants of opportunity identification? Identify and define each and explain how each individually and/or collectively help to identify an entrepreneurial opportunity. When managing an international/global business. rewarding long-run results and keeping a future oriented perspective. People who operate as individuals tend to focus on meeting their own needs and succeed by competing with others. which involves both new info and old info and no two people. People who operate collectively tend to build relationships among others and downplay individualism. Entrepreneurial alertness: refers to an individuals’ ability to notice and be sensitive to new information about objects. Short-term and long-term orientation: the degree to which a culture deemphasizes short-run success to achieve long-run success. Means-end relationships: people vary on their ability of entrepreneurs to understand how to turn a new technology into a product or service that will be valued by consumers. Information asymmetry: variation in information. education. People with a bigger network are more likely to identify potential opportunities – it also depends on the type of social network such as whether they are entrepreneurial. Managers need to know how to properly connect and motivate their employees to do the best possible job. Traditional masculine values place a high worth on factors like competitiveness. rewarding short-run results and maintaining a day-to-day perspective. Some people have a lot of social relationships while others don’t. success an wealth. Cultures that focus more on long-run success emphasize activities like planning. 7. When you employ one strategy across the board. share all this info at the same time. incidents. and to cater to them individually. it is important to recognize the differences in each country. When individuals have high levels of entrepreneurial alertness. Companies that focus more on short-run success emphasize training to enable one do a job now.Uncertainty avoidance: the extent to which a society feels threatened by uncertain or unpredictable situations. Countries that are high in uncertainty avoidance prefer being in more defined and predictable situations. Social networks: represents individuals’ patterns of social relationships. and patterns of behavior in the environment. assertiveness. it will not work because of the differences in these aspects.

List alternative ways of reaching objectives: once an objective is clearly stated. when forming objectives. Develop plans to pursue the chosen alternative: develop strategic (long-range) and tactical (short-range) plans. State organizational objectives: this is necessary before planning can begin. 1. 8. Develop premises on which to base each alternative: list all the premises and assumptions it would take to be accurate for each alternative way to succeed. 6. Put the plans into action: implement the plans.into something for commercial application. Often planners examine important elements of the environment of their organizations. 4. they should list as many available alternatives as possible for reaching those objectives. Choose the best alternative for reaching objectives: look at all the alternatives and exclude the ones that have unreasonable premises. ad then choose which one would best accomplish the objective 5. . such as the overall economy or competitors. 3. 2. Identify and define (in appropriate order) the steps in the planning process.