30. What is the difference between a free-trade area and a customs union?

1. A free-trade area refers to a group of countries where all trade barriers among members are removed but each participating country retains trade barriers to third countries. Examples include the European Free Trade Association (EFTA), the NAFTA, and the Latin American freetrade area, the Southern Common Market (MERCOSUR).19

2. A customs union is similar to the free-trade area and in addition participating countries pursue common external trade relations whereby they set common external tariffs on imports from nonparticipating nations.

31. What are the costs and benefits of economic and monetary union?

Long-run benefits include the increased convergence of the economies of the member states, increased competition, and downward convergence of interest rates, which results in higher investment levels in a stable environment and an efficient allocation of resources. The main costs associated with the EMU are the loss of the exchange rate and monetary policy as an instrument of national sovereign economic policy and the restricted effectiveness of fiscal and income policies.

International cultural environment

32. Define culture. Which definition in your opinion, is the most appropriate and why? Provide examples?

1. Anthropologists view culture as “the sum total of the beliefs, rules, techniques,

institutions, and artifacts that characterize human populations”

2. Culture can be defined as the socially constructed and learned ways of behaving

and believing that identify social groups. It can be described in terms of the following elements. It is learned, shared, patterned, mutually constructed, symbolic, arbitrary, and internalized.

The most appropriate definition of culture:

Culture is everything that people have, think, and do as members of their society.

- This means that in order for a person to have something, some material object must be present. For example: Ukrainians live in houses, flats; Africans-handmade tents

- When people think, ideas, values, attitudes, and beliefs are present.

For example: Ukrainian key values are family, independence, honesty, but in values in American society are wealth, success, power, and prestige;

We have certain national attitudes to family, education, marriage, holidays, etc;

We belief in God according to Bible, African tribes belief in a lot of Gods according to their understanding of nature

- When people do, they behave in certain socially prescribed ways;

For example: in Ukraine it is normally to come late on 5 minutes, leaders tend more to concentrate decision-making powers in their own hands; but for example in Japan people are punctual, leaders are more likely to delegate authority.

Thus culture is made up of (1) material objects; (2) ideas, values, and attitudes; and (3) normative or expected patterns of behavior.

The final component of this working definition, “as members of society,” tells us that culture is shared by at least two individuals and, of course, real societies are much larger than that. Thus, it is crucial that international business managers look at groupings of individuals within a society.