Chapter 1

Question 1

International Business

Answer 1

business (firm) that engages in international (cross-border) economic activities or the action of doing business abroad

Question 2

Global Business

Answer 2

business around the globe including both international (cross-border) activities and domestic business activities

Question 3

Expatriate Manager

Answer 3

a manager who works abroad

Question 4

International Premium

Answer 4

significant compensation “package” when working overseas

Question 5

Multinational Enterprise (MNE)

Answer 5

firm that engages in foreign direct investments

Question 6

Foreign Direct Investment (FDI)

Answer 6

investments in, controlling, and managing value-added activities in other countries

Question 7

Emerging Economies/Markets

Answer 7

a term that has gradually replaced the term “developing countries” since the 1990s
Example: BRIC, Mexico, South Africa

Question 8

Gross National Product (GNP)

Answer 8

measured as the sum of value added by RESIDENT firms, households, and government operating in an economy

Question 9

Gross Domestic Product (GDP

Answer 9

total market value of all final goods and services produced WITHIN A COUNTRY in a given period of time usually a calendar year

Question 10

Gross National Product (GNI)

Answer 10

GDP plus income from nonresident sources abroad – the term used by the World Bank and other international organizations to supersede the GNP term

Question 11

Purchasing Power Parity (PPP)

Answer 11

adjustment made to the GDP to reflect differences in the cost of living
- Where the same amount of money can purchase much more in another location

Question 12

TRIAD

Answer 12

North America, Western Europe and Japan

Question 13

BRIC

Answer 13

acronym for the emerging economies of Brazil, Russia, India, and China

Question 14

Group of 20

Answer 14

leaders of 19 major countries + EU who meet on biannual basis to discuss global economic issues

Question 15

Base of the pyramid

Answer 15

vast majority of humanity, about four billion people, live at the base of the pyramid and make less than $2,000 a year

Question 16

The “Bottom Billion”

Answer 16

concentrated in Africa and Central Asia – 58 small countries, stuck at the bottom in terms of growth, incomes, and human development

Question 17

Top Tier

Answer 17

Above $20,000, one billion people

Question 18

Formal rules

Answer 18

requirements that treat domestic and foreign firms as equals enhance the potential odds for foreign firms’ success or those that discriminate against foreign firms, would undermine the chances for foreign entrants

Question 19

Informal rules

Answer 19

cultures, ethics, and norms play an important part in shaping the success and failure of firms around the globe

Question 20

Resource-based view

Answer 20

suggests that the success and failure of firms are determined by their environments

Question 21

Liability of foreignness

Answer 21

inherent disadvantage that foreign firms experience in host countries because of their nonnative status.

Question 22

Institution-based view

Answer 22

Formal and informal rules of the game

Question 23

Three views of Globalization

Answer 23

• A new force in recent times - Since the end of WW II, trade & investment barriers have fallen and technology has greatly advanced.
• A long-running historical evolution - The cultures involved in trade over the centuries include Greeks, Romans, Mongolians (Chinese), Dutch, Spaniards, British, French, etc.
• A pendulum swinging between extremes - Trade moves in cycles, from open access to markets to protectionism, then back again.