Chapter 1 Terms Flashcards
International business (IB):
(1) A business (firm) that engages in international (crossborder) economic activities and/or (2) the action of doing business abroad
Multinational enterprise (MNE):
A firm that engages in foreign direct investment (FDI)
Foreign direct investment (FDI):
Investment in, controlling, and managing value-added activities in other countries
Global business
Business around the globe − Includes both (1) international (cross-border) business activities covered by traditional IB books and (2) domestic business activities
Reasons to Study Global Business:
1) Enhance your employability and advance your career in the global economy.
2) Better preparation for possible expatriate assignments abroad. 3) Stronger competence in interacting with foreign suppliers, partners, and competitors, and in working for foreign-owned employers in your own country
Group of 20 (G-20):
The group of 19 major countries plus the European Union whose leaders meet on a biannual basis to solve global economic problems
Global mindset:
Ability to “connect the dots” globally
Expatriate manager (expat):
A manager who works abroad
International premium
A significant pay raise when working overseas
Core Perspectives: 1. An Institution-Based View
—Suggests that the success and failure of firms are enabled and constrained by institutions
− Triple bottom line: Economic, social, and environmental performance
− Stakeholder: Any group or individual who can affect or is affected by the achievement of a firm’s objectives
Core Perspectives: 2. A Resource-Based View
—Focuses on a firm’s internal resources and capabilities
Liability of foreignness:
The inherent disadvantage that foreign firms experience in host countries because of their nonnative status
Globalization:
The close integration of countries and peoples of the world
Three major views conceptualize globalization as:
− A new force sweeping through the world in recent times
− A long-run historical evolution since the dawn of human history
− A pendulum that swings from one extreme to another from time to time
Emerging economies:
A term that has gradually replaced the term “developing countries” since the 1990s
Emerging markets:
A term that is often used interchangeably with “emerging economies”
Base of the pyramid (BoP):
Economies where people make less than $2,000 per capita per year
Reverse innovation (or frugal innovation):
An innovation that is adopted first in emerging economies and is then diffused around the world
Risk management:
The identification and assessment of risks and the preparation to minimize the impact of high-risk, unfortunate events
Black swan event:
An unpredictable event that is beyond what is normally expected and that has severe consequences
Semiglobalization:
A perspective that suggests that barriers to market integration at borders are high, but not high enough to insulate countries from each other completely
Total Globalization:
Leads to Standardization
Total Isolation:
Suggests localization
Gross domestic product (GDP):
The sum of value added by resident firms, households, and governments operating in an economy
