Chapter 1 Terms

Question 1

International business (IB):

Answer 1

(1) A business (firm) that engages in international (crossborder) economic activities and/or (2) the action of doing business abroad

Question 2

Multinational enterprise (MNE):

Answer 2

A firm that engages in foreign direct investment (FDI)

Question 3

Foreign direct investment (FDI):

Answer 3

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

Question 4

Global business

Answer 4

Business around the globe − Includes both (1) international (cross-border) business activities covered by traditional IB books and (2) domestic business activities

Question 5

Reasons to Study Global Business:

Answer 5

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

Question 6

Group of 20 (G-20):

Answer 6

The group of 19 major countries plus the European Union whose leaders meet on a biannual basis to solve global economic problems

Question 7

Global mindset:

Answer 7

Ability to “connect the dots” globally

Question 8

Expatriate manager (expat):

Answer 8

A manager who works abroad

Question 9

International premium

Answer 9

A significant pay raise when working overseas

Question 10

Core Perspectives: 1. An Institution-Based View

Answer 10

—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

Question 11

Core Perspectives: 2. A Resource-Based View

Answer 11

—Focuses on a firm’s internal resources and capabilities

Question 12

Liability of foreignness:

Answer 12

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

Question 13

Globalization:

Answer 13

The close integration of countries and peoples of the world

Question 14

Three major views conceptualize globalization as:

Answer 14

− 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

Question 15

Emerging economies:

Answer 15

A term that has gradually replaced the term “developing countries” since the 1990s

Question 16

Emerging markets:

Answer 16

A term that is often used interchangeably with “emerging economies”

Question 17

Base of the pyramid (BoP):

Answer 17

Economies where people make less than $2,000 per capita per year

Question 18

Reverse innovation (or frugal innovation):

Answer 18

An innovation that is adopted first in emerging economies and is then diffused around the world

Question 19

Risk management:

Answer 19

The identification and assessment of risks and the preparation to minimize the impact of high-risk, unfortunate events

Question 20

Black swan event:

Answer 20

An unpredictable event that is beyond what is normally expected and that has severe consequences

Question 21

Semiglobalization:

Answer 21

A perspective that suggests that barriers to market integration at borders are high, but not high enough to insulate countries from each other completely

Question 22

Total Globalization:

Answer 22

Leads to Standardization

Question 23

Total Isolation:

Answer 23

Suggests localization

Question 24

Gross domestic product (GDP):

Answer 24

The sum of value added by resident firms, households, and governments operating in an economy

Question 25

Purchasing power parity (PPP):

Answer 25

A conversion that determines the equivalent amount of goods and services that different currencies can purchase

Question 26

Gross national product (GNP):

Answer 26

GDP plus income from nonresident sources abroad

Question 27

Gross national income (GNI):

Answer 27

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

Question 28

Nongovernmental organizations (NGO):

Answer 28

An organization that is not affiliated with any government

Question 29

Deglobalization:

Answer 29

The process of weakening economic interdependence among countries

Question 30

Organizational slack:

Answer 30

A cushion of resources that allow an organization to adapt successfully to pressures

Question 31

Resilience:

Answer 31

Capacity to recover quickly from difficulties

Question 32

Global value chain (GVC):

Answer 32

A chain of geographically dispersed and coordinated activities involved in the production of a good or service and its supply and distribution activities

Question 33

Implications for Action:

Answer 33

1) From a resource-based view, instead of only focusing on delinking, shrinking, withdrawals, and divestitures (which, of course, are important), develop resources and capabilities to identify and leverage opportunities for further globalization.

2) From an institution-based view, enhance geopolitical savvy and be aware that globalization is a force for peace and prosperity.

3) From a career standpoint, even a less global world presents tremendous opportunities, especially for professionals with skills in geopolitics, tariffs and trade compliance, supply chain reorganization, and management of stakeholders and climate change challenges.

Question 34

• Global value chain (GVC):

Answer 34

A chain of geographically dispersed and coordinated activities involved in the production of a good or service and its supply and distribution activities