Chapter 9: Globalization and International Business

Question 1

Born-global companies

Answer 1

companies that start out with a global focus, usually because of their founders’ international experience and knowledge of foreign markets through advances in communications.

Question 2

Collaborative agreements

Answer 2

companies working together such as in joint ventures, licensing agreements, management contracts, minority ownership, and long-term contractual agreements

Question 3

Foreign Direct Investment (FDI)

Answer 3

operation in which the investor takes a controlling interest in a foreign company

Question 4

Franchising

Answer 4

a contract in which a company assists another on a continuous basis and allows use of its trademark

Question 5

Globalization

Answer 5

The widening set of interdependent relationships among people from different nations. The term sometimes refers to the elimination of barriers to international movements of goods, services, capital, technology, and people that influence the integration of world economies.

Question 6

Institutions

Answer 6

Systems of established and prevalent social rules that structure social interactions, such as language, money, law, systems of weights and measures, table manners and organizations.

Question 7

Joint venture (JV)

Answer 7

when two or more companies share ownership of an FDI (there is also non-equity joint ventures)

Question 8

Licensing agreement

Answer 8

when one company allows another to use its assets such as trade marks, patents, copyrights, or enterprise under these contracts

Question 9

Management contracts

Answer 9

arrangements in which one company provides personnel to perform general or specialized management functions for another organization

Question 10

Merchandise exports and imports

Answer 10

tangible products (goods) that are sent out of a country and brought into a country; aka visible exports

Question 11

Multinational corporation or company (MNC)

Answer 11

synonym of multinational enterprise (MNE)

Question 12

Multinational enterprise (MNE)

Answer 12

usually refers to any company with foreign direct investments

Question 13

Offshoring

Answer 13

the dependence on production in a foreign country, usually by shifting from a domestic source

Question 14

Reshoring/Rightshoring

Answer 14

Firms bring operations back to their home countries from abroad

Question 15

Royalties

Answer 15

payments for the use of some assets, such as trademarks, patents, copyrights, or expertise

Question 16

service export/imports

Answer 16

non-merchandise international earnings; often referred to as invisibles

Question 17

Sovereignty

Answer 17

A country’s freedom to “act locally” and without externally imposed restrictions

Question 18

strategic alliance

Answer 18

Companies working together, such as in joint ventures and licensing agreements. However, the term sometimes refers to an agreement that is of critical importance to a partner or one that does not involve joint ownership.

Question 19

transcendental company (TNC)

Answer 19

the term that the United Nations uses as a synonym for MNE

Question 20

turnkey operation

Answer 20

construction projects performed under contract and transferred to owners when they’re operational