Lecture 1: Introduction

Question 1

Global Value Chains

Answer 1

Different stages of the production process are located across different countries.

Question 2

The Agency Theory

Answer 2

An agency relationship is a contract under which one or more persons engage another person to perform some service on their behalf that involves delegating some decision-making authority to the agent.

Question 3

International Business (IB)

Answer 3

A business (or a firm) that engages in international (cross-border) economic activities It is the pursuit of value-creating opportunities by both public and private business organisations in countries other than their country of origin.

Question 4

Multinational Enterprise

Answer 4

A firm that owns and/or controls value-creating activities in two or more different countries. It is a firm that uses FDI to establish or purchase income-generating assets abroad, but may also trade goods and services across international borders.

Question 5

Parent company

Answer 5

An (un)incorporated enterprise which has a direct investment enterprise operating in a country other than that of the parent.

Question 6

Subsidiary

Answer 6

An incorporated enterprise in the host country in which another entity directly owns more than half of the shareholders’ voting power.

Question 7

Foreign Direct Investment (FDI)

Answer 7

An investment made to acquire a lasting interest in enterprises operating outside of the economy of the investors.