Module 2

Question 1

Define International Business (IB)

Answer 1

1. A firm that engages in international (cross-border) economic activities

and/or

2. the action of doing business abroad

Question 2

Define Multinational Enterprises (MNE) and FDI

Answer 2

A Firm that engages in FOREIGN DIRECT INVESTMENT (FDI) and operates in multiple countries

FDI= investments in controlling and managing value-added activities in other countries

Question 3

Define Emerging Economies

Answer 3

Economies that only recently extablished institutional frameworks that facilitate international trade and investments, typically with low or middle-level income, and above average economic growth

Question 4

Define Purchasing Power Parity (PPP)

Answer 4

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

Question 5

Describe Institution-Based View

Answer 5

this view suggests that success and failure of firms are enables by:

FORMAL RULES (laws, institutions, anti-trust regulations)
INFORMAL RULES (culture, norms, values)

Question 6

Describe Resource-Based View

Answer 6

Firms’ success and failure are influences by their environments

! focus on internal resouces and capabilities !

Question 7

Define the Liability of Outsidership

Answer 7

the inherent disadvantage the outsiders experience in a new environment because of their lack of familiarity

Question 8

Define Globalization

Answer 8

A process leading to greater interdependence and mutual awareness (reflexivity) among economic, political and social units in the world, and among actors in general

Question 9

What are the consequences of globalization?

Answer 9

LIBERALIZATION
the removal of the share of business activities outside the home country

HIGHER INCOME INEQUALITY

POLICY SWINGS BETWEEN LIBERAL AND PROTECTIONISTIC STRATEGIES

Question 10

Define the Transnationality Index

Answer 10

measure of the share of business activities outside of the home country

Question 11

What are the implications of Globalization

Answer 11

1- Ethnocentric view:
view of the world thourgh the lens of one’s own culture

2- Not-Invented-here Syndrome:
distrust ideas coming from outside of one’s own organization or community

3- Cosmopolitans:
people embracing cultural diversity and the opportunities of globalization