Topic 1 - Global Business

Question 1

Name the six dimensions of globalisation.

Answer 1

1. Integration and interdependence of national economies
2. Rise of regional economic integration blocs
3. Growth of global investment and financial flows
4. Convergence of buyer lifestyles and preferences
5. Globalisation of production activities
6. Globalisation of services

Question 2

Name the five driving forces of globalisation

Answer 2

1. Reduction of barriers to trade and investment
2. Market liberalisation and adoption of free markets
3. Industrialisation, economic development, and modernisation
4. Integration of world financial markets
5. Advances in technology

Question 3

Define born global firm

Answer 3

A young entrepreneurial company that initiates international business activity early in its evolution, moving rapidly into foreign markets.

Question 4

Define commercial risk

Answer 4

A firm’s potential loss or failure from poorly developed or executed business strategies, tactics, or procedures.

Question 5

Define cross-cultural risk

Answer 5

A situation or event in which a cultural misunderstanding puts some human value at stake.

Question 6

Define currency risk

Answer 6

Potential harm that arises from changes in the price of one currency relative to another.

Question 7

Define distribution channel intermediary

Answer 7

A specialist firm that provides various logistics and marketing services for focal firms as part of international supply chains, both in the home country and abroad.

Question 8

Define exporting

Answer 8

The sale of products and services to customers located abroad from a base in the home country or a third country.

Question 9

Define facilitator

Answer 9

A firm or an individual with special expertise in banking, legal advice, customs clearance, or related support services that assists focal firms in the performance of international business transactions.

Question 10

Define focal firm

Answer 10

The initiator of an international business transaction, which conceives, designs, and produces offerings intended for consumption by customers worldwide.

Question 11

Define foreign direct investment (FDI)

Answer 11

An internationalisation strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labour, land, plant and equipment (foreign entry strategy).

Question 12

Define freight forwarder

Answer 12

A specialised logistics service provider that arranges international shipping on behalf of exporting firms.

Question 13

Define globalisation of markets

Answer 13

Ongoing economic integration and growing interdependency of national economies.

Question 14

Define importing/global sourcing

Answer 14

Procurement of products or services from suppliers located abroad for consumption in the home country or a third country.

Question 15

Define International business

Answer 15

Performance of trade and investment activities by firms across national borders.

Question 16

Define international investment

Answer 16

The transfer of assets to another country or the acquisition of assets in that country.

Question 17

Define international portfolio investment

Answer 17

Passive ownership of foreign securities such as stocks and bonds to generate financial returns.

Question 18

Define international trade

Answer 18

Exchange of products (merchandise) and services (intangibles) across national borders, typically through exporting and importing.

Question 19

Define internationalisation

Answer 19

The tendency of companies to deepen their international business activity systematically.

Question 20

Define multinational enterprise (MNE)

Answer 20

A large company with substantial resources that performs various business activities through a network of subsidiaries and affiliates located in multiple countries.

Question 21

Define small and medium-sized enterprise (SMEs)

Answer 21

A company with 200 or fewer employees (Australia)

Question 22

Define state-owned enterprise

Answer 22

A company that is founded and owned by a government in order to undertake commercial activities on the government’s behalf.