Ch 1 - What Is Global Business?

Question 1

international business (IB)

Answer 1

1. A business (or firm) that engages in international (cross-border) 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

Investing in, controlling, and managing value-added activities in other countries.

Question 4

global business

Answer 4

Business around the globe.
Includes both international (cross-border) business activities covered by traditional IB books AND domestic business activities.

Question 5

emerging economies

Answer 5

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

Question 6

emerging markets

Answer 6

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

Question 7

purchasing power parity (PPP)

Answer 7

A conversion that determines the equivalent amount of goods and services that different currencies can purchase. An adjustment to reflect the differences in cost of living.

Question 8

gross domestic product (GDP)

Answer 8

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

Question 9

gross national product (GNP)

Answer 9

GDP plus income from non-resident sources abroad.

Question 10

gross national income (GNI)

Answer 10

GDP plus income from non-resident sources abroad. GNI is the term used by the World Band and other international organizations to supersede the term GNP.

Question 11

BRIC

Answer 11

emerging economies Brazil, Russia, India, & China

Question 12

BRICS

Answer 12

emerging economies Brazil, Russia, India, China, & South Africa

Question 13

Great Transformation

Answer 13

Transformation of the global economy embodied by the tremendous shift in economic weight and engines of growth toward emerging economies in general and BRICS) in particular.

Question 14

The Triad

Answer 14

North America, Western Europe, and Japan

Question 15

base of the pyramid (BoP)

Answer 15

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

Question 16

reverse innovation

Answer 16

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

Question 17

expatriate manager

Answer 17

A manager who works abroad, or “expat” for short.

Question 18

international premium

Answer 18

A significant pay raise when working overseas.

Question 19

liability of foreignness

Answer 19

The inherent disadvantage that foreign firms experience in host countries because of their non-native status.

Question 20

globalization

Answer 20

The close integration of countries and peoples of the world.

Question 21

risk management

Answer 21

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

Question 22

scenario planning

Answer 22

A technique to prepare and plan for multiple scenarios (either high or low-risk).

Question 23

Semiglobilization

Answer 23

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 24

nongovernmental organizations (NGOs)

Answer 24

An organization that is not affiliated with governments.

Question 25

Group of 20 (G-20)

Answer 25

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