Chapter 1 – Globalizing Business
International business (IB) is defined as a business (or firm) that engages
in international (cross-border) economic activities
A multinational enterprise (MNE) is defined as a firm that engages in FDI
Foreign direct investment (FDI) is directly investing in, controlling, and
managing value-added activities in other countries
Global business is defined as business around the globe
This book covers international as well as domestic business
Emerging economies and markets is synonymous with developing countries
Purchasing power parity is a conversion that determines the equivalent
amount of goods and services different currencies can purchase
Gross national product (GNP) is GDP plus income from nonresident sources
abroad
Gross national income (GNI) can be used interchangeably with GNP
Why study global business?
o Enhance your employability and advance your career in the global
economy
o Better preparation for possible expatriate assignments abroad
o Stronger competence in interacting with foreign suppliers, partners,
and competitors and in working for foreign-owned employers in your
own country
International premium is a significant pay raise when working overseas
In US firms, an expat’s total compensation package is approximately
$250,000 to $300,000 (including perks and benefits)
What determines the success and failure of firms around the globe?
o Global business is fundamentally about not limiting yourself to your
home country. It is about treating the entire global economy as your
potential playground (or battlefield)
o An Institution-Based View
This view suggests that the success and failure of firms are
enabled and constrained by institutions
Formal rules are laws and informal rules are values
This view primarily deals with the external environment
o A Resource-Based View
This view suggests that the success and failure of firms around
the globe are largely determined by their environments
This view focuses on a firm’s internal resources and
capabilities
Liability of foreignness is the inherent disadvantage that foreign firms
experience in host countries because of their nonnative status
Globalization is the close integration of countries and peoples of the world
Globalization could be one of the following:
o A new force sweeping through the world in recent times
o A long-run historical evolution since the dawn of human history
o A pendulum that swings from one extreme to another from time to
time
International business (IB) is defined as a business (or firm) that engages
in international (cross-border) economic activities
A multinational enterprise (MNE) is defined as a firm that engages in FDI
Foreign direct investment (FDI) is directly investing in, controlling, and
managing value-added activities in other countries
Global business is defined as business around the globe
This book covers international as well as domestic business
Emerging economies and markets is synonymous with developing countries
Purchasing power parity is a conversion that determines the equivalent
amount of goods and services different currencies can purchase
Gross national product (GNP) is GDP plus income from nonresident sources
abroad
Gross national income (GNI) can be used interchangeably with GNP
Why study global business?
o Enhance your employability and advance your career in the global
economy
o Better preparation for possible expatriate assignments abroad
o Stronger competence in interacting with foreign suppliers, partners,
and competitors and in working for foreign-owned employers in your
own country
International premium is a significant pay raise when working overseas
In US firms, an expat’s total compensation package is approximately
$250,000 to $300,000 (including perks and benefits)
What determines the success and failure of firms around the globe?
o Global business is fundamentally about not limiting yourself to your
home country. It is about treating the entire global economy as your
potential playground (or battlefield)
o An Institution-Based View
This view suggests that the success and failure of firms are
enabled and constrained by institutions
Formal rules are laws and informal rules are values
This view primarily deals with the external environment
o A Resource-Based View
This view suggests that the success and failure of firms around
the globe are largely determined by their environments
This view focuses on a firm’s internal resources and
capabilities
Liability of foreignness is the inherent disadvantage that foreign firms
experience in host countries because of their nonnative status
Globalization is the close integration of countries and peoples of the world
Globalization could be one of the following:
o A new force sweeping through the world in recent times
o A long-run historical evolution since the dawn of human history
o A pendulum that swings from one extreme to another from time to
time
