unit 1 study guide International Business Operations

Global business operations view

From a global perspective; includes cross-border business activities and domestic business activities

Cross-border & domestic

Business activities that occur across national borders and within one country

Multinational Enterprise (MNE)

A company with multiple countries’ operations engaging in foreign direct investment

Foreign Direct Investment (FDI)

Investment in controlling and managing value-added activities in other countries

Global mindset

Ability to understand, respect, and adapt to different cultures

Liability of foreignness

Disadvantage of foreign firms operating in host countries because of their nonnative status

Expatriate

A manager who works and resides in a foreign country

Institutional premium

Significant power or advantage gained by operating overseas

Primary vs. secondary stakeholders

Primary: firm depends directly (e.g., customers, employees); Secondary: less direct (e.g., media)

State

Nation/state—the close integration of countries and people of the world

Reverse innovation

Innovation flows from developing to developed countries

Risk management

Identification and assessment of risks plus preparation to minimize the impact of high risk

Black Swan event (ex: COVID)

Unpredictable event beyond what is normally expected and with severe consequences

Scenario planning

Technique to prepare and plan for multiple scenarios, decision-making, forecasting

Gross Domestic Product (GDP)

The sum of value added by resident firms within a country

Gross National Income (GNI)

GDP plus income from nonresident sources abroad

Purchasing Power Parity (PPP)

Conversion that determines the equivalent amount of goods/services that different currencies can purchase

Nongovernmental organization (NGO)

Organization not affiliated with any government

Reasons to study global business

Cultural knowledge, competitive edge, learning job performance

Triple bottom line

Economic, environmental, social performance (labor practices, waste, sustainability)

Business resources

Resources within an environment that affect firm success/failure

Resource-based view

Firm success/failure determined by its specific resources and capabilities

Why advocate promoting globalization?

Greater economic growth, improved technology, cultural exchange, social progress, development for emerging economies

Economic downside of globalization

Job loss in developed countries, promotes inequality, exploits workers, erodes local cultures, increased interconnectedness, western dominance/cultural hegemony

Environmental downside of globalization

Degrades environment, increased carbon emissions, resource depletion

Loss of regulation

Irresponsible practices, MNEs gain too much power

Influence over economies/societies

Diminishes ability of individual states to control their own economic policies

Three views of globalization

1) New force sweeping the world 2) Nothing new (long-run trend) 3) Pendulum that swings back and forth

Asian Tigers

Taiwan, Singapore, Hong Kong, South Korea (rapid industrialization)

BRICS countries

Brazil, Russia, India, China, South Africa

PIIGS countries

Portugal, Italy, Ireland, Greece, Spain (borrowing aggressively, debt issues)

Three things define Black Swan

Extremely rare, severe consequences, cannot be predicted beforehand

What countries make up the TRIAD?

North America, Western Europe, Japan