IB 300 chap 1-4

International Business (IB)

When companies do business across countries such as selling buying or investing abroad

Multinational Enterprise (MNE)

A company that owns or controls businesses in more than one country

Foreign Direct Investment (FDI)

When a company invests in and manages operations in another country

Global Business

All business activities worldwide including both international and domestic activities

Global Mindset

The ability to understand how the world is connected

Expatriate Manager (Expat)

A manager who works in another country

International Premium

Extra pay for working overseas

Globalization

Countries and people becoming more connected

Institution-Based View

The view that business success depends on laws government culture and social rules

Stakeholders

People or groups affected by a company

Triple Bottom Line

Economic success social responsibility and environmental responsibility

Resource-Based View

The view that business success depends on skills knowledge technology and brand strength

Liability of Foreignness

Extra challenges foreign companies face because they are not local

Emerging Economies/Markets

Growing countries with increasing global influence

Base of the Pyramid (BoP)

Very low-income populations

BRICS

Brazil Russia India China and South Africa

Reverse (Frugal) Innovation

Products made for poorer countries that later become popular worldwide

Risk Management

Planning to reduce possible damage from risks

Black Swan Events

Rare unpredictable events with major impact

Scenario Planning

Preparing for uncertainty by imagining different futures and creating plans for each scenario

Semiglobalization

The idea that the world is not fully globalized and that borders and differences still matter

GDP

The total value of goods and services in a country

PPP

An adjustment for differences in cost of living

GNP/GNI

Measures income including money earned from abroad

NGOs

Non-governmental organizations that can influence global business

Deglobalization

Countries becoming less economically connected

Global Value Chains (GVCs)

Products made using parts or activities from many countries

Resilience

The ability to recover from problems

Organizational Stack

Extra resources that help companies adapt

Institutions

The rules of the game in a society that guide people and businesses

Formal Institutions

Written rules such as laws regulations and government rules that are enforced by governments

Informal Institutions

Unwritten rules such as culture norms and ethics based on shared beliefs and values

Normative Pillar

What society expects people to do

Cognitive Pillar

What people accept as normal or common sense

Transaction Costs

The costs of doing business such as contracts and legal fees

Opportunism

Acting selfishly or dishonestly for personal gain

Transition Economies

Countries moving from government-controlled to market-based economies

Bounded Rationality

Managers making decisions with limited information

Nonmarket Political Strategy

Using political and social relationships to succeed

Institutional Work

Efforts to change or influence rules and institutions

Political System

The system that determines how a country is governed

Democracy

A political system where citizens elect leaders

Totalitarianism

A political system where one person or party has total control

Authoritarianism

A system where power is concentrated but not fully totalitarian

Political Risk

Changes in government that can hurt businesses

Geopolitics

How countries interact politically

Legal System

The system that determines how laws are made and enforced

Civil Law

A legal system based on written codes and statutes

Common Law

A legal system based on past court decisions

Theocratic Law

A legal system based on religious rules

Property Rights

Legal rights to use and profit from property

Intellectual Property (IP)

Creations of the mind

Economic System

A system that determines how resources are used

Market Economy

An economy where supply and demand control the economy

Command Economy

An economy where the government controls production and prices

Mixed Economy

An economy that combines market and government control

Private Ownership

Firms are privately owned and aim to maximize profits

State-Owned Enterprises (SOEs)

Businesses owned by governments that often focus on jobs and stability

Moral Hazard

Taking risks because the consequences can be avoided

State Capitalism

A market economy with strong government ownership

Hybrid Organizations

Organizations that combine private and state elements

Culture

The collective programming of the mind that distinguishes one group from another

Ethnocentrism

Believing your own culture is better than other cultures

Lingua Franca

A main shared language used for global business communication

Social Structure

How society organizes people

Social Stratification

The hierarchy of society based on factors such as class or caste

Social Mobility

The ability to move up the social hierarchy

Low-Context Culture

A culture where communication is direct and explicit and words matter most

High-Context Culture

A culture where meaning depends heavily on nonverbal cues and relationships

Cultural Clusters

Groups of countries with similar cultures

Civilizations

Broadest cultural groupings such as Western Islamic and Confucian

Power Distance

The acceptance of unequal distribution of power

Individualism

An identity based mainly on the individual

Collectivism

An identity based mainly on the group

Masculinity vs. Femininity

The degree of gender role differentiation in a culture

Uncertainty Avoidance

The degree of comfort with ambiguity and risk

Long-Term Orientation

A focus on perseverance and future rewards

Cross-Cultural Blunders

Mistakes caused by misunderstanding language titles power distance or cultural norms

Ethics

Standards that govern behavior

Code of Conduct

Guidelines for making ethical decisions

Ethical Relativism

The idea that ethics vary by culture

Ethical Imperialism

The idea that one universal set of ethics applies everywhere

Corruption

The abuse of public power for private gain

FCPA

The 1977 U.S. law banning bribery of foreign officials

Extraterritoriality

The ability of laws to apply beyond national borders

Reactive Ethical Response

Denying responsibility for an ethical issue

Defensive Ethical Response

Doing the minimum required to address an ethical issue

Accommodative Ethical Response

Accepting responsibility for an ethical issue

Proactive Ethical Response

Going beyond requirements to address an ethical issue

Cultural Intelligence (CQ)

The ability to function effectively across cultures

CQ Awareness

Understanding your own cultural bias

CQ Knowledge

Learning about other cultures

CQ Skills

Applying cultural awareness and knowledge

Global Business Rule 1-5

Be prepared, Slow down, Establish trust, Understand the importance of language, Respect cultural differences, No culture is superior

SWOT Analysis

An analysis of Strengths Weaknesses Opportunities and Threats

Resource-Based View (RBV)

A view focused on a firm's internal strengths and weaknesses

Resource

Something a firm has

Capability

Something a firm can do or its ability to use resources well