WGU C215 Study Guide - FINAL

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103 term sky Base of the pyramid (BOP)Economies where people make less than $2,000 per capita per year.BRICABrazil, Russia, India, and China.Emerging economiesterm that has gradually replaced the term "developing countries" since the 1990s.Emerging marketsA term that is often used interchangeably with "emerging economies." Expatriate managerA manager who works abroad, or "expat" for short.Foreign direct investment (FDI)Investment in, controlling, and managing value-added activities in other countries.Global BusinessBusiness around the globe.GlobalizationThe close integration of countries and peoples of the world.Gross domestic product (GDP)The sum of value added by resident firms, households, and governments operating in an economy.Gross national income (GNI)GDP plus income from non-resident sources abroad. The term used by the World Bank and other international organizations to supersede the term GNP.Gross national product (GNP)GDP plus income from non-resident sources abroad Group of 20 (G-20)The group of 19 major countries plus the European Union (EU) whose leaders meet on a biannual basis to solve global economic problems.International business (IB)(1) A business (or firm) that engages in international (cross-border) economic activities and/or (2) the action of doing business abroad.

International premiumA significant pay raise when working overseas.Liability of foreignnessThe inherent disadvantage that foreign firms experience in host countries because of their non-native status.Multinational enterprise (MNE)A firm that engages in foreign direct investment (FDI).Nongovernmental organization (NGO)An organization that is not affiliated with governments.Purchasing power parity (PPP)A conversion that determines the equivalent amount of goods and services that different currencies can purchase.Reverse innovationAn innovation that is adopted first in emerging economies and is then diffused around the world.Risk managementThe identification and assessment of risks and the preparation to minimize the impact of high-risk, unfortunate events.Scenario planningA technique to prepare and plan for multiple scenarios (either high or low risk).SemiglobalizationA perspective that suggests that barriers to market integration at borders are high, but not high enough to insulate countries from each other completely.TriadNorth America, Western Europe, and Japan.Purchasing power parity (PPP)adjustment made to the GDP to reflect differences in the cost of living The bottom billionConcentrated in Africa and Central Asia - 58 small countries, stuck at the bottom in terms of growth, incomes and human development Enhance employability & advance career, better preparation to be expat, competence in interacting with foreign suppliers/partners/competitors/employees Why study global business?Institution-based viewA core perspective. Success and failure of firms are constrained by institutions Formal rulesrequirements that treat domestic and foreign firms as equals enhance the potential odds for foreign firms' success or those that discriminate against foreign firms, would undermine the chances for foreign entrants Informal rulescultures, ethics, and norms play an important part in shaping the success and failure of firms around the globe Resource-based viewA core perspective. Success and failure of firms is determined by their environment New force in recent times, a long-running historical evolution, a pendulum swinging between extremes What are the three views of globalization?

"Four Tigers"Hong Kong, Singapore, South Korea and Taiwan Absolute advantageThe economic advantage one nation enjoys that is absolutely superior to other nations.Administrative policyBureaucratic rules that make it harder to import foreign goods.antidumping dutyTariffs levied on imports that have been "dumped" (selling below costs to "unfairly" drive domestic firms out of business).Balance of TradeThe aggregation of importing and exporting that leads to the country-level trade surplus or deficit.Classical trade theoriesThe major theories of international trade that were advanced before the 20th century, which consist of (1) mercantilism, (2) absolute advantage, and (3) comparative advantage.Comparative advantageRelative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations.Deadweight costNet losses that occur in an economy as a result of tariffs.ExportSelling abroad.Factor endowmentThe extent to which different countries possess various factors of production such as labor, land, and technology.Factor endowment theoryA theory that suggests that nations will develop comparative advantages based on their locally abundant factors.Heckscher-Ohlin theoryAnother name for factor endowment theory First-mover advantageAdvantage that first movers enjoy and do not share with late entrants.Free tradeThe idea that free market forces should determine how much to trade with little or no government intervention.ImportBuying from abroad.Import quotaRestriction on the quantity of imports.Import tariffA tax imposed on imports.Infant industry argumentThe argument that if domestic firms are as young as "infants," in the absence of government intervention, they stand no chances of surviving and will be crushed by mature foreign rivals.Local content requirementA requirement stipulating that a certain proportion of the value of the goods made in one country must originate from that country.

MerchandiseTangible products being traded.Modern trade theoriesThe major theories of international trade that were advanced in the 20th century, which consist of (1) product life cycle, (2) strategic trade, and (3) national competitive advantage of industries.Nontariff barrier (NTB)Trade barrier that relies on nontariff means to discourage imports.Opportunity costCost of pursuing one activity at the expense of another activity, given the alternatives (other opportunities).Product life cycle theoryA theory that accounts for changes in the patterns of trade over time by focusing on product life cycles.ProtectionismThe idea that governments should actively protect domestic industries from imports and vigorously promote exports.Resource mobilityAssumption that a resource used in producing a product for one industry can be shifted and put to use in another industry.ServicesIntangible services being traded.Strategic trade policyGovernment policy that provides companies a strategic advantage in international trade through subsidies and other supports.Strategic trade theoryA theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success.SubsidyGovernment payment to domestic firms.Tariff barrierTrade barrier that relies on tariffs to discourage imports.Theory of absolute advantageA theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage.Theory of comparative advantageA theory that focuses on the relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations.Theory of mercantilismA theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer.Theory of national competitive advantage of industries (diamond theory) A theory that suggests that the competitive advantage of certain industries in different nations depends on four aspects that form a "diamond." Trade deficitAn economic condition in which a nation imports more than it exports.Trade embargoPolitically motivated trade sanctions against foreign countries to signal displeasure.