RSM490 Global Business Midterm Notes.docx

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University of Toronto St. George
Rotman Commerce
Prof.Jan Klakurka

RSM490 Global Business 9222012 21900 PMInternational business IB a business that engages in international economic activities or doing the action of business abroadMultinational enterprise MNE a firm that engages in foreign direct investment FDIForeign direct investment FDI investment in controlling and managing value added activities in other countriesIB has two sides foreign entrants existing domestic firmsGlobal business business around the globe that include both foreign and domestic sidesEmerging economies developing countries emerging marketsGross domestic product GDP the sum of value added by resident firms households and government operating in an economyPurchasing power parity PPP a conversion that determines the equivalent amount of goods and services different currencies can purchaseAdjustment to reflect differences in cost of livingCost of living in emerging markets tends to be lowerBRIC Brazil Russia India and ChinaGross national product GNP GDP plus income from nonresident sources abroadGross national income GNI GDPincome from nonresident sources abroadTriad North America Western Europe and JapanBase of the pyramid economies where people make less than 2000 a yearGroup of 20 G20 19 countriesEU meet biannual basis to solve global economic problemsExpatriate manager expat manager works abroadInternational premium a significant pay raise when working overseasUnified FrameworkWhat determines the success and failure of firms around the globeTwo core perspectives o Institutionbased viewInstitutions rules of the gameFormal rules laws informal rules values cultures ethics and norms o Resourcebased viewInstitution based view is external while resource based is internal resources and capabilitiesFirms must have firmspecific resources and capabilities that are not shared by competitors in the same environmentsLiability of foregineness inherent disadvantage due to nonnative statusWhat is GlobalizationGlobalization close integration of countries and peoples of the worldThree view of globalization o Globalization can beA new force sweeping through the world in recent timesA long run historical evolution since the dawn of human historyA pendulum that swings from one extreme to another from time to timePendulum view o Globalization is unable to keep going in one direction o The rapid growth of globalization led to the historically inaccurate view that globalization is new o Created fear among people in developed economies o Risk management the identification and assessment of risks and the preparation to minimize the impact of highrisk unfortunate events o Scenario planning a technique to prepare and plan for multiple scenariosSemi globalization o A perspective that suggests barriers to market integration may be high but not enough for complete insulation o Total isolationlocalization which treats each country as a unique market o Total globalizationstandardization which treats the entire world as one marketGlobal business and globalization at a crossroadsNongovernmental organization NGO organizations that are not affiliated with governments
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