GEB 3373 Study Guide - Midterm Guide: Foreign Portfolio Investment, De Jure, Royalty Payment
23 Apr 2019
School
Department
Course
Professor
International Business: any commercial transactions among parties in multiple countries
CAGE: measure the “distance” between the home country and other countries
Cultural: differences/similarities in the language, religion, or values or two regions
Administrative: ease/difficulty of adapting to the government policies, legal environment, currency, politics,
and institution of a foreign market
Geographic: physical remoteness, transportation and communication infrastructure, country size, and common
borders/ports
Economic: per capita income, HR base, infrastructure, and technology; influence how a company produces and
markets its products in a country
Gravity model: countries that are geographically close are economically alike
Tangible merchandise exports and imports: trade in goods – cars, food, oil, textiles (visible trade)
Intangible service exports and imports: trade in service – banking, consulting, legal (invisible trade)
International Investment: the resident of one country supply capital to resident of another country
FDI: foreign direct investment; giving a company ownership and control of foreign assets
FPI: foreign portfolio investment; passive purchases of financial assets (stocks or bonds) for reasons other than
control
International licensing: a contract in which a firm in one country allows a firm in a foreign country to use its
intellectual property in exchange for royalties
International franchising: special kind of licensing when a firm in one country allows a firm in another country
to use its operating system and intellectual property in exchange for a royalty payment
International management contracts: arrangement in which a firm in one country agrees to manage the assets of
a firm in another country for a fee
Globalization: worldwide economic, social, technological, cultural, and political integration among individuals,
groups of people, companies, and nations
6 aspects of globalization: technological, economic, social, spatial, cultural, biological
1/3 of the world’s GDP comes from trade
Strategic imperatives to “go global”: leverage core competencies, acquire scarce resources, new markets to
diversify revenue streams, better compete w/rivals
GATT: general agreement on tariffs and trade; intended to reverse restrictions on foreign investment and
international trade
WTO: 1995, dispute settlement mechanism and protects intellectual property
De facto: flows and activities that can be measured
De jure: subjective measure of things a country can do to facilitate globalization
Cold War: first world (rich Western countries US and allies – Japan), second world (Soviet Union and allies),
third world (middle & low income nations
NICS: newly industrialization countries; emerging market economies including recently undergone
industrialization
BRICS: most promising emerging markets; Brazil, Russia, India, China, South Africa
CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa
Big Ten: Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea, Turkey
MINTs: Mexico, Indonesia, Nigeria, Turkey
66% world’s extremely poor people: India, china, Nigeria, Bangladesh, Democratic Republic of Congo
US: 23% World’s GDP; largest economy; world’s invoicing currency; invested flight capital – flee to safety
Canada: high political & legal stability; good education & infrastructure
