Global Economics Practice Test/Study Guide
(Learning Objectives)
Competency: Business Decision Making in the Global Environment
(73%)
Topic:
... [Show More] Globalization
Chapter 1 – Globalizing Business (Peng)
1. Explain the concepts of international business and global business, with a focus on
emerging economies.
International Business is defined as
o business that is done crossing borders, while global business consists of
business done while crossing borders AS WELL as business conducted
domestically.
o International Business focuses on business conducted in developed
economies, while Global Business also focuses on competition in
emerging economies at the base of the economic pyramid.
2. Give three reasons why it is important to study global business.
Enhance your employability and advance your career in the global economy by
equipping yourself with global business knowledge.
Better preparation for possible expatriate assignments abroad.
Stronger competence in interacting with foreign suppliers, partners, and
competitors and in working for foreign-owned employers in your own country.
3. Articulate one fundamental question and two core perspectives in the study of global
business.
The fundamental question of global economics is: “What determines the success
and failure of firms around the globe?”
Two core perspectives are
o institution-based view and
o resource-based view.
4. Identify three ways of understanding what globalization is.
Some view globalization as a recent phenomenon while others believe it is a
historical view that has been one-directional since the dawn of human history.
Another perspective and one we focus on is that it is a pendulum that swings
from one extreme to the other throughout time.
Pendulum that swings from one to the other.
5. State the size of the global economy and its broad trends and understand your likely bias
in the globalization debate.
The total size of global GDP (calculated at the official, nominal exchange rate) is
approximately $60 trillion.
MNEs, especially large ones from developed economies, are sizable economic
entities.
Current and would-be business leaders need to be aware of their own hidden
pro-globalization bias.
Chapter 1 Key Terms
Base of the Pyramid Part of the view of the global economy as a
pyramid. The vast majority of humanity –
about 4 billion people – live at the base of
the pyramid making less than $2,000 per
year.
BRIC Newly coined acronym that stands for Brazil,
Russia, India, China
Emerging Economies (Emerging Markets) Countries that are starting to emerge as new
players in the world economy.
Foreign Direct Investment (FDI) Direct investment in, control, and
management of value-added activities in
other countries.
Global Business Business around the globe. The activites
include both (1) international (cross-border)
activities covered by traditional IB books and
(2) domestic business activities
Gross Domestic Product (GDP) A nation’s total output of goods and services.
Gross National Product (GNP) GDP plus income from nonresident sources
abroad.
Gross National Income GDP plus income from nonresident sources
abroad.
International Business (IB) Defined as (1) a business firm [Show Less]