IB - Module 2

Foreign Direct Investment

investment in, controlling and managing value-added activities in another country

expatriate assignment

temporary job abroad with a multinational company

emerging economies

economies that only recently established institutional frameworks that ease international trade and investment; low-/middle-level income; high-level economic growth rate

BRIC

4 largest emerging economies (Brazil, Russia, India, China)

PPP Purchasing Power Parity

rate at which the currency of one country needs to be converted into that of the second country to ensure that a given amount of the first country's currency will purchase the same volume of goods and services in second one.

institution-based view

international performance of a frim depends on formal rules and informal rules that differ around the world; focus on external environment

resource-based view

firm's international success is influenced by its internal resources and capabilities; internal environment

liability of outsidership

disatvantage of outsiders over insiders caused by lack of familiarity with the local environment

globalization

a process leading to greater interdependence and mutual awareness (reflexivity) among economic, political, and social units around the world, and among actors in general

liberalization

the removal of regulatory restrictions on business

setbacks for globalization

fear among people in developing countries as competition about low-end manufacturing jobs arises; MNEs can destroy local companies, cultures, and values

risk management

the identification and assessment of risks and actions taken to minimize impacts of rare events

non-invented-here syndrome

tendency to distrust new ideas coming from outside one's own organization or country

ethnocentric perspective

view of the world through the lens of one's own culture

cosmopolitans

people who embrace cultural diversity and see personal and professional opportunities of globalization

task/immediate environment of organization

customers, competitors, suppliers, government, civil society organizations, interest groups

broader/indirect/macro environment of organization

innovations, political tensions, disposable income, consumer trust, employment, world trades slows down

external changes

technological, economic, societal, and climate changes

macro environment contexts

political, economic, socio-cultural, technological, ecology&climate

acceleration of globalization factors

political changes (e.g. liberalization), international collaboration (trade agreements, EU), socio-cultural changes (cultural exchange via travel, films, TV), technological changes (communication, information, transportation innovations)

multinationals

companies that have offices abroad and operate in a different country; international production chain; firms engaging in FDI