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Test 1 cheat sheet

Test 1 cheat sheet - The most frequently discussed foreign...

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The most frequently discussed foreign entrant is the multinational enterprise (defined as a firm that engages in foreign direct investment) Emerging economies = developing countries = emerging markets. Emerging markets = 50% global GDP (with PPP; 26% without PPP) Purchasing Power Parity – a conversion that determines the equivalent amount of goods and services that different currencies can purchase; used to capture the differences in cost of living in different countries. Cost of living in developing economies <cost of living in developed nations The Triad = North America, Western Europe, and Japan Expatriate manager – works abroad; commands an international premium (pay raise when working overseas) of $250 – 300 thousand Fundamental question: What determines the success/failure of firms around the globe? -Institution-based view suggests that institutions (structures that define rules of game). Formal institutions = government regulations. Informal institutions = cultures, ethics, norms. Individualistic nations (USA, Australia, Britain) have higher level of entrepreneurship. Collectivistic nations: Japan -Resource-based view suggests that firm performance is determined by resources and capabilities Liability of foreignness (inherent disadvantage from being a non-native firm) 3 Views on Globalization: 1. New force sweeping the world in recent times (argument of those who are against globalization) 2. A long-run historical evolution since the dawn of human history 3. Pendulum that swings from one extreme to another from time to time (makes most sense). Globalization can’t keep going in 1 direction (backlash from rapid globalization of 1990s, people in developed nations fear losing jobs) 4 Tigers (Hong Kong, Singapore, South Korea, Taiwan) began participating in global economy, and have become developed nations in a short time. BRIC – Brazil, Russia, India, China. These nations’ GDPs grew much more than other nations during the mid-2000s Semiglobalization – barriers to market integration at borders are high but not high enough to completely insulate countries from each other Size of world economy at 21 st century = $55 trillion; Growth of world output between 1990 and 2000 = 23%; Per capita GDP growth in emerging economies = 4.6%; People employed by foreign-owned firms = 80 million; Top economic entities in the world that are companies = 47; 18 Fortune 500 firms in Beijing China's economy will surpass Germany in the next few years, Japan by 2015, and the United States by 2041. India's growth rate will be the highest—not China's -- and it will overtake Japan (today the world's second-largest economy) by 2032. Taken together, the BRICs could be larger than the United States and the developed economies of Europe within 40 years. By 2025, BRICs will bring another 200 million people with incomes above $15,000 into the world's economy. That's equal to the combined populations of Germany, France and the United Kingdom.
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