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Internation Business summary CH 1 - 9

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Uitgebreide samenvatting van de belangrijke aspecten / begrippen / etc van het vak International Business

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  • October 25, 2022
  • 15
  • 2017/2018
  • Summary
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Notes on the book – International Business

Chapter 1

International business:
1) A business (firm) that engages in international (cross-border) economic activities,
and/or
2) The action of doing business abroad

Multinationals enterprise (MNE): A firm that engages in foreign direct investment
 investment in, controlling, and managing value-added activities in other countries.

Emerging economy/markets: “developing country”

Purchasing Power Parity (PPP): A conversion that determines that equivalent amount of
goods and services that different currencies can purchase.

Gross Domestic Product (GDP): Sum of value added by resident firms, households and
governments operating in an economy.

Gross National Product (GNP): GDP plus income from non-resident sources abroad.

Gross National Income (GNI): GDP plus income from non-resident sources abroad. GNI is the
term used by the world bank and other international organizations to supersede the term
GNP.

Reverse innovation: An innovation that is adopted first in emerging economies and is then
diffused around the world.

Expatriate manager (expat): A manager who works abroad.

International premium: A significant pay raise when working overseas.

Globalization: The close integration of countries and peoples of the world.

Risk management: The identification and assessment of risks and the preparation to
minimize the impact of high-risk, unfortunate events.

Semi globalization: A perspective that suggests that barriers to market integration at
borders are high, but not high enough to insulate countries from each other company.

, Chapter 2

Institutional transition: Fundamental and comprehensive changes introduced to the formal
and informal rules of the game that affect firms as players

 Example; Russia’s transitions from a communist totalitarian state to a market
economy with regular elections.

Institutions are supported by 3 “pillars” by Richard Scott:
Formal institutions  Laws  Regulatory pillar
 Regulations
 Rules
Informal institutions  Norms  Normative pillar
 Culture  Cognitive pillar
 Ethics

Regulatory pillar: The coercive power of governments  specifies the do’s and don’ts.
Normative pillar: The mechanism through which norms influence individual and firm
behavior.
Cognitive pillar: The internalized (or taken-for-granted) values and beliefs that guide
individual and firm behavior.

Transaction cost: The cost associated with economic transactions/costs of doing business
 Important source is opportunism: The act of seeking self-interest with guile
(misleading, cheating).

Transaction economies: A subset of emerging economies, particularly those moving from
central planning to market competition.

Political system: Rules of the game on how a country is governed politically
2 primary political systems:
- Democracy: A political system in which citizens elect representatives to govern the
country on their behalf
 Individual’s right to freedom of expression and organization
- Totalitarianism: A political system in which one person or party exercises absolute
political control over the population
4 different types;
 Communist totalitarianism: communist party. China & North Korea.
 Right-wing totalitarianism: is characterized by its intense hatred against
communism. One party restricts political freedom, arguing that such freedom
would lead to communism.
 Theocratic totalitarianism: monopolization of political power in the hands of
one religious party or ground. Iran & Saudi Arabia.
 Tribal totalitarianism: one tribe or ethnic group monopolizing political power
and oppressing other tribes or ethnic groups

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