Solution Manual for Global Business 5th
Edition by Peng Mike. Complete Chapters 1 - 17
1 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
,TABLE OF CONTENTS
1. Chapter 1: Introduction
2. Chapter 2: Formal Institutions: Politics, Laws, and Economics
3. Chapter 3: Informal Institutions: Cultures, Ethics, and Norms
4. Chapter 4: Resources and Capabilities
5. Chapter 5: International Trade
6. Chapter 6: Foreign Direct Investment
7. Chapter 7: Foreign Exchange
8. Chapter 8: Global and Regional Integration
9. Chapter 9: The Entrepreneurial Firm
10. Chapter 10: Foreign Market Entry
11. Chapter 11: Global Competitive Dynamics
12. Chapter 12: Alliances and Acquisitions
13. Chapter 13: Strategy, Structure, and Innovation in Multinationals
14. Chapter 14: Marketing and Supply Chain Management
15. Chapter 15: Human Resource Management
16. Chapter 16: Corporate Finance and Governance
Chapter 17: Corporate Social Responsibility
2 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
,Chapter 1
Table of Contents
Purpose and Perspective of the Chapter.......................................................................................................................... 2
Cengage Supplements ......................................................................................................................................................... 2
Chapter Objectives .............................................................................................................................................................. 2
Complete List of Chapter Activities and Assessments .................................................................................................. 3
What's New in This Chapter ............................................................................................................................................. 3
Opening Case Discussion: Emerging Markets—Apple, America, and China ........................................................... 3
Chapter Outline ................................................................................................................................................................... 4
End-of-Chapter Guide ....................................................................................................................................................... 9
Review Questions ........................................................................................................................................................... 9
Critical Discussion Questions ..................................................................................................................................... 11
Global Action ................................................................................................................................................................ 12
Closing Case: Emerging Markets—Are US Multinationals Good for America? ................................................ 12
Appendix ............................................................................................................................................................................ 14
Generic Rubrics ............................................................................................................................................................ 14
Standard Writing Rubric .............................................................................................................................................. 14
Standard Discussion Rubric ........................................................................................................................................ 14
3 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
,Purpose and Perspective of the Chapter
The purpose of this chapter is to explore the concepts of international and global business. First, we discuss
the importance of studying global business. Then, we develop the unified framework used in each chapter,
which focuses learning on one fundamental question and two core perspectives—an institution-based view
and a resource-based view. Next, we explore the concepts of globalization, semiglobalization, and risk
management. As a backdrop for the remainder of the text, the Global Business and Globalization at a
Crossroads section makes two points: First, a basic understanding of the global economy is necessary.
Second, it is important to critically examine your own personal views and biases regarding globalization.
Additionally, we outline three leading debates concerning business and globalization/deglobalization. Finally,
we explore the broad implications for savvy managers and students for the future of global business in a less
global world.
Cengage Supplements
The following product-level supplements provide additional information that may help you in preparing your
course. They are available in the Instructor Resource Center.
Transition Guide (provides information about what’s new from edition to edition)
Educator’s Guide (describes assets in the platform with a detailed breakdown of activities
by chapter with seat time)
PowerPoint (provides text-based lectures and presentations)
Test Bank (contains assessment questions and problems)
Guide to Teaching Online (provides information about the key assets within the product and how
to implement/facilitate use of the assets in synchronous and asynchronous teaching environments)
Accelerated Course Syllabus (provides guidance on the recommended delivery of course materials
given a 5-week, 8-week, 12-week, and 16-week course)
MindTap User Guide (provides information on how to navigate and use MindTap)
Chapter Objectives
The following objectives are addressed in this chapter:
1-1 Explain the concepts of international business and global business. 1-2
Give three reasons why it is important to study global business.
1-3 Articulate one fundamental question and two core perspectives in the study of global business.
1-4 Describe the importance of globalization, semiglobalization, and risk management.
1-5 State the size of the global economy and its broad trends and understand your likely bias in the
globalization debate.
1-6 Participate in three leading debates concerning global business. 1-7
Draw implications for action.
1-8 Understand the structure of the book and the discipline.
4 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
,Complete List of Chapter Activities and Assessments
For additional guidance refer to the Teaching Online Guide.
Chapter PPT slide Activity/Assessment Duration
Objective
1-2 7 Opening Day Quiz in PPT and Text 5 min
(Table 1.2)
1-4 19 Discussion Activity 1 in PPT 10 min
1-6 26 Polling Activity in PPT 5 min
1-6 29 Discussion Activity 2 in PPT 10 min
[return to top]
What's New in This Chapter
The following elements are improvements in this chapter from the previous edition:
Opening Case: Apple, America, and China
Closing Case: Are US Multinationals Good for America?
In Focus 1.1: How Firms From Emerging Economies Overcome Liability Of Foreignness
In Focus 1.3: The Dell Theory of Peace
Debate 1: Globalization versus Deglobalization
Debate 2: Strategic versus Nonstrategic Industries
Debate 3: Just-in-Time versus Just-in-Case Management
Table 1.3: Basics of Scenario Planning
Table 1.6: Implications for Action
Figure 1.3: Trade-offs Between Global Value Chain Resilience and Cost Per Unit
New Implications for Action: The future of global business in a less global world
New Topics: Black swan events, deglobalization, global value chain, organizational slack, resilience,
stakeholder, triple bottom line
[return to top]
Opening Case Discussion: Emerging Markets—Apple, America,
and China
This case can be used to help students understand how firms such as Apple are able compete around the
world while dealing with the various rules of the game. Ask students how a company can adapt when the
larger geopolitical relationship between their home and host country changes. What determines their success
and failure? How can they use globalization to their advantage? How important was it for Apple to get
involved in trade discussions and decisions by directly lobbying US government officials?
[return to top]
5 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
,Chapter Outline
In the outline below, each element includes references (in parentheses) to related content.
―CH.##‖ refers to the chapter objective; ―PPT Slide #‖ refers to the slide number in the PowerPoint deck
for this chapter (provided in the PowerPoints section of the Instructor Resource Center); and, as applicable
for each discipline, accreditation or certification standards (―BL 1.3.3‖). Introduce the chapter and review
learning objectives for Chapter 1. (PPT Slide 2).
I. INTERNATIONAL BUSINESS AND GLOBAL BUSINESS (LO 1-1, PPT Slides 3–4)
a. Key Concepts
International business is typically defined as (1) a business (firm) that engages in
international (cross-border) economic activities and (2) the action of doing
business abroad.
Global business is defined in this book as business around the globe and includes
both (1) international (cross-border) business activities covered by traditional IB
books and (2) domestic business activities.
This book goes beyond competition in developed economies. It devotes extensive
space to competitive battles waged in emerging economies and the base of the
global economic pyramid.
b. Key Terms
International business (IB): (1) A business (firm) that engages in international
(cross-border) economic activities and/or (2) the action of doing business abroad
Multinational enterprise (MNE): A firm that engages in foreign direct
investment (FDI)
Foreign direct investment (FDI): Investment in, controlling, and managing
value-added activities in other countries
Global business: Business around the globe
II. WHY STUDY GLOBAL BUSINESS? (LO 1-2, PPT Slides 5–9)
a. Key Concepts
Why study global business?
(1) Enhance your employability and advance your career in the global economy
(2) Better preparation for possible expatriate assignments abroad
(3) Stronger competence in interacting with foreign suppliers, partners,
and competitors, and in working for foreign-owned employers in
your own country
b. Key Terms
6 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
, Group of 20 (G-20): The group of 19 major countries plus the European Union
whose leaders meet on a biannual basis to solve global economic problems
Global mindset: Ability to ―connect the dots‖ globally
Expatriate manager (expat): A manager who works abroad
International premium: A significant pay raise when working overseas
c. Opening Day Quiz: 5 minutes total. (PPT Slide 7, Text p. 6)
Have students take the Opening Day Quiz in Table 1.2. Can they answer all the questions
correctly? If not, they will benefit from studying global business.
III. A UNIFIED FRAMEWORK (LO 1-3, PPT Slides 10–12)
a. Key Concepts
Our most fundamental question is: What determines the success and failure of
firms around the globe? The two core perspectives are (1) the institution-based
view and (2) the resource-based view. We develop a unified framework by
organizing materials in every chapter according to the two perspectives guided by
the fundamental question.
b. Key Terms
Triple bottom line: Economic, social, and environmental performance
Stakeholder: Any group or individual who can affect or is affected by the
achievement of a firm’s objectives
Liability of foreignness: The inherent disadvantage that foreign firms experience
in host countries because of their nonnative status
IV. GLOBALIZATION AND SEMIGLOBALIZATION (LO 1-4, PPT Slides 13–19)
a. Key Concepts
Advocates of globalization count its contributions to include greater economic
growth, higher standards of living, improved technology, and more extensive
cultural exchange.
Critics argue that globalization destroys jobs in rich countries, exploits workers
in poor countries, grants MNEs too much power, degrades the environment,
and promotes inequality.
This section (1) outlines three views on globalization, (2) reviews the swing of the
pendulum, (3) highlights the importance of risk management, and (4) discusses the
important idea of semiglobalization.
b. Key Terms
Globalization: The close integration of countries and peoples of the world
7 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
, Emerging economies: A term that has gradually replaced the term
―developing countries‖ since the 1990s
Emerging markets: A term that is often used interchangeably with
―emerging economies‖
Base of the pyramid (BoP): Economies where people make less than
$2,000 per capita per year
BRIC: Brazil, Russia, India, and China
BRICS: Brazil, Russia, India, China, and South Africa
Reverse innovation (or frugal innovation): An innovation that is adopted
first in emerging economies and is then diffused around the world
Risk management: The identification and assessment of risks and the
preparation to minimize the impact of high-risk, unfortunate events
Black swan event: An unpredictable event that is beyond what is normally
expected and that has severe consequences
Scenario planning: A technique to prepare and plan for multiple scenarios
(either high risk or low risk)
Semiglobalization: A perspective that suggests that barriers to market integration
at borders are high, but not high enough to insulate countries from each other
completely
c. Discussion Activity 1: 10 minutes total. (PPT Slide 19)
Pose the question to the class.
After comparing the three views of globalization, which seems the most sensible
to you and why?
(1) The important thing is not so much the answer as the extent to which the
student demonstrates thought in providing the answer to ―why.‖
(2) The three major views are:
(a) A new force sweeping through the world in recent times
(b) A long-run historical evolution since the dawn of human history
(c) A pendulum that swings from one extreme to another from time to
time
V. GLOBAL BUSINESS AND GLOBALIZATION AT A CROSSROADS (LO 1-5,
PPT Slides 20–24)
a. Key Concepts
8 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
, A basic understanding of the global economy is necessary. It is important to
critically examine your own personal views and biases regarding globalization.
b. Key Terms
Gross domestic product (GDP): The sum of value added by resident firms,
households, and governments operating in an economy
Purchasing power parity (PPP): A conversion that determines the equivalent
amount of goods and services that different currencies can purchase
Gross national product (GNP): GDP plus income from nonresident sources
abroad
Gross national income (GNI): GDP plus income from nonresident sources
abroad; GNI is a term used by the World Bank and other international
organizations to supersede the term GNP
Nongovernmental organizations (NGO): An organization that is not affiliated
with any government
VI. DEBATES AND EXTENSIONS (LO 1-6, PPT Slides 25–29)
a. Key Concepts
Debate 1: Globalization versus Deglobalization
Debate 2: Strategic versus Nonstrategic Industries
Debate 3: Just-in-Time versus Just-in-Case Management
b. Key Terms
Deglobalization: The process of weakening economic interdependence among
countries
Global value chain (GVC): A chain of geographically dispersed and coordinated
activities involved in the production of a good or service and its supply and
distribution activities
Organizational slack: A cushion of resources that allow an organization to adapt
successfully to pressures
Resilience: Capacity to recover quickly from difficulties
c. Polling Activity: 5 minutes total. (PPT Slide 26)
Ask students whether or not they agree with the statement on the slide.
Overall, globalization is good for the US economy.
(1) The purpose of this question is not so much to resolve whether
globalization is good for any given country’s economy as it is to help
students clarify their position in their own mind and then
9 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
, examine whether it can be justified. Answers may vary depending on the
national and cultural background of the student.
d. Discussion Activity 2: 10 minutes total. (PPT Slide 29)
Pose the question to the class.
Given the size of the global economy and the size of some of the large firms, do
you think it is possible to carve out a niche that you can exploit as a small business
person? Or do you feel that the most practical way to participate in the global
economy is to do so as an employee or manager in a global firm?
(1) Students do not have to look far to find that small business people have
indeed been successful by carving out a niche—an excellent strategy for
entrepreneurs.
(2) Also, many people today are finding opportunities in the US and
overseas with multinational corporations that need their capabilities.
VII. IMPLICATIONS FOR ACTION: THE FUTURE OF GLOBAL BUSINESS IN A LESS
GLOBAL WORLD (LO 1-7, PPT Slides 30–31)
a. Key Concepts
For savvy managers and students, the future of global business in a less global
world suggests at least three broad implications (Table 1.6):
(1) From a resource-based view, instead of only focusing on delinking,
shrinking, withdrawals, and divestitures (which, of course, are
important), develop resources and capabilities to identify and
leverage opportunities for further globalization.
(2) From an institution-based view, enhance geopolitical savvy and be aware
that globalization is a force for peace and prosperity.
(3) From a career standpoint, even a less global world presents tremendous
opportunities, especially for professionals with skills in geopolitics, tariffs
and trade compliance, supply chain reorganization, and management of
stakeholders and climate change challenges.
b. Key Terms
None
VIII. STRUCTURE OF THE BOOK AND THE DISCIPLINE (LO 1-8)
a. Key Concepts
This book has four parts:
(1) Part I is foundations. After this chapter, Chapters 2, 3, and 4 address the
two leading perspectives—namely, institution-based and resource-based
views.
10 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to
a publicly accessible website, in whole or in part.
