WHAT IS GLOBAL BUSINESS?
1. Key Concept
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. 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.
2. Key Terms
Base of the pyramid is part of the view of the global economy as a pyramid. The vast majority of humanity, about four billion people, lives at the base of this pyramid making less than $2,000 a year. BRIC stands for Brazil, Russia, India, and China.
Emerging economies (emerging markets) are countries that are starting to emerge as new players in the world economy. Foreign direct investment (FDI) is direct investment in, control, and management of value-added activities in other countries. Global business is defined in this book as business around the globe. The activities 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 is GDP plus income from nonresident sources abroad. International business (IB) is defined as (1) a business firm that engages in international (cross border) economic activities and/or (2) the action of doing business abroad. Multinational enterprise (MNE) is defined as a firm that engages in foreign direct investment by directly investing in, controlling, and managing value-added activities in other countries. Purchasing power parity (PPP) is an adjustment to reflect the differences in cost of living in various countries. Reverse innovation—an innovation that is adopted first in emerging economies and then...
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