Chapter 1- Introduction: What is International Business?

Globalization of Markets

Ongoing economic integration and growing interdependency of countries worldwide

Small and Medium-Sized Enterprise (SME)

a company with 500 or fewer employees (as defined in Canada and the United States)

Multinational Enterprise (MNE)

a large company with substantial resources that performs various business activities through a network of subsidiaries and affiliates located in multiple countries

Born Global Firm

a young entrepreneurial company that initiates international business activity very early in its evolution, moving rapidly into foreign markets

International Trade

exchange of products and services across national borders, typically through exporting and importing

Commercial Risk

firm's potential loss or failure from poorly developed or executed business strategies, tactics, procedures

Foreign Direct Investment (FDI)

internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant, and equipment

International Portfolio Investment

passive ownership of foreign securities such as stocks and bonds for the purpose generating financial returns

International Business

performance of trade and investment activities across national borders

Country Risk

potentially adverse effects on company operations and profitability caused by developments in the political, legal, and economic environment in a foreign country

Importing or Global Sourcing

procurement of products or services from suppliers locate abroad for consumption in the home country or a third country

Currency Risk

risk of adverse fluctuations in exchange rates

Exporting

sale of products or services to customers located abroad, from a base in the home country or a third country

Cross-Cultural Risk

situation or event where a cultural misunderstanding puts some human value at stake

Internationalization

tendency of companies to systematically increase the international dimension of their business activities

International Investment

the transfer of assets to another country or the acquisition of assets in that country