Business Law Chapter 1 Homework Participate in the debate on globalization with a reasonably balanced and realistic

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Instructor Manual

Chapter 1: GLOBALIZING BUSINESS

to accompany Mike Peng & Klaus Meyer: International Business, Cengage Learning

Prepared by Klaus Meyer

version February 2011

Introduction to the Topic

Learning Objectives

1. Explain the concepts of international business (IB) and global business

3. Identify one fundamental question and two core perspectives that provide a framework for this field

4. Participate in the debate on globalization with a reasonably balanced and realistic view and a keen

General Teaching Suggestions

This chapter is essentially about motivating students engage with the complex topic of

international business, to point to the complexities and challenges – as well as to the

opportunities that arise for those who can engage in business beyond their national borders. It

initiates many of the core themes that run through the book: one core question – two

theoretical perspectives (resource- and institution-based); the importance of emerging

economies – and of Europe; and the debates around globalization.

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Opening Case Discussion Guide

The opening case about Dell’s supply chain is all about coming to terms with the complexity

of international business. It is taken from Thomas Friedman’s famous book ‘The Flat World’,

which exposes the interdependencies of the world (contrary to his critics who seem not to

have read the book, Friedman does not actually mean ‘flat’ as ‘becoming equal’ or ‘becoming

identical’ – his book is about ‘an interdepend world’, and thus conveys a message not that

different from our book) .

Chapter Outline, Section by Section

Section 1: European and Global Business

Key Ideas

This short section tries to summarize what this book is about, and how it is different from

other textbooks – notably its focus on a) Europe and b) emerging economies.

Key Concepts

international business (IB)

(1) A business (firm) that engages in international (cross-border) economic activities and/or (2) the

action of doing business abroad.

InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.

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Investments in, controlling, and managing value-added activities in other countries.

emerging economies (emerging markets)

economies that only recently established institutional frameworks that facilitate international trade and

investment, typically with low or middle level income and above average economic growth

gross national product (GNP)

Gross domestic product plus income from non-resident sources abroad.

gross national income (GNI)

Section 2: Why study International Business

Key Ideas

This section emphasizes the career opportunities that open up to students capable of engaging

in international business. As an anecdote, this is a second where I changed the message from

Key Concepts

Section 3: A Unified Framework

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Key Ideas

The unified framework introduced in this section – see Figure 1.3 – provides a simple

structure that ties the various chapters together. While it may be very simple, I suggest you

Key Concepts

Most concepts relating to the two views are formally introduced in chapters 2, 3, and 4. Here

we introduce only one concept which may instructors also will find new. You may be more

Section 4: Understanding Globalization

Key Ideas

This section introduces the notion of globalization and what different people associate with

the word. I suggest to introduce this topic with a discussion based on the two photos on pages

12 and 13 (A Pepsi kiosk in Russia in the early 1990s, Removal of border controls when

Poland became member of EU/Schengen). What do these developments mean for the people

in Russia/Poland? How are they related to the bigger picture of the global economy? On this

Key Concepts

globalization

A process leading to greater interdependence and mutual awareness among economic, political and

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social units in the world, and among actors in general

liberalization

The removal of regulatory restrictions on business

Section 5: A Glance at the Global Economy

Key Ideas

The main purpose of this section is to introduce a few ‘big names’ in terms of both countries

and companies. These are the big players in the global economy, and what they do or say

Section 6: Implications for Practice

Key Ideas

This is the first ‘implications for practice’ section that you will find at the end of each

chapter. These challenge students to think beyond the material presented in the chapter, and

consider its applications to their personal experience and their careers.

InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.

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non-governmental organizations (NGOs)

Organizations, such as environmentalists, human rights activists, and consumer groups that are not

Review Questions

Review questions are provided to students on the website accompanying the book. They

directly ask to summarize the material provided in the text. Instructors may also use the

questions to structure their lectures or review sessions.

Normally, there are 15 questions. However, for chapter 1 – given its breadth, I have provided

a few more.

Review Questions

(as provided to students on the website) Material in the Book

1. What is foreign direct investment?

2. What do we call a firm that is engaged in foreign direct

investment?

3. What is international business?

9. What is the overarching question in the field of

international business?

10. What is the main focus of the institution-based view of

international business?

11. What is the main focus of the resource-based view of

international business?

12. Explain the concept of liability of outsidership!

Page 6

Page 10-11

Page 12 and 14 (Fig 1.4)

InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.

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in 1950?

18. Why did globalization gather speed in the 1990s?

22. Name the largest country by GDP, by population, and by

stock of outward FDI!

23. Name some of the largest companies in the world!

24. Which country has experienced the largest increase in

companies listed in the “Fortune 500”?

25. Why should business be concerned about the activities of

non-governmental organizations?

Page 18-19

Page 22

Page 23-24

Page 24-25

Page 25

Critical Discussion Questions

At the end the chapter, we provide discussion questions that aim to stimulate students

thinking beyond memorizing the material learned in the chapter. They are designed to be

used at a basis for in-class discussions, group work, or individual assignments. Below,I

provide some indicative answers of issues that may be raised in response to these questions.

Discussion Questions

(as provided in the book) Indicative Responses

1. A classmate says: “Global business is relevant

for top executives such as CEOs in large

2. A classmate says: “The world economy has

changed so much; all those textbooks and

1. A powerful way to address this

question is to explore the day-to-day

work of any individual working

point to the economic crisis of 2008.

Many of its root causes were similar

to those of 1929 – yet the lessons

from that time had been lost. A

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should care about lessons from the past?

3. What are some of the darker sides (in other

words, costs) associated with globalization?

4. Some argue that aggressively investing in

emerging economies is not only economically

beneficial but also highly ethical because it may

potentially lift many people out of poverty (see

Closing Case). However, others caution that in

the costs).

3. The darker sides include increased

concentration of power, both

economically and politically,

distribution of the gains of

globalization – for instance by

offering training.

4. Many views may be taken on this

question. Personally, I think the

second argument is nonsense

because returns in emerging

Closing Case

The closing case provides further opportunities to apply ideas and concepts learned in this

chapter in a real world setting. The Closing Case for this Chapter is “GE Innovates at the

Bottom of the Pyramid” and focuses onthe potential for reverse innovation in that new idea

and product develop in view of markets in emerging economies may eventually lead to

innovations that benefit mature market economies as well. Below are some indicative

responses to the case discussion questions.

InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.

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Case Discussion Questions

(as provided in the book) Indicative Responses

1. What are the similarities and differences

3. What are the main concerns that prevent

Western MNEs from aggressively investing

in emerging economies? What are the costs

if they choose not to focus on emerging

1. Similarities are many, the key difference

3. Focusing in investment in technology

only, the main concerns are intellectual

property rights, low sales prices, and the

possibility of grey exports (i.e. someone

buying the product in India and shipping

to the US where they sell below GE’s

own sales price). The costs of missing

Further Learning Activities

In addition to the cases and discussion questions provided in the book, instructors may want

to use any of the following activities to further engage students with the material.

1. A very useful assignment to raise the awareness of the complexity of the global

economy, and its interdependence, is to discuss the performance of your national

economy (where you are teaching) relative to others in Europe/worldwide at this

time in history.

A useful starting point for this may be any of a series of articles in The Economist on

InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.

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2. The two papers by the two authors of the book that are provided in the further

readings provide two different views about the essence of international business. Both

views have influenced the writing of this book. Assigning these two papers as a pair

with assignment questions such as ‘how do the authors define the scope of the

subject? What do you suggest should be the scope of the subject? provides ample

opportunity to discuss the contents of this class.

3. An important aspect of globalization is the fundamental stability of the global economic order

currently in place. Thus, FDI intentions can be influenced by its perceived sustainability to

some degree. Identify the three most important issues related to global economic stability

over the next 20 years. Be sure to discuss the sample surveyed to provide the appropriate

frame of reference for discussion.

business heads were included in the report.

Search Term: “foreign direct investment intentions”