Chapter 5


Word / Definition / Example
Sole proprietorship
Net income/ profit
Unlimited liability
Stockholder/ shareholders
Limited liability
Municipal corporation
Nonprofit corporation
Multinational Corporation
Indirect exporting
Direct exporting
Management contract
Joint venture
Foreign direct investment (FDI)
Wholly-owned subsidiary


What are 2 advantages and 2 disadvantages of a proprietorship?

What are 2 advantages and 2 disadvantages of a partnership?

Give an example of a:
municipal corporation

Nonprofit Corporation


How do nonprofit organizations benefit society?

In each of the following situations what type of business organization would you recommend?
A group of programmers in India plan to start a software company and sell stock to other investors.

A person in Italy wants to turn a jewelry-making hobby into a business.

Three doctors in Bali wish to share office space, staff, and equipment,

Three friends in Finland are opening a small store to sell sports equipment.


What are the 4 characteristics of a MNC?

Is it likely that a well-managed MNC could be successful in every country in the world? Explain.

Read the Global Business spotlight on page 123 and answer question 1.


What is the difference between licensing and franchising?

For each of the following situations, indicate what method the company is using for its global business activities.
A Vietnamese company share production costs and profits of a chemical manufacturing enterprise with an Israeli company.

A British toy company allows a Japanese company to create clothing and school supplies with one of the British company’s doll characters on the products.

A company in Egypt has purchased 51 percent of the stock of a company in Peru.

A small food-packaging firm cannot afford to sell in other countries, so it asks an export agent to obtain orders for the company.