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absolute advantage  Theory that a nation has absolute advantage when it can produce a larger amount of a good or service for the same amount of inputs as can another country or when it can produce the same amount of a good or service using fewer inputs than could another country
ad valorem duty  An import duty levied as a percentage of the invoice value of imported goods
advertising  Paid, nonpersonal presentation of ideas, goods, or services by an identified sponsor
aesthetics  A culture's sense of beauty and good taste
affiliates  A term sometimes used interchangeably with subsidiaries, but more forms exist than just stock ownership
air waybill  A bill of lading issued by an air carrier
allowances  Employee compensation payments added to base salaries because of higher expenses encountered when living abroad
American depository receipt (ADR)  Foreign shares held by a custodian, usually a U.S. bank, in the issuer's home market and traded in dollars on the U.S. exchange
Andean Community (CAN)  South American five-nation trading bloc
antitrust laws  Laws to prevent price fixing, market sharing, and business monopolies
appropriate technology  The technology (advanced, intermediate, or primitive) that most closely fits the society using it
arbitrage  The process of buying and selling instantaneously to make profit with no risk
arbitration  A process, agreed to by parties to a dispute in lieu of going to court, by which a neutral person or body makes a binding decision
Asian religions  Primary ones: Hinduism, Buddhism, Jainism, and Sikhism (India); Confucianism and Taoism (China); and Shintoism (Japan)
ask price  Sales price
Association of Southeast Asian Nations (ASEAN)  Ten-member body formed to promote peace and cooperation in the Southeast Asian region
associations  Social units based on age, gender, or common interest, not on kinship
Automated Commercial System (ACS)  Electronic tracking system used by U.S. Customs to track, control, and process all commercial goods imported into the United States
automated export system (AES)  U.S. Customs electronic filing system
backward vertical integration  Arrangement in which facilities are established to manufacture inputs used in the production of a firm's final products
balance of payments (BOP)  Record of a country's transactions with the rest of the world
Bank for International Settlements  Institution for central bankers; operates as their bank
bank swap  Swap made between banks to acquire temporary foreign currencies
banker's acceptance  A time draft with maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank's obligation; may be bought and sold at a discount in the financial markets like other commercial paper
barter  A direct exchange of goods or services for goods or services without the use of money
benchmarking  A technique for measuring a firm's performance against the performance of others that may be in the same or a completely different industry
bid price  Price offered to buy
biomass  A category of fuels whose energy source is photosynthesis, through which plants transform the sun's energy into chemical energy; sources include corn, sugarcane, wheat
blocked funds  Funds whose conversion from a host currency or repatriation is not allowed by a host government
bonded warehouse  An area authorized by customs authorities for storage of goods on which payment of import duties is deferred until the goods are removed
bonuses  Expatriate employee compensation payments in addition to base salaries and allowances because of hardship, inconvenience, or danger
boomerang effect  Situation in which technology sold to companies in another nation is used to produce goods to compete with those of the seller of the technology
bottleneck  Operation in a manufacturing system whose output sets the limit for the entire system's output
bottom-up planning  Planning process that begins at the lowest level in the organization and continues upward
brain drain  The loss by a country of its most intelligent and best-educated people
branch  Legal extension of the parent company
Bretton Woods  The New Hampshire town where treasury and central bank representatives met near the end of World War II; they established the IMF, the World Bank, and the gold exchange standard
bribes  Gifts or payments to induce the receiver to do something illegal for the giver
Canadian Shield  A massive area of bedrock covering one-half of Canada's landmass
capital account  Record of the net changes in a nation's international financial assets and liabilities
capitalism  An economic system in which the means of production and distribution are for the most part privately owned and operated for private profit
caste system  An aspect of Hinduism by which the entire society is divided into four groups (plus the outcasts) and each is assigned a certain class of work
CE (Conformite Europeene) mark  EU mark that indicates that the merchandise conforms to European health, safety and environmental requirements
Central American Free Trade Agreement (CAFTA)  FTA among the United States and several Central American nations
central reserve asset  Asset, usually currency, held by a government's central bank
child labor  The labor of children below 16 years of age who are forced to work in production and usually are given little or no formal education
clearing account arrangement  A process to settle a trading account within a specified time
climate  Meteorological conditions, including temperature, precipitation, and wind, that prevail in a region
cluster analysis  Statistical technique that divides objects into groups so that the objects within each group are similar
collective bargaining  The process in which a union represents the interests of a bargaining unit (which sometimes includes both union members and nonmembers) in negotiations with management
Collective Security Treaty Organization (CSTO)  Security alliance of six members of the Commonwealth of Independent States (former Union of Soviet Socialist Republics)
common market  Customs union that includes mobility of services, people, and capital within the union
communism  Marx's theory of a classless society, developed by his successors into control of society by the Communist Party and the attempted worldwide spread of communism
comparative advantage  Theory that a nation having absolute disadvantages in the production of two goods with respect to another nation has a comparative or relative advantage in the production of the good in which its absolute disadvantage is less
compensation  Countertrade in which the developing country makes payment in products produced by use of developed country equipment.
compensation packages  For expatriate employees, packages that can incorporate many types of payments or reimbursements and must take into consideration exchange rates and inflation
competition policy  The European Union equivalent of antitrust laws
competitive advantage  The ability of a company to have higher rates of profits than its competitors
competitive strategies  Action plans to enable organizations to reach their objectives
competitor analysis  Process in which principal competitors are identified and their objectives, strengths, weaknesses, and product lines are assessed
competitor intelligence system (CIS)  Procedure for gathering, analyzing, and disseminating information about a firm's competitors
complete economic integration  Integration on both economic and political levels
compound duty  A combination of specific and ad valorem duties
confirmed L/C  A confirmation made by a correspondent bank in the seller's country by which it agrees to honor the issuing bank's letter of credit
confiscation  Government seizure of the property within its borders owned by foreigners without payment to them
Confucian work ethic  Drive toward hard work and thrift; similar to Protestant work ethic
conservative  A person, group, or party that wishes to minimize government activities and maximize private ownership and business
consolidation  The process of translating subsidiary results and aggregating them into one financial report
contingency plans  Plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm
contract manufacturing  An arrangement in which one firm contracts with another to produce products to its specifications but assumes responsibility for marketing
controllable forces  Internal forces that management administers to adapt to changes in the uncontrollable forces
cooperative exporters  Established international manufacturers that export other manufacturers' goods as well as their own
Council of the European Union  Group that is the EU's primary policy-setting institution
counterpurchase  Countertrade in which the goods supplied do not rely on the goods imported
countertrade  The trade of goods or services for other goods or services
countervailing duties  Additional import taxes levied on imports that have benefited from export subsidies
country risk assessment (CRA)  An evaluation, conducted by a bank or business having an asset in or payable from a foreign country or considering a loan or an investment there, that assesses the country's economic situation and policies and its politics to determine how much risk exists of losing the asset or not being paid
country screening  Using countries as the basis for market selection
cross investment  Foreign direct investment by oligopolistic firms in each other's home countries as a defense measure
cross rates  Currency exchange rates for trading directly between non- US$ currencies
culture  Sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations
currency devaluation  The lowering of a currency's price in terms of other currencies
currency option hedge  An option to buy or sell a specific amount of foreign currency at a specific time in order to protect against foreign currency risk
currency swap  An exchange of debt service of a loan or bond in one currency for the debt service of a loan or bond in another currency
current account  Record of a country's exports and imports in goods and services
current rate method  An approach in foreign currency translation in which current assets and liabilities are valued at current spot rates and noncurrent assets and liabilities are translated at their historic exchange rates
customhouse broker  Independent businesses that handle import shipments for compensation
customs drawbacks  Rebates on customs duties
customs union  Collaboration that adds common external tariffs to an FTA
de-jobbing  Replacing fixed jobs with tasks performed by evolving teams
demonstration effect  Result of having seen others with desirable goods
derivative  A contract whose value is tied to the performance of a financial instrument or commodity
developed  A classification for all industrialized nations, which are the most technically developed
developing  A classification for the world's lower-income nations, which are less technically developed
direct exporting  The exporting of goods and services by the firm that produces them
direct investment  The purchase of sufficient stock in a firm to obtain significant management control
direct investment  Investments located in one country that are effectively controlled by residents of another country
discretionary income  The amount of income left after paying taxes and making essential purchases
distributors  Independent importers that buy for their own account for resale
Doha Development Agenda  WTO extended conference on trade; also called Doha Round
domestic environment  All the uncontrollable forces originating in the home country that surround and influence the firm's life and development
dumping  Selling a product abroad for less than the cost of production, the price in the home market, or the price to third countries
dynamic capability  Theory that for a firm to successfully invest overseas, it must have not only ownership of unique knowledge or resources but the ability to dynamically create and exploit these capabilities over time
eclectic theory of international production  Theory that for a firm to invest overseas, it must have three kinds of advantages: ownership-specific, internalization, and location-specific
Economic and Social Council (ECOSOC)  UN body concerned with economic and social issues such as trade, development, education, and human rights
economic exposure  The potential for the value of future cash flows to be affected by unanticipated exchange rate movements
efficient market approach  Assumption that current market prices fully reflect all available relevant information
environment  All the forces surrounding and influencing the life and development of the firm
environmental scanning  A procedure in which a firm scans the world for changes in the environmental forces that might affect it
environmental sustainability  Economic state in which the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations
estimation by analogy  Process of using a market factor that is successful in one market to estimate demand in a similar market
ethnocentric  As used here, related to hiring and promoting employees on the basis of the parent company's home country frame of reference
ethnocentricity  Belief in the superiority of one's own ethnic group (see the self-reference criterion in Chapter 1)
euro  Currency of the European Monetary Union
European Central Bank (ECB)  Institution that sets and implements EU monetary policy
European Commission  Institution that runs the EU's day-to-day operations
European Court of Justice (ECJ)  Court that rules on issues related to EU policies
European Free Trade Agreement (EFTA)  Four-nation non-EU FTA in Europe
European Monetary Union (EMU)  Group that established use of euro (€) in the 12-country euro zone
European Parliament  EU legislative body whose members are popularly elected from member-nations
European Union (EU)  A body of 25 European countries dedicated to economic and political integration
exchange rate  The price of one currency stated in terms of another currency
Ex-Im Bank  Principal government agency that aids American exporters by means of loans, guarantees, and insurance programs
expatriate  A person living outside his or her country of citizenship
export bill of lading (B/L)  Contract of carriage between shipper and carrier: straight bill of lading is nonnegotiable; endorsed "to order" bill gives the holder claim on merchandise
export processing zone  A government-designated zone in which workers are permitted to import parts and materials without paying import duties, as long as these imported items are then exported once they have been processed or assembled.
export trading company (ETC)  A firm established principally to export domestic goods and services and to help unrelated companies export their products
export, sight, and time drafts  An unconditional order drawn by the seller that instructs the buyer to pay the draft's amount on presentation (sight draft) or at an agreed future date (time draft) and that must be paid before the buyer receives shipping documents
exporting  The transportation of any domestic good or service to a destination outside a country or region; the opposite of importing, which is the transportation of any good or service into a country or region, from a foreign origination point
expropriation  Government seizure of the property within its borders owned by foreigners, followed by prompt, adequate, and effective compensation paid to the former owners
extended family  Family that includes blood relatives and relatives by marriage
extortion  Demand for payment to keep the receiver from causing harm to the payer
extraterritorial application of laws  A country's attempt to apply its laws to foreigners or nonresidents and to acts and activities that take place outside its borders
Ex-Works  INCOTERM equivalent of FOB
factor conditions  Attributes that a country inherits, such as climate and natural resources, and those a country can mold, such as the labor force and infrastructure
factor endowment  Heckscher-Ohlin theory that countries export products requiring large amounts of their abundant production factors and import products requiring large amounts of their scarce production factors
factoring  Discounting without recourse an account receivable
fiscal policies  Policies that address the collecting and spending of money by the government
Fisher effect  The relationship between real and nominal interest rates: The real interest rate will be the nominal interest rate minus the expected rate of inflation
fixed currency exchange rates  Rates that governments agree on and undertake to maintain
floating currency exchange rates  Rates that are allowed to float against other currencies and are determined by market forces
FOB  Pricing policy in which risks pass from seller to buyer at the factory door; U.S. equivalent of Ex-Works
Foreign Corrupt Practices Act (FCPA)  U.S. law against making payments to foreign government officials for special treatment
foreign direct investment  Direct investments in equipment, structures, and organizations in a foreign country at a level that is sufficient to obtain significant management control; does not include mere foreign investment in stock markets
foreign environment  All the uncontrollable forces originating outside the home country that surround and influence the firm
foreign national pricing  Local pricing in another country
foreign sourcing  The overseas procurement of raw materials, components, and products
foreign tax credits  Allowances by which U.S. taxpayers who reside and pay income taxes in another country can credit those taxes against U.S. income tax
foreign trade zone (FTZ)  Duty-free area designed to facilitate trade by reducing the effect of customs restrictions
forfaiting  Purchasing without recourse an account receivable whose credit terms are longer than the 90 to 180 days usual in factoring; unlike factoring, political and transfer risks are borne by the forfaiter
forward currency market  Trading market for currency contracts deliverable 30, 60, 90, or 180 days in the future
forward market hedge  Foreign currency contract sold or bought forward in order to protect against foreign currency movement
forward rate  The exchange rate between two currencies for delivery in the future, usually 30, 60, 90, or 180 days
franchising  A form of licensing in which one firm contracts with another to operate a certain type of business under an established name according to specific rules
free trade area (FTA)  Area in which tariffs among members have been eliminated, but members keep their external tariffs
free trade zone  An area designated by the government as outside its customs territory
functional currency  The primary currency of a business
fundamental approach  Exchange rate prediction based on econometric models that attempt to capture the variables and their correct relationships
General Agreement on Tariffs and Trade (GATT)  International agreement that functioned to encourage trade liberalization from 1947 to 1995
General Assembly  Deliberative body of the UN made up of all member-nations, each with one vote regardless of size, wealth, or power
general export license  Any export license covering export commodities for which a validated license is not required; no formal application is required
geocentric  As used here, related to hiring and promoting employees on the basis of ability and experience without considering race or citizenship
global company (GC)  An organization that attempts to standardize and integrate operations worldwide in all functional areas
global mind-set  A mind-set that combines an openness to and an awareness of diversity across markets and cultures with a propensity and ability to synthesize across this diversity
gold standard  The use of gold at an established number of units per currency
goods or merchandise account  Record of tangible exports and imports
gross national income (GNI)  The total value of all income generated by a nation's residents from international and domestic activity
Group of 8 (G8)  Group of government leaders from industrialized nations that meets regularly to discuss issues of concern
guest workers  People who go to a foreign country legally to perform certain types of jobs
Harmonized Tariff Schedule of the United States (HTSUSA)  American version of the Harmonized System used worldwide to classify imported products
hedging  A process to reduce or eliminate financial risk
hierarchy  A body of persons organized or classified according to rank or authority
home country national  Same as parent country national
horizontal corporation  A form of organization characterized by lateral decision processes, horizontal networks, and a strong corporatewide business philosophy
host country national (HCN)  Employee who is a citizen of the nation in which the subsidiary is operating, which is different from the parent company's home nation
human-needs approach  View that defines economic development as a reduction of poverty and unemployment as well as an increase in income
hybrid organization  Structure organized by more than one dimension at the top level
import substitution  The local production of goods to replace imports
in-bond plants (maquiladoras)  Production facilities in Mexico that temporarily import raw materials, components, or parts duty-free to be manufactured, processed, or assembled with less expensive local labor, after which the finished or semifinished product is exported
income distribution  A measure of how a nation's income is apportioned among its people, commonly reported as the percentage of income received by population quintiles
income tax  Direct tax levied on earnings
INCOTERMS  Universal trade terminology developed by the International Chamber of Commerce
indirect exporting  The exporting of goods and services through various types of home-based exporters
industrial cooperation  An exporter's commitment to a longer-term relationship than that in a simple export sale, in which some of the production occurs in the receiving country
industrial espionage  Act of spying on a competitor to learn secrets about its strategy and operations
inland waterways  Waterways that provide access to interior regions
instability  Characteristic of a government that cannot maintain itself in power or that makes sudden, unpredictable, or radical policy changes
intellectual property  Patents, trademarks, trade names, copyrights, and trade secrets, all of which result from the exercise of someone's intellect
interest rate swap  An exchange of interest rate flows in order to manage interest rate exposure
intermediate technology  Production methods between capital- and labor-intensive methods
internalization theory  An extension of the market imperfection theory: the concept that to obtain a higher return on its investment, a firm will transfer its superior knowledge to a foreign subsidiary rather than sell it in the open market
international company (IC)  Either a global or a multidomestic company
International Court of Justice (ICJ)  UN body that renders legal decisions involving disputes between national governments
international division  A division in the organization that is at the same level as the domestic division and is responsible for all non-home country activities
international environment  Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces
international Fisher effect  Concept that the interest rate differentials for any two currencies will reflect the expected change in their exchange rates
International Monetary Fund  Institution that coordinates multilateral monetary rules and their enforcement
international pricing  Setting prices of goods for export for both unrelated and related firms
international product life cycle (IPLC)  A theory explaining why a product that begins as a nation's export eventually becomes its import
international status  Entitles the expatriate employee to all the allowances and bonuses applicable to the place of residence and employment
international strategy  The way firms make choices about acquiring and using scarce resources in order to achieve their international objectives
intervention currency  A currency used by a country to intervene in the foreign currency exchange markets, often to buy (strengthen) its own currency
irrevocable L/C  A stipulation that a letter of credit cannot be canceled
iterative planning  Repetition of the bottom-up or top-down planning process until all differences are reconciled
Jamaica Agreement  The 1976 IMF agreement that allows flexible exchange rates among members
joint venture  A cooperative effort among two or more organizations that share a common interest in a business enterprise or undertaking
just-in-time (JIT)  A balanced system in which there is little or no delay time and idle in-process and finished goods inventory
Kyoto Protocol  United Nations Framework Convention on Climate Change, which calls for nations to reduce global warming by reducing their emissions of the gasses that contribute to it
labor market  The pool of available potential employees with the necessary skills within commuting distance from an employer
labor mobility  The movement of people from country to country or area to area to get jobs
labor quality  The skills, education, and attitudes of available employees
labor quantity  The number of available employees with the skills required to meet an employer's business needs
labor unions  Organizations of workers
language trap  A situation in which a person doing international business can speak only his or her home language
law of one price  Concept that in an efficient market, like products will have like prices
leading and lagging  Timing payments early (lead) or late (lag), depending on anticipated currency movements, so that they have the most favorable impact for company
left wing  A more extreme liberal position
letter of credit (L/C)  Document issued by the buyer's bank in which the bank promises to pay the seller a specified amount under specified conditions
liberal  In the contemporary United States, a person, group, or party that urges greater government involvement in business and other aspects of human activities
licensing  A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee
lingua franca  A foreign language used to communicate among a nation's diverse cultures that have diverse languages
management contract  An arrangement by which one firm provides management in all or specific areas to another firm
manufacturers' agents  Independent sales representatives of various noncompeting suppliers
manufacturing rationalization  Division of production among a number of production units, thus enabling each to produce only a limited number of components for all of a firm's assembly plants
market factors  Economic data that correlate highly with market demand for a product
market indicators  Economic data used to measure relative market strengths of countries or geographic areas
market screening  A version of environmental scanning in which the firm identifies desirable markets by using the environmental forces to eliminate the less desirable markets
mass customization  The use of flexible, usually computer-aided, manufacturing systems to produce and deliver customized products and services for different customers worldwide
material culture  All human-made objects; concerned with how people make things (technology) and who makes what and why (economics)
matrix organization  An organizational structure composed of one or more superimposed organizational structures in an attempt to mesh product, regional, functional, and other expertise
matrix overlay  An organization in which top-level divisions are required to heed input from a staff composed of experts of another organizational dimension in an attempt to avoid the double-reporting difficulty of a matrix organization but still mesh two or more dimensions
mercantilism  An economic philosophy based on the belief that (1) a nation's wealth depends on accumulated treasure, usually gold, and (2) to increase wealth, government policies should promote exports and discourage imports
Mercosur (Mercosul)  Economic free trade area in South America modeled on the EU
minorities  A relatively smaller number of people identified by race, religion, or national origin who live among a larger majority
mission statement  A broad statement that defines the organization's purpose and scope
monetary policies  Government policies that control the amount of money in circulation and its growth rate
money market hedge  A method to hedge foreign currency exposure by borrowing and lending in the domestic and foreign money markets
monopolistic advantage theory  Theory that foreign direct investment is made by firms in oligopolistic industries possessing technical and other advantages over indigenous firms
most favored nation (MFN) clause  Agreement that GATT member-nations would treat all members equally in trade matters
multidomestic company (MDC)  An organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences
multilateral netting  Strategy in which subsidiaries transfer net intracompany cash flows through a centralized clearing center
national competitiveness  A nation's relative ability to design, produce, distribute, or service products within an international trading context while earning increasing returns on its resources
national tax jurisdiction  A tax system for expatriate citizens of a country whereby the country taxes them on the basis of nationality even though they live and work abroad
natural resources  Anything supplied by nature on which people depend
newly industrialized economies (NIEs)  The fast-growing upper-middle-income and high-income economies of South Korea, Taiwan, Hong Kong, and Singapore
newly industrializing countries (NICs)  The four Asian tigers and the middle-income economies such as Brazil, Mexico, Malaysia, Chile, and Thailand
nonrevenue tax purposes  Purposes such as redistributing income, discouraging consumption of products such as tobacco and alcohol, and encouraging purchase of domestic rather than imported products
nontariff barriers (NTBs)  All forms of discrimination against imports other than import duties
North American Free Trade Agreement (NAFTA)  Agreement creating a free trade area among Canada, Mexico, and the United States
North Atlantic Treaty Organization (NATO)  Security alliance of 26 North American and European nations
official reserves account  Record of the assets held by the government, gold, foreign currencies, and accounts in foreign banks; a balance of the country's foreign currency
offset  Trade arrangement that requires that a portion of the inputs be supplied by the receiving country
offshore financial center  Location that specializes in financing nonresidents, with low taxes and few banking regulations
offshoring  Relocating some or all of a business's activities or processes to a foreign location
orderly marketing arrangements  Formal agreements between exporting and importing countries that stipulate the import or export quotas each nation will have for a good
Organisation for Economic Cooperation and Development (OECD)  Group of developed countries dedicated to promoting economic expansion in its member-nations
Organization of Petroleum Exporting Countries  Cartel of 11 petroleum-exporting countries
organizational structure  The way that an organization formally arranges its domestic and international units and activities, and the relationships among these various organizational components
outsourcing  Hiring others to perform some of the noncore activities and decision making in a company's value chain, rather than having the company and its employees continue to perform those activities
Overseas Private Investment Corporation (OPIC)  Government corporation that offers American investors in developing countries insurance against expropriation, currency inconvertibility, and damages from wars and revolutions
par value  Stated value
parallel loans  Matched loans across currencies that are made to cover risk
parent country national (PCN)  Employee who is a citizen of the nation in which the parent company is headquartered; also called home country national
passive processing  The finishing or refining in Eastern European countries of semifinished goods from the West, which are then returned to the West after finishing; similar to Mexican maquiladora operations
polycentric  As used here, related to hiring and promoting employees on the basis of the specific local context in which the subsidiary operates
population density  A measure of the number of inhabitants per area unit (inhabitants per square kilometer or square mile)
population distribution  A measure of how the inhabitants are distributed over a nation's area
portfolio investment  The purchase of stocks and bonds to obtain a return on the funds invested
portfolio investment  Long-term investments that do not give the investors control over the investment
preferential trading arrangement  An agreement by a small group of nations to establish free trade among themselves while maintaining trade restrictions with all other nations
preventive (planned) maintenance  Maintenance done according to plan, not when machines break down
private international law  Laws governing transactions of individuals and companies that cross international borders
privatization  The transfer of public sector assets to the private sector, the transfer of management of state activities through contracts and leases, and the contracting out of activities previously conducted by the state
pro forma invoice  Exporter's formal quotation containing a description of the merchandise, price, delivery time, method of shipping, terms of sale, and points of exit and entry
product liability  Standard that holds a company and its officers and directors liable and possibly subject to fines or imprisonment when their product causes death, injury, or damage
programmed-management approach  A middle-ground advertising strategy between globally standardized and entirely local programs
promotion  Any form of communication between a firm and its publics
promotional mix  A blend of the promotional methods a firm uses to sell its products
Protestant work ethic  Duty to glorify God by hard work and the practice of thrift
public international law  Legal relations between governments
public relations  Various methods of communicating with the firm's publics to secure a favorable impression
purchasing power parity (PPP)  The number of units of a currency required to buy the same amounts of goods and services in the domestic market that one dollar would buy in the United States
purchasing power parity (PPP)  Theory that predicts that currency exchange rates between two countries should equal the ratio of the price levels of their commodity baskets
quality circle (quality control circle)  Small work group that meets periodically to discuss ways to improve its functional areas and the quality of the product
questionable or dubious payments  Bribes paid to government officials by companies seeking purchase contracts from those governments
quotas  Numerical limits placed on specific classes of imports
random walk hypothesis  Assumption that the unpredictability of factors suggests that the best predictor of tomorrow's prices is today's prices
regiocentric  As used here, related to hiring and promoting employees on the basis of the specific regional context in which the subsidiary operates
Rhine waterway  A system of rivers and canals that is the main transportation artery of Europe
right wing  A more extreme conservative position
rural-to-urban shift  The movement of a nation's population from rural areas to cities
sales company  A business established for the purpose of marketing goods and services, not producing them
sales promotion  Any of various selling aids, including displays, premiums, contests, and gifts
scenarios  Multiple, plausible stories about the future
Secretariat  The staff of the UN, headed by the secretary-general
Security Council  Main policy-setting body of the UN, composed of 15 members including 5 permanent members
segment screening  Using market segments as the basis for market selection
self-reference criterion  Unconscious reference to one's own cultural values when judging behaviors of others in a new and different environment
services account  Record of intangibles that are exchanged internationally
shale  A fissile rock (capable of being split) composed of laminated layers of claylike, fine-grained sediment
shipper's export declaration (SED)  U.S. Department of Commerce form used to control export shipments and record export statistics
short term capital flows  Changes in international assets and liabilities with an original maturity of one year or less
Six Sigma  Business management process for reducing defects and eliminating variation
socialism  Public, collective ownership of the basic means of production and distribution, operating for use rather than profit
sogo shosha  The largest of the Japanese general trading companies
special drawing right (SDR)  An international reserve asset established by the IMF; the unit of account for the IMF and other international organizations
specific duty  A fixed sum levied on a physical unit of an imported good
spot and forward market swaps  Use of the spot and forward markets to hedge foreign currency exposure
spot rate  The exchange rate between two currencies for delivery within two business days
stability  Characteristic of a government that maintains itself in power and whose fiscal, monetary, and political policies are predictable and not subject to sudden, radical changes
stakeholder theory  An understanding of how business operates that takes into account all identifiable interest holders
standards  Documented agreements containing technical specifications or other precise criteria that will be used consistently as guidelines, rules, or definitions of the characteristics of a product, process, or service
strategic alliances  Partnerships between competitors, customers, or suppliers that may take one or more of various forms, both equity and non equity
strategic business unit (SBU)  Business entity with a clearly defined market, specific competitors, the ability to carry out its business mission, and a size appropriate for control by a single manager
strict liability  Standard that holds the designer/manufacturer liable for damages caused by a product without the need for a plaintiff to prove negligence in the product's design or manufacture
subsidiaries  Companies controlled by other companies through ownership of enough voting stock to elect board-of-directors majorities
subsidiary  Separate legal entity owned by the parent company
subsidiary detriment  Situation in which a small loss for a subsidiary results in a greater gain for the total IC
subsidies  Financial contributions, provided directly or indirectly by a government, which confer a benefit; include grants, preferential tax treatment, and government assumption of normal business expenses
supply chain management  The process of coordinating and integrating the flow of materials, information, finances, and services within and among companies in the value chain from suppliers to the ultimate consumer
swap contract  A spot sale/purchase of an asset against a future purchase/sale of an equal amount in order to hedge a financial position
switch trading  The use of a third party to market products received in countertrade
synchronous manufacturing  An entire manufacturing system with unbalanced operations that emphasizes total system performance
tariffs  Taxes on imported goods for the purpose of raising their price to reduce competition for local producers or stimulate local production
tax treaties  Treaties between countries that bind the governments to share information about taxpayers and cooperate in tax law enforcement; often called tax conventions
Taylor's scientific management system  System based on scientific measurements that prescribes a division of work whereby planning is done by managers and plan execution is left to supervisors and workers
technical analysis  An approach that analyzes data for trends and then projects these trends forward
technological dualism  The side-by-side presence of technologically advanced and technologically primitive production systems
temporal method  An approach in foreign currency translation in which monetary accounts are valued at the spot rate and accounts carried at historical cost are translated at their historic exchange rates
terms of sale  Conditions of a sale that stipulate the point at which all costs and risks are borne by the buyer
territorial tax jurisdiction  A tax system in which expatriate citizens who neither live nor work in the country—and therefore receive none of the services for which taxes pay—are exempt from the country's taxes
terrorism  Unlawful acts of violence committed for a wide variety of reasons, including for ransom, to overthrow a government, to gain release of imprisoned colleagues, to exact revenge for real or imagined wrongs, and to punish nonbelievers of the terrorists' religion
third country national (TCN)  Employee who is a citizen of neither the parent company nation nor the host country
top-down planning  Planning process that begins at the highest level in the organization and continues downward
topography  The surface features of a region
total product  What the customer buys, including the physical product, brand name, accessories, after-sales service, warranty, instructions for use, company image, and package
total quality management (TQM)  System in which the entire organization is managed so that it excels on all dimensions of product and services that are important to the customer
trade balance  The balance on the merchandise account
trade fair  A large exhibition, generally held at the same place and same time periodically, at which companies maintain booths to promote the sale of their products
trade mission  A group of businesspeople and/or government officials (state or federal) that visits a market in search of business opportunities
trade-related intellectual property rights (TRIPS)  The acronym TRIPS refers to the WTO agreement that protects copyrights, trademarks, trade secrets, and other intellectual property matters.
trading at a discount  Situation in which a currency's forward rate quotes are weaker than spot
trading at a premium  Situation in which a currency's forward rate quotes are stronger than spot
trading companies  Firms that develop international trade and serve as intermediaries between foreign buyers and domestic sellers and vice versa
traditional hostilities  Long-standing enmities between tribes, races, religions, ideologies, or countries
traditional societies  Tribal peoples before they turn to organized agriculture or industry; traditional customs may linger after the economy changes
transaction exposure  Change in the value of a financial position created by foreign currency changes between the establishment and the settlement of a contract
transfer price  Intracorporate price, or the price of a good or service sold by one affiliate to another, the home office to an affiliate, or vice versa
transfer price  The cost of intracompany sales of goods or services
translation exposure  Potential change in the value of a company's financial position due to exposure created during the consolidation process
treaties  Countries, which may be bilateral (between two countries) or multilateral (involving more than two countries); also called conventions, covenants, compacts, or protocols
trend analysis  Statistical technique by which successive observations of a variable at regular time intervals are analyzed to establish regular patterns that are used for establishing future values
Triffin paradox  The concept that a national currency that is also a reserve currency will eventually run a deficit, which eventually inspires a lack of confidence in the reserve currency and leads to a financial crisis
triple bottom line (3BL)  A results or impact report on the environmental, social, and financial impacts of the business
uncontrollable forces  External forces over which management has no direct control, although it can exert an influence
underground economy  The part of a nation's income that, because of unreporting or underreporting, is not measured by official statistics
unilateral transfer  A transfer with no matched return flow, no reciprocity
unit labor costs  Total direct labor costs divided by units produced
United Nations (UN)  International organization of 191 member-nations dedicated to the promotion of peace and global stability; has many functions related to business
unspoken language  Nonverbal communication, such as gestures and body language
Uruguay Round  The last extended conference of GATT negotiations
validated export license  A required document issued by the U.S. government authorizing the export of a strategic commodity or a shipment to an unfriendly country
value-added tax (VAT)  Indirect tax collected from the parties as they add value to the product
values statement  A clear and concise description of the fundamental values, beliefs, and priorities of the organization's members.
variable levy  An import duty set at the difference between world market prices and local government-supported prices
vehicle currency  A currency used as a vehicle for international trade or investment
vertically integrated  Descriptive term for a firm that produces inputs for its subsequent manufacturing processes
virtual corporation  An organization that coordinates economic activity to deliver value to customers using resources outside the traditional boundaries of the organization
vision statement  A description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy
voluntary export restraints (VERs)  Export quotas imposed by the exporting nation
withholding tax  Indirect tax paid by the payor, usually on passive income
World Bank  Institution that focuses on funding of development projects
World Trade Organization (WTO)  A multinational body of 149 members that deals with rules of trade between nations







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