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
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ad valorem duty | An import duty levied as a percentage of the invoice value of imported goods
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advertising | Paid, nonpersonal presentation of ideas, goods, or services by an identified sponsor
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aesthetics | A culture's sense of beauty and good taste
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affiliates | A term sometimes used interchangeably with subsidiaries, but more forms exist than just stock ownership
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air waybill | A bill of lading issued by an air carrier
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allowances | Employee compensation payments added to base salaries because of higher expenses encountered when living abroad
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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
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Andean Community (CAN) | South American five-nation trading bloc
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antitrust laws | Laws to prevent price fixing, market sharing, and business monopolies
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appropriate technology | The technology (advanced, intermediate, or primitive) that most closely fits the society using it
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arbitrage | The process of buying and selling instantaneously to make profit with no risk
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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
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Asian religions | Primary ones: Hinduism, Buddhism, Jainism, and Sikhism (India); Confucianism and Taoism (China); and Shintoism (Japan)
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ask price | Sales price
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Association of Southeast Asian Nations (ASEAN) | Ten-member body formed to promote peace and cooperation in the Southeast Asian region
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associations | Social units based on age, gender, or common interest, not on kinship
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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
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automated export system (AES) | U.S. Customs electronic filing system
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backward vertical integration | Arrangement in which facilities are established to manufacture inputs used in the production of a firm's final products
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balance of payments (BOP) | Record of a country's transactions with the rest of the world
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Bank for International Settlements | Institution for central bankers; operates as their bank
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bank swap | Swap made between banks to acquire temporary foreign currencies
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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
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barter | A direct exchange of goods or services for goods or services without the use of money
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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
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bid price | Price offered to buy
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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
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blocked funds | Funds whose conversion from a host currency or repatriation is not allowed by a host government
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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
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bonuses | Expatriate employee compensation payments in addition to base salaries and allowances because of hardship, inconvenience, or danger
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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
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bottleneck | Operation in a manufacturing system whose output sets the limit for the entire system's output
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bottom-up planning | Planning process that begins at the lowest level in the organization and continues upward
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brain drain | The loss by a country of its most intelligent and best-educated people
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branch | Legal extension of the parent company
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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
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bribes | Gifts or payments to induce the receiver to do something illegal for the giver
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Canadian Shield | A massive area of bedrock covering one-half of Canada's landmass
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capital account | Record of the net changes in a nation's international financial assets and liabilities
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capitalism | An economic system in which the means of production and distribution are for the most part privately owned and operated for private profit
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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
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CE (Conformite Europeene) mark | EU mark that indicates that the merchandise conforms to European health, safety and environmental requirements
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Central American Free Trade Agreement (CAFTA) | FTA among the United States and several Central American nations
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central reserve asset | Asset, usually currency, held by a government's central bank
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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
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clearing account arrangement | A process to settle a trading account within a specified time
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climate | Meteorological conditions, including temperature, precipitation, and wind, that prevail in a region
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cluster analysis | Statistical technique that divides objects into groups so that the objects within each group are similar
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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
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Collective Security Treaty Organization (CSTO) | Security alliance of six members of the Commonwealth of Independent States (former Union of Soviet Socialist Republics)
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common market | Customs union that includes mobility of services, people, and capital within the union
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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
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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
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compensation | Countertrade in which the developing country makes payment in products produced by use of developed country equipment.
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compensation packages | For expatriate employees, packages that can incorporate many types of payments or reimbursements and must take into consideration exchange rates and inflation
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competition policy | The European Union equivalent of antitrust laws
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competitive advantage | The ability of a company to have higher rates of profits than its competitors
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competitive strategies | Action plans to enable organizations to reach their objectives
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competitor analysis | Process in which principal competitors are identified and their objectives, strengths, weaknesses, and product lines are assessed
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competitor intelligence system (CIS) | Procedure for gathering, analyzing, and disseminating information about a firm's competitors
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complete economic integration | Integration on both economic and political levels
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compound duty | A combination of specific and ad valorem duties
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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
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confiscation | Government seizure of the property within its borders owned by foreigners without payment to them
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Confucian work ethic | Drive toward hard work and thrift; similar to Protestant work ethic
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conservative | A person, group, or party that wishes to minimize government activities and maximize private ownership and business
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consolidation | The process of translating subsidiary results and aggregating them into one financial report
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contingency plans | Plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm
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contract manufacturing | An arrangement in which one firm contracts with another to produce products to its specifications but assumes responsibility for marketing
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controllable forces | Internal forces that management administers to adapt to changes in the uncontrollable forces
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cooperative exporters | Established international manufacturers that export other manufacturers' goods as well as their own
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Council of the European Union | Group that is the EU's primary policy-setting institution
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counterpurchase | Countertrade in which the goods supplied do not rely on the goods imported
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countertrade | The trade of goods or services for other goods or services
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countervailing duties | Additional import taxes levied on imports that have benefited from export subsidies
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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
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country screening | Using countries as the basis for market selection
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cross investment | Foreign direct investment by oligopolistic firms in each other's home countries as a defense measure
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cross rates | Currency exchange rates for trading directly between non- US$ currencies
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culture | Sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations
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currency devaluation | The lowering of a currency's price in terms of other currencies
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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
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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
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current account | Record of a country's exports and imports in goods and services
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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
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customhouse broker | Independent businesses that handle import shipments for compensation
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customs drawbacks | Rebates on customs duties
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customs union | Collaboration that adds common external tariffs to an FTA
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de-jobbing | Replacing fixed jobs with tasks performed by evolving teams
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demonstration effect | Result of having seen others with desirable goods
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derivative | A contract whose value is tied to the performance of a financial instrument or commodity
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developed | A classification for all industrialized nations, which are the most technically developed
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developing | A classification for the world's lower-income nations, which are less technically developed
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direct exporting | The exporting of goods and services by the firm that produces them
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direct investment | The purchase of sufficient stock in a firm to obtain significant management control
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direct investment | Investments located in one country that are effectively controlled by residents of another country
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discretionary income | The amount of income left after paying taxes and making essential purchases
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distributors | Independent importers that buy for their own account for resale
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Doha Development Agenda | WTO extended conference on trade; also called Doha Round
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domestic environment | All the uncontrollable forces originating in the home country that surround and influence the firm's life and development
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dumping | Selling a product abroad for less than the cost of production, the price in the home market, or the price to third countries
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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
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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
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Economic and Social Council (ECOSOC) | UN body concerned with economic and social issues such as trade, development, education, and human rights
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economic exposure | The potential for the value of future cash flows to be affected by unanticipated exchange rate movements
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efficient market approach | Assumption that current market prices fully reflect all available relevant information
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environment | All the forces surrounding and influencing the life and development of the firm
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environmental scanning | A procedure in which a firm scans the world for changes in the environmental forces that might affect it
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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
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estimation by analogy | Process of using a market factor that is successful in one market to estimate demand in a similar market
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ethnocentric | As used here, related to hiring and promoting employees on the basis of the parent company's home country frame of reference
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ethnocentricity | Belief in the superiority of one's own ethnic group (see the self-reference criterion in Chapter 1)
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euro | Currency of the European Monetary Union
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European Central Bank (ECB) | Institution that sets and implements EU monetary policy
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European Commission | Institution that runs the EU's day-to-day operations
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European Court of Justice (ECJ) | Court that rules on issues related to EU policies
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European Free Trade Agreement (EFTA) | Four-nation non-EU FTA in Europe
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European Monetary Union (EMU) | Group that established use of euro (€) in the 12-country euro zone
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European Parliament | EU legislative body whose members are popularly elected from member-nations
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European Union (EU) | A body of 25 European countries dedicated to economic and political integration
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exchange rate | The price of one currency stated in terms of another currency
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Ex-Im Bank | Principal government agency that aids American exporters by means of loans, guarantees, and insurance programs
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expatriate | A person living outside his or her country of citizenship
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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
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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.
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export trading company (ETC) | A firm established principally to export domestic goods and services and to help unrelated companies export their products
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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
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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
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expropriation | Government seizure of the property within its borders owned by foreigners, followed by prompt, adequate, and effective compensation paid to the former owners
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extended family | Family that includes blood relatives and relatives by marriage
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extortion | Demand for payment to keep the receiver from causing harm to the payer
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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
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Ex-Works | INCOTERM equivalent of FOB
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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
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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
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factoring | Discounting without recourse an account receivable
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fiscal policies | Policies that address the collecting and spending of money by the government
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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
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fixed currency exchange rates | Rates that governments agree on and undertake to maintain
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floating currency exchange rates | Rates that are allowed to float against other currencies and are determined by market forces
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FOB | Pricing policy in which risks pass from seller to buyer at the factory door; U.S. equivalent of Ex-Works
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Foreign Corrupt Practices Act (FCPA) | U.S. law against making payments to foreign government officials for special treatment
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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
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foreign environment | All the uncontrollable forces originating outside the home country that surround and influence the firm
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foreign national pricing | Local pricing in another country
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foreign sourcing | The overseas procurement of raw materials, components, and products
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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
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foreign trade zone (FTZ) | Duty-free area designed to facilitate trade by reducing the effect of customs restrictions
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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
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forward currency market | Trading market for currency contracts deliverable 30, 60, 90, or 180 days in the future
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forward market hedge | Foreign currency contract sold or bought forward in order to protect against foreign currency movement
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forward rate | The exchange rate between two currencies for delivery in the future, usually 30, 60, 90, or 180 days
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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
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free trade area (FTA) | Area in which tariffs among members have been eliminated, but members keep their external tariffs
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free trade zone | An area designated by the government as outside its customs territory
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functional currency | The primary currency of a business
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fundamental approach | Exchange rate prediction based on econometric models that attempt to capture the variables and their correct relationships
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General Agreement on Tariffs and Trade (GATT) | International agreement that functioned to encourage trade liberalization from 1947 to 1995
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General Assembly | Deliberative body of the UN made up of all member-nations, each with one vote regardless of size, wealth, or power
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general export license | Any export license covering export commodities for which a validated license is not required; no formal application is required
|
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geocentric | As used here, related to hiring and promoting employees on the basis of ability and experience without considering race or citizenship
|
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global company (GC) | An organization that attempts to standardize and integrate operations worldwide in all functional areas
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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
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gold standard | The use of gold at an established number of units per currency
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goods or merchandise account | Record of tangible exports and imports
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gross national income (GNI) | The total value of all income generated by a nation's residents from international and domestic activity
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Group of 8 (G8) | Group of government leaders from industrialized nations that meets regularly to discuss issues of concern
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guest workers | People who go to a foreign country legally to perform certain types of jobs
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Harmonized Tariff Schedule of the United States (HTSUSA) | American version of the Harmonized System used worldwide to classify imported products
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hedging | A process to reduce or eliminate financial risk
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hierarchy | A body of persons organized or classified according to rank or authority
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home country national | Same as parent country national
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horizontal corporation | A form of organization characterized by lateral decision processes, horizontal networks, and a strong corporatewide business philosophy
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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
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human-needs approach | View that defines economic development as a reduction of poverty and unemployment as well as an increase in income
|
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hybrid organization | Structure organized by more than one dimension at the top level
|
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import substitution | The local production of goods to replace imports
|
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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
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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
|
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income tax | Direct tax levied on earnings
|
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INCOTERMS | Universal trade terminology developed by the International Chamber of Commerce
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indirect exporting | The exporting of goods and services through various types of home-based exporters
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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
|
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industrial espionage | Act of spying on a competitor to learn secrets about its strategy and operations
|
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inland waterways | Waterways that provide access to interior regions
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instability | Characteristic of a government that cannot maintain itself in power or that makes sudden, unpredictable, or radical policy changes
|
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intellectual property | Patents, trademarks, trade names, copyrights, and trade secrets, all of which result from the exercise of someone's intellect
|
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interest rate swap | An exchange of interest rate flows in order to manage interest rate exposure
|
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intermediate technology | Production methods between capital- and labor-intensive methods
|
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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
|
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international company (IC) | Either a global or a multidomestic company
|
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International Court of Justice (ICJ) | UN body that renders legal decisions involving disputes between national governments
|
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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
|
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international environment | Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces
|
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|
|
international Fisher effect | Concept that the interest rate differentials for any two currencies will reflect the expected change in their exchange rates
|
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|
International Monetary Fund | Institution that coordinates multilateral monetary rules and their enforcement
|
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|
international pricing | Setting prices of goods for export for both unrelated and related firms
|
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|
international product life cycle (IPLC) | A theory explaining why a product that begins as a nation's export eventually becomes its import
|
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|
international status | Entitles the expatriate employee to all the allowances and bonuses applicable to the place of residence and employment
|
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international strategy | The way firms make choices about acquiring and using scarce resources in order to achieve their international objectives
|
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|
intervention currency | A currency used by a country to intervene in the foreign currency exchange markets, often to buy (strengthen) its own currency
|
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|
irrevocable L/C | A stipulation that a letter of credit cannot be canceled
|
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|
|
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
|
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|
|
joint venture | A cooperative effort among two or more organizations that share a common interest in a business enterprise or undertaking
|
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|
just-in-time (JIT) | A balanced system in which there is little or no delay time and idle in-process and finished goods inventory
|
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|
|
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
|
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|
|
labor market | The pool of available potential employees with the necessary skills within commuting distance from an employer
|
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|
|
labor mobility | The movement of people from country to country or area to area to get jobs
|
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|
|
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
|
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|
|
labor unions | Organizations of workers
|
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|
|
language trap | A situation in which a person doing international business can speak only his or her home language
|
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|
law of one price | Concept that in an efficient market, like products will have like prices
|
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|
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
|
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|
left wing | A more extreme liberal position
|
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|
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
|
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|
liberal | In the contemporary United States, a person, group, or party that urges greater government involvement in business and other aspects of human activities
|
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licensing | A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee
|
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|
lingua franca | A foreign language used to communicate among a nation's diverse cultures that have diverse languages
|
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|
|
management contract | An arrangement by which one firm provides management in all or specific areas to another firm
|
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|
manufacturers' agents | Independent sales representatives of various noncompeting suppliers
|
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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
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market factors | Economic data that correlate highly with market demand for a product
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market indicators | Economic data used to measure relative market strengths of countries or geographic areas
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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
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mass customization | The use of flexible, usually computer-aided, manufacturing systems to produce and deliver customized products and services for different customers worldwide
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material culture | All human-made objects; concerned with how people make things (technology) and who makes what and why (economics)
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matrix organization | An organizational structure composed of one or more superimposed organizational structures in an attempt to mesh product, regional, functional, and other expertise
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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
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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
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Mercosur (Mercosul) | Economic free trade area in South America modeled on the EU
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minorities | A relatively smaller number of people identified by race, religion, or national origin who live among a larger majority
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mission statement | A broad statement that defines the organization's purpose and scope
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monetary policies | Government policies that control the amount of money in circulation and its growth rate
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money market hedge | A method to hedge foreign currency exposure by borrowing and lending in the domestic and foreign money markets
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monopolistic advantage theory | Theory that foreign direct investment is made by firms in oligopolistic industries possessing technical and other advantages over indigenous firms
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most favored nation (MFN) clause | Agreement that GATT member-nations would treat all members equally in trade matters
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multidomestic company (MDC) | An organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences
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multilateral netting | Strategy in which subsidiaries transfer net intracompany cash flows through a centralized clearing center
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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
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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
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natural resources | Anything supplied by nature on which people depend
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newly industrialized economies (NIEs) | The fast-growing upper-middle-income and high-income economies of South Korea, Taiwan, Hong Kong, and Singapore
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newly industrializing countries (NICs) | The four Asian tigers and the middle-income economies such as Brazil, Mexico, Malaysia, Chile, and Thailand
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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
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nontariff barriers (NTBs) | All forms of discrimination against imports other than import duties
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North American Free Trade Agreement (NAFTA) | Agreement creating a free trade area among Canada, Mexico, and the United States
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North Atlantic Treaty Organization (NATO) | Security alliance of 26 North American and European nations
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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
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offset | Trade arrangement that requires that a portion of the inputs be supplied by the receiving country
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offshore financial center | Location that specializes in financing nonresidents, with low taxes and few banking regulations
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offshoring | Relocating some or all of a business's activities or processes to a foreign location
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orderly marketing arrangements | Formal agreements between exporting and importing countries that stipulate the import or export quotas each nation will have for a good
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Organisation for Economic Cooperation and Development (OECD) | Group of developed countries dedicated to promoting economic expansion in its member-nations
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Organization of Petroleum Exporting Countries | Cartel of 11 petroleum-exporting countries
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organizational structure | The way that an organization formally arranges its domestic and international units and activities, and the relationships among these various organizational components
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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
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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
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par value | Stated value
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parallel loans | Matched loans across currencies that are made to cover risk
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parent country national (PCN) | Employee who is a citizen of the nation in which the parent company is headquartered; also called home country national
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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
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polycentric | As used here, related to hiring and promoting employees on the basis of the specific local context in which the subsidiary operates
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population density | A measure of the number of inhabitants per area unit (inhabitants per square kilometer or square mile)
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population distribution | A measure of how the inhabitants are distributed over a nation's area
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portfolio investment | The purchase of stocks and bonds to obtain a return on the funds invested
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portfolio investment | Long-term investments that do not give the investors control over the investment
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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
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preventive (planned) maintenance | Maintenance done according to plan, not when machines break down
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private international law | Laws governing transactions of individuals and companies that cross international borders
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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
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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
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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
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programmed-management approach | A middle-ground advertising strategy between globally standardized and entirely local programs
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promotion | Any form of communication between a firm and its publics
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promotional mix | A blend of the promotional methods a firm uses to sell its products
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Protestant work ethic | Duty to glorify God by hard work and the practice of thrift
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public international law | Legal relations between governments
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public relations | Various methods of communicating with the firm's publics to secure a favorable impression
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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
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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
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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
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questionable or dubious payments | Bribes paid to government officials by companies seeking purchase contracts from those governments
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quotas | Numerical limits placed on specific classes of imports
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random walk hypothesis | Assumption that the unpredictability of factors suggests that the best predictor of tomorrow's prices is today's prices
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regiocentric | As used here, related to hiring and promoting employees on the basis of the specific regional context in which the subsidiary operates
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Rhine waterway | A system of rivers and canals that is the main transportation artery of Europe
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right wing | A more extreme conservative position
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rural-to-urban shift | The movement of a nation's population from rural areas to cities
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sales company | A business established for the purpose of marketing goods and services, not producing them
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sales promotion | Any of various selling aids, including displays, premiums, contests, and gifts
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scenarios | Multiple, plausible stories about the future
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Secretariat | The staff of the UN, headed by the secretary-general
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Security Council | Main policy-setting body of the UN, composed of 15 members including 5 permanent members
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segment screening | Using market segments as the basis for market selection
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self-reference criterion | Unconscious reference to one's own cultural values when judging behaviors of others in a new and different environment
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services account | Record of intangibles that are exchanged internationally
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shale | A fissile rock (capable of being split) composed of laminated layers of claylike, fine-grained sediment
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shipper's export declaration (SED) | U.S. Department of Commerce form used to control export shipments and record export statistics
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short term capital flows | Changes in international assets and liabilities with an original maturity of one year or less
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Six Sigma | Business management process for reducing defects and eliminating variation
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socialism | Public, collective ownership of the basic means of production and distribution, operating for use rather than profit
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sogo shosha | The largest of the Japanese general trading companies
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special drawing right (SDR) | An international reserve asset established by the IMF; the unit of account for the IMF and other international organizations
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specific duty | A fixed sum levied on a physical unit of an imported good
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spot and forward market swaps | Use of the spot and forward markets to hedge foreign currency exposure
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spot rate | The exchange rate between two currencies for delivery within two business days
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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
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stakeholder theory | An understanding of how business operates that takes into account all identifiable interest holders
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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
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strategic alliances | Partnerships between competitors, customers, or suppliers that may take one or more of various forms, both equity and non equity
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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
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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
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subsidiaries | Companies controlled by other companies through ownership of enough voting stock to elect board-of-directors majorities
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subsidiary | Separate legal entity owned by the parent company
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subsidiary detriment | Situation in which a small loss for a subsidiary results in a greater gain for the total IC
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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
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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
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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
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switch trading | The use of a third party to market products received in countertrade
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synchronous manufacturing | An entire manufacturing system with unbalanced operations that emphasizes total system performance
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tariffs | Taxes on imported goods for the purpose of raising their price to reduce competition for local producers or stimulate local production
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tax treaties | Treaties between countries that bind the governments to share information about taxpayers and cooperate in tax law enforcement; often called tax conventions
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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
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technical analysis | An approach that analyzes data for trends and then projects these trends forward
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technological dualism | The side-by-side presence of technologically advanced and technologically primitive production systems
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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
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terms of sale | Conditions of a sale that stipulate the point at which all costs and risks are borne by the buyer
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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
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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
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third country national (TCN) | Employee who is a citizen of neither the parent company nation nor the host country
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top-down planning | Planning process that begins at the highest level in the organization and continues downward
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topography | The surface features of a region
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total product | What the customer buys, including the physical product, brand name, accessories, after-sales service, warranty, instructions for use, company image, and package
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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
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trade balance | The balance on the merchandise account
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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
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trade mission | A group of businesspeople and/or government officials (state or federal) that visits a market in search of business opportunities
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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.
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trading at a discount | Situation in which a currency's forward rate quotes are weaker than spot
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trading at a premium | Situation in which a currency's forward rate quotes are stronger than spot
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trading companies | Firms that develop international trade and serve as intermediaries between foreign buyers and domestic sellers and vice versa
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traditional hostilities | Long-standing enmities between tribes, races, religions, ideologies, or countries
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traditional societies | Tribal peoples before they turn to organized agriculture or industry; traditional customs may linger after the economy changes
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transaction exposure | Change in the value of a financial position created by foreign currency changes between the establishment and the settlement of a contract
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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
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transfer price | The cost of intracompany sales of goods or services
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translation exposure | Potential change in the value of a company's financial position due to exposure created during the consolidation process
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treaties | Countries, which may be bilateral (between two countries) or multilateral (involving more than two countries); also called conventions, covenants, compacts, or protocols
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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
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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
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triple bottom line (3BL) | A results or impact report on the environmental, social, and financial impacts of the business
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uncontrollable forces | External forces over which management has no direct control, although it can exert an influence
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underground economy | The part of a nation's income that, because of unreporting or underreporting, is not measured by official statistics
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unilateral transfer | A transfer with no matched return flow, no reciprocity
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unit labor costs | Total direct labor costs divided by units produced
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United Nations (UN) | International organization of 191 member-nations dedicated to the promotion of peace and global stability; has many functions related to business
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unspoken language | Nonverbal communication, such as gestures and body language
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Uruguay Round | The last extended conference of GATT negotiations
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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
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value-added tax (VAT) | Indirect tax collected from the parties as they add value to the product
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values statement | A clear and concise description of the fundamental values, beliefs, and priorities of the organization's members.
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variable levy | An import duty set at the difference between world market prices and local government-supported prices
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vehicle currency | A currency used as a vehicle for international trade or investment
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vertically integrated | Descriptive term for a firm that produces inputs for its subsequent manufacturing processes
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virtual corporation | An organization that coordinates economic activity to deliver value to customers using resources outside the traditional boundaries of the organization
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vision statement | A description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy
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voluntary export restraints (VERs) | Export quotas imposed by the exporting nation
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withholding tax | Indirect tax paid by the payor, usually on passive income
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World Bank | Institution that focuses on funding of development projects
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World Trade Organization (WTO) | A multinational body of 149 members that deals with rules of trade between nations
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