Global Business and International Trade Review

Vocabulary flashcards created from lecture notes covering topics in global business, international trade, organizational structure, market entry strategies, corporate governance, and technology.

Cultural Globalization

Experiencing diverse international foods (like Mexican, Thai, and Sushi) and media (like K-pop) within one's home country.

Higher Standard of Living

Considered one of the primary macro-level advantages of global expansion.

Market Economy

An economic model that relies on supply and demand to dictate pricing, resource distribution, and wages.

Common Law

The US legal system, which relies on previous judicial rulings and interpretations of the law.

Value Chain Disaggregation

A firm separating its production steps across various global locations to optimize advantages for each specific component.

Lower Resource and Production Costs

A major financial rationale driving companies to expand their operations globally.

"World Is Flat" Perspective

A view on global business suggesting that there are no barriers to globalization.

International Monetary Fund (IMF)

An organization designed to provide financial aid and stability to countries experiencing major economic crises.

Country's Minimum Loan Eligibility

A factor that is NOT determined by the quota assigned to an International Monetary Fund (IMF) member nation.

World Trade Organization (WTO)

A global organization whose policies frequently face criticism regarding environmental damage.

Most Favored Nation (MFN) Status Rule

A rule within the World Trade Organization (WTO) framework designed to ensure non-discriminatory trade between all partner countries by requiring the lowest applicable tariff to be applied to all member nations.

Comparative Advantage

An economic theory where opportunity cost is the primary determining factor for specialization.

Intra-Industry Trade

The practice where two developed nations mutually import and export similar goods (like luxury vehicles) to one another.

Countervailing Duty

A type of tariff implemented by a government to offset the unfair advantage of foreign goods sold at unreasonably low prices due to foreign government subsidies.

Decreased Standard of Labor

A potential negative socio-economic consequence of widespread free trade.

Specific Tariff

A fixed monetary fee (e.g., $10$) applied to an imported good regardless of its value.

Economic Effect of Import Quotas

Higher prices for both imported and domestic goods directly resulting from a government implementing a quota on imported goods.

Infant Industry Protection

A rationale based on applying high tariffs to shield a newly emerging domestic sector from established foreign competitors.

Portfolio Investment

Purchasing a small percentage of equity in a foreign company without gaining control.

Ownership Limitations on FDI

Strategic restrictions on foreign direct investment implemented by governments to prevent foreign interference in politics.

Backward Vertical FDI

An arrangement where a manufacturer establishes a facility abroad to produce components and ships them back to the home country for final assembly.

Capital Outflow Benefit Misconception

The idea that the outflow of capital generates more jobs for home country's workers, which is NOT a recognized benefit motivating host governments to encourage FDI.

Economic Union

A stage of integration that removes trade barriers, adopts common external trade policies, and uses a single monetary policy (like the EU).

Loss of Sovereignty

A significant recognized cost or drawback for a nation joining a regional economic integration agreement.

USMCA

A modernized trade agreement signed in 2020 to reduce trade barriers between the US, Canada, and Mexico.

Gap Fillers

A mechanism under the Uniform Commercial Code used to fill in price and delivery based on what is customary if an international contract fails to specify them.

Grease Payment

A small local fee paid to expedite routine, legal government actions (like processing permits).

Financial Irregularity

A financial act where an employee secretly under-reports cash payments and pockets the difference.

WIPO Strategic Plan Objective

A key objective of the strategic plan for the World Intellectual Property Organization, focused on developing a global intellectual property infrastructure.

Insider Trading

Using confidential, unreleased information about a product failure to sell company stock before the price drops.

Internal Control Triad

The combination of internal auditing, role rotations, and division of tasks best utilized to prevent accounting discrepancies and fraud.

Corporate Social Responsibility

Accounting for a company's environmental impact and societal obligations alongside shareholder duties.

Segregating Duties

An internal control demonstrated when one employee handles physical machinery maintenance while a separate employee handles the related accounting records.

Standardization

A strategy where a company produces identical product models in its foreign manufacturing facilities as it does in its domestic market.

Teams Organizational Structure

An organizational structure best suited for an international business wanting to maximize employee creativity, flexibility, and cross-functional innovation.

Functional Structure

An organizational model where an organization is structured by grouping employees based on their shared skills or specific professional tasks.

Market Structure

Structuring a company based strictly on the demographics or categories of clients they support (e.g., residential, business, government).

Blurred Authority

A defining characteristic—and frequent operational challenge—found within a matrix organizational structure.

Product Adaptation

Modifying a core physical product slightly to meet the specific requirements or preferences of different international markets.

Product Glocalization

Maintaining a standard product formula globally but adjusting minor elements (like sweetness or carbonation) for specific local tastes.

Strategic Alliance

A foreign market entry strategy that allows two firms to collaborate on a project while remaining entirely separate legal entities.

Joint Venture

A new, independent company created and jointly owned by multiple parent corporations.

Licensing

A foreign market expansion strategy that typically involves the absolute lowest amount of financial risk for the entering company.

Franchising

Expanding internationally by providing a partner with your operational framework, marketing, and pricing in exchange for an annual fee.

Acquisition (Market Entry)

A market entry strategy offering the advantage of rapid entry and established infrastructure but carrying a very high level of financial risk.

Low Uncertainty Avoidance

A cultural dimension reflected in a corporate culture that openly encourages and praises employees for experimenting with new, untested methods.

Acquisition (Operating Presence)

Gaining a direct, immediate operating presence in a foreign country by purchasing an existing local company.

"There Is Always Tomorrow"

A statement that generally reflects a cultural norm regarding the perception of time and urgency when attempting to do business in Mexico.

Cultural Norms

The shared, sanctioned, and integrated systems of beliefs and practices passed down through generations within a group.

Polycentric Staffing

A staffing strategy that explicitly hires management from the host country for each respective foreign subsidiary.

Geocentric Staffing

A staffing approach focused on filling corporate leadership roles with the most qualified individuals globally, regardless of their country of origin.

Indulgence vs Restraint

One of Hofstede's cultural dimensions; a culture that strictly discourages giving in to immediate desires or today's pleasures aligns with Restraint.

Culture Simulation Training Role-Play

A core, practical component of effective culture simulation training where participants role-play various situations and practice responding in culturally sensitive ways.

Push Model

A supply chain model heavily driven by the product itself and relying on persuasive advertising to generate consumer demand.

Value-Chain Disaggregation (Risk Mitigation)

Producing components in multiple different countries so production can survive regional disruptions.

Mass Customization

A production process where a customer selects specific options, colors, and designs before the final item is manufactured.

Centralized Location Strategy

The most efficient global location strategy for a product with a very high value-to-weight ratio, involving a single centralized facility shipping to global markets.

Direct Distribution Strategy

A strategy where a firm establishes its own dedicated internal marketing and sales offices to sell goods directly to end consumers.

Disadvantage of Third-Party Distributors

Loss of control over marketing and messaging when selling products internationally.

Equity Financing

Raising financing by asking investors to provide capital in exchange for a percentage of ownership in the company.

Bonds

Raising operating funds from investors with a contractual agreement to repay the principal amount plus interest in the future.

Governmental or Organizational Financing

Receiving export financing or logistical funding from a government-affiliated trade organization.

IFRS

The specific accounting standard that a US multinational company must generally follow when preparing financial statements for its European operations.

Fronting Loans

The strategic maneuver of utilizing a bank as an intermediary to route funds between subsidiaries in tax havens and high-tax jurisdictions.

Economic Risk

A specific type of risk where severe domestic inflation leading to rapid currency depreciation makes a country highly unsafe for FDI.

Usability Divide

A type of digital divide demonstrated when employees stubbornly prefer to perform complex calculations by hand despite having access to computing technology.

Fourth Industrial Revolution (Industry 4.0)

The fusion of technologies that blurs the lines between the physical, digital, and biological spheres, such as the Internet of Things (IoT) and Artificial Intelligence.

Bots

A digital technology that allows global businesses to most efficiently provide automated 24-7 customer support.

Enterprise Resource Planning System

A comprehensive technology platform that allows a firm to seamlessly integrate data across all functional areas of the company.

General Data Protection Regulation (GDPR)

A comprehensive regulation protecting consumer privacy in Europe that threatens companies with fines of up to 4% $of global turnover or$ 20 million Euros$$ for non-compliance.