International Business Practice Flashcards

Vocabulary-style flashcards covering the core terminology of international business, globalisation, institutional frameworks, trade theories, and regional integration.

Globalisation (Simple definition)

The flow of goods, services, money, information, technology, and people between countries.

Global business

A business that works in both domestic and international markets.

Multinational enterprise (MNE)

A company that invests and operates in more than one country, usually through foreign direct investment.

Foreign direct investment (FDI)

Investment into a company or business in another country with the aim of having a lasting interest or control.

Emerging economies / emerging markets

Countries moving toward industrial development with fast economic growth, rising trade, and a growing middle class, but also higher risk and volatility.

Gross domestic product (GDP)

A measure of economic health representing the total market value of all finished goods and services produced inside a country in a certain period.

Globalisation of markets

The fusion of separate national markets into one big global market where companies can sell to customers everywhere.

Globalisation of production

Firms making products in different countries to gain cost or quality advantages related to labour, skills, or resources.

The 'World is Flat' view

Thomas Friedman's idea that technology and open markets have leveled the playing field, allowing companies and people to compete more equally globally.

Outsourcing

A company paying another company to perform specific activities for it, such as IT helpdesks, training, or printing.

Offshoring

A company moving its production or operations to another country.

Global supply chains

Suppliers and production networks that span across many different countries.

Insourcing

A company using a specialist partner to improve its operations while maintaining strong control.

Slowbalisation

The trend where globalisation continues but at a much slower pace than in previous years.

Deglobalisation

The process of countries becoming less integrated and less dependent on each other, often due to protectionism or political tension.

CAGE framework

Pankaj Ghemawat's model for looking at four types of distance: Cultural, Administrative, Geographic, and Economic.

Law of distance

The principle that international interactions are reduced by the distance between countries.

Law of semi-globalisation

The idea that borders still matter even though global interactions continue to take place.

Institutions

The 'rules of the game' in a country that shape how people and firms behave and how business is done.

Formal institutions

Official rules such as laws, regulations, and government systems.

Informal institutions

Socially derived rules including norms, culture, ethics, religion, and language.

Institutional framework

The full set of formal and informal institutions that guide behavior in a country.

Institutional transition

Major changes in the formal or informal rules of a country, such as China's shift after the Open Door policy in $1978$.

Transaction costs

The costs of doing business, including searching, negotiating, making contracts, and monitoring supplier performance.

Political risk

The risk that political changes or instability in a country will harm local or foreign firms.

Collectivism

A political philosophy that gives more importance to the group or society than to the individual, stressing collective goals.

Individualism

A philosophy focusing on individual freedom, where people pursue their own interests to create the best outcomes for society.

Totalitarianism

A political system where one person or party has absolute power and the state controls many aspects of society.

Democracy

A system where people choose leaders by voting, most commonly occurring as representative democracy.

Market economy

An economic system where the government takes a hands-off approach and individuals or firms decide what to produce.

Command economy

An economic system where the government owns or controls the factors of production and handles resource allocation.

Mixed economy

A system combining market and command elements, where private firms operate but the state owns some important industries.

Liberal Market Economy (LME)

A free-market form where firms have more freedom, the labor market is flexible, and firms often raise capital via shares (e.g., USA, UK).

Coordinated Market Economy (CME)

A market economy featuring more coordination between government, firms, and unions with a focus on long-term relationships (e.g., Germany, Japan).

Civil law

A legal system based on comprehensive written laws and codes that judges use as the primary basis for decisions.

Common law

A legal system based on tradition, precedents, and past judicial decisions rather than just written codes.

Religious law

A legal system based on religious teachings, such as Islamic (Sharia) law.

Property rights

Legal rights over how a resource is used and the income generated from it.

Intellectual property rights (IPR)

Legal rights that protect the ownership of ideas and creations, including patents, copyrights, and trademarks.

Corporate governance

The rules governing how companies are controlled and the distribution of rights and responsibilities within a firm.

Culture

A shared system of values and norms that shape how a group of people live, think, and behave.

Subculture

A smaller culture existing inside a larger, dominant culture, such as hippie or punk groups.

Low-context cultures

Cultures where communication is direct and explicit, and words say exactly what is meant (e.g., USA, Germany).

High-context cultures

Cultures where communication is indirect and based on tone, gestures, and trust-based relationships (e.g., China, Japan).

Power distance

A cultural dimension describing the extent to which people accept unequal distribution of power.

Uncertainty avoidance

A cultural dimension measuring how much people prefer rules and structure over accepting ambiguity.

Masculinity vs Femininity

A dimension comparing values like assertiveness and competition versus cooperation and quality of life.

Ethnocentrism

The belief in the superiority of one's own ethnic group or culture.

Ethical relativism

The belief that ethical practices should follow local standards ('When in Rome, do as the Romans do').

Ethical imperialism

The belief that there is only one correct set of ethics, typically applying home-country values everywhere.

Corporate Social Responsibility (CSR)

A company's consideration of social and environmental issues alongside profit and legal duties.

Triple bottom line

A business focus on three performance areas: profit, people, and planet.

Sustainability

Meeting present needs without harming the ability of future generations to meet their own needs.

Circular economy

An economic model designed to be restorative and regenerative, keeping products and materials in use as long as possible.

Corruption

The abuse of entrusted power for private gain, commonly involving bribery.

Mercantilism

The classical trade theory that a nation's wealth is fixed and it should export more than it imports to accumulate gold.

Absolute advantage

Adam Smith's theory that a country should specialize in producing goods it can make more efficiently than any other country.

Comparative advantage

David Ricardo's theory that trade is beneficial even if one country is less efficient in all goods, provided it specializes in what it does relatively better.

Factor endowment theory

The Heckscher-Ohlin theory that trade advantages arise from the different resources (land, labour, technology) a country possesses.

Strategic trade theory

The idea that government intervention can help specific industries gain first-mover advantages or economies of scale.

Porter's Diamond

A model explaining national competitive advantage based on factor endowments, demand conditions, related industries, and firm strategy/rivalry.

Tariff barriers

Taxes imposed on imported goods to make them more expensive and protect domestic industries.

Non-tariff barriers (NTBs)

Regulations and restrictions other than taxes that limit trade, such as quotas, subsidies, or administrative rules.

Greenfield investment

A form of FDI where a firm builds a brand-new business or facility from the ground up in a foreign country.

Mergers and acquisitions (M&A)

A form of FDI involving the purchase of or combination with an existing foreign company.

OLI framework

Dunning's model stating that FDI occurs when a firm possesses Ownership, Location, and Internalisation advantages.

Agglomeration

Location advantages gained from firms and industries clustering together, such as in Silicon Valley.

Regional integration

Independent countries in the same geographic area working together to increase cooperation and reduce trade barriers.

Trade creation

The positive effect when regional integration generates more efficient trade between member countries.

Trade diversion

The negative effect when higher-cost producers within a trade bloc replace lower-cost producers from outside the bloc.

Free Trade Area

A level of integration where members remove internal trade barriers but maintain their own individual policies toward non-members.

Customs Union

A free trade area that also adopts a common external tariff towards non-member countries.

Common Market

A customs union that allows the free movement of factors of production, such as labour and capital.

Economic Union

A common market that also involves the coordination of economic policies, such as monetary or fiscal rules.

Political Union

The highest level of integration where countries share both political and economic institutions.

WTO (World Trade Organization)

The primary multilateral organization that sets global trade rules and settles disputes between member nations.

Most-favoured-nation principle

A WTO rule stating that any trade concession given to one member must be extended to all other members.

IMF (International Monetary Fund)

An organization that promotes international monetary stability and provides short-term loans to countries with balance-of-payments problems.

World Bank

A financial institution that provides long-term loans and grants to developing countries for projects aimed at reducing poverty.

Maastricht criteria

The economic requirements countries must meet to join the euro, including limits on budget deficits and public debt.

ASEAN

The Association of Southeast Asian Nations, a regional organization promoting growth and stability in Southeast Asia.

RCEP (Regional Comprehensive Economic Partnership)

A massive free trade agreement in the Asia-Pacific region covering tariffs, IP, and e-commerce.

CPTPP

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, noted for having stricter labour and environmental standards than RCEP.