global business environment & geopolitics

from the glossary

andean common market

a sub-regional free trade compact designed to promote economic and social integration and cooperation; bolivia, colombia, ecuador and peru were all members

belt and road initiative

china has increasingly aligned itself with the brics by being connected with the belt and road programme.

born global firm

a firm that is immediately or very quickly engaged in international business since its founding. it engages in early and rapid internationalisation to leverage critical resources beyond their national borders

canada labour code

federal law that covers areas such as wages, employment practices, work safety and conciliation of labour disputes

company chop

an offical company seal or signature stamp used to verify company documents, contracts and often financial transactions

competition act

a canadian federal law that regulates anticompetitive practices and prohibits actions that will substantially lessen or prevent competition

downstream

this stage involves processing the materials into a finished product and selling it

economic globalisation

the growing interdependece of locations and economic actors across countries and regions

exports

goods and services produced by a firm in one country and then sent to another country

flying geese model

a model suggesting that asian countries have followed japan’s historical economic transition, specialising in particular industries during particular growth stages. at a certain point in time we should expect to see these industries located in different asian countries

foreign direct investment (fdi)

equity investments by private firms in firms located in other nations. this is different from portfolio investments, because fdi is undertaken by mnes

formal institutions

rules that may be in the form of legal code and law that are legally laid out and codified

general agreement on tariffs and trade (gatt)

a major trade agreement that was established to negotiate trade concessions among member countries. now superceded by wto agreements

global production networks (gpns)

organisational platforms where various actors from globally dispersed locations compete and cooperate for value creation, transformation and capture

global value chains

stages of the production process are organised across multiple countries, so that firms can fully capture the cost and other advantages brought by a globalised world

guanxi

symbol for personalised or informal networks in china. they can be important preconditions for smoothing the way or gaining favours or advantages. there are parallels with the concept of social capital

imports

goods and services produced in one country and bought in by another country

informal institutions

rules that are not always laid out in the form of written instruction, but come out of usage and tradition, and are often unwritten and tacit

institutions

the sets of common habits, routines, established practices, rules or laws that regulate the interaction between individuals and groups

interdependence

mutal reliance between groups of actors; individuals, firms, countries or regions

internalisation

the strategic decision by a MNE to manage a business activity or transaction within its own organisational boundaries rather than outsourcing it to the open market

international business

the study of transactions taking place across national borders for the purpose of satisfying the needs of individuals and organisations

international trade

the exchange of goods and services across international borders

intra-regional investments

investments in the local region rather than in other triad or non-triad regions

investment canada act

a law enacted to significantly reduce restrictions for foreign investors in Canada to create a more open economy

latin american integration association (laia)

a free trade group formed to reduce intra-regional trade barriers and to promote regional economic cooperation

liberalisation policies

government policies that move away from planned economics towards more free market systems; marked by the privatisation of state-owned businesses, lowering of tariff and non-tariff barriers and reductions in constraints for FDI

market-seeking FDI

mnes invest in distribution, sales or marketing operations in order to sell products or services in particular country markets

mercosur

a sub-regional free trade group formed to promot economic cooperation. the group consisted of argentina, brazil, paraguay and uruguay

meta-integrator

the modern mne must be able to leverage knowledge within its complex structure and across its external affiliations. this requires efficient internal markets and well-structured cross-border hierarchies

multinational enterprises (MNEs)

a multi-plant firm that controls and coordinates operations in at least two countries; or a firm that engages in value-added international business activities, that has affliliaties in more than one country, and whose operations and activities in different locations are actively coordinated by one or more headquarters organisations

north america free trade agreement (nafta)

a regional free trade agreement among canada, the united states and mexico

newly industrialised countries (nics)

a subgroup of emerging market economies that have experienced rapid economic growth, normally accompanied by political and social changes. forerunners were the asian tiger companies (singapore, south korea, taiwan and hong kong)

resource seeking FDI

MNEs invest in production-related activities to benefit from cheaper or better sources of inputs in a particular location; these can include raw materials, components or labour and expertise

state owned enterprises (soe)

companies that are owned, financed and controlled by the government

upstream

the production stage where the process of exploring and extracting raw materials takes place

us-canada fta

a trade agreement that eliminates most trade restrictions between these two countries and extends national treatment to foreign investment

wfoe

a wholly foreign owned enterprise is a limited liability company under chinese company law and the preferred mode of investment for foreign mnes looking to manufacture in china

wto

an international organisation that deals with the rules of trade among member countries; one of its most important functions is to act as a dispute settlement mechanism

wto accession

admission to the world trade organisation; in return for the right to access and to engage in fair trade with other national markets, the country must liberalise its own markets