Review for 1st exam_Ch1-6_Spring2025 (1)

Multinational Firm

A multinational firm is one that has productive operations in more than one country.

Foreign Direct Investment (FDI)

The purchase of assets in a foreign country by a firm, providing control over the use of those assets.

Foreign Subsidiary

An organization in the host country that is an extension of a firm’s operations into a host country for business activities.

Globalization

The shift toward a more integrated and interdependent world economy.

Globalization of Markets

The process of expanding markets on a global scale.

Globalization of Production

The sourcing of goods and services from different locations across the globe to take advantage of differences in cost and quality.

Trade Barriers

Government-imposed regulations such as tariffs that restrict international trade.

Communication Technology

Technologies that enable communication among people, including the internet and microprocessors.

Transportation Technology

Technologies that improve the movement of goods, such as commercial jets and containerization.

Collectivism

A political system that stresses the primacy of collective goals over individual goals.

Individualism

A political system in which the interests of the individual take precedence over the interests of the state.

Market Economy

An economic system where all productive activities are privately owned and production is determined by supply and demand.

Command Economy

An economic system in which the government plans and allocates goods and services for the 'good of society'.

Common Law

A legal system based on tradition, precedent, and custom.

Civil Law

A legal system based on detailed sets of laws organized into codes.

Theocratic Law

A legal system based on religious teachings.

Cultural Literacy

Understanding how cultural differences can affect business practices.

Social Stratification

The hierarchical arrangement of individuals in a society based on factors such as wealth, income, education, and occupation.

Christianity

The world’s largest religion with implications for economic behavior, emphasizing hard work and individual freedom.

Buddhism

A religion that stresses spiritual growth and the afterlife, with some acceptance of entrepreneurial behavior.

Ethical Dilemma

A situation in which a difficult choice must be made regarding conflicting ethical principles.

Corporate Social Responsibility (CSR)

The concept that companies should be accountable for their impact on society and the environment.

Mercantilism

An economic theory that advocates government intervention to achieve a trade surplus.

Absolute Advantage

The ability of a country to produce a good more efficiently than another country.

Comparative Advantage

The ability of a country to produce goods at a lower opportunity cost than other countries.

Heckscher-Ohlin Theory

A theory that suggests countries export goods that utilize their abundant factors of production.

Product Life-Cycle Theory

The idea that new products are first developed and sold in one country and then spread to others.

New Trade Theory

A theory focusing on the role of economies of scale and network effects in international trade.

Porter’s Diamond

A model that explains why certain industries in particular countries are more competitive than others.

First-Mover Advantage

The competitive advantage gained by the first significant company to move into a new market.

Economies of Scale

The cost advantages that a business obtains due to the scale of operation, with cost per unit of output generally decreasing with increasing scale.

Network Effects

The phenomenon whereby a good or service becomes more valuable as more people use it, particularly relevant in technology and telecommunications.

Tariffs

Taxes imposed by a government on goods and services imported from other countries, used to protect domestic industries.

Quotas

Limits set by governments on the quantity of a good that can be imported, designed to protect domestic industries.

National Competitive Advantage

The advantage a nation gains by creating a favorable environment for businesses through factors like resources, skilled labor, and policies.

International Business

Business transactions that occur across national borders.

Cultural Dimensions Theory

A framework for understanding cross-cultural communication, developed by Geert Hofstede.

Business Environment

The combination of internal and external factors that influence a company's operating situation.

Foreign Exchange Market

A global marketplace for trading national currencies against one another.

Emerging Markets

Nations with social or business activity in the process of rapid growth and industrialization.

Foreign Portfolio Investment (FPI)

Investment in financial assets in a foreign country, such as stocks and bonds.

Intellectual Property Rights (IPR)

Legal rights that grant creators control over the use of their inventions and creations.

Joint Venture

A business arrangement in which two or more parties agree to pool their resources for a specific goal.

Sustainability

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

Trade Agreement

A treaty between two or more countries to establish trade regulations and tariffs.

Export

Goods and services sold by a country to foreign buyers.

Import

Goods and services purchased by a country from foreign sellers.

Balance of Trade

The difference between a country's exports and imports.

Foreign Exchange Rate

The price of one currency in terms of another currency.

Trade Surplus

An economic condition where a country exports more than it imports.

Trade Deficit

An economic condition where a country imports more than it exports.

Multilateral Trade Agreement

An agreement between three or more countries regarding trade.

Bilateral Trade Agreement

A trade agreement between two countries.

Trade Facilitation

Simplification and harmonization of international trade processes.

Free Trade Zone

A geographical area where goods may be landed, handled, manufactured, or reconfigured without the intervention of customs authorities.

Global Supply Chain

A network between a company and its suppliers to produce and distribute a specific product.

Outsourcing

The process of obtaining goods or services from an external source, often to reduce costs.

Nearshoring

Moving business operations or services to a nearby country to reduce costs and improve efficiency.

Insourcing

The practice of using an organization's own personnel or resources to accomplish a task instead of outsourcing.

E-commerce

Buying and selling goods and services over the internet.

Digital Transformation

The integration of digital technology into all areas of a business, changing how it operates and delivers value.

Market Penetration

A strategy to increase sales of existing products in existing markets.

Economies of Scope

Cost advantages that arise when a company produces multiple products together.

Cross-border Trade

Trade between two or more countries across their borders.

Trade Policy

A government's official stance regarding international trade agreements and tariffs.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Market Segmentation

The process of dividing a broader market into subsets of consumers with common needs or characteristics.

Supply Chain Management

The management of the flow of goods and services and includes all processes that transform raw materials into final products.

Competitive Advantage

The attribute that allows an organization to outperform its competitors.

Brand Equity

The value added to a product by having a well-known brand name.

Consumer Behavior

The study of how individuals make decisions to spend their available resources on consumption-related items.

Corporate Strategy

The overall plan for a diversified company to manage its portfolio of businesses.

Value Proposition

The promise of value to be delivered to the customer, highlighting the benefits of a product or service.

Market Entry Strategy

A plan for how to enter a new market, which can involve various methods like exporting or joint ventures.

Innovation

The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Trade Liberalization

The removal or reduction of trade barriers to facilitate free trade between nations.

Foreign Market Entry Modes

Different strategies firms use to enter foreign markets, such as exporting, franchising, or direct investment.

Market Research

The process of gathering, analyzing, and interpreting information about a market to understand consumer needs and market conditions.

Global Marketing Strategy

A strategy that standardizes marketing activities across different countries to achieve efficiency while considering local markets.

Digital Marketing

The promotion of products or services using digital channels to reach consumers.

Supply Chain Disruptions

Events that interfere with the normal flow of goods and services in the supply chain.

Cultural Barriers in Business

Obstacles in communication and interaction arising from differences in cultural backgrounds.

Intellectual Property Theft

The unauthorized use of someone else's intellectual property, including patents, copyrights, and trademarks.

Franchising

A form of licensing where a company (franchisor) allows another (franchisee) to operate a business under its brand and systems.

Business Ethics in International Trade

Principles and standards that guide behavior in the international business arena, focusing on fairness and integrity.

E-commerce Growth

The increasing trend of conducting business transactions over the internet.

Circular Economy

An economic system aimed at minimizing waste and making the most of resources.

Micro financing

Small loans provided to individuals or small businesses that lack access to traditional banking services.

Sustainable Business Practices

Business strategies that focus on long-term environmental, social, and economic sustainability.

Blockchain in Supply Chain

A technology that ensures secure and transparent transactions in supply chain management.

Corporate Governance

The system by which companies are directed and controlled and the relationships among stakeholders.

Business Analytics

The skills, technologies, practices for continuous iterative exploration, and investigation of past business performance.

Values

Core beliefs or principles that guide individuals and organizations in their decision-making process.

Social Mobility

Refers to the ability of individuals or groups to move up or down the social ladder within different countries, which can impact their access to opportunities, resources, and economic benefits in a global context.

Max Weber Christianity

links the rise of capitalism to Protestant values, emphasizing hard work, frugality, and economic success as moral obligations.

Formal Education for Country

Provides a national competitive advantage

Ethnocentrism

The belief in the superiority of one's own culture or ethnic group, often leading to the viewing of other cultures from the perspective of one's own.

Sullivan Principle

A corporate policy that encourages companies to be responsible for their operations in South Africa and to take a stand against apartheid by not doing business with firms that support it or contribute to apartheid.

Tragedy of the Commons

When a resource is overused due to individuals acting in their own self-interest, resulting in depletion and negative consequences for the entire group.

U.S. Foreign Corrupt Practices Act (FCPA)

A law that prohibits U.S. entities from bribing foreign officials to gain business.