C1-6

International environment

consists of the interactions between the domestic environmental forces and the foreign environmental forces, as well as interactions between the foreign environmental forces of two countries, such as when an affiliate in one country does business with customers in another

Self-reference criterion

unconscious reference to one's own cultural values when judging behaviors of others in a new and different environment.

Controllable forces

internal forces over which management does have some control and that management administers to adapt to changes in the uncontrollable forces.

Multidomestic company

an organization with multi-country affiliates, each of which formulates its own business strategy based on perceived market differences.

International business

is business that is carried out across national borders.

Preferential trading arrangements

a trade pact between countries that reduces tariffs for certain products to the countries who sign the agreement. While the tariffs are not necessarily eliminated, they are lower than countries not party to the agreement.

Global company

an organization that attempts to standardize and integrate operations worldwide in most or all functional areas.

Domestic environment

all the uncontrollable forces originating in the home country that surround and influence the life and development of the firm

Multinational corporation

has facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they coordinate global management

Uncontrollable forces

external forces that management has no direct control over, although it can exert influence.

Foreign business

denotes the operations of a company outside its home or domestic market; many refer to this as business conducted within a foreign country

Bargaining power

the relative ability of parties in a situation to exert influence over each other

Economic globalization

the tendency toward an international integration and interdependency of goods, technology, information, labor and capital, or the process of making this integration happen.

International company

either a global or a multidomestic company

Exporting

the transportation of any domestic good or service to a destination outside a country or region.

Mergers and acquisitions

Transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities.

Privatization

the process by which a property or business goes from being owned by the government to being privately owned.

Environment

all the forces influencing the life and development of the firm.

Foreign direct investment

direct investments in equipment, structures, and organizations in a foreign country at a level sufficient to obtain significant management control; does not include mere foreign investment in stock markets

Unit costs

the total expenditure incurred by a company to produce, store and sell one unit of a particular product or service. They include all fixed costs, or overhead costs, all variable costs, or direct material and labor costs.

Economies of scale

reduced costs per unit that arise from increased total output of a product

Foreign environment

all the uncontrollable forces originating outside the home country that surround and influence the firm

Subsidiary

a company with stock that is more than 50% controlled by another company, which is usually referred to as the parent company or the holding company

Foreign sourcing

the overseas procurement of raw materials, components, and products.

Portfolio investment

purchase of stocks and bonds to obtain a return on the funds invested

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

Preferential trading agreement

an agreement by a small group of nations to establish free trade among themselves while maintaining trade restrictions with all other nations

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

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 semi-finished product is exported

International Trade

exchange of products and services from one country to another. It consists of goods and services moving in two directions: Imports - flowing into a country from abroad, Exports - flowing out of a country and sold overseas

Sogo shosha

Japanese general trading companies that trade in a wide range of products and materials, and also engage in logistics, plant development and other services, as well as international resource exploration

NAFTA

an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994

The EU

political and economic union located primarily in Europe that has developed an internal single market through a standardized system of laws, aimed to ensure the free movement of people, goods, services and capital within the internal

ASEAN

regional intergovernmental organization comprising ten Southeast Asian countries that promotes intergovernmental cooperation and facilitates economic, political, security, military, educational, sociocultural integration amongst its members and other Asian states.

Annual FDI outflows

the amount invested each year into other nations

Merges and Acquisitions

transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities

Protectionism

government actions and policies that restrict or restrain international trade, often with the intent of protecting local businesses and jobs from foreign competition

M-BRIC countries

Mexico, Brazil, Russia, India, China

Bamboo network

ethics Chinese family businesses based outside of China

Downstream markets

market at the next stage of the production/distribution chain, for example, the distribution and sale of motor vehicles would be a downstream market in relation to the production of motor vehicles

Beliefs

tenets or convictions that people hold to be true

Culture

the sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations

Culture shock

an experience of personal disorientation when confronted with an unfamiliar way of life

Ethnocentricity

believe that your own culture is superior to other countries

High culture

the cultural patterns of a society's elite

Language

a symbolic system of communication

Material culture

the objects or belongings of a group of people

Norms

visible and invisible rules of conduct through which societies are structured

Symbols

gestures or objects that have meanings associated with them that are recognized by people who share a culture

Values

a culture's standard for discerning what is good and just in society

Individualism-collectivism

measures the degree to which people in the culture are integrated into groups

Power distance

extent to which members of a society expect power to be distributed unequally and accept that it is

Uncertainty avoidance

describes a society's level of comfort with uncertainty

Masculinity-femininity

describes the distribution of roles between the sexes

Attitudes toward time

whether a country uses the past, the present, or the future as a lens to view the present and whether actions are sequential (monochronic) or synchronous (polychronic)

aesthetics

a cultures sense of beauty and good taste expressed in everything (art, drama, music, folklore and dance); it can also be material culture or artifacts)

Demonstration effect

result of having seen others with desirable goods

Protestant work ethic

duty to glory God by hard work and the practice of thrift

Confucian work ethic

drive toward hard work and thrift

Technological dualism

side-by-side presence of technologically advanced and primitive production systems

Appropriate technology

the technology (advanced, intermediate, or primitive) that most closely fits the society using it

Boomerang effect

situation in which technology sold to companies in another nations is used to produce goods to compete with those of the seller of the technology

Developed nations

a classification for all industrialized nations, which are the most technically developed

Developing nations

a classification for the world's lower-income nations, which are less technically developed

Discretionary income

the amount of income left after paying taxes and making essential purchases

Gross national income

the total value of all income generated by a nation's residents from international and domestic activity

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

Population density

a measure of the number of inhabitants per area unit (inhabitants per square kilometer or square mile)

Population distribution

a measure of how the inhabitants are distributed over a nation's area

Promotional mix

a blend of the promotional methods a firm uses to sell its products

Purchasing power parity

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

Rural-to-urban shift

the movement of a nation's population from rural areas to cities

Underground economy

the part of a nation's income that, because of unreporting or underreporting, is not measured by official statistics

Unit labor costs

total direct labor costs divided by units produced

Communism

Max'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.

Expropriation

government seizure of the property within its borders owned by foreigners, followed by prompt, adequate, and effective compensation paid to the former owners.

Confiscation

government seizure of the property within its borders owned by foreigners without payment to them.

Capitalism

an economic system in which the mean of production and distribution are for the most part privately owned and operated for private profit.

Terrorism

unlawful acts of violence committed to achieve a

variety of objectives.

Socialism

public, collective ownership of the basic means of production and distribution, operating for use rather than profit.

Conservative

a person, group or party that wishes to minimize government activities and ownership and business.

Right wing

a more extreme conservative position.

Liberal

a person, group or party that urges greater government involvement in business and other aspects of human activities.

Left wing

a more extreme liberal position.

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.

Country risk assessment

an assessment of a country's economic situation and politics to determine how much risk to employees, property, and investment exists for the firm doing business there.

Infant industry

a new industry, which in its early stages experiences relative difficulty or is absolutely incapable in competing with established competitors abroad.

Retaliation

representatives of an industry whose exports have had import restrictions placed on them by another country may ask their government to retaliate with similar restrictions.

Dumping

selling a product abroad for less than the cost of production, less than the price in the home market, or less than the price to third party countries.

Subsidies

financial contributions provided directly indirectly by a government, that confer a benefit, including grants, preferential tax treatment, and government assumption of normal business expenses

Tariffs

are taxes levied on imported goods primarily to raise their selling price in order to reduce competition for domestic producers. Smaller nations use them to raise revenue.

Nontariff barriers

all forms of discrimination against imports other than import duties. They impose additional costs on producers and exporters, and this on customers, and they discourage trade.

Quotas

numerical limits placed on specific classes of imports.

Organizational structure

the way that an organization formally arranges its domestic and international units and activities, and the relationships among these various organizational components

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

Hybrid organization

structure organized by more than one dimension at the top level

Matrix organization

an organizational structure composed of one or more superimposed organizational structures in an attempt to mesh product, regional, functional, and other expertise

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

Strategic business unit

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