International Business Term

What is globalization?

The shift toward a more integrated and interdependent world economy.

What is the globalization of markets?

The merging of historically distinct and separate national markets into one huge global marketplace.

What is the globalization of production?

The sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production.

What are factors of production?

Labor, energy, land, and capital.

What is the General Agreement on Tariffs and Trade (GATT)?

An international treaty that committed signatories to lowering barriers to free flow of goods across national borders and led to the WTO.

What is the World Trade Organization (WTO)?

An organization that succeeded the General Agreement on Tariffs and Trade (GATT) as a result of the successful completion of the Uruguay Round of GATT negotiations.

What is the International Monetary Fund (IMF)?

An international institution set up to maintain order in the international monetary system.

What is the World Bank?

An international institution set up to promote general economic development in the world's poorer nations.

What is the United Nations (UN)?

An international organization made up of 193 countries headquartered in NYC, formed in 1945 to promote peace, security, and cooperation.

What is the Group of Twenty (G20)?

An international organization established in 1999 that comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank.

What is international trade?

A firm exports goods or services to consumers in another country.

What is foreign direct investment (FDI)?

Direct investment in business operations in a foreign country.

What is Moore's Law?

The power of a microprocessor technology doubles and its costs of production fall in half every 18 months.

What is the outward stock of foreign direct investment (FDI)?

The total cumulative value of foreign investments by firms domiciled in a nation outside of that nation's borders.

What is a Multinational Enterprise (MNE)?

A firm that owns business operations in more than one country.

What is International Business?

Any firm that engages in international trade or investment.

What is Political Economy?

The political, economic, and legal systems of a country.

What is a Political System?

The system of government in a nation.

What is Collectivism?

A political system that emphasizes collective goals as opposed to individual goals.

Who are Socialists?

Those who believe in public ownership of the means of production for the common good of society.

Who are Social Democrats?

Those committed to achieving socialism by democratic means.

What is Privatization?

The sale of state-owned enterprises to private investors.

What is Individualism?

An emphasis on the importance of guaranteeing individual freedom and self-expression.

What is Democracy?

A political system in which government is by the people, exercised either directly or through elected representatives.

What is Totalitarianism?

Forms of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

What is Representative Democracy?

A political system in which citizens periodically elect individuals to represent them in government.

What is Communist Totalitarianism?

A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.

What is Tribal Totalitarianism?

A political system in which a party, group, or individual that represents the interests of a particular tribe monopolizes political power.

What is Right Wing Totalitarianism?

A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism.

What is a Market Economy?

An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

What is a command economy?

An economic system where the government plans resource allocation.

What is a legal system?

A system of rules that regulate behavior and enforce laws.

What is common law?

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

What is a civil law system?

A law system based on detailed written laws and codes.

What is a theocratic law system?

A law system based on religious teachings.

What is a contract?

A document specifying conditions and obligations of an exchange.

What is contract law?

The body of law governing contract enforcement.

What is the United Nations Convention on Contracts for the International Sale of Goods (CISG)?

A set of rules governing commercial contracts between international sellers and buyers.

What are property rights?

Legal rights over resource use and derived income.

What is private action?

Violation of property rights by private individuals or groups.

What is public action?

Extortion of property holders' income by public officials.

What is the Foreign Corrupt Practices Act (FCPA)?

US law regulating unethical behavior in international business.

What is intellectual property?

Products of the mind protected by patents, copyrights, and trademarks.

What is a patent?

Exclusive rights to manufacture, use, or sell an invention

What are copyrights?

Exclusive rights to publish and distribute creative work

What are trademarks?

Registered designs and names to differentiate products

What is the World Intellectual Property Organization?

International organization protecting intellectual property

What is the Paris Convention for the Protection of Industrial Property?

International agreement protecting intellectual property

What are product safety laws?

Standards that products must adhere to for safety

What is product liability?

Holding a firm responsible for product-related harm

What is Gross National Income (GNI)?

Total earnings of a nation's people and businesses

What is Gross Domestic Product (GDP)?

Value of goods and services produced within a country

What is Purchasing Power Parity (PPP)?

Adjustment of GDP per capita based on cost of living

What is the Human Development Index (HDI)?

UN's measure of quality of human life in a country

What is innovation?

Development of new products, processes, and strategies

Who are entrepreneurs?

Individuals who commercialize innovations

What is deregulation?

Removal of government restrictions on business conduct

What are first-mover advantages?

Advantages of being the first to enter a market

What are late-mover disadvantages?

Disadvantages of being a late entrant in a market

What is political risk?

Likelihood of political forces affecting business environment

What is economic risk?

Likelihood of economic events affecting business environment

What is legal risk?

Likelihood of contract breach or intellectual property expropriation

What is cross-cultural literacy?

Understanding how culture affects business practices

Define culture.

Shared values and norms of a group of people

What are values?

Abstract ideas of what society considers good and desirable

Define norms.

Social rules that prescribe appropriate behavior

What is a society?

Group of people with shared values and norms

What are folkways?

Routine conventions of everyday life

What are mores?

Norms central to society's functioning and social life

Define social structure.

Basic social organization of a society

What is a group?

Association of individuals with shared identity and expectations

What are social strata?

Hierarchical social categories based on background, occupation, and income

What is social mobility?

Extent to which individuals can move between social strata

What is ethnocentrism?

Belief in the superiority of one's own culture

What is cultural relativism?

Understanding and respecting other cultures without judgment

What is cultural intelligence?

Ability to adapt and interact effectively in different cultural contexts

What is the Caste System?

Social stratification based on birth.

What is the Class System?

Social stratification with mobility between classes.

What is Class Consciousness?

Perceiving oneself based on class background.

What is Religion?

System of shared beliefs and rituals.

What is an Ethical System?

Set of moral principles guiding behavior.

What is Power Distance?

How a society deals with inequalities of power.

What is Individualism versus Collectivism?

Focus on individual or collective relationships.

What is Uncertainty Avoidance?

Tolerance for ambiguous situations and uncertainty.

What is Social Stratification?

Division of society into different levels.

What is Socioeconomic Achievement?

Success based on economic and social factors.

What is Mobility?

Ability to move between social classes.

What is Sacred?

Relating to the divine or holy.

What are Rituals?

Formal actions performed in a specific order.

What are Moral Principles?

Guiding rules for ethical behavior.

What are Inequalities of Power?

Differences in authority and control.

What are Extended Families?

Collectives including multiple generations.

What is Tolerance?

Acceptance and openness towards differences.

Masculinity vs Femininity

Theory of the relationship between gender and work roles

Long-term vs Short-term Orientation

Theory of attitudes towards time and delayed gratification

Ethnocentrism

Belief in the superiority of one's own culture

Ethics

Principles of right and wrong conduct

Business ethics

Principles of right and wrong in business conduct

Ethical strategy

Course of action that aligns with business ethics

Foreign Corrupt Practices Act

US law regulating unethical behavior in international business