International Business Fundamentals (KDQTE 1)

Terminology and definitions covering company types, environmental forces, and drivers of globalization based on the KDQTE (1) lecture notes.

Multidomestic company

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

Global company

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

International company

A term used to refer to either a global or a multi-domestic company.

Economic globalization

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

Self-reference criterion

Unconscious reference to oneʼs own cultural values when judging behaviors of others in a new and different environment.

Multinational corporation

An organization that has facilities and other assets in at least one country other than its home country, with offices and/or factories in different countries and usually a centralized head office.

Foreign direct investment

Direct investments in equipment, structures, and organizations in a foreign country at a level sufficient to obtain significant management control, excluding mere investment in stock markets.

Exporting

The transportation of any domestic goods or service to a destination outside a country or region.

Environment

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

Uncontrollable forces

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

Controllable forces

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

Domestic environment

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

Foreign environment

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

International environment

The environment which 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.

International business

Business that is carried out across national borders.

Foreign business

The operations of a company outside its home or domestic market, often referred to as business conducted within a foreign country.

Political driver

A change-based driver for globalization characterized by preferential trading agreements.

Technological driver

A change-based driver for globalization characterized by advances in communications technology.

Cost driver

A globalization driver where firms reduce costs by achieving economies of scale.

Competitive driver

A driver where firms defend home markets from foreign competitors by entering the foreign competitors' markets.

Affiliate

A business entity in one country that does business with customers in another, used to describe units involved in the international environment.