International Business Terms

customs' brokers

specialist enterprises that arrange clearance of products through customs on behalf of importing firms

Trading Companies

put buyers and sellers together and handle export/import arrangements

export companies

export specialists that act as the export marketing department or international department for client firms

Ethnocentric

evaluating other peoples and cultures according to the standards of one's own culture.

Polycentric

A philosophy of management whereby the decisions are tailored to suit the cultures of the countries where the MNC operates.

Regiocentric

As used here, related to hiring and promoting employees on the basis of the specific regional context in which the subsidiary operates

Geocentric

A model of the universe in which Earth is at the center of the revolving planets and stars.

CIF (cost, insurance, freight)

reflects the cost of goods as well as shipping and insurance to the requested port

FOB shipping point

Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.

Indirect distribution channel

Occurs when goods or services are sold with the use of one or more intermediaries between the producer and the consumer

direct distribution channel

describes a situation in which the producer sells a product directly to a consumer without the help of intermediaries.

Product Life Cycle

The stages through which goods and services move from the time they are introduced on the market until they are taken off the market.

Debt Capital

borrowed money obtained through loans of various types

equity capital

money that a business gets from its owners in order to operate

World Bank

an international bank that offers low-interest loans, advice, and information to developing nations

International Monetary Fund

a United Nations agency to promote trade by increasing the exchange stability of the major currencies

International Monetary Systems

Key parts of a countries economy are controlled by another country (monetary system, trade)

noncash transactions

investing and financing activities that do not affect cash; if significant, they are disclosed below the statement of cash flows or in the notes to the financial statements

Offset Transaction

transaction that cancels out another transaction, cancels risks and benefits of

another element (a transaction that chooses the investor's decision in another transaction)

countertrade transaction

a sale results in product flowing in one direction to a buyer; a separate stream of products and services, often flowing in the opposite direction, is also created.

Transaction Exposure

currency risk that firms face when outstanding accounts receivable or payable are denominated in foreign currencies

Economic Exposure

currency risk that results from exchange rate fluctuations affecting the pricing of products, the cost of inputs, and the value of foreign investments

balance of payment deficit

shortfall that occurs when more money flows out of a nation than into that nation

balance of payment accounts

national accounts that track both payments to and receipts from foreigners

multinational capital budgeting

focuses on the cash inflows and outflows associated with prospective long-term investment projects

hedge fund

a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.

foreign exchange exposure

The risk that future changes in a country's exchange rate will hurt the firm

strike price

price set for calling/putting asset

covered interest arbitrage

interest rate arbitrage that includes the signing of a forward currency contract to sell the foreign currency when the foreign assets mature

Absolute Purchasing Power Parity

the idea that the exchange rate should equal the ratio of the price indexes of two countries

Mercosur

Pact among Argentina, Brazil, Paraguay, and Uruguay to establish a free trade area

NAFTA

North American Free Trade Agreement; allows open trade with US, Mexico, and Canada.

GATT

General Agreement on Tariffs and Trade; international trade organization that encourages free trade by lowering tariffs and other trade restrictions

WTO

an international body that enforces agreements that reduce barriers to international trade; successor to the GATT

multilateral

three or more nations involved in this agreement

bilateral

agreement between two countries loosens trade restrictions

unilateral

only one country enjoys fewer restrictions

subsides

Financial support from the government

tariffs

Taxes on imported goods

quota systems

A policy of limiting the number of minority group members in a business

Oligarchy

A government ruled by a few powerful people

Monarchy

A government ruled by a king or queen

Totilitarianism

government control over every aspect of public and private life

democracy

A political system in which the supreme power lies in a body of citizens who can elect people to represent them

Ethical Character Traits

honesty, justice, compassion, integrity

Social Responsibility

the obligation of a business to contribute to society

ethics and responsibility

refers to the moral obligation of rulers who must consider national (state) security

incentives

a positive or negative environmental stimulus that motivates behavior

benefit

A satisfaction that people believe they will enjoy if a policy is adopted

promotion

Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response

compensation

something given to make up for something else

Evaluation

gauging the extent to which the marketing objectives have been achieved during the specified time period

Employee Development

the combination of formal education, job experiences, relationships, and assessment of personality and abilities to help employees prepare for the future of their careers

recruitment selection

The process of filling an organisation's job vacancies by appointing new staff

speculation

An involvement in risky business transactions in an effort to make a quick or large profit.

currency exchange rate

the price of one country's currency expressed in terms of another country's currency

Stereotyping

the process by which people draw inferences about others based on their knowledge of the categories to which others belong

Multicultaralism

the doctrine that several different cultures (rather than one national culture) can coexist peacefully and equitably in a single country

cultural bias

stems from the culture in which a person grows up

Knowledge Management Systems

software that stores and organizes expertise possessed by individual employees so that the knowledge can be shared and used by others

decision support system

Models information to support managers and business professionals during the decision-making process

transaction processing system

Basic business system that serves the operational level and assists in making structured decisions

litigation

the process of taking legal action

Mediation

A method of settling disputes outside of court by using the services of a neutral third party, called a mediator. The mediator acts as a communicating agent between the parties and suggests ways in which the parties can resolve their dispute.

Arbiration

settling a dispute by agreeing to accept the decision of an impartial outsider

Taxation

the levying of tax

liability

An amount owed by a business

Labor Laws

Laws which regulated how workers could be paid and treated

Consumer Protection

Deals with safety features and product labeling standards that protect the consumer

Muslim law

The legal system based on religious Muslim beliefs that regulates behavior

Civil Law

the system of law concerned with private relations between members of a community

common law

A legal system based on custom and court rulings

joint venture

an agreement between two or more companies to share a business project

Franchising

the actual granting of a franchise

Exporting

selling products to another country

Licensing

selling the right to use some process, trademark, patent, or other right for a fee or royalty

Oligopoly

A market structure in which a few large firms dominate a market

Monopoly

A market in which there are many buyers but only one seller.

pure competition

the market structure that exists when there are many small businesses selling one standardized product

Corporation

A business that is owned by many investors.

Partnership

a business owned by two or more people

International Business

the buying, selling, and trading of goods and services across national boundaries

Traditional Economy

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

market economy

economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets

command economy

An economic system in which the government controls a country's economy.

mixed economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

primary sector

the part of the economy that draws raw materials from the natural environment

Primary commodity

Any product that is produced in the primary sector, which includes agriculture, forestry, fishing, and the extractive industries.

export dependence

A country's reliance on exports as the major source of financing for development activities.

Inflation

A general and progressive increase in prices

Gross Domestic Product

The sum total of the value of all the goods and services produced in a nation

Purchasing Power Parity

The amount of money needed in one country to purchase the same goods and services in another country

balance of trade

the difference between a country's total exports and total imports

foreign debt

the amount a country owes to other countries

cost of living

the cost of purchasing goods and services essential for survival

scarcity

Limited quantities of resources to meet unlimited wants

opportunity costs

countries have to prioritze certain products or services over others

process

identify goal, research, weigh alternatives

natural resource availability

increases countrys production capacity