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Global Business - Key definitions
Terms in this set (516)
1. A business (firm) that engages in international (cross-border) economic activities and/ or (2) the action of doing business abroad.
A firm that engages in foreign direct investment and operates in multiple countries.
Foreign direct investment (FDI)
Investments in, controlling and managing value-adding activities in other countries.
Emerging economies (emerging markets)
Economies that only recently established institutional frameworks that facilitate international trade and investment, typically with low- or midlevel income and above average economic growth.
Gross domestic product (GDP)
The sum of value added by resident firms, households and government operating in the economy.
A temporary job abroad with a multinational company.
Gross national product (GNP)
Gross domestic product plus income from non-resident sources abroad.
Gross national income (GNI)
GDP plus income from non-resident sources abroad. GNI is the term used by the world bank and other international organizations to supersede the term GNP
Purchasing power parity (PPP)
A conversion that determines the equivalent amount of goods and services different currencies can purchase. This conversion is usually used to capture the differences in cost of living in different countries.
Suggest that success and failure of firms are enabled and destroyed by the different rules of the games
Suggest that success and failure is dependent on firm´s internal/ firm- specific resources and capabilities
Liability of outsider ship (LOO)
The inherent disadvantage that outsiders experience in a new environment because of their lack of familiarity.
Distributions of operations and supply chains through advances in digital technologies
A process leading to greater interdependence and mutual awareness among economic, political and social units in the world, and among actors in general.
The removal of regulatory restrictions on business.
Waves of globalization
The pattern of globalization arising from a combination of long-term trends and pendulum swings.
Three regions of developed economies (North America, Western Europe and Japan)
Brazil, Russia, India and China
Base of the pyramid
The vast majority of humanity, about four billion people who make less than 1500euro a year.
The identification and assessment of risks and the actions taken to minimize their impact.
A view of the world through the lens of one's own culture.
The tendency to distrust new ideas coming from outside of one's organization or community.
The people embracing cultural diversity and the opportunities of globalization.
Formal and informal rules of the game.
Formal and informal institutions governing individual and firm behavior.
A theoretical perspective suggesting that a firm performance is, at least in part, determined by the institutional frameworks governing the firms.
Institutions represented by laws, regulations and rules.
Rules that are not formalized but exist in for example norms, values and ethics.
The coercive power of governments. (formal)
The mechanism through which norms influence individual and firm behavior. (informal)
The internalized, taken-for-granted values and beliefs that guide individual and firm behavior. (informal)
Key role of institution
seeking self-interest with guile.
fundamental and comprehensive changes introduced to formal and informal rules of the game that affect organizations as players.
A system of the rules of the game on how a country is governed politically.
A political system in which citizens elect representatives to govern the country on their behalf.
Election system that allocates seats in parliament in proportion to the votes received by each party (usually subject to minimum threshold).
Election system by which in each constituency the candidate with the relative majority of votes gets the seat
A political system in which power is concentrated in the hands of one person or a small elite.
Making your views known to decision makers with the aim of influencing political process - mostly legal
The abuse of public power for private benefits - mostly illegal
Risk associated with political changes that may negatively impact domestic and foreign firms.
Rules of the game on how a country is governed economically.
An economy that is characterized by the 'invisible hand' of market forces.
An economy in which all factors of production are government- or state-owned and controlled, and all supply, demand and pricing are planned by the government.
Varieties of capitalism
A scholarly view suggesting that economies have different inherent logics on how markets and other mechanisms coordinate economic activity.
Liberal market economy (LME)
A system of coordinating primarily through market signals.
Coordinated market economy (CME)
A system of coordinating through a variety of other means in addition to market signals.
Vocational training system for crafts and professions.
The rules of the game on how a country's laws are enacted and enforced.
A legal tradition that uses comprehensive statutes and codes as a primary means to form legal judgments.
A legal tradition that is shaped by precedence and traditions from previous judicial decisions.
Rules of law that have been created by precedents of cases in court.
Clarity over the relevant rules applying to a particular situation.
The legal rights to use an economic property (resource) and to derive income and benefits from it.
Intellectual property rights (IPR)
Rights associated with the ownership of intellectual property.
Legal rights awarded by government authorities to innovators of new technological ideas, who are given exclusive (monopoly) rights to derive income from such inventions.
Exclusive legal rights of authors and publishers to publish and disseminate their work.
Exclusive legal rights of firms to use specific names, brands and designs to differentiate their products from others.
Rules by which shareholders and other interested parties control corporate decision makers.
Risk associated with political changes that may negatively impact on domestic and foreign firms.
Rules that are not formalized but exist in for example norms, values and ethics
Artefacts of culture
Physical objects that represent the visible surface of culture.
The collective programming of the mind that distinguishes the members of one group or category of people from another.
Countries that share similar cultures together.
The highest cultural grouping of people and the broadest level of cultural identity people have.
An aggregate term for European, North American, Australian and New Zealand cultures.
The extent to which less powerful members within a country expect and accept that power is distributed unequally.
The perspective that the identity of an individual is fundamentally his or her own.
The perspective that the identity of an individual is primarily based on the identity of his or her collective group.
Values traditionally associated with male role, such as assertive, decisive, and aggressive.
Values traditionally associated with the female role, such as compassion, care, and quality of life.
The extent to which members in different cultures accept ambiguous situations and tolerate uncertainty.
A perspective that emphasizes perseverance and savings for future betterment.
A culture in which communication is usually taken at face value without much reliance on unspoken context.
A culture in which communication relies a lot on the underlying unspoken context, which is as important as the words used.
Set of simplistic often inaccurate generalizations about group that allows other to categories them
System of shared meaning that enables people to effectively communicate
Communication barriers between people who speak different mother tongues and lack shared language which all are fluent
The language used for communications between entities of the same MNE in different cultures.
The dominance of one language as a global business language.
An item or activity that is treated with particular respect by a religion.
An item activity that is considered unclean by a religion.
Societies where religions do not dominate public life.
The principals, standards and norms of conduct governing individual and firm behavior.
Code of conduct
Written policies and standards for corporate conduct and ethics.
A perspective that suggests that all ethical standards are relative.
The absolute belief that 'there is only one set of Ethics, and we have it'.
Groups within a nation sharing a culture that varies substantially from the national average.
The idea that cultures around the world are becoming similar
The abuse of public power for private benefits, usually in the form of bribery.
Culture shared by people working in the organization.
Individuals and firms regarded as one of 'us'
Individuals and firms not regarded as part of one of 'us'
An individual's ability to understand and adjust to new cultures
A person who works well with people from similar backgrounds but does not work effectively with people from different cultural backgrounds
A person who observes and learns from others and plans a strategy for interacting with people from different cultural backgrounds
A person who relies on intuition rather than on a systematic learning style when interacting with people from different cultural backgrounds
A person who created a comfort zone for people from different cultural backgrounds by adopting their general posture and communication style. This is not pure imitation, which may be regarded as mocking.
A person who may be mistaken for a native of the foreign country. He/she may achieve results that natives cannot due to his/her insider´s skills and outsider´s perspective. This is very rare.
Resource based view
A leading perspective in global business that posits that firm performance is fundamentally driven by firm-specific resources.
The ability of a firm to outperform its rivals.
The tangible and intangible assets as well as human resources that a firm uses to choose and implement its strategies.
Firm specific abilities to use resources to achieve organizational objectives.
Assets that are observable and easily quantified.
Assets that are hard to observe and difficult (or sometimes impossible) to quantify.
The value of a firm's abilities to develop and leverage its reputation.
Resources embedded in individuals working in an organization.
Employees' shared values, traditions and social norms within an organization.
A chain of activities vertically related in the production of goods and services.
The resource-based framework that focuses on the value creation (V), rarity (R), imitability (I), and organizational (O) aspects of resources.
Temporary competitive advantage
The ability to outperform rivals for a limited time. (R)
The difficulty of identifying the causal determinants of successful firm performance. (I)
The socially complex ways of organizing typical of many firms. (I)
Sustainable competitive advantage
The ability to deliver persistently above-average performance. (O)
The ability of the firm to appropriate the values for itself. (O)
Depends on 1) revenues received from costumers
2) expenses paid to suppliers
An examination of resources to perform a particular activity compared against competitors.
Turning over an activity to an outside supplier that will perform it on behalf of the firm.
Business process outsourcing (BPO)
The outsourcing of business services such as IT, HR or logistics.
Moving an activity to a location abroad.
Offshoring to a nearby location, i.e. within Europe.
Bringing activities back to a firm's home country.
Outsourcing to another firm doing the activity abroad.
Outsourcing to a firm in the same country.
setting up subsidiaries abroad- the work done is in-house, but the location is foreign.
Producting at home and also internal
Original equipment manufacturer (OEM)
A firm that executes the design blueprints provided by other firms and manufactures such products.
Original design manufacturer (ODM)
A firm that both designs and manufactures products.
Original brand manufacturer (OBM)
A firm that designs, manufactures and markets branded products.
Higher level capabilities that enable an organization to continuously adapt to new technologies and changes in the external environment.
Buying from abroad.
An economic condition in which a nation imports more than it exports.
An economic condition in which a nation exports more than it imports.
Balance of trade
The aggregation of importing and exporting that leads to the country-level trade surplus or deficit.
Classic trade theories
The major theories of international trade that were advanced before the 20th century, which consist of mercantilism, absolute advantage and comparative advantage.
Modern trade theories
The major theories of international trade that were advanced in the 20th century, which consist of product life cycle, strategic trade and national competitive advantage.
Theory of mercantilism
A theory that holds the wealth of the world (measured in gold and silver) is fixed and that a nation that exports more and imports less would enjoy the net inflows of gold and silver and thus become richer.
The idea that governments should actively protect domestic industries from imports and vigorously promote exports.
Trade uninhibited by trade barriers.
Theory of absolute advantage
A theory that suggests that under free trade, each nation gains by specializing in economic activities in which it has absolute advantage.
The economic advantage one nation enjoys that is absolutely superior to other nations.
Theory of comparative advantage
A theory that focuses on the relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations.
Relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations.
Given the alternatives (opportunities), the cost of pursuing one activity at the expanse of another activity.
Resource (factor) endowments
The extent to which different countries possess various resources (factors), such as labor, land and technology.
Factor endowment theory (or Hackschner-Ohlin theory)
A theory that suggests that nations will develop comparative advantage based on their locally abundant factors.
Product life cycle theory
A theory that accounts for changes in the patterns of trade over time by focusing on product life cycles.
Strategic trade theory
A theory that suggests the strategic intervention by governments in certain industries can enhance their odds for international success.
First mover advantage
Advantage that first entrants enjoy and do not share with late entrants.
Strategic trade policy
Government subsidies inspired by strategic trade theory.
Theory of national competitive advantage of industries (or 'diamond' model)
A theory that suggests that competitive advantage of certain industries in different nations depends on four aspects that form a 'diamond'.
Four aspects that form the "diamond"
1. resource endwoment in terms of natural& human resources
2. sophistication& scale of domestic demand
3. strategies,structure& rivalry of domestic competitors
4. availability-related& supporting industries
The ability to move resources from one part of a business to another.
Trade barriers that rely on tariffs to discourage imports.
Non-tariff barrier (NTB)
Trade barriers that rely on non-tariff means to discourage imports.
A tax imposed on imports.
Net losses that occur in an economy as the result of tariffs.
Government payments to (domestic) firms.
Restrictions on the quantity of imports.
Voluntary export restraint (VER)
An international agreement in which exporting countries voluntarily agree to restrict their exports.
Bureaucratic rules that make it harder to import foreign goods.
Costs levied on imports that have been 'dumped' (selling below cost to 'unfairly' drive domestic firms out of business.)
Infant industry argument
The argument that temporary protection of young industries may help them to attain international competitiveness in the long run.
Politically motivated trade sanctions against foreign countries to signal displeasure.
Foreign direct investment (FDI)
Investment in, controlling and managing value-added activities in other countries.
Multinational enterprise (MNE)
A firm that engages in foreign direct investment and operates in multiple countries.
Foreign portfolio investment (FPI)
Investment in a portfolio of foreign securities such as stocks and bonds.
An operation with shared ownership by several domestic or foreign companies.
FDI that creates operations abroad at the same position in the value chain as the operation in the home country.
A type of FDI in which a firm moves upstream or downstream in different value chain stages in a host country.
Upstream vertical FDI
A type of vertical FDI in which a firm engages in an upstream stage of the value.
Downstream vertical FDI
A type of vertical FDI in which a firm engages in a downstream stage of the value chain in two different countries.
The amount of FDI moving in a given period (usually a year) in a certain direction.
The total accumulation of inbound FDI in a country or outbound FDI from a country across a given period of time (usually several years).
A theoretical framework positing that ownership (O), location (L), and internalization (I) advantages combine to induce firms to engage in FDI.
Resources of the firm that are transferable across borders and enable the firm to attain competitive advantages abroad.
Advantages enjoyed by firms operating in certain locations.
Advantages of organizing activities within a multinational firm rather than using a market transaction.
Location bound resource
Resources that cannot be transferred abroad.
The location advantages that arise from the clustering of economic activities in certain locations.
Knowledge diffused from one firm to others among closely located firms.
The costs of organizing a transaction.
Imperfections of the market mechanism that make some transactions prohibitively costly.
An investment that is specific to a business relationship.
International trade between two subsidiaries in two countries controlled by the same MNE.
The risks associated with unauthorized diffusion of firm-specific know-how.
Codifiable knowledge - can be written & transferred without losing richness
Knowledge that is non-codifiable, and whose acquisition and transfer require hands-on practice.
Local content requirements
Requirement that a certain proportion of the value of the goods made in a country originates from that country.
Reducing tax liability by legally moving profits to jurisdictions where tax rates are lower.
The ability to extract a favorable outcome from negotiations due to one party's strengths.
Refers to the deal struck by MNE's and host governments, which change their requirements after the initial FDI entry.
Up-front investment that are non-recoverable if the project is abandoned.
Government's confiscation of private (foreign-owned) assets.
Emerging economy MNE's
MNEs that originate from an emerging economy and are headquartered there.
Advantages of organizing activities within a multinational firm rather than using a market transaction.
Sovereign wealth fund (SWF)
A state-owned investment fund composed of financial assets, such as stocks, bonds, real estate or other financial instruments.
The price of one currency in another country.
Appreciation (of a currency)
An increase in the value of a currency.
Depreciation (of a currency)
A decrease in the value of a currency.
Currency exchange market
A market where individuals, firms, governments and banks buy and sell foreign currencies.
Purchasing power parity (PPP) hypothesis
Hypothesis suggesting that, in the long run baskets of goods would cost the same in all currencies ('law of one price').
Relative PPP hypothesis
Hypothesis suggesting that changes in exchange rates will be proportional to differences in inflation rates.
The (average) change of prices over time.
Interest rate parity
Hypothesis suggesting that the interest rate in two currencies should be the same after accounting for spot and forward in exchange rates.
Spot market rate
The exchange rate for immediate payment.
A currency exchange transaction in which participants buy and sell currencies now for future delivery, typically in 30,90 or 180 days, after the date of the transaction.
Forward exchange rate
The exchange rate for forward transaction.
Balance of Payments (BoP)
A country's international transaction statement, including merchandise trade, service trade and capital movement.
Current account (of the BoP)
Exports and imports of goods and services.
Capital and financial account (of the BoP)
Sales and purchases of financial assets.
The result of investors moving as a herd in the same direction at the same time.
A phenomenon in which a large number of individuals and companies exchange domestic currencies for a foreign currency.
A system in which the value of most major currencies was maintained by fixing their prices in terms of gold, which served as the common denominator.
Bretton woods system
A system in which all currencies were pegged at a fixed rate to the us dollar.
International monetary fund (IMF)
International organization that provides financial assistance to countries experiencing temporary imbalances in their balance of payment and helps securing macroeconomic stability.
International organization that provides loans for specific projects in developing countries.
Post-bretton Woods system
A system of flexible exchange rate regimes with no official common denominator.
Floating (or flexible) exchange rate policy
The willingness of a government to let the demand and supply conditions determine exchange rates.
A pure market solution to determine exchange rates.
The common practice of influencing exchange rates through selective government intervention.
Pegged exchange rate
An exchange rate of a currency attached to that of another currency.
A limited policy of keeping the exchange rate within a specified range, which may be changing over time.
Fixed exchange rate
An exchange rate of a currency relative to other currencies.
A monetary authority that issues notes and coins convertible into a key foreign currency at a fixed exchange rate.
A currency shared across several countries, such as the euro and the CFA franc.
Exchange rate risk (or currency risk)
The risk of financial losses because of unexpected changes in exchange rates.
Organizing activities in such a way that currencies of revenues and expenditures match.
Currency risk diversification
Reducing overall risk exposure by working with a number of different currencies.
Classical single-shot exchange of one currency for another
A transaction that protects traders and investors from exposure to fluctuations of the spot rate.
A condition under which the forward rate of one currency relative to another currency is higher than the spot rate.
A condition under which the forward rate of one currency relative to another currency is lower than the spot rate.
A currency exchange transaction between two firms in which one currency is converted into another in Time1, with an agreement to revert it back to the original currency at a specific Time2 in the future.
The price offered to sell a currency.
The price offered to buy a currency.
The difference between the offered price and the bid price.
Counter party risk
The risk of a business partner not being able to fulfill the contract.
European Union (EU)
The political and economic organization of 27 countries in Europe.
The currency of the European monetary union.
A free trade area with common external tariffs for imports to the Union.
An area with free movement of goods, services, capital and people.
In addition to all features of a common market, members on an economic union coordinate and harmonize economic policies beyond the removal of tariffs and quotas.
Countries sharing a common currency and monetary policy.
The integration of political and economic affairs of a region.
Council of Europe
A loose association in which essentially all European countries are members.
European convention on human rights
A charter defining human rights in Europe.
European court of human rights
An international court assessing human right cases in Europe.
Treaties of Rome
The first treaties establishing European integration, which eventually led to the EU.
Criteria the new members have to fulfill to be admitted as members of the EU.
Central and eastern Europe (CEE)
The common name used for the countries east of the former iron curtain.
the pre-1990 trading bloc of socialist countries.
The process of changing from central plan to a market economy.
Single European act (SEA)
the agreement that established the basis for the single European market. (1986)
The Eu's term of its common market.
A major treaty deepening integration in Europe. (1993)
An ambitious project to create a new legal foundation for the EU, which failed.
Four freedoms of the EU single market
Freedom of movement of people, goods, services and capital.
The principle that products recognized as legal in one country may be sold throughout the EU.
The EU takes action only if it is more effective than actions taken at lower levels.
Sectors of industry for which the EU has created common rules.
An EU Programme encouraging student mobility in Europe.
A political process aimed at harmonizing European higher education.
The agreement that laid the basis for passport-free travel.
The area covered by the Schengen Agreement.
Visa giving non-citizens access to the Schengen area.
Financial support from government to firms through e.g. subsidies or tax rebates.
The competition between governments trying to attract investors by offering subsidies.
The countries that have adopted the euro as their currency.
Criteria that countries have to fulfill to join the eurozone.
-Budget deficit nor more than 3%
-public dept lower 60% of GDP
-inflation rates 1.5% of three lowest rates within EU
European Central Bank (ECB)
The central bank for the eurozone.
European stability mechanism (ESM)
A fund to support member countries with difficulties raising money on capital markets.
Optimum currency area
A theory establishing criteria for the optimal size of an area sharing a common currency.
The assembly of heads of governments setting overall policy directions for the EU.
President of the European council
The person chairing the meetings of the European council.
Council of the European Union
The top decision-making body for the EU, consisting of ministers from the national governments; it decides by qualified majority voting.
The executive arm of the EU, similar to a national government.
Directorate general (DG)
A department of the commission, similar to a ministry of a national government.
President of the Commission
The head of the Eu's executive, similar to a national prime minister.
The directly elected representation of European citizens.
Members of the European Parliament (MEPs)
Parliamentarians directly elected by the citizens of the EU.
European court of justice (ECJ)
The court system of the EU.
Making your voice heard and known to decision makers with the aim of influencing political processes.
Organizations set up by several collaborating countries.
World trade organization (WTO)
The organization underpinning the multilateral trading system since 2005.
A principle that a country cannot discriminate among its trading partners (a concession given to one country needs to be made available to all other WTO members).
General agreement on tariffs and trade (GATT)
A multilateral agreement governing the international trade of goods (merchandise).
General agreement on trade in services (GATS)
A WTO agreement governing the international trade of services.
Trade-related aspects of intellectual property rights (TRIPS)
A WTO agreement governing intellectual property rights.
Dispute settlement mechanism
A procedure of the WTO to resolve conflicts between governments over trade related matters.
Doha development Agenda
A round of WTO negotiations started in Doha, Qatar, in 2001 focusing on economic development.
International Monetary Fund (IMF)
A multilateral organization promoting international monetary cooperation and providing temporary financial assistance to countries with balance of payment problems.
Primary activities of IMF
1. Monitoring global economy
2.Providing technical assistance to developing economies
3.Lending (loan, not gran) to countries in financial difficulties
Conditions that the IMF attaches to loans to bail out countries in financial distress.
Free trade area (FTA)
A group of countries that remove trade barriers among themselves.
North American Free Trade Agreement (NAFTA)
A free trade agreement between Canada, Mexico and the USA.
Association of Southeast Asian Nations (ASEAN)
The organization underpinning regional economic integration in Southeast Asia.
South Asian Free Trade Area (SAFTA)
Free trade area covering India, Pakistan, Bangladesh, Sri Lanka, The Maldives, Nepal, and Bhutan.
Gulf cooperation council (GCC)
Political and economic integration involving Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, and the United Arab Emirates.
Shanghai Cooperation Organization (SCO)
Organization facilitating military and economic cooperation among China, Russia, and four of the central Asian nations.
A customs Union in South America that was launched 1969
A customs union in South America that was launched in 1991.More state intervention & trade protection
Economic integration in West africa.
Common currency of French-speaking countries in west Africa.
Generalized System of preferences (GSP)
A system of tariff reductions facilitating less and least developed country's access to EU markets.
Australia-New Zealand closer economic relations trade agreement (ANZCERTA)
A bilateral trade agreement between Australia and New Zealand.
Eu Canada comprehensive Economic trade agreement (CETA)
An economic integration agreement in negotiation between the EU and Canada.
Transatlantic Trade and Investment partnership (TTIP)
An economic integration agreement in negotiations between Eu and USA.
International investment agreements (IIAs)
Agreements between states to protect foreign direct investment between countries.
Investor-state dispute settlement (ISDS)
Legal processes using tribunals that are outside the national and supranational court systems.
A change in trade pattern away from comparative advantages due to trade barriers.
A multilateral bank designed to help developing countries, especially with project finance.
A gift from generous donors wishing to help developing countries.
European Bank for reconstruction and development (EBRD)
A multilateral bank designed to help transition economies.
Asia Infrastructure Investment Bank (AIIB)
A development bank, focused on infrastructure development banking in the Asia Pacific region, based in Beijing
An agreement committing developed countries to limit their greenhouse gas emissions.
An agreement in which countries make major commitments towards climate change goals.
A group of central bankers establishing standards for banking supervision.
Basel II/ Basel III
The name of a set of rules for banking regulation.
Agencies that assign ratings to assets such as bonds that indicate the level of riskiness of the assets.
Black swan events
Rare events that occur only once in a generation.
Corporate social responsibility (CSR)
The consideration of, and response to, issues beyond the narrow economic, technical and legal requirements of the firm to accomplish social benefits along with the traditional economic gains the firm seeks.
The ability to meet the needs of the present without compromising the ability of future generations to meet their needs around the world.
The right that one has simply because one is a human being
Triple bottom line
The economic, social and environmental performance that simultaneously satisfies the demands of all stakeholder groups.
Any group or individual who can affect or is affected by the achievements of the organization's objectives.
Primary stakeholder groups
The constituents on which the firm relies for its continuous survival and prosperity.
Secondary stakeholder groups
Those who influence or affect, or are influenced or affected by, the corporation, but are not engaged in transaction with the corporation and are not essential for its survival.
Non-governmental organizations (NGOs)
Organizations, such as environmentalists, human rights activists and consumer groups that are not affiliated with governments.
A view that treating stakeholders well may indirectly help financial performance.
A view that firms ought to be self-motivated to 'do it right' because they have social obligations.
Shared value creation
An approach to CSR that focuses on activities that are good for the firm and the stakeholders.
Working people under the age of sixteen.
Countries with lower environmental standards.
Race to the bottom
Countries competing for foreign direct investment by lowering environmental standards.
Rules for the employment of laborers including working hours, minimum pay, union representation and child labor.
Plants that can easily be relocated.
Code of conduct (Standards of engagement, code of ethics)
Written policies and standards for corporate conduct and ethics.
Health safety and environment (HSE)
A common term to cover the areas for which companies have mandatory standards.
Procedure to monitor and enforce standards for employees and suppliers.
Mandatory training and tests designed to ensure that every employee knows the relevant codes of conduct.
Voluntarily assuming responsibility of societal concerns.
Donations for purposes that benefit the wider society.
Participating in the wider formal and informal institutions for the society's interests and concerns.
Norms considered valid anywhere in the world.
A strategy that focuses on regulatory compliance with little top management commitment to CSR causes.
A strategy that is characterized by some support from top managers, who may increasingly view CSR as a worthwhile endeavor.
A strategy that endeavors to do more than is required in CSR.
Small and medium-sized enterprises (SMEs)
Firms with fewer than 500 employees.
Leader identifying opportunities and taking decisions to exploit them.
A group of people jointly acting as entrepreneurs.
Seller of products or services to another country.
Buyer of goods or services from another country.
The sale of products made by firms in their home country to customers in other countries.
Fob (free on board)
Contract clause; the seller has to deliver goods free on board of a ship or train.
Cif (Costs of insurance and freight)
Contract clause; the seller has to pay all transportation costs to a destination port.
DDP (Delivered duty paid)
The seller will deliver the goods to a specified place and pay the necessary customs duties.
EXW (Ex works)
Buyer has to pick up the goods from the seller´s specified factory or warehouse.
Bill of landing (B/L)
Document certifying the delivery of the goods to a ship or train.
Letter of credit (L/C)
A financial contract that states that the importer's bank will pay a specific sum of money to the exporter upon delivery of the merchandise.
AWL (Airway Bill)
Document issued by an airline to certify receipt of merchandise. Contrary to B/L, it does not entail a legal title to the products
A way for SMEs to reach overseas customers by exporting through domestic based export intermediaries.
A firm that performs an important 'middleman' function by linking sellers and buyers overseas.
An intermediary receiving commissions for sales.
An intermediary trading on their own account.
Supplying services across national borders.
Servicing foreign residents
Supplying services to customers coming from abroad.
Firm A's agreement to give Firm B the rights to use A's proprietary technology (such as a patent) or trademark (such as corporate logo) for a royalty fee paid to A by B.
The company granting a license.
The company receiving the license.
Firm A's agreement to give firm B the rights to use a package of A's proprietary assets for a royalty fee paid to A by B.
The company granting a franchise.
The company receiving a franchise.
A project which clients pay contractors to design and construct new facilities and train personnel.
Design-and-build (DB) contract
A contract combining the architectural or design work with the actual construction. (Turnkey for larger projects)
A contract combining the construction and temporary operation of a project eventually to be transferred to a new owner.
A project-based temporary business owned and managed jointly by several firms.
A contract that involves outsourcing of an intermediate stage of a value chain.
A competition for a major contract.
A subcontracting of R&D between firms. (outsourcing design and development work)
A contract over the management of assets or a firm owned by someone else.
Knowledge learned by engaging in the activity and context.
A model of internationalization processes focusing on learning processes.
Network internationalization model
A model of internationalization which is focused on the growth of business networks.
Models depicting internationalization as a slow stage-by stage process an SME must go through.
Born global (International new venture)
Start-up company that from inception, seeks to derive significant competitive advantages from the use of resources and the sale of outputs in multiple countries.
Imitating the behavior of others as a means to reduce uncertainty.
The extent of similarity or dissimilarity between the regulatory, normative and cognitive institutions of two countries.
The difference between two cultures along some dimensions of value or subjective affinity.
Foreign operation mode configuration
The full set of contracts and operations in a given location
Business that create and coordinate the value chain of their business online
An operation abroad set up by foreign direct investment.
A plan the specifies the objectives of an entry and how to achieve them.
Natural resource-seeking FDI
Investors' quest to pursue natural resources in certain locations.
Market seeking FDI
Investors' quest to go after countries that offer strong demand for their products and services.
Investors' quest to single out the most efficient locations featuring a combination of scale economies and low-cost factors.
Investors' quest for new ideas and technologies that upgrade their own technological and managerial capabilities.
Advantages that can be exploited by those present at a location.
Advantages that first movers obtain and that later movers do not enjoy.
Advantages that late movers obtain and that first movers do not enjoy.
Modes of entry
The format of foreign market entry.
A mode of entry that does not involve owning equity in a local firm.
A mode of entry (JVs that involves taking full or partial) equity ownership in a local firm.
Wholly-owned subsidiaries (WOS)
A subsidiary located in a foreign country that is entirely owned by the parent multinational.
Building factories and offices from scratch.
The transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter. (70% of worldwide FDI flows)
Joint venture (JV)
A new corporation entity created and jointly owned by two or more parent companies.
Acquisition of an equity stake in another firm.
Collaboration between independent firms using equity modes, non-equity contractual agreements, or both.
Scale of entry
The amount of resources committed to foreign market entry.
An investment that provides a small foothold in a market or location.
Acquisition where subsequent investment overlays the acquired organization.
A strategy based on acquiring and integrating multiple businesses.
Acquisition where ownership transfer takes place over stages.
A framework of MNE management on how to simultaneously deal with two sets of pressures for global integration and local responsiveness.
objectives and a set of actions to achieve those objectives; where, when & how to compete
market structure with only small number of competing firms; firms don't compete by driving down prices - rather interact in strategic ways to beat competitor
actions and responses undertaken by competing firms
The process of anticipating a rival's actions in order to both revise a firm's plan and prepare to deal with rivals' responses.
An initial set of actions to gain competitive advantage.
Set of actions in response to an attack
A conceptual framework of awareness, motivation, capability indicating when firms are likely to attack and counterattack each other.
Blue ocean strategy
A strategy of attack that avoids direct confrontation
Collective attempts between competing firms to reduce competition.
Firms indirectly coordinate actions by signaling their intention to reduce output or to raise prices above competitive levels.
Firms directly negotiate output, fix pricing or divide markets.
Multiple competitors engaging in output- or price-fixing.
In game theory, a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.
A game played over several periods of time.
A strategy of matching the competitors move being either aggressive or accommodative.
The percentage of total industry sales accounted for by the top firms.
A firm that has a dominant market share and sets 'acceptable' prices and margins in the industry.
Capacity to punish
Sufficient resources possessed by a price leader to deter and combat defection.
Barriers to entry
Start-up costs or other obstacles that prevent new competitors from easily entering an industry or market segment.
Firms engage the same rivals in multiple markets.
The overlap between two rivals' markets
The ability of a firm to expand in a competitor's market if the competitor attacks in its original market.
Policy governing the rules of the game in competition in a country.
American term for competition
Collusive price setting
Price setting by monopolists or collusion parties at a higher than competitive level.
Programme that give immunity to members of a cartel that first report the cartel to the authorities
Market division collusive
A collusion to divide markets among competitors.
Business practices by a dominating firm that make it more difficult for competitors to enter or survive.
An attempt to monopolize a market by setting prices below cost and intending to raise prices to cover losses in the long run after eliminating rivals.
An exporter selling below cost abroad and planning to raise prices after eliminating local rivals.
A competition of R&D units where the first one to patent a new technology gets to dominate a market.
A strategy designed to ensure survival by ensuring liquidity and positive cash flow.
A technique using econometric models to predict the likely future value of key economic variables.
A technique generating multiple scenarios of possible future states of the industry.
Plans devised for specific situations when things could go wrong.
This strategy centres on leveraging local assets in areas in which MNEs are weak.
This strategy centres on leveraging home-grown competencies abroad.
This strategy centres on cooperating through joint ventures (JVs) with MNEs and sell-offs to MNEs.
This strategy centres on a firm engaging in rapid learning and then expanding overseas.
A strategy of focusing benefits of aggregating operations above the national level
The necessity to be responsive to different customer preferences around the world.; a strategy that focuses on accommodation of local consumer demand and institutions
Home replication strategy
strategy that emphasizes international replication of home country-based competencies such as production scales, distribution efficiencies & brand power only makes sense as starting point for learning how best to adapt while retaining core features of model
Localization (multidomestic) strategy
strategy that focuses on number of foreign countries/regions, each of which is regarded as stand-alone local market worthy of significant attention and adaption; extension of home replication strategy
Global standards strategy
A strategy that relies on the development and distribution of standardized products worldwide to reap the maximum benefits from low-cost advantages.
Centre of excellence
A MNE subsidiary explicitly recognized as a source of important capabilities, with the intentions that these capabilities be leveraged by and/or disseminated to other subsidiaries.
Global key accounts
Customers who themselves operate at multiple sites where they expect delivery
A strategy that endeavors to be cost-efficient, locally responsive and learning-driven simultaneously around the world.
defined as an organizations central unit that hosts corporate executives as week as central staff functions
A structure bundling all international activities in one unit, often associated with home replication strategy.
Geographic area structure
An organizational structure that organizes the MNE according to different countries and regions.
Country or regional manager
The business leader of a specific geographic area or region.
unit coordinating business activities in a geographic area
Global product division
An organizational structure that assigns global responsibilities to each product division. Associated with global standards strategy
An organizational structure often used to alleviate the disadvantages associated with both geographic and global product division structures, especially for MNEs adopting a transnational strategy.
The structures, processes and systems that actively develop, leverage and transfer knowledge.
Knowledge that is codified (that is, can be written down and transferred with little loss of its richness).
Knowledge that is non-codifiable and its acquisition and transfer require hands on practice.
Organizational (team-embedded) knowledge
Knowledge held in an organization that goes beyond the knowledge of the individual members.
Reverse knowledge transfer
Knowledge created in a subsidiary being transferred from the subsidiary to a parent organization..
Community of practice (CoP)
Group of people doing similar or related work and sharing knowledge about their practices of work.
Virtual community of practice
Community of practice interacting via the internet.
The structures and mechanisms MNEs use to facilitate the creation, integration, sharing and utilization of knowledge.
The ability to recognize the value of new information, assimilate it and apply it.
the informal benefits individuals and organizations derive from their social structures and networks
Worldwide (or global) mandate
The charter to be responsible for one MNE function throughout the world.
The proactive and deliberate pursuit of new opportunities by a subsidiary to expand its scope of responsibilities.
National innovation system
The institutions and organizations that influence innovation activity in a country.
Business unit headquarters
The central coordinating unit for an entire business unit.
Human resource management (HRM)
Activities that attract, select and manages employees.
An emphasis on the norms and practices of the parent company (and the parent country of the MNE) by relying on expatriates.
A non-native employee who works in a foreign country.
Parent (home) country national
An employee who comes from the parent country of the MNE and works at its local subsidiary.
An emphasis on the norms and practices of the host country.
A focus on finding the most suitable managers independent of nationality.
Third country national
An employee who comes from neither the parent country nor the host country.
Global talent management
The attraction, selection, development and retention of talented employees in the most strategic roles of an MNE.
Global talent pool
Employees that are systematically prepared to assume leadership.
Expatriates as a strategist
Individual who leads the design and implementation of the subsidiary's strategies requires integration of local knowledge with strategies and values of parent
Expatriates as monitors
Individual who ensures the parent´s control over the operations of the subsidiary (e.g Financial officer)
Expatriates as an ambassador
Individual who represents HQ´s interests, they build relationships with host country stakeholders, such as local managers etc.
Expatriates as a daily manager
Individual who runs the operations and lead the local workforce
Expatriates as a trainer
Individual who trains local staff, including their own replacement thus transferring knowledge from HQ to subsidiaries.
The specific preparation to do a particular job.
Full immersion training
Intensive exposure to a foreign culture and language by living within that culture.
An expatriate's reaction to a new, unpredictable and therefore uncertain environment.
Stress caused by an imbalance between expectations and abilities affected by culture shock.
The process of facilitating the return of expatriates.
An informal understanding of expected delivery of benefits in the future for current services.
Reverse culture shock
Culture shock experience by persons returning to their country of origin.
The identification, selection and hiring of staff.
A company specializing in finding suitable people for senior positions.
The determination of salary and benefits.
Workers from rural areas temporarily working in factories in the cities.
The evaluation of employee performance for promotion, retention or termination purposes.
A work team with members representing multiple cultures.
A short assignment for a specific project or contract.
Assignments that involve regular stays abroad but with the main base remaining back home.
A team that is geographically dispersed and interact primarily through electronic communication.
Employees of a foreign subsidiary relocated to the MNE's headquarters for the purpose of (1)Filling skill shortages at headquarters and (2) developing a global mindset for such inpatriates.
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