Worldwide interconnections in virtually every sphere of activity including the spread of products, technology, information, and job opportunities. Can result in blurred boundaries between nations, organizations, and investors


The actions of buying and selling goods and serviced


Financial assets such as funds but also equipment, facilities, and other means of production

1. Trade and Transactions2. Capital and Investment Movements3. Migration and Movement of People4. Dissemination of Knowledge

Four fundamental aspects of globialization


Three major areas of globalization


To obtain goods or services from an outside or foreign supplier

Cultural Globalization

Transmission of ideas, meanings, and values around the world in such a way that extends and intensified social relations

Nongovernmental Organizations (NGOs)

Not for profit organizations that are independent of the government and are active in humanitarian causes

Economic Globalization

Refers to the widespread international movement of goods, capital, services, technology, and information


A sum of money granted by the government to assist and industry or business

Intellectual Property

A work or invention that is a result of creativity, such as a manuscript

Financial Instrument

A monetary contract between parties

Stakeholder Analysis

A technique to identify and assess the important key people, groups of people, or institutions that may significantly influence the success of an organization's activity, project, or business

Foreign Direct Investment

When a firm invests assists directly into a foreign country's buildings, equipment, or organizations

Stage 1: Market EntryStage 2: Product SpecializationStage 3: Value Chain DisaggregationStage 4: Value Chain Re-engineeringStage 5: Creation of New Markets

The five stages of becoming a global company

McKinsey Global Institute

An organization whose mission is to help leaders in the commercial, public, and social sectors develop and understanding of the evolution of the global economy

Stage 1: Market entry

Stage when companies enter the new countries using business models similar to the ones deployed in their home markets

Stage 2: Product specialization

Stage when companies transfer the full production process of a particular product to a single, low-cost location and export the goods to various consumer markets

Stage 3: Value Chain Disaggregation

Stage when companies disaggregate (separate into its component parts) the production process and focus on completing each activity in the most advantageous location

Stage 4: Value Chain Reengineering

Stage when companies seek to further increase their cost savings by re-engineering their processes to suit local market conditions by substituting lower cost labor for capital

Stage 5: Creation of New Markets

Stage when companies focus on market expansion

Opportunities for Scale

Cost advantages due to an increase in the amount of output and a decrease in the cost per unit

Market OpportunitiesCostCompetitionGovernment

Four industry globalization drivers


To develop efficiencies in terms of variety not volume

1. Ethical Business Practices2. Organization Structure3. Public Relations4. Leadership5. Legal and Regulatory Structure6. Infrastructure7. Technology

7 Drawbacks of Global Expansion

Market Driver

Drivers: Opportunity for scale and scope; convergence of needs; needs and wants of the market

Cost Drivers

Drivers: Economies of scale and scope; exploiting cost of factors of production

Competition Drivers

Drivers: New markets; Increased levels of trade

Government Driver

Drivers: Favorable policies; Support for industry

1. Organizations2. Governmental Organizations3. NGOs

What are the different forms of international business?


Sells products and services that are sources from other countries


Sells products and services that are sources from its home country in foreign countries

Foreign Direct Investment

When a firm invests assets directly into a foreign country's buildings, equipment, or organizations


Engages in foreign business such as exporting, importing, foreign direct investment

Governmental Organization

Engages in creating international treaties to issues such as trade, environment, or child labor; maintain embassies and consulates in foreign countries

Non-Governmental Organization (NGO)

Includes any nonprofit, voluntary citizens group that are organized on a local, national, or international level

Six Sigma

A method that provides tools for organizations to increase performance and decrease process variation


CAGE components

Human capital

The education and skills of workers

Gini Coefficient

Measures the inequality among values of a frequency distribution such as levels of income

Happy Planet Index

Measures how well nations are doing at achieving long, happy, sustainable lives

Political system

The system of politics and government in a country; it governs a complete set of rules, regulations, institutions, and attitudes.


The absence of organized government; individuals have the right to choose what happens


A government in which a single person rules until he or she dies or abdicated the throne

Absolute Monarchy

Governments where a monarch has absolute or unmitigated power

Constitutional Manarchy

Governments of nations that recognize monarchs but require that these figures abide by the laws of a greater constitution; feature prime ministers


An elite group holds the power of the government


Power is held by a single person (or very small group of people) who wields complete and absolute authority over a government and its population


Form of government that strives to provide all citizens an equal voice, or vote, in determining state policy, regardless of socioeconomic status

Totalitarian Dictatorship

A dictatorship in which the dictator controls all aspects of its subjects lives, including occupations, religious beliefs, and the number of children each family is permitted to have


A branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole

1. Centered around a family or tribe and guided by tradition2. Found in hunt-gatherer and nomadic societies; everyone consumed and produces the same goods3. Relies on bartering4. Members product what they need with no surplus5. Eventually, the economy evolves to some form of currency

5 characteristics of a traditional economy

1. Collective or state ownership of capital (such as money, property, and other physical assets)2. The state determines inputs and outputs3. Labor is allocated according to state plans4. Private ownership is not possible5. Prices and paying for goods and services are regulated by the state with little regard to costs; often a currency does not exist but resources are given to citizens as needed

5 distinguishing features of a command economy

1. It is standard for all goods and services to be privately owned.2. People are free to choose to produce, sell, and purchase goods at the price set with the capital they possess3. Every seller aims to make the most profit possible4. Market economy relies on an efficient market in which all buyers and sellers have equal access to the same information5. Competition keeps prices low6. Government interference is at the minimum that is necessary to ensure that markets are functioning correctly

6 characteristics of a market economy


Three types of conventional systems of law

Civil Law

Countries under this system of law have more detailed, prescriptive laws in which the role of the judge is to investigate whether a law has been broken

Common Law

This legal system is based on precedence. The role of the judge is to hear arguments from both parties and make a judgment, which is used as a precedent for future cases

Religious Law

This legal system is based on religious beliefs

Special Drawing Right (SDR)

International type of money reserve created by the IMF used to loan money to member countries

Balance of Payments

The difference in total volume between payments into and out of the country over a period of time

Fixed-Rate Currency Exchange System

When a country's currency value is fixed or pegged by a monetary authority against the value of another currencyC a basket of currency, or another measure of value

To promote international economic cooperationTo promote international tradeTo promote employmentTo promote exchange rate stability By making financial resources available to member countries to meet their balance of payment needs

Objectives of the IMF


Something pledged as security for repayment of a loan to be forfeited in the event of a default

1. Prior actions2. Quantitative Performance Criteria3. Indicative Targets4. Structural Benchmarks

Four conditions of the IMF

Prior Actions

Actions that a country agrees to before the IMF's executive board approves financing or completes a review

Quantitative Performance

Criteria that are specific and measurable conditions that a country must meet to complete a review

Indicative targets

Quantitative targets used to measure a country's progress in meeting the IMF's requirements

Structural benchmarks

Nonquantitative measures such as social safety nets

A country doesn't need collateral, but has to correct financial practices that led to debt in the first place to ensure the country can pay back its loan to support other struggling countries

Conditionality of the IMF

Being owned and directed by the governments of the member nations

Which activity of the IMF affects policy making?


Is a cooperative institution and provides more effective currency exchange


Selling government holdings to private companies


The removal of regulations or restrictions in a particular industry

Result currency exchange change between nations

Original purpose of the IMF

Provides means for nations to easily exchange currencyProvides oversightOffers loans to member organizations

Evolved purpose of the IMF

1. Conditionalities may make conditions worse in a struggling country2. Poor countries are underrepresented3. Does not consider effects on the environment

3 criticisms of the IMF

AAA Rating

The highest possible rating that may be assigned by a credit rating agency for a bond

Debt Instrument

A tool used by a company or any other entirety to raise money or capital

1. Helping build sustainable economic growth2. Investing in people3. Building resilience to shocks and threats

3 World Bank Priorities

1. To end extreme poverty2. To improve the income of the lowest 40% of citizens in each country

2 World Bank Goals


A raw material or primary agricultural product that can be bought or sold


One of the earliest economic theories, which states that a country's wealth was determined by the amount of gold and silver they had in their possession

Trade surplus

When the value of a country's exports is greater than the value of goods being imported


When a group of people are conscious of sharing a common identity and the same culture


The theory or practice of protecting a country's domestic industries from foreign competition by taxing imports

Navigation Acts

British Acts in 1651 to tighten and protect trade between Asia, American colonies, Africa, and England. Trade had to come in English ships. The purpose was to use American colonies to increase British finances and power

Government subsidies

Money paid by the government to help and organization or industry reduce its costs

Free trade

International trade left to its natural course without tariffs, quotas, and other restrictions

Absolute Advantage

The ability of an individual or group to produce a good or service more efficiently than another

Production Possibility Frontier (PPF)

A curve that shows various combinations of the amount of two that can be produced within the limits of the given resources and technology


The gradient of a graph at any point calculated as the change in y over the change in x

Hecksher-Ohlin Theory

Stated that countries would produce and export goods that required resources or factors that were in abundant supply and therefore cheaper; in contrast, countries would import goods that required resources that were in short supply but higher demand

Country Similarity Theory

Theory that proposed that customers in countries that are in the same or similar stage of development would have similar preferences; takes brands and customer loyalty, technology, and quality into account

Global Strategic Rivalry Theory

Theory that focused on Multinational corporations and their efforts to gain a competitive advantage against other global firms; to prosper, they must develop competitive advantage

Barriers to Entry

The obstacles that make it difficult for a new company to enter a given market. These barriers may include technology challenges, start-up costs, or government regulations

Economies of Scale

A proportionate savings in costs gained by an increased level of production


A currency that can be used to buy or sell without government restrictions

Resource endowments

Refers to the skill and abilities of a country's workforce, the natural resources available within its borders, and the sophistication of its capital stock

Economic sanctions

Commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual

Value chain

The process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales services

Producer Surplus

The difference between how much money producers want to sell a good for an how much they receive by selling it


A person or company that sells goods in large quantities at low prices, typically to retailers


A limited quantities of a particular product that can be produced, exported, or imported under official controls

Consumer Surplus

The difference in price between the highest price a consumer is willing to pay for a good or service an what they actually paid

Import tariff

Taxes on goods that are imported into a country

Export tariff

Taxes on goods leaving a country

Protective tariff

Tariffs that protect a domestic industry by making imported goods more expensive than equivalent goods produced domestically

Revenue tariff

Tariffs levied to raise revenue for the government

Specific tariff

Import taxes expressed in an amount of money per unit inported

Ad volerem tariff

Import taxes based on a fixed percentage of the assessed commercial value of imported goods

Compound tariff

Taxes on imported goods that are a combination of a fixed amount and an amount based on the value of the goods

Absolute quota

Quota that strictly limits the quantity of goods that may enter a country

Tariff-rate quota

Quota that permits a specified quantity of imported goods to enter a country at a reduced rate during the quota period

Voluntary export restraint

A trade restriction on the quantity of a good that an exporting country is allowed to export to another country


A political or economic system that becomes self-sufficient to survive

Government Procurement Programs

The process of buying goods and services by a government agency through a specific process of issuing bid proposals and seeking responses from companies

Export subsidies

A government policy to encourage export of goods and discourage sale of goods on the domestic market through direct payments, low cost loans, tax relief for exporters, or government-financed international advertising

Countervailing duties

Import taxes imposed on certain goods to prevent dumping or counter export subsidies

Economic inefficiency

An economic state in which every resource is not optimally allocated to serve each individual or entity in the best way possible by minimizing waste and inefficiency

Trade diversion

Trade is diverted from a more efficient exporter toward a less efficient one by the formation of s free trade agreement or a customs union


The practice of charging a lower price for a product in foreign markets than in the firm's home market

Must be approved by a Senate 2/3 vote

How are treaties made?

Must be approved by the US senate and the house of representatives

How are trade agreements made?

Free Trade Agreement

Economic agreement between countries to allow free trade between members


The policy or practice of acquiring full or partial political control over another country to exploit it economically

Portfolio Investment

An investment in another country is purely financial and does not involve any management responsibility; investing in a company's stocks, bonds, or assets but not to control the firms operations


The process of allocating capital in a way that reduces the exposure to any one particular asset or risk

Foreign Direct Investment (FDI)

An investment in or the acquisition of foreign assets with the intent to control and manage them; don't by purchasing assets, investing in the company or new property, plant and equipment, or participating in a joint venture

Most Favored Nation

Each and every nation that participated in the WTO is obligated to give all investors the same treatment as it produces its most favored trading partners

10% ownership of the firm

What is the threshold to be considered a direct investment?

Dividend repatriation

The return of earnings from foreign subsidies to their parent companies back in the home country

Market capitalization

The total dollar value of a company's outstanding shares of stock, which can be sensitive to growth rates, exchange rate stability, health of the foreign banking system, liquidity of the stock and bond market, interest rates, and level of foreign exchange reserves held by the central banks

Horizontal FDI

When a company is trying to open a new market

Vertical FDI

When a company invests internationally to provide input into its core operations— usually in its home country

Greenfield FDI

When multinational corporations enter into developing countries to build NEW factories or stores; starts from the beginning

Brownfield FDI

When a company or government entity purchases or leases existing production facilities to launch a new production activity; modifying or upgrading existing facilities

Multinational corporations

Change agents that drive trade and investment flows that allow for economic growth

Regional Economic Integration

A unification between states or countries with a partial or full abolition of tariff and non tariff restrictions on trade between them; the ideal would be free trade

1. Free trade area2. Customs unions3. Common market4. Economic union5. Political union

Five Stages of Economic Integration

Political Union

When a single nation is formed and a mutual organization confederates all policies; USA

Free Trade Area

Allows basic economic cooperation so member countries remove barriers to trade among themselves; no mutual policy on trading with nonmember countries; NAFTA

Common Market

Permits the formation of economically integrated markets between member countries, removing trade barriers and any restrictions on the movement of labor, technology, and capital; Common Market for Eastern and Southern Africa

Customs Union

Offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers; Mercosur

Economic Union

When countries enter into an economic agreement to remove barriers to trade and adopt common economic policies; members use a common currency, harmonized taxes monetary, and fiscal policy; European Union

1. Encourages specialization2. Lowers prices3. Provides more choices on goods and services4. Increases productivity5. Allow for more efficient use of natural resources

5 goals of a trade bloc

Exchange rates

The price of one currency expressed in terms of units of another countrh

Trade bloc

A free-trade zone formed by one or more tax, tariff, and trade agreement between two or more countried

Preferential tariff

A tariff that is lower for some nations than others


A country that is not the United States uses the U.S. dollar as its currency

Foreign Exchange Market

The market in which people use one currency to buy another

Exchange Rate Regime

The way in which an authority manages its currency in relation to other currencies and the foreign exchange market

Floating exchange rate

A system where the value of currency in relation to others is allowed to freely fluctuate subject to market forces

Fixed exchange rates

A system where a currency's value is tied to the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold

Pegged exchange rate

A currency system that fixes and exchange rate around a certain value, but still allows fluctuations, usually within certain values, to occur

Stronger Dollar

Stronger or weaker dollar? Foreign currency buys less US dollars

Stronger Dollar

Stronger or weaker dollar? US dollar will buy more of a foreign currency

Weaker Dollar

Stronger or weaker dollar? Foreign currency buys more US dollars

Weaker Dollar

Stronger or weaker dollar? US dollar will but less of a foreign currency

Robber Barons

Corporations and cartels that monopolized business in the period following the American civil war

Monopoly Power

When a specific person or enterprise is the only supplier of a particular product


A person who needs, uses, or has used a particular service or product

Antitrust laws

Consumer production policy used to limit unfair business practices related to competition and control of prices


Market in which a single producer is a price maker that can determine the price level by deciding what quantity of goods to produce

Blood Diamonds

Diamond mined in war zones and sold in order to finance ware efforts

Perfectly competitive market

A market in which no individual is colonic actor can affect the price of a good

World Trade Organization (WTO)

An international organization that works at standardizing competitive market practices in conjunction with the internal laws of individual nations

Protect the process of competition for the benefit of consumers

Basic objective of antitrust laws

The European Union (EU)

European Statute established in 1952 with the purpose of reducing the ability for one country/region to gain a monopoly on critical natural resources

Sherman Antitrust Act

The first American antitrust policy. Established in 1890, it dealt with limiting the power of price-controlling cartels

Competition lawsAntimonopoly laws

Other names for antitrust laws

Natural resources

What was the main purpose is creation of the EU?

Collective Environment

Understanding that the environment not only belongs to everyone to enjoy but is also everyone's shared responsibility

United Nations Environment Programme (UNEP)

Branch of the United Nations that deals specifically with worldwide environmental problems

Paris Agreement

Universal global climate deal aimed at keeping long-term global temperature increase at below 2°C

National Environmental Policy Act (NEPA)

American environment act from the 1970s that required federal agencies to prepare environmental impact statements for every recommendation or report

Environmental Protection Agency (EPA)

American agency established in the 1970s with the goal of monitoring the environmental practices of industry

Sovereign rights of nations

What makes the enforcement of UNEP regulations difficult?

Kyoto Protocol (1997)

Treaty that the US originally supported, but the Senate failed to ratify the treaty stating the treaty threatened the US economy and did not require developing nations to lower their emissions at the same rate as developed countries


A factory that is guilty of some sort of labor abuse or violation such as unsafe working conditions, employment of children, mandatory overtime, unsafe working conditions, and so on


Worldwide interconnection sin virtually every sphere of activity including the spread of products, technology, information, and job opportunities. Can result in blurred boundaries between nations, organizations, and investors

National Labor Committee

A nongovernmental organization involved in anti-sweatshop activities and the implementation of labor laws

Worst Forms of Child Labor Convention, 1999

Convention that aimed to eliminate all practices of child slavery or those similar to slavery

The Maritime Labor Convention (MLC), 2006

Convention that set out a bill of rights for all seafarers

Domestic Workers Convention, 2011

Convention aimed at protecting domestic workers from abuse and exploitation


A legally enforceable promise


Recompense for the injured party by the party that breaches the contract

Vertical structure of law

A structure of law where those at the top govern those at the bottom

Uniform Commercial Code (UCC)

Source of contract law in the US

Horizontal structure

Structure of law where neither party is in a legally dominant position over the other

Horizontal laws

Laws that govern disputes on a horizontal structure

UN Convention for the International Sale of Goods (CISG)

United Nations treaty that applies to the international sales of commercial goods

Apple Inc. vs Pepper

Antitrust court case in which a group of iPhone users have accused Apple of monopolistic practices via the app store

Deepwater Horizon oil spill

A 2010 industrial accident that is considered the largest oil spill in history

Oil Pollution Act of 1990

US law that strengthened the EPA's ability to prevent and respond to oil spills

The Clean Water Act

A US federal law governing water pollution

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

a WTO agreement governing intellectual property law


Protects inventions and improvements to existing inventions for a limited period of time in exchange for details public disclosure of those inventions


Protection for any word, name, symbol, device, or combination used in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others


Form the protection provided by the laws of the US to the authors of original works of authorship including literary, dramatic, musical, artistic, and certain other intellectual works

World Intellectual Property Organization (WIPO)

Established in 1967 by the UN to implement global policy related to intellectual property


Field of philosophy that deals with the morality of what is considered right or wrong

Sarbanes-Oxley Act of 2002

Law aimed st increasing level of ethical transparency within corporate America


A person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization

Organizational ethics

How an organization ethically responds to an internal or external stimulus

Business Ethics

The contemporary standards or sets of values that govern the actions and behavior of individuals in the business organization and the action of the business itself

Ethical Consumerism

A movement in which consumers make purchasing decisions based on a company's ethical profile

Corporate Social Responsibility (CSR)

The ethical role of a corporation in society

UN Global Compact

a non binding UN pact aimed at encouraging businesses to adopt sustainable and socially responsible policies and to report on implementation

Global Reporting Initiative

An international standards organization that assists organizations in understanding and communicating their impact on ethical issues such as human rights, climate change, and corruption


All parties who have a stake in the performance and output of the corporation

Cultural norms

Shared, sanctioned, and integrated systems of beliefs and practices that are passed down through generations and characterize a cultural group

Conflict of Interest

Ethical challenges in which multiple interests are at conflict with one another

Grease payments

A business practice or paying small inducements in order to expedite decisions and trasnactions

Securities and Exchange Commission (SEC)

An independent US agency aimed at regulating the nations securities industry

Multilevel marketing

Marketing strategy in which revenue is derived from a non salaried worker selling the company's products or services and earning a commission

Corruption Perceptions Index

Tracks, rates, and ranks 180 countries based on their levels of corruption and illicit behaviors

Open Government Information Regulations

Chinese regulation (2008) that established limited rules for government information disclosure and public participation

Power distance

One of Hofstede's six dimensions of national culture. It describes how formal and authority focused a society is


Cash payment or other bonus that benefits an individual but provides little advantage to the company

Teapot Dome Scandal

A scandal dating back to the 1920s in which an American cabinet official received a jail sentence and fine for the first time for adopting bribery practices

US Foreign Corrupt Practices Act

Outlawed bribery of foreign officials

due diligence

When officers adequately investigate and enforce procedures

Internal Controls

The redundancies that are built into a system to make sure that it functions property


Accounting errors that occur unintentionally


Misrepresentations of accounting data with the intent to defraud

UK Bribery Act

A UK act that enhances UK law related to bribery, including bribery of foreign corporations

Internal auditing

A control in which the company investigates and evaluates employees' compliance with company policies and procedures

Organizational structure

The formal way a company divides labor, groups employees, and assigns responsibilities


Large corporations made up of several combines companies, often forms through mergers and takeovers


Companies completely owned or controlled by a parent company

Divisions of labor

Dividing organizational activities into small tasks

Organizational chart

A visual map of the roles and relationships within an organizations and how functions and responsibilities are divided

Vertical and horizontal linkages

Lines on an organizational chart showing the relationships within an organization

Unity of command

One employee should only report to one person

Functional/departmental structure

Employees are divided into departments related to a functional area of the business, such as marketing, production, Human Resources, IT, and customer service; traditional organizational structure

Divisional structure

Employees are divided into departments based on different markets the company serves, product areas, and/or geographic regions; common in large, international corporations

Matrix structure

Employees can be put on different teams to maximize creativity and idea flow; common in high-tech and engineering firms

Teams structure

Composed of people with complementary skills working together for a common purpose ; less hierarchical with shared leadership and objectives


Grouping a business's people, tasks, and resources into units

Functional departmentalization

Organizing a company's people, tasks, and resources based on business functions such as marketing, production, and sales

Product departmentalization

Organizing a company's people, tasks, and resources based on goods or services

Process departmentalization

Organizing a company's people, tasks, and resources based on a production proces

Customer departmentalizaion

Organizing a company's people, tasks, and resources based on the type of customer served

Geographic departmentalization

Organizing a company's people, tasks, and resources based on a geographic region

Tall structures

Organizational structures with many levels

Flat structures

Organizational structures with few levels

multinational corporation (MNC)

A company that operates in two or more countries

economies of scale

A proportionate savings in cost gained by an increased level of production

Economies of scope

The savings from producing more than one type of item

Specific Strategic Business Unit (SBU)

An independent division within a large company with responsibility for specific products or activities


The degree to which decision-making authority is concentrated at higher levels in an organization and business functions controlled in a central location

Centralized Companies

Companies with structures that limit decision making to higher levels in the organizational hierarchy

Decentralized Companies

Companies with structures that distribute the authority to make decisions to lower levels of employees who are closer to the problem

Global integration

The degree to which a company is able to use the same products and methods in multiple countries

Local responsiveness

The degree to which a company must customize its products and methods to meet the conditions in other countries

Export Strategy

An international commerce strategy that focuses on shipping domestic products to other countries

Standardization strategy

A strategy for international commerce that does not customize products for local markets

Multidomestic strategy

A strategy of international commerce that customizes products to each country

Transnational Strategy

An international commerce strategy that combines the aspects of standardization and multidomestic strategies

Portfolio investment

An investment in a country is purely financial and does not involve any management responsibility

Foreign Direct Investment (FDI)

An investment strategy of investing in a foreign market through direct involvement in the operations of a company, either by acquisition or partnership or by creating a new business


The act of taking over ownership or controlling a business


Financial assets such as funds but also equipment, facilities, and other means of production


Something that discourages people from an action


Sending goods to another country to sell


A type of contract that allows one party to use another's property as their own without paying royalties for a designated length of time


A system where a business grants an entrepreneur the right to use their products, names, and processes in exchange for a percentage of the profits


An agreement between two or more entities to share responsibilities for a business

Strategic allowances

An agreement between two companies to cooperate on a mutually beneficial project


The process of making everything conform to expectations and guidelines for consistency


A type of product made by a particular company under a particular name

Economies of scale

A proportionate savings in cost gained by an increased level of production

Multibrand strategy

The practice of a company offering different brand of similar products for different markets

Product adaptation

The process of changing a product in some way so it is more acceptable or desirable in a particular market


Modify something to appeal to people in a specific location


The process of adapting to local markets while maintaining a global identity


A person or company who owns a product but provides it to someone else as part of an agreement


A person or company who has entered into an agreement with someone to use their products or service for a specified period of time

Strategic plan

A formal agreement on priorities, focus, and goals

Vertical Integration

The combination of two or more stages of production in one company

Horizontal Integration

The expansion at a single point in the supply chain, often through the combination of two or more similar companies


Someone who supplies goods to a business

Export Management Company (EMC)

A private company that is hired to act as a company's export department

Greenfield venture; high risk because companies assume all the risk

Which method of entering an international market offers the most potential for above-average returns?

Emerging markets

A country that is transitioning from a less developed economy to a more developed one with an expanding middle class and increasing social-political stability


The degree that a company is able to make a profit


Obtaining needed materials from a supplier

Operational expenses

Expenses relating to everyday expenses

Gross Domestic Product (GDP) growth

The total value of goods and services provided in a country in a one-year period

Mature economy

A term that describes countries with a stable population and slowing economic growth

Developing economies

A term that describes countries with a less-developed industrial infrastructure and lower per capita income


The beliefs, values, mind-sets, and practices of a group of people


Focused on the good of the group or society over the individual

Masculine vs Femininity

One of hofstede's six dimensions of national culture. It measures how the society views traits that it considers masculine or feminine

Power distance

One of Hofstede's six dimensions of national culture. It describes how formal and authority focused a society is


One of Hofstede's six dimensions. It measures how focused people are on their immediate circle at the expense of the greater group

Uncertainty avoidance

One of Hofstede's six dimensions. It measures how comfortable a society is with uncertainty

Long-term orientation

One of Hofstede's six dimension. It measures how focused a society is on traits such as perserverence or shame

Short-term orientation

One of Hofstede's six dimensions. It focused on immediate gratification and fulfilling current social obligations

Indulgence vs Restraint

One of Hofstede's six dimensions. It measures the degree of freedoms and spontaneity that is valued


Concept in China that describes a connection based on reciprocity


A persons unique characteristics that shape thought and behavior patterns


The belief that one's own culture is most important


People who live and work outside their own country


Related to home or place of origin


Ability to move quickly and flexibly


A focused educational program with a specific goal

Primary sources

Original information that could be firsthand accounts, raw data, or artifacts

Secondary sources

Information that has been passed on from an original source or interpreted

Human Resources (HR) management (HRM)

Department within an organization responsible for employment issues


A conversation to acheive an agreement

Performance evaluation

Formal process for evaluating an employee


What an employee is paid in exchange for work

Ethnocentric strategy

HR strategy of hiring only people from the home country for key positions in foreign subsidiaries

Polycentric strategy

HR strategy that gives local hiring control to foreign subsidiaries

Geocentric strategy

HR strategy that takes a whole-world view of the company, hiring the best people for positions regardless of location


The process of transitioning employees back to their home countries

Supply chain networks

A complex, evolved form of a supply chain that included secondary support and multiple, interrelated supple and distribution lines

Supply chain

The sequence of processes involved in the production and distribution of a commodity

Value chain

The process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales services

Supply Chain Management

The management of the flow of goods or services through the process of moving from production to customer

Production planning

The allocation of resources in the production process


The process of supplying goods to customers

Push model

Theory in supply chain management that focused decisions on the needs of the product

Production cycle

All the activities involved in creating a product

Pull model

Theory in supply chain management that based decisions and activities on the needs of the customers

Lean manufacturing principles

A collection of methods or theories for reducing waste in manufacturing

Multinational production

Manufacturing process that spans multiple countries outside a firms country of origin, usually in a coordinated multistage system

Country-of-origin effect

The effect the consumer's perception or opinion of the country where a product is made has on the consumer's perception or opinion of the product itself


A manufacturing method that allows customers to customize the product

Mass production

A manufacturing method that created large amounts of identical products

Mass customization

A manufacturing method that combines the flexibility of custom production with the scale of mass production by allowing the customer to dictate some of the design elements in products that will have a wide distribution

Value to weight ratio

The value of a product per pound or kilo

Fixed costs

The necessary expenses of the manufacturing process other than the cost of materials and labor used in production

minimum efficient scale (MES)

The balance point between price and cost that allows a company to make a profit


Hiring staff or business outside the company to complete business activities


Using in-house staff to complete a business task

Intellectual property

A creation of the mind, whether it is an invention, literary or artistic work, or unique process

Intellectual property rights

The legal protections for creations of the mind

Trade secret

Intellectual property that is kept private


The exclusive legal right granted to an inventor to profit from his or her creation

Marketing channel

The way a seller connects with a customer; sometimes called a distribution channel

Direct channel

The shortest path between producer and a consumer

Direct distribution strategy

Distribution strategy that reaches customer directly without any intermediaries

Indirect channel

An indirect path between producer and consumer with intermediaries

Indirect distribution strategy

Distribution strategy that uses intermediaries to reach customers


Amount owed to someone


Value of the shares of a company


Enlisting the help of a large number of people, often via the Internet


A useful or valuable thing; something you own such as a building, inventory, or cash

Foreign currency

Any form of money in circulation in s different country

Exchange rates

The price of one currency expressed in terms of units of another currency

Venture capital

A type of high-risk investing

GAAP (Generally Accepted Accounting Principles)

A collection of accounting principles in the United States that provide guidance and standardization for financial accounting

IASB (International Accounting Standards Board)

An independent group that oversees the development and revisions of the IFRS

IFRS (International Financial Reporting Standards)

A collection of accounting principles used through much of the world outside the United states

FASB (Financial Accounting Standards Board)

An independent group that oversees the development and revision of GAAP

Political risk

Possible political changes or instability in a country that could hurt a company's financial return on a foreign investment

Macro risk

A type of political risk that applies to all foreign investments in a country

Asset seizure

An act of confiscating or taking control of private assets such as funds or property by a government

Micro risk

A type of political risk that applies to a specific foreign company or a group of foreign companies in a country


Any form of money in circulation in a country

Foreign exchange market

The market in which people use one currency to buy another currency

Spot rates

Currency exchange rates that require immediate settlement with the delivery of traded currency

Currency risk

The risk of a change in the exchange rate that will have an adverse effect

Currency translation

The act of translating currencies on a financial statement to another currency

Current Rate Method

A method of foreign currency translation that translates items on financial statements at the current exchange rate

Temporal method

A method of foreign currency translation that used exchange rates based on the rate in place when the assets and liabilities were originally acquired or incurred


Using financial instruments to reduce adverse price movements


Special types of financial instruments, the prices of which are ultimately derived from the price or performance of some underlying assets

Return volatility

A measure of the variation in returns on an investment

Forward contract

A contract in which the firm agreed to pay a set rate at the beginning of a contract

Currency swap contracts

A simultaneous buy and sell of currency for two different dates

Currency option contracts

The option or right to exchange a specific amount of currency on a specific future date and at a specific agreed on rate

Currency futures contracts

Contracts that require the exchange of a specific amount of currency at a specific future date and at a specific exchange rate

Internal forward rate

A company generated forecast of future spot exchange rates

Long position

A strategy used in investing of a trader who buys an asset with expectation that it will increase in value

Short position

A strategy used in investing of a trader who sells someone else's asset with the expectation of buying it back later when it decreases in value

value added tax (VAT)

A consumption tax added to products incrementally for all stages of production but collected by the end retailer; similar to a sales tax; also called a goods and services tax (GST)

Transfer pricing

the practice of shifting assets to a subsidiary in a country with a better tax bracket

Fronting loan

A loan made between a parent company and its subsidiary through a financial intermediary such as a bank

Tax haven

A country that has very low corporate taxes

Digital divide

The inequality between groups to access knowledge and use of information in communication technologies


The equipment and techniques used to manage and process information

Graphical User Interface (GUI)

A type of interface that allows users to interact with electronic devices through graphical icons and visual indicators instead of text


An electronic filing system that collects and organizes data and information


A type of high-speed wired or wireless communication

The Group of 77 and China) G77)

A coalition of 134 developing nations that join together to promote their economic interests at the UN. China participates but does not consider itself a member

International Telecommunication Union

A specialized agency of the UN responsible for communication and information issues

Jakob Nielsen

Danish web usability consultant. He holds a PHD in human-computer interaction from the technical university of denmark in copenhagen


Communication using radio frequencies

Chief Information Officer (CIO)

An executive the responsibility for managing all information resources in an organization

Knowledge workers

Workers who develop or use knowledge, contributing to and benefiting from information used to perform planning, acquiring, searching, analyzing, organizing, storing, programming, producing, distributing, marketing, or selling functions

Management information system

The method and equipment that provide information about all aspects of a firm's operations

Machine learning algorithms

Computer systems that automatically learn from experience instead of being explicitly programmed

Deep learning

A subset of machine learning in which computers learn unsupervised data that are unstructured

DNS blocking

A strategy that makes it difficult for users to locate specific domains or websites on the internet

Virtual Private Network (VPN)

A private corporate network connected over a public network, such as the internet, it includes strong security measures to allow only authorized users to access the network

Country A exports more goods to Country B than it imports from Country B. Country A receives more monetary gain by using this practice.Which relationship does Country A have with Country B?

Trade surplus

Country A has been criticized by other countries for giving generous tax credits to its corn farmers, which enables the country's farmers to sell corn on the international markets for cheaper than all other countries.Which term is used by other countries to describe this practice?

Government subsidies

Economies of scale

A proportionate savings in costs gained by an increased level of production

Which type of tariff is put in place to specifically ensure that domestic industries are given an advantage?