International Trade
consists of the exchange of goods and services by different countries.
Absolute Advantage
The ability to produce more of a good than another producer with the same quantity of inputs.
Law of Comparative Advantage
Axiom that producers should produce the goods they are most efficient at producing and purchase from others the goods they are less efficient at producing.
Exports
Goods and services that are sold abroad.
Imports
Goods and services purchased abroad.
Diversification
Process by which a company engages in a variety of operations.
Balance of Trade
Difference between the value of goods a country exports and the value of goods it imports.
Tariff
Government-imposed tax on goods imported into a country.
Quotas
Restrictions on the quantity of a good that can enter the country.
Embargo
A ban on exports to or imports from a foreign country.
Free Trade Area
A region within which trade restrictions are reduced or eliminated.
North American Free Trade Agreement (NAFTA)
Treaty that allows businesses in the United States, Mexico, and Canada to sell their products anywhere in North America without facing major trade restrictions.
Foreign Intermediary
A wholesaler or agent that markets products for companies wanting to do business abroad.
Licensing Agreement
An agreement that permits one company to sell another company's products abroad in return for a percentage of the company's revenues.
Strategic Alliance
An agreement by which companies pool resources and skills in order to achieve common goals.
Multinational Corporation
Business that maintains a presence in two or more countries, has a considerable portion its assets invested in and derives a substantial portion of its sales and profits from international activities, considers opportunities throughout the world, and has
Organization
A group of people working together in some concerted or coordinated effort to attain objectives.
Organizing
Grouping activities, assigning activities, and providing the authority necessary to carry out the activities.
Formal Organization
Organization structure that defines the boundaries of the organization and within which the organization operates.
Informal Organization
Aggregate of the personal contacts and interactions and the associated groupings of people working within the formal organization.
Job Scope
Number of different types of operations performed on the job.
Job Depth
Freedom of employees to plan and organize their own work, work at their own pace, and move around and communicate as desired.
Power
Ability to influence, common, or apply force; a measure of a person's potential to get others to do what he or she wants them to do, as well as to avoid being forced by others to do what he or she does not want to do.
Authority
Legitimate exercise of power; the right to issue directives and expend resources; related to power but narrower in scope.
Responsibility
Accountability for the attainment of objectives, the use of resources, and the adherence to organizational policy.
Centralization
Little authority is delegated to lower levels of management
Decentralization
A great deal of authority is delegated to lower levels of management.
Empowerment
Form of decentralization in which subordinates have authority to make decisions
Four elements for Empowerment to take root and Thrive
-Participation
-Innovation
-Access to Information
-Accountability
Parity Principle
Principle that authority and responsibility must coincide
Exception Principle
Principle that managers should concentrate on matters that deviate significantly from normal and let subordinates handle routing matters; also called management by exception.
Unity of Command Principle
Principle that an employee should have one, and only one, immediate manager.
Scalar Principle
Principle that authority in the organization flows through the chain of managers one link at a time, ranging from highest to the lowest ranks; also called chain of command.
Span of Management
Number of subordinates a manager can effectively manage; also called span of management.
Organization Structure
The framework that defines the boundaries of the formal organization and within which the organization operates.
Mechanistic Systems
Organizational systems characterized by a rigid delineation of functional duties, precise job descriptions, fixed authority and responsibility, and a well-developed organizational hierarchy through which information filters up and instructions flow down.
Organic Systems
Organizational systems having less formal job descriptions, greater emphasis on adaptability, more participation, and less fixed authority.
Contingency (Situational) Approach
The process of assessing relevant variables that affect and organization's structure and then choosing the most appropriate structure for the situation.
Departmentalization
Arrangement of jobs into related work units
Functional Departmentalization
Categorization of organization units in terms of the nature of the work.
Product Departmentalization
Placement of all activities necessary to produce and market a product or service under one manager.
Geographic Departmentalization
Organizational units that are defined by territories
Customer Departmentalization
Organizational units that are defined by customers served.
Hybrid Departmentalization
Use of multiple types of departmentalization within the organization.
Line Structure
Organization structure in which authority originates at the top and moves downward in a line and in which all organizational units are directly involved in producing and marketing the organization's goods or services.
Line and Staff Structure
Organization structure that results when staff specialists are added to a line organization
Staff Functions
Functions that are advisory and supportive in nature; designed to contribute to the efficiency and maintenance of the organization.
Line Functions
Functions and activities directly involved in producing and marketing the organization's goods or services.
Matrix Structure
Hybrid organization structure in which individuals from afferent functional areas are assigned to work on a specific project or task.
Horizontal Structure
Organization structure consisting of two groups: the first composed of senior management responsible for strategic decisions and policies and the second composed of empowered employees working together in different process teams; also known as team struct
Virtual Organization
Temporary network of independent companies - suppliers, customers, and even rivals - linked by information technology to share skills, costs, and access to one another's markets.
Flat Structure
Organization with few levels and relatively large spans of management at each level.
Tall Structure
Organization with many levels and relatively small spans of management
Committee
Organization structure in which a group of people are formally appointed, organized, and superimposed on the line or line and staff structure to consider or decide certain matters.
Board of directors
Carefully selected committee that reviews major policy and strategy decisions proposed by top management.
Job Analysis
The process of determining the pertinent information relating to the nature of a specific job.
Job Description
A written statement that identifies the tasks, duties, activities, and performance results required in a particular job.
Job Specification
A written statement that identifies the abilities, skills, traits, or attributes necessary for successful performance in a particular job.
Skills inventory
Consolidated information about an organization's current human resources.
Human Resource Planning (HRP)
Matching the internal and external supply of people with the openings the organization expects to have for a given time frame.
Human Resource Forecasting
A process that attempts to determine the future human resource needs of an organization in light of the organization's objectives.
Human Resource Forecasting
A process that attempts to determine the future human resource needs of an organization in light of the organization's objectives.
Recruitment
Process of seeking and attracting a supply of people from which qualified candidates for job vacancies can be selected.
Temporary Help
Help that may augment the current staff or be laid off whenever necessary; hired through an agency that pays the benefits and salary of the help, while the organization pays the agency an agreed-on figure for its services.
Employee Leasing Companies
Companies that provide permanent staff at customers companies, issue the workers' paycheck, take care of personnel matters, ensure compliance with workplace regulations, and provide various employee benefits
Tests
Methods for obtaining a sample of behavior that is used to draw inferences about the future behavior or performance of an individual.
Aptitude tests
Tests that measure a person's capacity or potential ability to learn.
Psychomotor Tests
Tests that measure a person's strength, dexterity, and coordination.
Job Knowledge Tests
Tests that measure the job-related knowledge possessed by a job applicant
Proficiency Tests
Tests that measure how well the applicant can do a sample of the work to be performed.
Interest Test
Tests that determine how a person's interests compare with the interests of successful people in a specific job.
Psychological tests
Tests that measure personality characteristics.
Polygraph Tests
Tests that record physical changes in the body as the test subject answers a series of questions.
Test Validity
The extent to which a test predicts a specific criterion.
Test Reliability
The consistency or reproducibility of the results of a test.
Structured Interview
An interview conducted using a predetermined outline.
Semistructured Interview
An interview in which the interviewer prepares the major questions in advance but has the flexibility to use techniques, such as probing, to help assess the applicant's strengths and weaknesses.
Situational Interview
An interview in which the interviewer uses projective techniques to put the prospective employee in action situations that might be encountered on the job.
Unstructured Interviews
Interviews conducted without a predetermined checklist of questions
Stress Interview
An interview during which the interviewee is placed under pressure.
Board (Panel) Interview
An interview conducted by two or more people.
Group Interview
Several interviewees are interviewed at once.
Halo Effect
Interviewer allowing a single prominent characteristics to dominate judgment of all other traits.
Formal Work Groups
Groups established by the management to carry out specific tasks
Informal Work Groups
Groups formed voluntarily by members of an organization.
Group Norms
The informal rules a group adopts to regulate the behavior of group members.
Group Cohesiveness
The degree of attraction among group members, or how tightly knit a group is
Group Conformity
The degree to which group members accept and follow group norms
Groupthink
Group members losing their ability to think as individuals and conforming at the expense of their good judgment
Linchpin Concept
Concept that managers are members of overlapping groups and link formal work groups to the total organization
Team building
The process of establishing a cohesive group that works together to achieve its goals.