BAtxst D. Rose Exam 1

Born global firm (international new venture)

A start-up company that attempts to do business abroad from inception.

North American Free Trade Agreement (NAFTA)

Agreement that created a free-trade area among the United States, Canada, and Mexico.

Regional Economic Integration

Agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other

Economic Union

Having all the features of a common market, members also coordinate and harmonize economic policies (in areas such as monetary, fiscal, and taxation) to blend their economies into a single economic entity

Social Complexity

The socially intricate and interdependent ways firms are typically organized

Resources and Capabilities

The tangible and intangible assets a firm uses to choose & implement its' strategies

Value Chain

A series of activities used in the production of goods and services that make a product or service more valuable

Union of South American Nations (UNASUR)

A regional integration mechanism integrating two existing customs unions (Andean Community and Mercosur) in South America

Local Content Requirement (LCR)

A requirement that some specific fraction of a good must be produced domestically.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

A WTO agreement governing intellectual property rights

International Entrepreneurship

A combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations.

Going rate approach

A compensation approach that pays expatriates the prevailing (going) rate for comparable positions in a host country

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.

Export Intermediaries

A firm that performs an important middleman function by linking domestic sellers and foreign buyers that otherwise would not have been connected

Labor relations

A firm's relations with organized labor (unions) in both home and host countries

Specialization

A focus on a particular activity or area of study

Relationship Orientation

A focus to establish, maintain, and enhance relationships with customers

Subsidies

A government payment that supports a business or market

Free Trade Areas (FTAs)

A group of countries that remove trade barriers among themselves

Trans-Pacific Partnership (TPP)

A multilateral free trade agreement being negotiated by 12 Asia Pacific countries

Third-party logistics (3PL) provider

A neutral, third-party intermediary in the supply chain that provides logistics and other support services.

Market Orientation

A philosophy that places the highest priority on the creation of superior customer value in the marketplace

Microfinance

A practice to provide micro loans ($50-$300) used to start small businesses with the intention of ultimately lifting the entrepreneurs out of poverty.

Commodization

A process of market competition through which unique products that command high prices and high margins gradually lose their ability to do so, thus becoming commodities

Product Life Cycle Theory

A theory that accounts for changes in the patterns of trade over time by focusing on product life cycles

Theory of Competitive Advantage

A theory that focuses on the relative (not absolute) advantage in one economic activity that one nation enjoys in comparison with other nations

Strategic Trade Theory

A theory that suggests that strategic intervention by governments in certain industries can enhance their odds for international success

Theory of national competitive advantage of industries (Diamond Theory)

A theory that suggests that the competitive advantage of certain industries in different nations depends on four aspects that form a "diamond."

Theory of Mercantilism

A theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer (Jean-Baptiste)

Theory of Absolute Advantage

A theory that suggests that under free trade, a nation gains by specializing in economic activities in which it has an absolute advantage. (Adam Smith)

Supply Chain Management

Activities to plan, organize, lead, and control the supply chain.

Psychological contract

An informal, unwritten understanding of expected delivery of benefits in the future for current services

European Union

An international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members

venture capitalists

An investor who provides risk capital for early stage ventures

Resource Mobility

Assumption that a resource used in producing a product for one industry can be shifted and put to use in another industry

First-mover advantages

Benefits that accrue to firms that enter the market first and that late entrants do not enjoy

Administrative Policies

Bureaucratic rules that make it harder to import foreign goods

Common Market

Combining everything a customs union has, a common market, in addition, permits the free movement of goods and people

Benchmarking

Comparing an organization's practices, processes, and products against the world's best.

Market Segmentation

Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs

Onshoring

Domestic outsourcing

Stage Models

Model of internationalization that portrays the slow step-by-step (stage-by-stage) process an SME must go through to internationalize its business.

Original Design Manufacturers (ODMs)

Firm that both designs and manufactures products

Original Brand Manufacturers (OBMs)

Firm that designs, manufactures, and markets branded products

Original Equipment Manufacturers (OEMs)

Firm that executes design blueprints provided by other firms and manufactures such products

supply chain

Flow of products, services, finances, and information that passes through a set of entities from a source to the customer.

Staffing

HRM activities associated with hiring employees and filling positions

Host-country nationals (HCN)

Individual from the host country who works for the MNE

Parent-country nationals (PCN)

Individuals from parent country of MNE, work at its local subsidiary

Voluntary Export Restraint (VER)

International agreements that show that exporting countries voluntarily agree to restrict their exports (quotas)

Offshoring

International/foreign outsourcing

Development

Long-term, broader preparation to improve managerial skills for a better career

Reshoring

Moving formerly offshored activities back to the home country of the focal firm

Deadweight Costs

Net losses that occur in an economy because of tariffs

Customs Union (CU)

One step beyond a free trade area (FTA), a customs union imposes common external policies on nonparticipating countries

Business process outsourcing (BPO)

Outsourcing business processes to third-party providers. (Can be controversial)

Trade embargos

Politically motivated trade sanctions against foreign countries to signal displeasure

Marketing Mix (4 P's)

Product, Price, Place, Promotion

Inpatriation

Relocating employees of a foreign subsidiary to the MNE's headquarters for the purposes of filling skill shortages at headquarters and developing a global mindset for such inpatriates

Training

Specific preparation to do a particular job

Antidumping duties

Tariff imposed on imports that have been "dumped" (selling below costs to "unfairly" drive domestic firms out of business)

VRIO Framework

The resource-based framework that focuses on the value (V), rarity (R), imitability (I), and organizational (O) aspects of resources and capabilities

Infant industry argument

The argument that new industries should be protected from foreign competition until they are large enough to achieve economies of scale that will allow them to compete

Complementary Assets

The combination of numerous resources and assets that enable a firm to gain a competitive advantage

Casual Ambiguity

The difficulty of identifying the actual cause of a firm's successful performance

Absolute advantage

The economic advantage one nation enjoys that is absolutely superior to other nations

Performance Appraisal

The evaluation of employees' job performance and contributions to their organization.

Factor Endowments

The extent to which different countries possess various factors of production such as labor, land, and technology

Free trade

The idea that free market forces should determine how much to trade with little or no government intervention

Protectionism

The idea that governments should actively protect domestic industries from imports and vigorously promote exports

Political Union (PU)

The integration of political and economic affairs of a region

Asia-Pacific Economic Cooperation (APEC)

The official title for regional economic integration involving 21 member economies around the Pacific

Association of Southeast Asian Nations (ASEAN)

The organization underpinning regional economic integration in Southeast Asia

Expatriation

The process of selecting, managing, & motivating expatriates to work abroad

Total Cost of Ownership (TCO)

Total cost needed to own a product, consisting of initial purchase cost and follow-up maintenance/service cost.

Nontariff Barriers (NTBs)

Trade barrier that relies on nontariff means to discourage imports. NTBs include subsidies, import quotas, export restraints, local content requirements, administrative policies, and antidumping duties

Tariff Barrier

Trade barrier that relies on tariffs to discourage imports

Outsourcing

Turning over an activity to an outside supplier that will perform it on behalf of the focal firm

Trade Deficit

When a nation imports more than it exports

Balance Sheet Approach

a compensation approach that balances the cost of living differences relative to parent country levels and adds a financial inducement to make the package attractive

Small and medium-sized enterprise (SME)

a firm with fewer than 500 employees in the United States, or with fewer than 250 employees in the European Union

Monetary Union

a group of countries that use a common currency

Price elasticity

a measure of the sensitivity of demand to changes in price

General Agreement on Tariffs and Trade (GATT)

a multilateral agreement regulating international trade

World Trade Organization (WTO)

a permanent global institution to promote international trade and to settle international trade disputes

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

Import Tariff

a tax imposed on imports

Indirect Export

a way to reach overseas customers by exporting through domestic-based export intermediaries

Human Resource Management

activities managers perform to plan for, attract, develop, and retain an effective workforce

Alignment

alignment of interests of various players

Polycentric Approach

an emphasis on the norms and practices of the host country

Ethnocentric Approach

an emphasis on the norms and practices of the parent company (and the parent country of the MNE) by relying on PCNs

Global economic integration

efforts to reduce trade and investment barriers around the globe

Third-country nationals (TCNs)

individual who is from neither the parent country nor the host country of the MNE

Captive Sourcing

setting up subsidiaries to perform in-house work in foreign locations

Classical Trade Theories

mercantilism, absolute advantage, comparative advantage

Modern Trade Theories

product life cycle, strategic trade, national competitive advantage

Geocentric Approach

seek the best people (most suitable), regardless of nationality, for key jobs

Adaptability

the ability to change supply chain configurations in response to longer-term changes in the environment and technology

Agility

the ability to react quickly to unexpected shifts in supply and demand

Repatriation

the act of returning to the country of origin (returning expatriates)

Compensation

the determination of salary and benefits

Balance of Trade

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

Distribution Channel

the set of firms that facilitates the movement of goods from producers to consumers

Trade Surplus

when a nation exports more than it imports