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International Business
Chapters 14-20 (w/out 18)
87
Business
Undergraduate 3
04/30/2009

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Term
appropriability theory
Definition
the theory that companies will favor foreign direct investment over such nonequity operating forms as licensing arrangements so that potential competitors will be less likely to gain access to proprietary information
Term
consortium
Definition
the joining together of several entities, such as companies or governments, in order to strengthen the possibility of achieving some objective.
Term
equity alliance
Definition
a situationi in which a cooperating company takes an equity position (almost always a minority) in the company with which it has a collaborative arrangement.
Term
internalization
Definition
control through selfhandling of foreign operations, primarily because such control is less expensive to deal with in the same corporate family than to contract with an external organization
Term
resource-based view (of the firm)
Definition
a perspective that holds that each company has a unique combination of competencies
Term
boundaries
Definition
horizontal constraints that follow from having specific employees only do specific jobs in specific units and the vertical constraints that separate employees into specific levels of the heirarchy.
Term
centralization
Definition
the situation in which decision making is done at the home office rather than at the country level
Term
control systems
Definition
regulate the allocation and utilization of resources
Term
coordination
Definition
linking or integrating activities into a unified system
Term
decentralization
Definition
the situation in which decisions tend to be made at lower levels in a company or at the country-operating level rather than at headquarters
Term
divisional structure
Definition
an organization that contains separate divisions based around individual product lines or based on the geographic areas of the markets served
Term
functional structure
Definition
an organization that is structured according to functional areas of business
Term
horizontal differentiation
Definition
how the company specifies, divides, and assigns the set of organizational tasks
Term
matrix structure
Definition
an organizational structure in which foreign units report (by product, function, or area) to more than one group, each of which shares responsibility over the foreign unit
Term
mixed structure
Definition
a structure that integrates various aspects of the other forms of structures
Term
network structure
Definition
a situation in which a group of companies is interrelated and in which the managemnet of the interrelation is shared among so-called equals
Term
organization
Definition
how the company defines the formal structure that specifies the framework for work, develops the systems that coordinate and control what gets done, and cultivates a set of shared values and ideals among employees around the world
Term
organization culture
Definition
the values, beliefs, business principles, traditions, ways of doing things, and nature of internal work environment within a company
Term
organization structure
Definition
the formal arrangement of roles, responsibilities, and relationships within an organization
Term
unity-of-command principal
Definition
holds that an unbroken chain of command and communication should flow from the senior executive to the worker on the factory floor
Term
vertical differentiation
Definition
determining where in the heirarchy the authority to make decisions stands
Term
virtual organization
Definition
a form of company that acquires strategic capabilities by creating a temporary network of independent companies, suppliers, customers, and even rivals
Term
cost-plus strategy
Definition
the stragtegy of pricing at a desired margin over cost
Term
distribution
Definition
the course--physical path or legal title--that goods take between production and consumption
Term
gap analysis
Definition
a tool used to discover why a company's sales of a given product are less than the market potential in a country; the reason may be a usage, competition, product line, or distribution gap
Term
generic
Definition
available for anyone to use
Term
gray market
Definition
the handling of goods through unofficial distributors
Term
penetration strategy
Definition
a strategy of introducing a product at a low price to induce a maximum number of consumers to try it
Term
pull
Definition
promotion relying on mass media (as opposed to push which uses direct selling techniques)
Term
push
Definition
promotion which uses direct selling techniques
Term
skimming strategy
Definition
charging a high price for a new product by aiming first at consumers willing to pay that price and then progressively lowering the price
Term
acceptable quailty level (AQL)
Definition
a concept of quality control whereby managers are willing to accept a certain level of production defects, which are dealt with through repair facilities and service centers
Term
e-commerce
Definition
the use of the internet to join together suppliers with companies and companies with customers
Term
electronic data interchange (EDI)
Definition
the electronic movement of money and information via computers and telecommunications equipment
Term
enterprise resource planning (ERP)
Definition
solfware that can link information flows from different parts of a business and from different geographic areas
Term
extranet
Definition
the use of the internet to link a company with outsiders
Term
foreign trade zones (FTZs)
Definition
a government designated area in which goods can be stored, inspected, or manufactured without being subject to formal customs procedures until they leave the zone
Term
International Organization for Standardization (ISO)
Definition
formed in Geneva in 1947 to facilitate the international coordination and unification of industrial standards. partnered with IEC (international electrotechnical commission)
Term
intranet
Definition
the use of the internaet to link together the different divisions and functions inside a company
Term
logistics (or materials management)
Definition
that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of comsumption, to meet customers' requirements; sometimes called materials management
Term
offshore manufacturing
Definition
any manufacturing that takes place outside of a company's home country. a type of foreign direct investment
Term
outsourcing
Definition
where one company contracts with another company to perform certain functions, including manufacturing and back office operations. may be done in or close to the company's home country (nearshoring) or in another country (offshoring)
Term
private technology exchange (PTX)
Definition
an online collaboration model that brings manufacturers, distributors, value-added resellers, and customers together to execute trading transactions and to share information about demand production, availability, and more
Term
quality
Definition
meeting or exceeding the expectations of a customer
Term
Six Sigma
Definition
a highly focused system of quality control that uses data and rigorous statistical analysis to identify "defects" in a process or product, reduce variability, and achieve as close to zero defects as possible
Term
sourcing
Definition
the strategy that a company pursues in purchasing materials, components, and final products; sourcing can be from domestic and foreign locations and from inside and outside the company
Term
supply chain
Definition
the coordination of materials, information, and funds from the initial raw material supplier to the ultimate customer
Term
total quality managment (TQM)
Definition
the process that a company uses to achieve quality, where the goal is elimination of all defects
Term
vertical integration
Definition
the control of the different stages as a product moves from raw materials through production to final distribution
Term
zero defects
Definition
the elimination of defects, which results in the reduction of manufacturing costs and an increase in consumer satisfaction
Term
active income
Definition
income of a CFC that is derived from the active conduct of a trade or business, as specified by the U.S. Internal Revenue Code
Term
American Depository Receipt (ADR)
Definition
a negotiable certificate issued by a U.S. bank in the United States to represent the underlying shares of a foreign corporation's stock held in trust at a custodian bank in the foreign country
Term
arm's-length price
Definition
A price between two companies that do not have an ownership interest in each other
Term
controlled foreign corporation (CFC)
Definition
a foreign corporation of which more than 50% of the voting stock is owned by U.S. shareholders (taxable entities that own at least 10% of the voting stock of the corporation)
Term
economic (or operating) exposure
Definition
the foreign-exchange risk that international businesses face in the pricing of products, the source and cost of inputs, and the location of investments
Term
Eurobond
Definition
a bond sold in a country other than the one in whose currency it is denominated
Term
Eurocredit
Definition
a loan, line of credit, or other form of medium-or long-term credit on the Eurocurrency market that has a maturity of more than one year
Term
Eurocurrency
Definition
any currency that is banked outside of its country of origin
Term
Eurocurrency market
Definition
an international wholesale market that deals in eurocurrencies
Term
Eurodollar
Definition
dollars banked outside the U.S.
Term
Euroequity market
Definition
the market for shares sold outside the boundaries of the issuing company's home country
Term
foreign bonds
Definition
a bond sold outside the borrower's country but denominated in the currency of the country of issue
Term
global bond
Definition
a combination of domestic bond and Eurobond that is issued simultaneously in several markets and that must be registered in each national market according to that market's registration requirements
Term
leverage
Definition
the degree to which a firm funds the growth of the business by debt
Term
lag strategy
Definition
an operational strategy that involves either delaying collection of foreign-currency receivables if the currency is expected to strengthen or delaying payment of foreign-currency payables when the currency is expected to weaken; the opposite of a lead strategy
Term
lead strategy
Definition
an operational strategy that involves either collecting foreign currency recievables before they are due when the currency is expected to weaken or paying foreign-currency payables before they are due when the currency is expected to strengthen; the opposite of a lag strategy
Term
London Inter-Bank Offered Rate (LIBOR)
Definition
the interest rate for large interbank loans of Eurocurrencies
Term
market capitalization
Definition
a common measure of the size of a stock market, which is computed by multiplying the total number of shares of stock listed on the exchange by the market price per share
Term
net present value (NPV)
Definition
the sum of the present values of the annual cash flows minus the initial investment
Term
netting
Definition
the transfer of funds from subsidiaries in a net payable position to a central clearing account and from there to the accounts of the net receiver subsidiaries
Term
offshore financial centers
Definition
cities or countries that provide large amounts of funds in currencies other than their own and are used as locations in which to raise and accumulate cash
Term
offshore financing
Definition
the provision of financial services by banks and other agents to nonresidents
Term
payback period
Definition
the number of years required to recover the initial investment made
Term
Subpart F (or passive) income
Definition
income of a CFC that comes from sources ofhter than those connected with the active conduct of a trade or business, such as holding company income
Term
syndication
Definition
cooperation by a lead bank and several other banks to make a large loan to a public or private organization
Term
tax-haven country
Definition
countries with low income taxes or no taxes on foreign source income
Term
transaction exposure
Definition
foreign-exchange risk arising because a company has outstanding accounts recievable or accounts payable that are denominated in a foreign currency
Term
translation exposure
Definition
foreign-exchange risk that occurs because the parent company must translate foreign-currency financial statements into the reporting currency of the parent country
Term
balance sheet compensation plan
Definition
MNEs use this to manage expatriate accounts. it develops a salary structure that equalizes purchasing power accross countries so expatriates have the same living standard in their foreign posting that they had at home--no matter which country their assignment takes them
Term
codetermination
Definition
a process by which both labor and management participate in the management of a company
Term
culture shock
Definition
a generalized trauma one experiences in a new and different culture because of having to learn and cope with a vast array of new cues and expectations
Term
expatriate
Definition
noncitizen of the country in which they are working
Term
expatriate failure
Definition
the premature return of expatriate manager to the home country
Term
home-country national
Definition
expatriate employees who are citizens of the country in which the company is headquartered
Term
human resource management (HRM)
Definition
the primary staffing function of the organization. it includes the activities of human resource planning, recruitment, selection, performance appraisal, compensation, and retention
Term
repatriation
Definition
an expatriate's return to his or her home country
Term
third-country national
Definition
expatriate employees who are neither citizens of the country in which they are working nor citizens of the country where the company is headquartered
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