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Glossary Ch 1-7
Chapter 1
Asia–Pacific– Economic Cooperation (APEC)	A confederation of 19 nations with less specific agreements on trade facilitation in the Pacific region.
Developed countries	Countries with mature economies, high GDPs, and high levels of trade and investment.
Developing countries	Countries with economies that have grown extensively in the past two decades.
Emerging markets	Countries that are currently between developed and developing countries and are rapidly growing.
European Union (EU)	Austria, Belgium, Bulgaria, Britain, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Romania, Spain, and Sweden, plus Norway and Switzerland in the related European Free Trade Area.
Foreign direct investment (FDI)	Multinational firm’s ownership, in part or in whole, of an operation in another country.
General Agreement on Tariffs and Trade (GATT)	Tariff negotiations among several nations that reduced the average worldwide tariff on manufactured goods.
Global mindset	Mindset that requires managers to think globally, but act locally.
globalization	The worldwide trend of cross– border economic integration that allows businesses to expand beyond their domestic boundaries.
ISO 14000	The current name for the environmental protection standards of the International Organization for Standardization.
ISO 9001:2000	The current name for the technical and quality standards of the International Organization for Standardization.
Less developed countries (LDCs)	The poorest nations, often plagued with unstable political regimes, high unemployment, and low worker skills.
Multinational company (MNC)	Any company that engages in business functions beyond its domestic borders.
Multinational management	The formulation of strategies and the design of management systems that successfully take advantage of international opportunities and that respond to international threats.
North American Free Trade Agreement (NAFTA)	A multilateral treaty that links the United States, Canada, and Mexico in an economic bloc that allows freer exchange of goods and services.
Regional trade agreements	Agreements among nations in a particular region to reduce tariffs and develop similar technical and economic standards.
strategy	The maneuvers or activities that managers use to sustain and increase organizational performance.
Strategy formulation	Process by which managers select the strategies to be used by their company.
Strategy implementation	All the activities that managers and an organization must perform to achieve strategic objectives.
Transition economies	Countries in the process of changing from government– controlled economic systems to capitalistic systems.
TRIAD	The world’s dominant trading partners: the European Union, the United States, and Japan.
World Trade Organization (WTO)	A formal structure for continued negotiations to reduce trade barriers and a mechanism for settling trade disputes.


Glossary Chapter 2 7d culture model Seven–dimension cultural model based on beliefs regarding how people relate to each other, how people manage time, and how people deal with nature. Achievement versus ascription How a society grants or gives status. Business culture The norms, values, and beliefs that pertain to all aspects of doing business in a culture. collectivism Set of cultural values that views people largely through the groups to which they belong. Country clusters Groups of countries with similar cultural patterns. Cultural beliefs Our understandings about what is true. Cultural norms Prescribed and proscribed behaviors, telling us what we can do and what we cannot do. Cultural paradoxes When individual situations seem to contradict cultural prescriptions. Cultural relativism A philosophical position arguing that all cultures, no matter how different, are correct and moral for the people of those cultures. Cultural rituals Ceremonies such as baptism, graduation, the tricks played on a new worker, or the pledge to a sorority or fraternity. Cultural stories These include such things as nursery rhymes and traditional legends. Cultural symbols These may be physical, such as national flags or holy artifacts. In the workplace, office size and location can serve as cultural symbols. Cultural values Values that tell us such things as what is good, what is beautiful, what is holy, and what are legitimate goals in life. culture The pervasive and shared beliefs, norms, and values that guide the everyday life of a group. ethnocentrism When people from one culture believe that theirs are the only correct norms, values, and beliefs. Global Leadership and Organizational Behavior Effectiveness (GLOBE) project Recent large–scale project based on Hofstede’s model to determine nine cultural dimensions of 62 countries. Hofstede model of national culture A cultural model mainly based on differences in values and beliefs regarding work goals. Humane orientation An indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous. Individualism Relationship between the individual and the group in society. Internal versus external control Beliefs regarding whether one controls one’s own fate. Levels of culture The levels of cultural influence, including national, business, and occupational and organizational culture. Long–term (Confucian) orientation An orientation toward time that values patience. masculinity Tendency of a society to emphasize traditional gender roles. National culture The dominant culture within the political boundaries of the nation–state. Neutral versus affective The acceptability of expressing emotions. Occupational cultures Distinct cultures of occupational groups such as physicians, lawyers, accountants, and craftspeople. Organizational culture The norms, values, and beliefs concerning the organization that are shared by members of the organization. particularism Dealing with other people based on personal relationships. Performance orientation The degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence. pervasive The idea that culture affects almost everything we do, everything we see, and everything we feel and believe. Power distance Expectations regarding equality among people. Shared cultural values, norms, and beliefs The idea that people in different cultural groups have similar views of the world. Specific versus diffuse The extent to which all aspects of an individual’s life are involved in his or her work relationships. stereotyping When one assumes that all people within a culture behave, believe, feel, and act the same. Time horizon The way cultures deal with the past, present, and future. Uncertainty avoidance How people react to what is different and dangerous. universalism Dealing with other people based on rules.
Glossary Chapter 3 Buddhism Religious tradition that focuses primarily on the reality of world suffering and the ways one can be freed from suffering. Capitalist or market economy System where production is decentralized to private owners who carry out these activities to make profits. Christianity Religion based on the life and teachings of Jesus. Economic system System of beliefs (concerning work, property, and wealth), activities (extraction, production, and distribution), organizations (business firms, labor unions), and relationships (ownership, management) that provide the goods and services consumed by the members of a society. education Organized networks of socialization experiences that prepare individuals to act in society. Hinduism Acceptance of the ancient traditions of India that are based on the Vedic scriptures Index of economic freedom Determines the extent of governmental intervention in a country. Industrial society Characterized by the dominance of the secondary or manufacturing sectors. Industrialization Cultural and economic changes that occur because of how production is organized and distributed in society. Islam Religion based on the submission of the will to Allah (God). Market transitions Changes that societies go through as they move from socialism toward a market–based economy. Mixed economy Combines aspects of capitalist and socialist economies. National context National culture and social institutions that influence how managers make decisions regarding the strategies of their organizations. Postindustrial society Characterized by emphasis on the service sectors. Preindustrial society Characterized by agricultural dominance and shaping of the economic environment. religion Shared set of beliefs, activities, and institutions based on faith in supernatural forces. Social inequality Degree to which people have privileged access to resources and positions within societies. Social institution A complex of positions, roles, norms, and values organizing relatively stable patterns of human resources with respect to sustaining viable societal structures within a given environment. Socialist or command economy Production resources are owned by the state and production decisions are centrally coordinated.
Glossary Chapter 4 Convenient relativism What occurs when companies use the logic of ethical relativism to behave any way they please, using the excuse of differences in cultures. Corporate social responsibility Idea that businesses have a responsibility to society beyond making profits. Deontological ethical theory Focus on actions that, by themselves, have a good or bad morality regardless of their outcomes. Economic analysis Of an ethical problem, focuses on what is the best decision for a company’s profits. Ethical analysis One that goes beyond focusing on profit goals and legal regulations. Ethical relativism Theory that each society’s view of ethics must be considered legitimate and ethical. Ethical universalism Theory that basic moral principles transcend cultural and national boundaries. Foreign Corrupt Practices Act (FCPA) Forbids U.S. companies to make or offer illegal payments or gifts to officials of foreign governments for the sake of getting or retaining business. International business ethics Unique ethical problems faced by managers conducting business operations across national boundaries. Legal analysis Of an ethical problem, focuses only on meeting legal requirements of host and parent countries. Moral languages Descriptions of the basic ways that people use to think about ethical decisions and to explain their ethical choices. Prescriptive ethics for multinationals Suggested guidelines for the ethical behavior of multinational companies. Primary stakeholders Groups or entities directly linked to a company's survival, including customers, suppliers, employees, and shareholders. Secondary stakeholders Groups or entities less directly linked to a company’s survival, including the media, trade associations, and special interest groups. Teleological ethical theory Theory that suggests that the morality of an act or practice comes from its consequences. Utilitarianism Argument that what is good and moral comes from acts that produce the greatest good for the greatest number of people.
Glossary Chapter 5 Business–level strategies Those for a single business operation. capabilities The ability to assemble and coordinate resources effectively. Competitive advantage When a company can outmatch its rivals in attracting and maintaining its targeted customers. Competitive scope How broadly a firm targets its products or service. Competitive strategies Moves multinational firms use to defeat competitors. Competitor analysis Profile of a competitor’s strategies and objectives. Corporate–level strategies How companies choose their mixture of different businesses. counterparry Fending off a competitor’s attack in one country by attacking in another country, usually the competitor’s home country. Defensive competitive strategies Attempts to reduce the risks of being attacked, to convince an attacking firm to seek other targets, or to blunt the impact of any attack. Differentiation strategy Strategy based on finding ways to provide superior value to customers. Distinctive competencies Strengths that allow companies to outperform rivals. Focus strategy Applying a differentiation or low–cost strategy to a narrow market. Generic strategies Basic ways that both domestic and multinational companies keep and achieve competitive advantage. Key success factors (KSFs) Important characteristics of a company or its product that lead to success in an industry. Low–cost strategy Producing products or services equal to those of competitors at a lower cost. Offensive competitive strategies Direct attacks, end–run offensives, preemptive strategies, and acquisitions. outsourcing The deliberate decision to have outsiders or strategic allies perform certain activities in the value chain. Porter’s five forces model A popular technique that can help a multination firm understand the major forces at work in the industry and its degree of attractiveness. Related diversification A mix of businesses with similar products and markets. resources Inputs into the production or service processes. strategy The central, comprehensive, integrated, and externally oriented set of choices of how a company will achieve its objectives. Strategy formulation Process by which managers select the strategies to be used by their company. sustainable Characteristic of strategies that are not easily defeated by competitors. SWOT The analysis of an organization’s internal strengths and weaknesses and the opportunities or threats from the environment. Unrelated diversification A mix of businesses in any industry. Value chain All the activities that a firm uses to design, produce, market, deliver, and support its product.
Glossary Chapter 6 Comparative advantage That arising from cost, quality, or resource advantages associated with a particular nation. Contract manufacturing Producing products for foreign companies following the foreign companies’ specifications. Direct exporting Exporters take on the duties of intermediaries and make direct contact with customers in the foreign market. Export management company (EMC) Intermediary specializing in particular types of products or particular countries or regions. Export trading company (ETC) Intermediary similar to EMC, but it usually takes title to the product before exporting. Foreign direct investment (FDI) Multinational firm’s ownership, in part or in whole, of an operation in another country. Global integration solution Conducting business similarly throughout the world and locating company units wherever there is high quality and low cost. Global platform Country location where a firm can best perform some, but not necessarily all, of its value chain activities. Global–local dilemma Choice between a local–responsiveness or global approach to a multinational’s strategies. Globalization drivers Conditions in an industry that favor transnational or international strategies over multilocal or regional strategies. Greenfield investments Starting foreign operations from scratch. Indirect exporting Intermediary or go– between firms provide the knowledge and contacts necessary to sell overseas. International franchising Comprehensive licensing agreement where the franchisor grants to the franchisee the use of a whole business operation. International strategic alliance Agreement between two or more firms from different countries to cooperate in any value chain activity from R&D to sales. International strategies Selling global products and using similar marketing techniques worldwide. licensing Contractual agreement between a domestic licenser and a foreign licensee. (Licenser usually has a valuable patent, technological know– how, a trademark, or a company name that it provides to the foreign licensee.) Local–responsiveness solution Responding to differences in the markets in all the countries in which a company operates. Location advantages Dispersing value chain activities anywhere in the world where the company can do them best or cheapest. Multidomestic strategy Emphasizing local– responsiveness issues. Participation strategies Options multinational companies have for entering foreign markets and countries. Passive exporting Treating and filling overseas orders like domestic orders. Regional strategy Managing raw material sourcing, production, marketing, and support activities within a particular region. Transnational strategy Seeking location advantages and gaining economic efficiencies from operating worldwide. Turnkey operations Multinational company makes a project fully operational and trains local managers and workers before the foreign owner takes control.
Glossary Chapter 7 Copycat businesses Those following the me– too strategy, whereby they adopt existing strategies for providing products or services. Customer contact techniques Trade shows, catalog expositions, international advertising agencies and consulting firms, government– sponsored trade missions, and direct contact. entrepreneur Person who creates new ventures that seek profit and growth. Entry wedge Company’s competitive advantage for breaking into the established pattern of commercial activity. First mover advantage That of the entrepreneur who moves quickly into a new venture and establishes the business before other companies can react. Global culture Managerial and worker values that view strategic opportunities as global and not just domestic. Global start–up/ born–global firm Company that begins as a multinational company. International entrepreneurship The discovery, evaluation, and exploitation of market opportunities. International sales intensity Amount of international sales divided by total sales of the company. Liabilities of smallness The challenges facing small businesses in getting access to necessary resources to internationalize. New ventures Entering a new market; offering a new product or service; or introducing a new method, technology, or innovative use of raw materials. Small business UN definition: fewer than 500 employees. Popular press definition: fewer than 100 employees. The U.S. Small Business Administration’s definition varies by industry and uses both sales revenue and the number of employees. Small business advantage Fast moving entrepreneurs can use their competitive advantage of speed. Being first to market, they can capture significant sales before large competitors react. Small business stage model Incremental process of internationalization followed by many small businesses. Switching costs Expenses incurred when a customer switches to a competitor’s products. Technological leadership Being first to use or introduce a new technology.