Global Business Flashcards

Terms Definitions
Globalisation
refers to the shift towards a more integrated and interdependent world economy
Outsourcing
The task that were previously performed in-house are now purchased from another firm
Offshoring
A form of outsourcing; it means that a task previously performed in one country is now undertaked abroad
Globalisation of markets
The merging of historically distinct and separate national markets into one huge global market place
Globalisation of Production
Sourcing goods and services from locations around the globe to take advantage of national differences in the cost and quality of various factors of production
Factors of Production
Components of production such as land, labour, capital and energy
General Agreement on Tariffs and Trade (GATT)
An international treaty that committed signatories to lowering barriers to the free flow of goods across national boarders, a predecessor to the World Trade Organisation
World Trade Organisation (WTO)
The organisation that succeeded the General Agreement on Tarrifs and Trade and now acts to police the world trading system
The International Monetary Fund (IMF)
The international institution set up to maintain order in the international monetary system
World Bank
The international organisation set up to promote economic development, primarily by offering low-interest loans to governments to poorer nations
United Nations (UN)
An international organisation made upi of 192 countries charged with keeping international peace, developing cooperation between nations, and promoting human rights
International Trade
When a firm exports goods or services to buyers in another country
Foreign Direct Investment
When firms invest resources in business activities outside its home country, giving it some control over those activities
Foreign Direct Investment (FDI) Flow
The amount of FDI undertaken over a given time
Foreign Direct Investment (FDI) Stock
The total accumulated value of foreign-owned assets at a given time
Foreign Direct Investment (FDI) Outflow
The flow of DFI out of a country
Foreign Direct Investment (FDI) Inflow
The flow of FDI into a country
Moore's Law
The premise that the power of microprocessor technology doubles and its cost of production drops by half every 18 months
Group of Eight (G8)
An international forum comprising the government representatives of Western industrial economies
Group of Twenty (G20)
An international forum comprising the government representatives of the G8 and other economies, including emerging economies as a reflection of their rising global economic and political power
Multinational Enterprise
Any business that has productive activities in two or more countries
International Business
Any firm that engages in international trade or investment
Economies of Scale
Cost advantages associated with large-scale production
First Mover Advantage
The economic and strategic advantahes that accrue to early entrants into an industry
Porter's Theory
Porter contends that the degree to which a nation is likely to achieve international success in a certain industry is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and domestic rivalry.
Eclectic Paradigm
Arguement that combining location-specific assets or resource endowments and the firm's own unique assets often required FDI; it requires the firm to establish production facilities where those foreign assets or resource endowments are located
Exporting
Sale of products produced in othe country to residents of another country
Licensing
Occurs when a firm (or licensor) licenses the right to produce its product, use its production processes, or use its brand name or trademark to another firm (the licensee). In return for giving these rights, the licensor collects a royalty fee on every unit the licesnsee sells
Internationalisation Theory
Marketing imperfections approach to foreign direct investment
Ologopoly
An industry composed of a limited number of large firms
Multipoint Competition
Arises when two or more enterprises encounter each other in regional markets, national markets and industries
Ownership Advantages
Advantages that arise from the accumulation of intangible assets, technological capacities or innovations
International Advantages
Factors associated with a firm deciding to keep the production of a good or service within the firm rather than outsourcing it to another firm
Location-Specific Advantages
Advantages that arise from using resource endowerments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets (such as a firm's technological, marketing or management know-how)
Extenalities
Knowledge 'spillovers'
Gross National Income (GNI)
The total value of income accuring to a nation's residents
GNI per Capita
The average income of a nation derived by dividing GNI by the total population
Population Distributions
Information on how a population is derived into various categories such as gender, age and location
Income Distribution
Information on what proportion of the population receives what proportion of the total income
Human Capital
The stock of educated, mobile and healty people of a nation
Infrastructure
The collaction of he nation's assets and institutions that facilitate and support economic activity
Rule of Law
When behaviour and processes are regulated by a system of laws that are consistently and transparently applied and enforced
Competitiveness
The quality possessed by a nation or a business that enables it to maintain an economic advantage in a marketplace
External Economies
Cost efficiencues in production and marketing that a firm enjoys as a result of the action of others external to the firm
Productivity
The ratio of output to the factors of production
Macroeconomic Stability
Occurs when an economy grows without persistent and major fluctuations in the level of economic activity, inflation rates, unemployment and balance of payments imbalances
Business Cycle
The tendency of economies to move in sequence through phases of expansion an contraction of economic activity in a somewhat regular pattern
Fiscal Policy
A form of macroeconomic policy that uses changes in government expenditures and taxes to stabilise the economies
Monetary Policy
A form of macroeconomic policy that uses changes in interest rates and money supply to stabilise the economy
Economic Growth
An increase in the productive capacity and national output of a country, measured by the rate or increase of GDP
Real GDP
A measure of the dollar value of GDP after account has been taken of the changes in value due to price changes
SOurces of Economic Growth
Increases in the quantity and quality of resources and increased productivity
Inflation
An increase in the general price level
COnsumer Price Index (CPI)
A measure of a change in the average price of a sample of consumer price of a sample of consumer products
GDP Deflator
A measure of a change in average price based on the changing money value of GDP
Balance of Payments
The national accounts that summarise both payments to and receipts from foreigners
International Investment Position
Records a nation's stock of foreign assets and liabilities at a particular point in time
Current Account Deficit
The amount by which payments to foreigners exceed receipts from foreigners for current account items
Foreign Debt
The amount owing by both the private sector and government to foreigners
Debt-Service Ratio
The proportion of the current expot earnings used to service the foreign debt
Economic Development
The increasing capacity o an economy to improve and sustain the standards of living of the entire population
Purchasing Power Parity (PPP)
An adjustment in gross national income per capita to reflect differences in the cost of living
Market Economy
An economic system in which the interaction of individual decision markers on questions of supply and demand determines the quantity in which goods and services are produced
Command Economy
An economic system where the allocation of resources, including determination of what goods and services should be produced and in what quantity, is planned by the government
Mixed Economy
An economic system where certain sectors are left to private ownership and free market mechanisms, while other sectors have significant government ownership and government planning
Privatisation
The process of selling state-owned enterprises to private investors
Deregulation
The process of removing legal restrictions to the free ploy of markets, the establishment of private enterprises and the manner in which private enterprises operate
Culture
A system of values and norms that are shared among a group of people and that when taken together constitute a design for living
Values
Abstract ideas about what a group believes to be good, right and desirable
Norms
TThe social rules and guidelines that prescribe appropriate behavour in particular situations
Society
A group of peole who share a common set of values and norms
Social Structure
The basic social organisation of a society
Religion
A sysem of shared beliefs and rituals that are concerned with the realm of the sacred
Ethical Systems
A set of moral principles, or values, that are used to guide a shape behaviour
Low-Context Culture
A culture in which the speaker's message is conveyed explicity by the spoken words
High-Context Culture
A culture in which the context of a discussion is as important as the actual words spoken
Power Distance
Extent to how much a socially allows ineqalities of physical and itellectual capabilites between people to grow into inequalities of power and wealth
Free Trade
The absence of barriers to the free flow of goods and services between countries
Tariff
A tax levied by governments on imports and exports
Subsidy
Government financial assistance to a domestic producer
Dumping
Selling goods in a foreign market for less than their cost of production of below their fair market value
Infant Industry Argument
This calls for the protection of an emerging industry until it becomes efficient enough to compete on the world market
BAlance of Payments Account
The national accounts that summarise both payments to and receipts from foreigners
Current Account
The part of the balances of payments that records transactions involving the export and import goods and services
Transfer Pricing
The pricing of goods and services traded between the subsidiaries of the same company itself that best services the company's interest
Political Economy
The political, economic and legal systems and forces that govern the economy and business activity
Free Market View
An expression of liberalisation that supports private ownership and individual enterprise and advocates the free flow of foreign capitl in order to maximise national and global economic well-being
Legal System
The system of rules and institutions that regulate behavoiur and the processes by which the laws of a country are enforced and through which redress of grievance is obtained
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