1. General Agreement on Tariffs and Trade (GATT)
International treaty that committed signatories to lowering barriers to the free flow of goods across
national borders and led to the WTO.
2. global strategy
Strategy focusing on increasing profitability by reaping cost reductions from experience curve and
location economies.
3. globalization
Trend away from distinct national economic units and toward one huge global market.
4. globalization of markets
Moving away from an economic system in which national markets are distinct entities, isolated by
trade barriers and barriers of distance, time, and culture, and toward a system in which national
markets are merging into one global market.
5. globalization of production
Trend by individual firms to disperse parts of their productive processes to different locations
around the globe to take advantage of differences in cost and quality of factors of production.
6. gross domestic product (GDP)
The market value of a country's output attributable to factors of production located in the country's
territory.
7. human resource management
Activities an organization conducts to use its human resource effectively.
8. initial rate
The spot exchange rate when a budget is adopted.
9. innovation
Development of new products, processes, organizations, management practices, and strategies.
10. internalization theory
Marketing imperfection approach to foreign direct investment.
11. international business
Any firm that engages in international trade or investment.
12. international strategy
Trying to create value by transferring core competencies to foreign markets where indigenous
competitors lack those competencies.
13. international trade
Occurs when a firm exports goods or services to consumers in another country.
14. joint venture
A cooperative undertaking between two or more firms.
15. logistics
The procurement and physical transmission of material through the supply chain, from suppliers
to customers.
16. market economy
The allocation of resources is determined by the invisible hand of the price system.
17. market segmentation
Identifying groups of consumers whose purchasing behavior differs from others in important
ways.
18. marketing mix
Choices about product attributes, distribution strategy, communication strategy, and pricing
strategy that a firm offers its targeted markets.
19. mixed economy
Certain sectors of the economy are left to private ownership and free market mechanisms, while
other sectors have significant government ownership and government planning.
20. North American Free Trade Agreement (NAFTA)
Free trade area between Canada, Mexico, and the United States.
21. price discrimination
The practice of charging different prices for the same product in different markets.
22. price elasticity of demand
A measure of how responsive demand for a product is to changes in price.
23. product life-cycle theory
The optimal location in the world to produce a product changes as the market for the product
matures.
24. production
Activities involved in creating a product.
25. property rights
Bundle of legal rights over the use to which a resource is put and over the use made of any
income that may be derived from that resource.
26. push strategy
A marketing strategy emphasizing personal selling rather than mass media advertising
27. 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.
28. short selling
Occurs when an investor places a speculative bet that the value of a financial asset will decline,
and profits from that decline.
29. socialism
A political philosophy advocating substantial public involvement, through government ownership,
in the means of production and distribution.
30. society
Group of people who share a common set of values and norms.
31. state-directed economy
An economy in which the state plays a proactive role in influencing the direction and magnitude of
private sector investments.
32. strategic trade policy
Government policy aimed at improving the competitive position of a domestic industry and/or
domestic firm in the world market.
33. strategy
Actions managers take to attain the firm's goals.
34. subsidy
Government financial assistance to a domestic producer.
35. tariff
A tax levied on imports.
36. tax credit
Allows a firm to reduce the taxes paid to the home government by the amount of taxes paid to the
foreign government.
37. tax haven
A country with exceptionally low, or even no, income taxes.
38. tax treaty
Agreement between two countries specifying what items of income will be taxed by the authorities
of the country where the income is earned.
39. technical analysis
Uses price and volume data to determine past trends, which are expected to continue into the
future.
40. time draft
A promise to pay by the accepting party at some future date.
41. time-based competition
Competing on the basis of speed in responding to customer demands and developing new
products.
42. timing of entry
Entry is early when a firm enters a foreign market before other foreign firms and late when a firm
enters after other international businesses have established themselves.
43. total quality management
Management philosophy that takes as its central focus the need to improve the quality of a
company's products and services.
44. totalitarianism
Form of government in which one person or political party exercises absolute control over all
spheres of human life and opposing political parties are prohibited.
45. trade creation
Trade created due to regional economic integration; occurs when high-cost domestic producers
are replaced by low-cost foreign producers in a free trade area.
46. trade diversion
Trade diverted due to regional economic integration; occurs when low-cost foreign suppliers
outside a free trade area are replaced by higher-cost foreign suppliers in a free trade area.
47. trademark
Designs and names, often officially registered, by which merchants or manufacturers designate
and differentiate their products.
48. transaction costs
The costs of exchange.
49. transaction exposure
The extent to which income from individual transactions is affected by fluctuations in foreign
exchange values.
50. transfer fee
A bank charge for moving cash from one location to another.
51. transfer price
The price at which goods and services are transferred between subsidiary companies of a
corporation.
52. transnational strategy
Plan to exploit experience-based cost and location economies, transfer core competencies with
the firm, and pay attention to local responsiveness.
53. universal needs
Needs that are the same all over the world, such as steel, bulk chemicals, and industrial
electronics
54. values
Abstract ideas about what a society believes to be good, right, and desirable.
55. vertical differentiation
The centralization and decentralization of decision-making responsibilities.
56. vertical foreign direct investment
Foreign direct investment in an industry abroad that provides input into a firm's domestic
operations, or foreign direct investment into an industry abroad that sells the outputs of a firm's
domestic operations.
57. vertical integration
Extension of a firm's activities into adjacent stages of productions (i.e., those providing the firm's
inputs or those that purchase the firm's outputs).
58. wholly owned subsidiary
A subsidiary in which the firm owns 100 percent of the stock.
59. World Bank
International institution set up to promote general economic development in the world's poorer
nations.
60. World Trade Organization (WTO)
The organization that succeeded the General Agreement on Tariffs and Trade (GATT) as a result
of the successful completion of the Uruguay round of GATT negotiations.