This online glossary is an extended version of the glossary that appears in the book. Use the alphabetical list below to find words beginning with each letter, or the search tool to find a certain word or phrase.
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‘Arm’s length’ dealings - Business transactions which are focused solely on business criteria, independent of social or relational context.
Absolute advantage - Enjoyed by a country where production of a product involves using fewer productive inputs than would be possible in any other country.
Absolute poverty - Defined by the World Bank as living on less than $1 a day.
Accounting and finance for international businesses - Budgeting, costs and raising finance, any or all of which arise in more than one country, and involve more than one regulatory authority.
Acid rain - Contamination caused by the accumulation of pollutants in atmospheric water, mainly from the burning of fossil fuels, which, when it falls as rain, causes harm to plant and animal life.
ACP - African, Caribbean and Pacific (countries)
Acquisition - Purchase of the whole of the capital of a company, or a controlling stake, which amounts to a change of ownership.
Agile manufacturing - The ability to respond and adapt to continuous change in the design, production and delivery of products.
Agile supply chain - Ability of firms in a supply chain to respond quickly to frequent changes in consumer preferences and levels of demand.
Aid for Trade - WTO initiative by which aid is directed at capacity building and other developments in recipient countries.
Alliance - Co-operative arrangement between two or more different organizations for a particular purpose, which offers benefits to participating organizations while retaining their individual identity.
Alliance capitalism - Capitalist market model which rests heavily on relational ties among firms, through cross-shareholding and personal ties.
Antitrust law - Law designed to curtail monopolists and encourage competitive markets.
Apec - Asia-Pacific Economic Cooperation: grouping of economies bordering the Pacific Ocean, which seeks liberalization of trade among members and with non-members.
Assimilation - In societies, process by which a minority culture gradually acquires the language and culture which predominates in a country.
Appraisal - Process of analysing an employee’s work achievement and potential for further development.
Asean - Association of Southeast Asian Nations: regional grouping of Southeast Asian countries which aims to promote trade liberalization.
Asia-Pacific Economic Co-operation (Apec) - Grouping of economies bordering the Pacific Ocean, which seeks liberalization of trade among members and with non-members.
Assimilation - In societies, process by which a minority culture gradually acquires the language and culture which predominates in a country.
Association of Southeast Asian Nations (Asean) - Regional grouping of Southeast Asian countries which aims to promote trade liberalization.
Auditor - Professional accountant appointed by a company to prepare its annual accounts in accordance with applicable regulatory rules, and from an independent perspective.
Authoritarian government - Rule by one or more individuals who claim absolute power to govern a state, with no substantive accountability to its citizens.
Balance of payments - The total credit and debit transactions between a country’s residents and those of other countries over a given period.
Bank for International Settlements (BIS) - International organization which oversees central banks.
Bilateralism - International trade and related agreements negotiated between two countries.
Biodiversity - A variety of living organisms and species co-existing in the same habitat.
Biofuels - Fuels derived from organic matter, seen as an alternative to fossil fuels.
BIS - Bank for International Settlements: international organization which oversees central banks.
Bond - A type of loan security issued by organizations for a fixed period, with interest payable to the lender.
Born-global firm - Entrepreneurial firm which adopts a global focus and commitment to international operations from the start.
BPO - Business process outsourcing: the shifting of particular business functions or processes to a specialist company, usually for cost savings.
Brand - Trademark or logo distinguishing an organization’s products from those of rivals, which is an important asset capable of legal protection.
BRIC - The large emerging economies of Brazil, Russia, India and China.
Buddhism - Asian religion based on the teachings of Buddha.
Business process outsourcing (BPO) - The shifting of particular business functions or processes to a specialist company, usually for cost savings.
Buyout - Purchase of a controlling stake in a company.
Capitalism - Economic system based on the principle that markets determine supply and demand.
Carbon capture and storage - Process of removing carbon dioxide from the burning of fossil fuels and storing it deep underground.
Carbon neutrality - Policy of reducing emissions to a minimum and then offsetting the remaining emissions through activities which directly contribute to environmental protection.
Carbon offsetting - Policy whereby a firm invests in green projects, often in developing countries, which are the equivalent of the firm’s greenhouse gas emissions.
Central American Free Trade Agreement (Cafta) - Regional trade agreement between the US and 6 Caribbean countries.
CEO - Chief executive officer
CFO - Chief financial officer
Chaebol - Traditional South Korean family-owned and paternalistically controlled conglomerate.
Christianity - Monotheistic religion based on belief in Jesus Christ, whose teachings are in the Bible.
Civil rights - Rights enjoyed by the individual citizen of a country, often enshrined in the country’s constitution.
Civil society - Voluntary groups representing cultural, religious and political diversity within a society.
Civil society organizations - Voluntary groups representing cultural, religious and political diversity within a society.
Climate change - Global rise or fall in temperatures, whether natural in causation or caused by human activity.
Cluster - Group of companies and other organizations in an industry, designed to bring benefits through co-operation.
Coalition government - Government formed by an agreement between parties to work together, in the event of no single party commanding enough seats for form an overall majority in the elected chamber.
Co-determination - Principle by which employees are represented in governance structures along with shareholders.
Codified knowledge - Tangible elements of knowledge, such as products, designs and specifications.
Commercial services trade - Trade in services across national borders, including financial services, business services, transport and travel.
Common market - Group of countries which remove barriers to the free movement of labour and capital among members, addition to the removal of trade barriers and the operation of a common trade policy.
Comparative advantage - Enjoyed by a country where production of a product involves greater relative advantages in terms of inputs than would be possible anywhere else.
Confucianism - Ancient Chinese ethical and philosophical system based on the teachings of Confucius.
Consumer market - The aggregate of needs and desires of consumers within a country, taking into account their buying behaviour.
Continuous improvement - Process which strives constantly to find creative ways in which problems can be solved and processes improved, involving all workers in the organization.
Convertibility - The extent to which a government allows its currency to be bought and sold freely by both residents and foreigners.
COO - Chief operating officer
Co-operative - Voluntary organization in which all participate to achieve common goals in a community, usually regulated within a national framework.
Co-operative R&D agreement - Agreement between organizations to work on specific research projects, sharing knowledge and expertise.
Copyright - Property of the author in a literary, musical, dramatic or artistic work, including software.
Core competencies - An organization’s collective skill and learning in specialist areas.
Corporate citizenship - The concept that companies, like individuals, have the legal and moral duties attached to citizenship.
Corporate governance - A company’s decision-making structure and processes at the highest level, by which its directors are responsible to its owners and other stakeholders.
Corporate social responsibility (CSR) - The approach the business enterprise which takes in economic activities, legal obligations and social responsibilities.
Cost-plus pricing - Price based on costs plus a standard mark-up.
CPI - consumer price index
Creative destruction - Process whereby new ideas or ways of doing things lead to the death of older ideas through revolutionary transformation.
CSR - Corporate social responsibility: the approach the business enterprise which takes in economic activities, legal obligations and social responsibilities.
Cultural distance - In the business context, the degree to which a firm is unfamiliar with the culture of a foreign business location.
Cultural melting pot - Mixture of cultures to form a new and distinctive culture, often in a new setting, such as the ‘settler’ societies of the US and Australia.
Cultural pluralism - The recognition of separate cultures within a society.
Culture - Shared, learned values, norms of behaviour, means communication and other outward expressions which distinguish one group of people from another.
Currency board - Framework whereby a country guarantees conversion of its currency into another currency, supported by reserves of the backup currency.
Customs union - Group of countries which removes barriers to trade among member countries and agrees common trade policies towards non-member countries.
Debt/equity ratio - Expression of the balance between debt financing and equity financing for a particular company.
Democratic government - Political system which, at a minimum, is based on accountability of government to the voting public, through regular, free and fair elections.
Demographics - Characteristics of whole populations - such as age, income, mobility, ethnic groupings, employment and education - which are used by market researchers and government authorities.
Derivative - Financial instrument whose value is dependent on another asset class, such as stock.
Design right - Appearance of a product, including packaging and symbols, which can be registered with national authorities, prohibiting its use without the owner’s permission.
Developed country - Country whose economy has become industrialized and technologically advanced.
Developing country - Country in the process of industrialization and building technological capacity.
Diamond of competitive advantage - Configuration of four sets of attributes (factor conditions, demand conditions, supporting industries and inter-firm rivalry) which, in Porter’s theory, determine a nation’s competitive advantage.
Differentiated marketing - Adapting products and marketing mix for differing target markets.
Direct and indirect taxes - Direct taxes are paid by individuals and companies on their earned and unearned income. Indirect taxes are incurred for goods and services at the point of delivery.
Distribution channel - Interlinked stages and organizations involved in the process of bringing a product or service to the consumer or industrial user.
Dumping - The export of an inordinately large quantity of a specific class of goods in a foreign market at prices less than in their home market, which can result in ‘anti-dumping’ sanctions by the importing country.
ECJ - European Court of Justice
Eclectic paradigm - Dunning’s theory of FDI, based on ownership advantages, location advantages and internalization.
Ecology - The relationship between organisms and their environment, including the changes in their distribution and numbers.
Economic development - Process of change in economic activities and organizations of a country.
Economic growth - An economy’s increase in total income over time, usually shown as an annual percentage change.
Economic nationalism - The growth and expansion of state owned and state-controlled companies, aimed at promoting national economic power in global markets.
Entrepreneur - Individual who, having identified a new business opportunity, assembles the necessary resources and creates a new business.
Entrepreneurship - Attributes associated with business start-ups, including identifying opportunities, pursuing innovative ideas, and willingness to undertake manageable risks.
EPZ - Export processing zone: designated geographic area designed to attract export-oriented businesses through incentives such as exemption from tariffs and other trade rules which apply outside the zone.
Equities - Shares, also known as ‘stock’, in a registered company.
Equity - Total shares in the registered company.
Ethical marketing - Approach to marketing activities which prioritizes utmost fairness, safety, honesty and transparency in the interests of consumers, even in situations where the law is less stringent.
Ethnic grouping - People drawn together by sense of common identity, sense of belonging, and a shared history, including a belief in common descent (real or mythical).
Ethnocentrism - Perspective of individuals and organizations completely imbued with their own culture, to the exclusion of differing cultures.
EU - European Union: regional European economic union, comprising 27 member states.
Eurobond - Bond issued in countries outside that of the currency in which it is denominated.
European Monetary Union - The EU programme which operates a single monetary policy, overseen by the European Central Bank.
European Union (EU) - Regional European economic union, comprising 27 member states.
Eurozone - EU member states which are members of the European Monetary Union (EMU).
Executive directors - Officers employed by the company, who are in charge of day-to-day management.
Expatriate - National of a parent company’s home country, assigned to work in one of its foreign subsidiaries, usually as a secondment for a year or more.
Export processing zone (EPZ) - Designated geographic area designed to attract export-oriented businesses through incentives such as exemption from tariffs and other trade rules which apply outside the zone.
Export subsidy - Payments made by a government to producers of specific products in order to increase their production for export.
Factor endowments - The labour, land, capital and natural resources of a country.
Factor-price equalization - Theory which holds that, with trade, an abundant factor of production will rise in value and a scarce factor of production will fall.
Fair trade initiatives - Initiatives by companies, often under the Fairtrade trademark, which guarantee a reasonable return to producers and provide other benefits for producer communities.
FDI - Foreign direct investment: investment by an organization in a business in another country with a view to establishing production in the host country.
FDI inflows - Value of FDI which flows into a recipient country from all foreign investors.
FDI outflows - Value of all foreign direct investments made by a country’s firms over a period, usually a year.
FDI stock - Accumulated value of all foreign investments within a country.
First-mover advantages - Advantages enjoyed by the first entrant in an industry or market, which may yield increasing returns, making it harder for other entrants to follow and acting as a barrier to entry.
Five forces model - Theory devised by Porter for formulating strategy, based on analysis of competition in particular industries.
Flexible manufacturing - Manufacturing processes based on machines, tasks and coordination systems which are adapted to achieve both volume and variety.
Fordism - Assembly-line manufacturing on a large scale, whose processes were designed for producing large volumes of standardized products.
Foreign bond - Bond issued outside the country of the issuing organization, denominated in the currency of the issuing country.
Foreign direct investment (FDI) - Investment by an organization in a business in another country with a view to establishing production in the host country.
Foreign exchange option - Financial instrument which gives the firm the right, but not the obligation, to purchase currency at a particular exchange rate.
Forward or futures contract - Contract to carry out a particular transaction on a designated date in the future.
Franchise - A commercial agreement by which a business (the franchisee) is allowed to use the brand, products and business format of another business (the franchisor), in return for payment of agreed fees between the two parties.
Free trade - Situation in which markets are allowed to operate without any government intervention.
FSA - Financial Services Authority (UK)
FTSE - Financial Times Stock Exchange (index)
GATT - General Agreement on Tariff s and Trade: series of multilateral agreements aimed at reducing trade barriers internationally.
GDP - Gross domestic product: value of the total economic activity within an economy, including domestic and foreign producers.
General Agreement on Trade and Tariffs (GATT) - Series of multilateral agreements aimed at reducing trade barriers internationally.
Generic - In the pharmaceutical industry, a drug which is not subject to patent protection, usually due to the expiry of relevant patents.
Geocentrism - International approach involving collaboration between the centre and subsidiaries, and among subsidiaries.
Gini index - Measure of inequality of income and wealth distribution within a country.
Global citizenship - Extension of the notion of citizenship from the state to the entire world, involving global rights and responsibilities.
Global governance - Evolving transnational processes of regulation and standard-setting by governmental and non-governmental agents.
Global model - In Bartlett and Ghoshal’s typology, a model of the international company based on centralized control.
Global product category - Broad category of products which can be subdivided into products with distinctive features for differing markets.
Global sourcing - Processes of coordinating and integrating design and supply of goods between suppliers and purchasers in different locations worldwide.
Global warming - Global rise in temperatures, impacting on all forms of life and ecosystems.
Globalization - Increasing and deepening interactions between individuals and organizations across the globe.
Globalization of markets - The melding of national markets into a single global market; applies to standardized products, such as industrial goods and commodities, but for most consumer products, national markets remain distinct.
Globalization of production - Trend in manufacturing industries, in particular, of shifting operations to countries where conditions and environment are more advantageous for the firm than they are in its current location; usually involving cost reductions.
GM - Genetically modified
GNI - Gross national income: total income from all final products and services produced within a country; includes foreign income earned by the country’s residents.
Greenfield investment - FDI which involves the investor in setting up an operation from scratch in a new location.
Greenhouse gases - Atmospheric gases that absorb the heat of the sun, causing global warming.
GRI - Global Reporting Initiative
Gross domestic product (GDP) - Value of the total economic activity within an economy, including domestic and foreign producers.
Gross national income (GNI) - Total income from all final products and services produced within a country; includes foreign income earned by the country’s residents.
Group of 20 (G20) - Group dating from 1999, which co-operates on matters relating to the international financial system; it consists of the G8 plus 11 other key countries (Argentina, Australia, Brazil, China, India, Indonesia, South Korea, Mexico, Saudi Arabia, South Africa and Turkey).
Group of 7 (G7) - Group of 7 major industrial countries (Canada, France, Germany, Japan, Italy, UK and US), dating from 1975.
Group of 8 (G8) - Group of 7, plus Russia, dating from 1994.
Guanxi - Personal relations which establish trust and mutual obligations necessary for business in China.
Hedge - A financial tool or arrangement which insures a firm against adverse currency movements in its international financial activities.
Hedge fund - Investment fund managed by an individual or firm, which is active in all types of securities markets; noted for skills in achieving short-term gains for investors.
Hegemony - In international relations, the domination of a single country.
High elasticity of demand - Market condition in which a small rise in prices produces a significant drop in demand.
High elasticity of price - Market condition in which prices can be raised with minimum adverse effect on demand for a product.
High-context culture - Culture in which information is conveyed nonverbally, often relying on personal understandings of meanings.
Hinduism - Polytheistic religion whose followers are concentrated in India.
HIV/Aids - Human immunodeficiency virus/acquired immunodeficiency syndrome
HKSE - Hong Kong Stock Exchange
Host-country national (HCN) - National of the host country of a foreign investor, who is employed either by the parent company directly or by the partner organization in the host country.
HR - Human resource
HR planning - Process of devising systems for all aspects of HR, including selection, recruitment, compensation and appraisal of staff, within the strategic goals of the organization.
HRM - Human resource management: a range of management activities which aim to achieve organizational objectives through effective use of employees.
Human development index - Measure of development devised by the UN, which combines three criteria: economic performance, life expectancy and educational attainment for each member country.
Human resource management (HRM) - A range of management activities which aim to achieve organizational objectives through effective use of employees.
Human rights - Basic universal rights recognized in both ethics and international law.
IASB - International Accounting Standards Board
IEA - International Energy Agency
IFRS - International financial reporting standards: international accounting standards, designed to harmonize reporting standards in different countries, which are gradually supplanting national accounting standards.
IGO - Inter-governmental organization: grouping of representatives of sovereign states formed to foster international co-operation to tackle particular global issues.
IHRM - International human resource management: processes and activities of people management which involve more than one national context.
IJV - International joint venture: formal agreement between two or more organizations in different countries, to form a new organization, in which each normally has a share in the equity.
ILO - International Labour Organization
IMF - International Monetary Fund
Immigration - The movement of people into a country.
Import quota - Predetermined limit on the quantity of goods of a specific class that can be imported; the exporter must usually obtain a licence to export within the quota.
Income inequality - The extent to which the members of a population do not all enjoy equal shares in the country’s income.
Incremental innovation - Approach to innovation based on a series of small improvements in an existing product or service.
Incremental internationalization - Gradual approach to international expansion of the firm, which stresses the need for the organization to build up knowledge and experience of new markets.
Independent trade union - A self-governing organization of workers, independent of employer or other controls, which exists to gain better terms and conditions of employment for its members.
Indigenous peoples - Groups of people with distinctive cultures and historical links to particular territories, which pre-date the arrival of settlers or colonialists in their territories.
Industrial relations - Processes by which managers and worker organizations deal collectively with work-related issues such as terms and conditions of employment
Industrialization - Process of transition from a mainly agricultural economy to one based on machine production.
Inflation - The persistent rise in the general level of money prices.
Initial public offering (IPO) - Process by which a company becomes a public company, inviting prospective investors to subscribe for its shares for the first time.
Innovation - New or improved product or way of doing things, which aims to contribute to value creation for the organization.
Intellectual property rights (IPR) - Legal rights to the ownership and exclusive use of products of human creativity and endeavour, such as patents for inventions, copyright for literature and music, and trademarks for corporate symbols.
Inter-governmental organization (IGO) - Grouping of representatives of sovereign states formed to foster international co-operation to tackle particular global issues.
International business - Any business activity across national borders, including exporting and importing, manufacturing, service provision and retailing; also refers to the organization itself which engages in cross-border business.
International Financial Reporting Standards (IFRS) - International accounting standards, designed to harmonize reporting standards in different countries, which are gradually supplanting national accounting standards.
International Fisher effect (IFE) - Theory which holds that gains in nominal interest rates will be nullified by movements in exchange rates over the long term.
International HRM (IHRM) - Processes and activities of people management which involve more than one national context.
International joint venture (IJV) - Formal agreement between two or more organizations in different countries, to form a new organization, in which each normally has a share in the equity.
International labour standards - Rules agreed by the ILO on working conditions and the treatment of workers.
International marketing - Function by which an organization assesses and meets the needs of consumers outside its home market, for its products.
International model - In Bartlett and Ghoshal’s typology, a model of the international company based on decentralized subsidiaries.
International Monetary Fund (IMF) - Agency of the UN which overseas international monetary stability.
International operations - Process by which the firm makes and delivers its goods or services across national borders.
Inter-organizational network - Formal and informal links between separate firms which may take the form of contractual arrangements, but may also reinforce social relations between them, often based on personal ties.
Intra-industry trade - Trade in similar goods between countries of similar levels of economic development.
Invention - New product or process which represents a technological leap forward and is capable of industrial application.
IP - Intellectual property
IPCC - Intergovernmental Panel on Climate Change
IPO - Initial public offering: rrocess by which a company becomes a public company, inviting prospective investors to subscribe for its shares for the first time.
IPR - Intellectual property rights: legal rights to the ownership and exclusive use of products of human creativity and endeavour, such as patents for inventions, copyright for literature and music, and trademarks for corporate symbols.
Islam - Monotheistic religion based on the teachings of the prophet Muhammad, as revealed in the Koran; followers are referred to as Muslims.
ISO 9000 - Quality standards, for which companies can apply to be certified by bodies accredited by the International Organization for Standardization.
ISP - Internet service provider
IT - Information technology
Joint venture - A formal arrangement between two or more organizations, which may be based in different countries, which results in the formation of a new entity in which each invests.
Judaism - Ancient monotheistic religion, predominant in the modern state of Israel.
Just-in-time (JIT) manufacturing - System of production which relies on a continuous flow of materials.
Keiretsu - Loose groupings of Japanese companies, usually centred on a main bank, built on cross-shareholdings and personal relations.
Kyoto Protocol - Treaty agreed in Kyoto, Japan, which aimed to reduce global emissions of greenhouse gases; it was agreed in 1997 and became legally binding internationally in 2004.
Labour productivity - Calculation which divides output by the hours worked per person
Lean production - Systems and techniques of production enabling companies to reduce waste, leading to greater flexibility in production processes and products.
Lean supply chain - Integrated approach which emphasizes the elimination of waste at every stage in the supply chain.
Legal risk - Uncertainties surrounding legal liabilities, their implementation in differing legal systems, and the observance of fairness and impartiality in judicial proceedings.
Leveraged buyout (LBO) - Purchase of a controlling stake in a company, financed by borrowing.
Liberal market economy - Capitalist economic system, in which supply and demand, as well as prices, are determined by free markets for goods and services.
LNG - Liquefied natural gas
Localization - Strategy which focuses on distinctive characteristics of specific countries, in terms of production and markets.
Location advantages - Factor endowments of a particular country or area within a country, which offers specific benefits to the potential foreign investor.
Logistics - Management of processes for moving materials and products within a supply chain.
Low-context culture - Culture in which information is conveyed predominantly by explicit expression.
LSE - London Stock Exchange
M and A - Merger and acquisition
Macroeconomics - Study of whole economic systems, in particular, national economies.
Manufacturing cells - Arrangement of workers into teams, each of which has responsibility for manufacture and inspection of a specific product or component.
Marketing concept - An organizational focus on identifying the needs of consumers and satisfying those needs.
Marketing mix - Set of co-ordinated marketing tools focusing on the four Ps (product, promotion, price and place), designed to satisfy the needs of targeted consumers.
Mass customization - Production of a diversity of products utilizing mass-production techniques.
Matrix structure - Organizational structure involving two lines of authority, such as area and product divisions.
MDG - Millennium Development Goal: goals established by the UN in 2000, which set targets for the alleviation of poverty, hunger, disease, illiteracy and other development goals of the world’s poorest countries.
Merchandise trade - Trade in goods, including agricultural products; fuels and mining products; and manufactured goods.
Mercosur - Mercado Común del Sur (Southern Common Market): regional trade agreement among South American countries.
Merger - Agreement between two or more companies to form a new company, in which the constituent companies are subsumed.
MFN - Most favoured nation: principle under which a country allows imports from all countries on terms equivalent to the most preferential.
Microeconomics - Study of economic activity at the level of individuals and enterprises.
Millennium development goals (MDGs) - Goals established by the UN in 2000, which set targets for the alleviation of poverty, hunger, disease, illiteracy and other development goals of the world’s poorest countries.
MNE - Multinational enterprise: an organization or set of organizational relations co-ordinating business activities across national borders.
Moderate poverty - Defined by the World Bank as living on between $1 and $2 a day.
Modular manufacturing - Strategy of designing and using a component in a variety of end products.
Monopolistic competition - Situation in which there are many producers producing products in the same class, where competition is based on product differentiation within the class.
Monopoly - Domination by one firm of the market for particular goods or services, enabling the firm to determine price and supply.
Monotheistic religion - Religion based on belief in one god.
Most favoured nation (MFN) principle - Principle under which a country allows imports from all countries on terms equivalent to the most preferential.
Multidivisional structure - Organizational structure characterized by separate business units based on products or geographical areas, which are co-ordinated by the parent company’s head office.
Multilateralism - International trade and related agreements between more than 2 countries.
Multinational enterprise (MNE) - An organization or set of organizational relations co-ordinating business activities across national borders
Multinational model - In Bartlett and Ghoshal’s typology, a model of the international company based on autonomous national units.
Multiparty system - System in which many parties represent a wide spectrum of views, and where the government is likely to be a coalition of parties.
Nafta - North American Free Trade Agreement: regional free trade agreement of the US, Canada and Mexico.
National budget balance - The extent to which public spending exceeds receipts from taxes and other sources.
National culture - Culture, including a sense of identity and belonging, which distinguishes and unites people, linking them to a territorial homeland, usually a nation-state.
National government - Formal institutions by which sovereign lawmaking authority is exercised in a country.
National legal system - System of substantive law and court structure, which is administered and enforced by state authorities.
Nato - North Atlantic Treaty Organization
Network - Broad category of both intra-firm and inter-firm links. They may involve individuals, teams and whole organizations.
Network organization - Organization in which informal relational ties are nurtured, both internally and with other organizations and individuals with which it interacts.
New sovereigntist approach - Approach to international relations which emphasizes state sovereignty and views international law and multilateral agreements as threats to sovereignty.
NGO - Non-governmental organization: voluntary organization formed by private individuals for a particular shared purpose.
NHS - National Health Service (UK)
Niche market - Subgroup of consumers with specific specialized needs.
Non-executive directors - Officers who sit on the board as independent directors, not employed in management positions.
Non-governmental organization (NGO) - Voluntary organization formed by private individuals for a particular shared purpose.
Nonverbal communication - Gestures and facial expressions which convey meaning within a particular linguistic context.
North American Free Trade Agreement (Nafta) - Regional free trade agreement of the US, Canada and Mexico.
NYSE - New York Stock Exchange
ODA - Official development assistance: funds and other types of government aid provided to foreign countries, often as part of an aid package which also includes trade provisions.
OECD - Organisation for Economic Cooperation and Development: inter-governmental organization of the world’s rich developed countries.
Official development assistance (ODA) - Funds and other types of government aid provided to foreign countries, often as part of an aid package which also includes trade provisions.
Offshoring - Contracting out of a business process to another country, the main motivation usually being to benefit from its low-cost environment.
Oligopoly - An industry dominated by a few very large firms.
Opec - Organization of Petroleum Exporting Countries: organization of oil-producing countries which aims to coordinate policies and production targets among members.
Organic products - Products produced in ways which minimize the use of chemicals such as pesticides.
Organisation for Economic Co-operation and Development (OECD) - Inter-governmental organization of the world’s rich developed countries.
Organization of Petroleum Exporting Countries (Opec) - Organization of oil-producing countries which aims to coordinate policies and production targets among members.
Organizational or corporate culture - Values and practices of an organization in relations with its stakeholders.
Original equipment manufacturer (OEM) - A somewhat misleading term, which designates a focal manufacturer in a supply chain, who assembles final products destined for end consumer.
Outsourcing - Shifting of an operation or process by one organization to another, under a contractual agreement, usually designed to reduce costs for the organization shedding the activity.
Ownership advantages - Resources specific to the firm, such as technology, managing skills and marketing skills.
Parent-country national (PCN) - National of the home country of a parent company, who takes on a management role in foreign operations.
Patent - Intellectual property right for inventions, which is granted by patent authorities for a term of years, following rigorous examination; it gives the patent holder the right to exploit the product or process commercially, or license others to do so, on payment of royalties.
Pegged exchange rate - Linking the exchange rate of a currency to another currency, often with some degree of movement allowed.
Performance-related pay - Payments made to employees in addition to salary, which are for specific tasks performed or targets met.
Personnel management - Administrative systems and processes for managing workers, including job descriptions, employee selection, rewards, training and appraisal.
PEST analysis - Analysis of the political, economic, sociocultural and technological dimensions of a country, which is carried out by firms considering international expansion.
Philanthropy - Donation of resources to a recipient deemed to be good causes in the eyes of the donor, with no expected material return.
Planned economy - Economic system in which the supply and price of goods and services are controlled by central planning authorities of the state.
Political party - Organization of people with similar political perspectives, which aims to put forward candidates for office and influence government policies.
Political risk - Uncertainties associated with location and exercise of power within a country and from forces outside its borders.
Political system - Structures and processes by which a nation-state is governed.
Pollution - Release of harmful substances from a source through air, soil or water.
Polycentrism - Perspective of individuals and organizations which recognizes their own culture as one among many, and strives to understand differing cultures.
Polytheistic religion - Religion based on belief in numerous gods or other deities.
Portfolio investment - Financial investment in an overseas company without a view to obtaining control over management decision-making
PPP - Purchasing power parity
Private brand - Brands owned by supermarkets and other retailers, which are produced for sale in their outlets alone; also known as ‘private labels’ and ‘own brands’.
Private company - Registered company in which shares are not tradable and which is subject to lower levels of public disclosure of information than the public company.
Private equity fund - Investment fund managed on behalf of wealthy investors, usually structured as a partnership and lasting a fixed number of years.
Privatization - The process of converting a state-owned entity into a company in which private investors are invited to buy shares.
Product - Goods (tangible), services (intangible), or a combination of the two, which a firm offers to potential customers in exchange for payment, usually money.
Product differentiation - Differences in attributes between products in the same class.
Product life cycle - Theory based on the view that the most advantageous location for production of a product differs as the product evolves through stages of birth, growth and maturity in international markets.
Production under licence - Process whereby the production of goods subject to patent, brand or other intellectual property rights is contracted out to another firm under terms agreed with the owner of the rights.
Promotion - All types of marketing communication; one of the four Ps in the marketing mix.
Protectionism - Government approach to trade policy which seeks to shield domestic industries from competition from trade.
Public company - Registered company in which all or a portion of shares are tradable, usually on a stock exchange; subject to a high level of public disclosure of corporate information.
Push and pull factors - In respect of international expansion, conditions in the home market which encourage firms to internationalize (push factors) and conditions in overseas markets which attract foreign firms (pull factors).
Quality - Degree to which a product or service meets the needs and expectations of customers.
Quality circle - Small group of workers which meets regularly to identify problems and discuss solutions.
R&D - Research and development: science and technology directed towards new and improved products and processes.
Real interest rate - A country’s interest rate adjusted for inflation, by subtracting the inflation rate from the nominal interest rate (which is that actually offered by lenders).
Refugee - A person forced to leave his or her own country, for any of a number of reasons, including natural disaster and civil war.
Regional trade agreements - Multilateral agreements which provide for preferential trade terms between member countries.
Regional trade bloc - Group of countries within a region which aims to establish preferential arrangements for trade within the group; the bloc usually forms an organization or forum which meets regularly.
Registered company - Entity formed through registration with national authorities, which enjoys legal status separate from the owners and limited liability for the company’s obligations.
Remittances - Money sent back to home countries by migrant workers.
Reputational risk - For the MNE, the risk that negative perceptions of its activities and policies in any of its locations can damage the firm’s image globally.
Research and development (R&D) - Science and technology directed towards new and improved products and processes.
Reward system - Comprehensive system of monetary and non-monetary rewards provided for staff in return for the work they perform for the organization.
RTA - Regional trade agreement: multilateral agreements which provide for preferential trade terms between member countries.
Rule of law - Primacy of laws over the will of individuals, including both rulers and ruled.
SEC - Securities and Exchange Commission (US)
Securities - Financial instruments of ownership, debt obligation or future rights, which can be traded.
Segmentation - Division of a consumer market into groups of similar consumers who share some key characteristics, such as socioeconomic grouping, cultural identity or demographic similarity.
Separation of powers - Constitutional principle by which each branch of government – executive, legislative and judicial – has limited express authority.
Six sigma - A quality control system which focuses on improvements in measurable performance through cost reductions and elimination of defects.
SME - Small and medium-sized enterprise
Social cohesion - Shared sense of belonging to a society despite cultural differences.
Social enterprise - A business formed for social objectives, in which revenues from trading in goods or services are largely reinvested for its social purposes.
Social entrepreneur - Person who whose creative talent and business flair are directed towards an enterprise focused on achieving specific social goals.
Social market economy - Capitalist economic system which seeks to combine a market approach with social justice priorities.
Socialization - Processes, both formal and informal, by which employees become imbued with a company’s culture and norms of behaviour.
Societas europaea (SE) - Company registered in the EU as a whole, rather than registration in a member state.
South African Development Community (SADC) - Intergovernmental organization which addresses development and other issues of member countries.
Sovereign wealth fund - Fund held by a sovereign state, often from accumulated reserves, which may be invested in global markets, often through a state-owned investment company.
Spillover effects - Opportunities for local firms to benefit from FDI, gaining technological competence which generates new local businesses and technological capacities
Spot contract - Transaction in which the terms, including the exchange rate, are agreed and performed almost immediately.
Staffing - Processes for selecting and allocating staff to particular posts within the organization, in keeping with corporate goals.
Stakeholder - Individual, organization or interest which affects the company or is affected by the company.
Stock exchange - Organization, usually established in a national context, which facilitates the trading of securities by individuals and organizations.
Stock option - Right to buy shares at a set price and within a specific time period.
Structural unemployment - Loss in jobs due to changes in technology or shifting of operations to another location.
Sub-brand - Brand created to serve a distinctive product or market segment under the umbrella of the firm’s corporate brand.
Subculture - Culture which distinguishes a minority grouping in a state where a different national culture is dominant.
Subsidiary - Company which is owned by another company (the parent company), either wholly or by holding a majority of the shares.
Supply chain management (SCM) - The integration of business processes which encompass all stages of the production process for goods or services, from the supply of raw materials to the delivery of the product to the end consumer.
Sustainable development - Development that meets the needs of the present without compromising the ability of future generations meet their own needs.
Swap - Financial instrument which allows a firm to customize terms to its advantage by swapping them with another party.
SWOT analysis - Analytical tool used by strategists, which assesses strengths, weaknesses, opportunities and threats.
Tacit knowledge - Intangible elements, such as skills and know-how, which help in the understanding and application of the tangible elements.
Target marketing - Marketing aimed at satisfying the needs of a particular group of consumers.
Tariff - A charge on imports or exports, but most often, an import duty.
Teamworking - Cooperation by a group of people towards a common purpose.
Technology - Systematic application of scientific knowledge to practical purposes.
Third-country national (TCN) - Person employed by a parent company to work in its foreign operations, who is neither a national of the parent’s home country nor the host country.
Third-party verification - The use of independent specialist bodies for the measurement of a firm’s environmental performance.
Tier-one supplier - In supply chain management, a lead supplier, which itself sources from a range of other suppliers.
Total quality management (TQM) - Approach to quality which commits the entire organization to continuous improvement principles and extends to supply chain partners.
TQM - Total quality management: approach to quality which commits the entire organization to continuous improvement principles and extends to supply chain partners.
Trademark - Distinctive logo or brand applied to a product, which can be registered with national authorities, legally prohibiting its use without permission of the owner.
Training and development - The building of competencies and skills of individual employees, to enable them to improve work performance and achieve organizational goals.
Transboundary pollution - Pollution which extends across national boundaries, sometimes great distances from the source.
Transfer pricing - Pricing of products traded internally within the MNE, such as between subsidiaries, often with the aim of maximizing financial benefits to the parent company.
Transition economy - A country which is changing its economy from a state-planned system to a market-based one.
Translation risk - Risk associated with the translation of accounts prepared in a local currency into the currency of the home country of an MNE.
Transnational manager - Manager able to understand and adapt to a range of cultural environments.
Triad - The three traditional trading centres, comprising the US, Japan and Europe.
Triple bottom line reporting - Corporate reporting focusing on social and environmental aspects of the company, in addition to traditional financial information.
Turnaround - Radical change in a poorly performing organization, involving rationalization and cost reductions.
Two-party system - System in which two broadly based parties dominate, alternating between government and opposition, reflecting electoral fortunes.
UN - United Nations
UNDP - United Nations Development Programme
UNEP - United Nations Environment Programme
Urbanization - The process of large-scale shift from a rural to urban environment.
US - United States of America
USDA - United States Department of Agriculture
Value chain - Concept which identifies the value created at each stage in a production process.
Value-based pricing - Price based on buyers’ perceptions of value.
VER - Voluntary export restraint: self-imposed limitation which an exporter sets on goods it exports in a particular class, usually at the behest of the importing country.
Vertical integration - Firm strategy of acquiring ownership and control over differing stages in the production process, including sourcing of inputs, production and delivery of final products.
Voluntary export restraint - Self-imposed limitation which an exporter sets on goods it exports in a particular class, usually at the behest of the importing country.
WHO - World Health Organisation
Work–life balance - Allocation of time and commitment between work and personal life, which reflects the personal needs of the employee.
Works council - Representative bodies organized at workplace level, which give employees rights to information and consultation in personnel and other business-related issues within the firm.
World Bank - International organization set up to fund economic development in individual countries and promote development goals.
World Trade Organization (WTO) - International organization established to foster liberalization of trade through multilateral agreements and to resolve trade disputes between member states.
WTO - World Trade Organization: international organization established to foster liberalization of trade through multilateral agreements and to resolve trade disputes between member states.
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