ADRIENNE KŐHALMI GAZDASÁGI ANGOL International Business Expressions 1
Chapter 1: Introduction CAGE framework The analytical framework used to understand country and regional differences along the distance dimensions of culture, administration, geography, and economics. SWOT (strengths, weaknesses, opportunities, threats) A strategic management tool that helps an organization take stock of its internal characteristics (strengths and weaknesses) to formulate an action plan that builds on what it does well while overcoming or working around weaknesses and also assess external environmental conditions (opportunities and threats) that favor or threaten the organization s strategy. business A person or organization engaged in commerce with the aim of achieving a profit. business ethics The branch of ethics that examines various kinds of business activities and asks, Is this business conduct ethically right or wrong? entrepreneur A person who engages in entrepreneurship. entrepreneurship The recognition of opportunities (needs, wants, problems, and challenges) and the use or creation of resources to implement innovative ideas for new, thoughtfully planned ventures. ethics A branch of philosophy that seeks virtue and morality, addressing questions about right and wrong behavior for people in a variety of settings; the standards of behavior that tell how human beings ought to act. exporter A person or organization that sells products and services in foreign countries that are sourced from the home country. flat-world view A metaphor for viewing the world as a level playing field in terms of commerce, where all competitors have an equal opportunity. foreign direct investment The investment of foreign assets into domestic structures, equipment, and organizations. globalization The shift toward a more interdependent and integrated global economy. government The body of people that sets and administers public policy and exercises executive, political, and sovereign power through customs, institutions, and laws within a state, country, or other political unit. importer A person or organization that sells products and services that are sourced from other countries. international business All cross-border exchanges of goods, services, or resources between two or more nations. These exchanges can go beyond the exchange of money for physical goods to include international transfers of other resources, such as people, intellectual property, and contractual assets or liabilities. 2
intrapreneur A person within an established business who takes direct responsibility for turning an idea into a profitable finished product through assertive risk taking and innovation. intrapreneurship A form of entrepreneurship that takes place in a business that is already in existence. location advantages Advantages due to choice of foreign markets and can include better access to raw materials, less costly labor, key suppliers, key customers, energy, and natural resources. multidomestic view A metaphor for viewing the world s markets as being more different than similar, such that the playing field differs in respective markets. nongovernmental organization (NGO) Any nonprofit, voluntary citizens group that is organized on a local, national, or international level. stakeholder An individual or organization whose interests may be affected as the result of what another individual or organization does. stakeholder analysis A technique used to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of an activity, project, or business. strategic management The body of knowledge that answers questions about the development and implementation of good strategies; mainly concerned with the determinants of firm performance. strategy The central, integrated, and externally oriented concept of how an organization will achieve its performance objectives. Chapter 2: International Trade and Foreign Direct Investment Leontief Paradox A paradox identified by Russian economist Wassily W. Leontief that states, in the real world, the reverse of the factor proportions theory exists in some countries. For example, even though a country may be abundant in capital, it may still import more capital-intensive goods. Porter s theory A modern, firm-based international trade theory that states that a nation s or firm s competitiveness in an industry depends on the capacity of the industry and firm to innovate and upgrade. In addition to the roles of government and chance, this theory identifies four key determinants of national competitiveneness: (1) local market resources and capabilities, (2) local market demand conditions, (3) local suppliers and complementary industries, and (4) local firm characteristics. absolute advantage The ability of a country to produce a good more efficiently than another nation. 3
barriers to entry The obstacles a new firm may face when trying to enter into an industry or new market. brownfield FDI An FDI strategy in which a company or government entity purchases or leases existing production facilities to launch a new production activity. comparative advantage The situation in which a country cannot produce a product more efficiently than another country; however, it does produce that product better and more efficiently than it does another good. country similarity theory A modern, firm-based international trade theory that explains intraindustry trade by stating that countries with the most similarities in factors such as incomes, consumer habits, market preferences, stage of technology, communications, degree of industrialization, and others will be more likely to engage in trade between countries and intraindustry trade will be common. factor proportions theory Also called the Heckscher-Ohlin theory; the classical, country-based international theory states that countries would gain comparative advantage if they produced and exported goods that required resources or factors that they had in great supply and therefore were cheaper production factors. In contrast, countries would import goods that required resources that were in short supply in their country but were in higher demand. foreign direct investment (FDI) The acquisition of foreign assets with the intent to control and manage them. greenfield FDI An FDI strategy in which a company builds new facilities from scratch. horizontal FDI When a company is trying to open up a new market that is similar to its domestic markets. intraindustry trade Trade between two countries of goods produced in the same industry. inward FDI An investment into a country by a company from another country. mercantilism A classical, country-based international trade theory that states that a country s wealth is determined by its holdings of gold and silver. outward FDI An investment made by a domestic company into companies in other countries. portfolio investment The investment in a company s stocks, bonds, or assets, but not for the purpose of controlling or directing the firm s operations or management. product life cycle theory A modern, firm-based international trade theory that states that a product life cycle has three distinct stages: (1) new product, (2) maturing product, and (3) standardized product. protectionism The practice of imposing restrictions on imports and protecting domestic industry. 4
trade deficit When the value of imports is greater than the value of exports. trade surplus When the value of exports is greater than the value of imports. vertical FDI When a company invests internationally to provide input into its core operations usually in its home country. A firm may invest in production facilities in another country. If the firm brings the goods or components back to its home country (acting as a supplier), then it is called backward vertical FDI. If the firm sells the goods into the local or regional market (acting more as a distributor), then it is referred to as forward vertical FDI. Chapter 3: International Monetary System Group of Five (G5) The original five largest industrial powers Britain, France, Germany, Japan, and the United States who met to reduce and stabilize the value of the dollar. Special Drawing Right (SDR) An international monetary reserve asset of the IMF. Triffin Paradox Named after the economist Robert Triffin, who stated that the more dollars foreign countries held, the less faith they had in the ability of the US government to convert those dollars. bullion Purest form of the precious metal and usually in a bar or coin format. Often refers to gold or silver bars or coins; typically used for monetary or economic purposes. exchange rate The price of one currency in terms of a second currency. fixed exchange rate system A system in which the price of one currency vis-à-vis another is fixed and does not change. float When a currency s value increases or decreases based on demand and supply. free floating exchange rate system A system in which currencies freely float against each other and there is no government intervention. gold standard The pre World War I global monetary system that used gold as the basis of international economic exchange. international monetary system The system and rules that govern the use of money around the world and between countries. managed float system of exchange rates A system in which currencies float against one another with governments intervening only to stabilize their currencies at set target exchange rates. reserve currency A main currency that many countries and institutions hold as part of their foreign exchange reserves. Reserve currencies are often international pricing currencies for 5
world products and services. Current reserve currencies are the US dollar, the euro, the British pound, the Swiss franc, and the Japanese yen. soft loans Loans made by an international organization. In this chapter, the IDA is a long-term option for countries. These loans have no interest and have a grace period of several decades for repayment. There s also a possibility that the country may not repay the loan. trade deficit When the value of imports is greater than the value of exports. Chapter 4: Foreign Exchange and the Global Capital Markets American terms Also known as US terms, American terms are from the point of view of someone in the United States. In this approach, foreign exchange rates are expressed in terms of how many US dollars can be exchanged for one unit of another currency (the non-us currency is the base currency). European terms Foreign exchange rates are expressed in terms of how many currency units can be exchanged for one US dollar (the US dollar is the base currency). For example, the pound-dollar quote in European terms is 0.64/US$1 ( /US$1). Glass-Steagall Act Enacted in 1932 during the Great Depression, the Glass-Steagall Act, officially called the Banking Reform Act of 1933, created the Federal Deposit Insurance Corporations (FDIC) and implemented bank reforms, beginning in 1932 and continuing through 1933. These reforms are credited with providing stability and reduced risk in the banking industry. ask (or offer or sell) Quote that refers to the price at which a bank or financial services firm is willing to sell that currency. base currency The currency that is to be purchased with another currency and is noted in the denominator. bid (or buy) The price at which a bank or financial service firm is willing to buy a specific currency. bond A debt instrument. When investors buy bonds, they are lending the issuers of the bonds their money. In return, they typically receive interest at a fixed rate for a specified period of time. capital markets Markets in which people, companies, and governments with more funds than they need transfer those funds to people, companies, or governments that have a shortage of funds. Capital markets promote economic efficiency by transferring money from those who do not have an immediate productive use for it to those who do. Capital markets provide forums and mechanisms for governments, companies, and people to borrow or invest (or both) across national boundaries. 6
cross rate The exchange rate between two currencies, neither of which is the official currency in the country in which the quote is provided currency Any form of money in general circulation in a country. currency futures contracts Contracts that require the exchange of a specific amount of currency at a specific future date and at a specific exchange rate. currency hedging Refers to the technique of protecting against the potential losses that result from adverse changes in exchange rates. currency options The option or the right, but not the obligation, to exchange a specific amount of currency on a specific future date and at a specific agreed-on rate. Because a currency option is a right but not a requirement, the parties in an option do not have to actually exchange the currencies if they choose not to. currency swap A simultaneous buy and sell of a currency for two different dates. debt Money that s borrowed and must be repaid. The bond is the most common example of a debt instrument. derivatives Financial instruments whose underlying value comes from (derives from) other financial instruments or commodities. direct quote States the domestic currency price of one unit of foreign currency. For example, 0.78/US$1. We read this as it takes 0.78 of a euro to buy 1 US dollar. In a direct quote, the domestic currency is a variable amount and the foreign currency is fixed at one unit. equity Money that is invested in return for a percentage of ownership but is not guaranteed in terms of repayment. exchange rate The rate at which the market converts one currency into another. foreign exchange Money denominated in the currency of another country. Money can also be denominated in the currency of a group of countries, such as the euro. forward contract A contract that requires the exchange of an agreed-on amount of a currency on an agreed-on date and a specific exchange rate. forward exchange rate The rate at which two parties agree to exchange currency and execute a deal at some specific point in the future, usually 30 days, 60 days, 90 days, or 180 days in the future. forward market The currency market for transactions at forward rates. 7
indirect quote States the price of the domestic currency in foreign currency terms. For example, US$1.28/ 1. We read this as it takes 1.28 US dollars to buy 1 euro. In an indirect quote, the foreign currency is a variable amount and the domestic currency is fixed at one unit. international capital markets Global markets where people, companies, and governments with more funds than they need transfer those funds to people, companies, or governments that have a shortage of funds. International capital markets provide forums and mechanisms for governments, companies, and people to borrow or invest (or both) across national boundaries. liquidity In capital markets, this refers to the ease by which shareholders and bondholders can buy and sell their securities or convert their investments into cash. primary market Where new securities (stocks and bonds are the most common) are issued. The company receives the funds from this issuance or sale. quoted currency The currency with which another currency is to be purchased. secondary market The secondary market includes stock exchanges (the New York Stock Exchange, the London Stock Exchange, and the Tokyo Nikkei), bond markets, and futures and options markets, among others. Secondary markets provide a mechanism for the risk of a security to be spread to more participants by enabling participants to buy and sell a security (debt or equity). Unlike the primary market, the company issuing the security does not receive any direct funds from the secondary market. securities Includes a wide range of debt- and equity-based financial instruments. spot exchange rate The exchange rate transacted at a particular moment by a buyer and seller of a currency. When we buy and sell our foreign currency at a bank or at American Express, it s quoted as the rate for the day. For currency traders, the spot can change throughout the trading day, even by tiny fractions. spread The difference between the bid and the ask. This is the profit made for each unit of currency bought and sold. stocks A type of equity security that gives the holder an ownership (or a share) of a company s assets and earnings. Chapter 5: Exporting, Importing, and Global Sourcing Silk Road The land and water trade routes that covered more than four thousand miles and connected the Mediterranean with Asia. carbon footprint A measure of the impact that activities like transportation and manufacturing have on the environment, especially on climate change. Includes daily activities, such as using electricity or driving, because of the greenhouse gases produced through burning fossil 8
fuels for electricity, heating, transportation, and so on. The higher the carbon footprint, the worse the impact on the environment. contract manufacturing The outsourcing of manufacturing. distributors Export intermediaries who represent the company in the foreign market. equity joint venture A contractual strategic partnership between two or more separate business entities to pursue a business opportunity together; each partner contributes capital and resources in exchange for an equity stake and share in any resulting profits. export management company (EMC) An independent company that performs for a fee or commission the duties a firm s own export department would execute such as handling the necessary documentation, finding buyers for the export, and taking title of the goods for direct export. exporting The sale of products and services in foreign countries that are sourced or made in the home country. franchising Granting rights on an intangible property, like technology or a brand name, to a foreign company for a specified period of time and receiving a royalty in return. global sourcing Buying raw materials, components, or services from companies outside the home country. importing Buying goods and services from foreign sources and bringing them back into the home country. Importing is also known as global sourcing. licensing The granting of permission by the licenser to the licensee to use intellectual property rights, such as trademarks, patents, brand names, or technology, under defined conditions. outsourcing The company delegates an entire process (e.g., accounts payable) to the outsource vendor. The vendor takes control of the operations and runs the operations as they see fit. The company pays the outsource vendor for the end result; how the vendor achieves the end result is up to the vendor. service-level agreement (SLA) A contract that specifies the service levels that an outsourcer must meet when performing the service to ensure quality and performance when outsourcing services. tax haven A country that has very advantageous (low) corporate income taxes. Chapter 6: Winning through Effective, Global Talent Management Balanced Scorecard A performance-management tool that helps managers define the performance categories that relate to the company s strategy. 9
Workforce Scorecard An application of the Balanced Scorecard concept to an organization s human capital to identify and measure the behaviors, skills, mind-sets, and results required for the workforce to contribute to the company s success. at-will employment doctrine A doctrine that stipulates that a contract of employment can be terminated by either the employer or the employee at any time for any legal reason. (In the United States, for example, it is illegal to fire an employee on the basis of gender or ethnicity.) bonus A form of variable pay where the employee earns additional compensation on the basis of achieved objectives. expatriate A person who is living in a country other than his or her home (native) country. free rider Individuals or firms that benefit from a shared resource or the actions of others without paying or contributing their fair share of the costs. gainsharing A form of pay for performance in which an organization shares the financial gains with employees, such that employees receive a portion of the profit achieved from their efforts (sometimes called profit sharing). high-performance work system (HPWS) A set of management practices that attempts to create an environment within an organization in which the employee has greater involvement and responsibility. human capital The collective sum of the attributes, life experiences, knowledge, inventiveness, energy, and enthusiasm that a company s employees choose to invest in their work. job design The process of combining tasks to form a whole job while taking into account issues of the health and safety of the worker. job evaluation An analysis of the internal value of a job that is intended to identify how critical a given job is to the success of the organization. pay for performance Ties pay directly to an individual s performance in meeting specific business goals or objectives. situational interview A job interview where the candidate is asked to describe in specific and behavioral detail how he would respond to a hypothetical situation. strategic human resources management (SHRM) An organizational approach to human resources management (HRM) with a concern for the effects of HRM practices on firm performance. succession planning A process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. talent management Anticipating the need for human capital and setting a plan to meet it. 10
third-country national (TCN) An individual who is a citizen of neither the US nor the host country and who is hired by the US government or a government-sanctioned contractor to perform work in the host country. war for talent The competition between organizations to attract and retain the most able employees. Chapter 7: Competing Effectively through Global Marketing, Distribution, and Supply- Chain Management Total Quality Management (TQM) A set of management practices initially introduced by W. Edwards Deming. The focus of TQM is increasing quality and reducing errors in production or service delivery. TQM consists of systematic processes, planning, measurement, continuous improvement, and customer satisfaction. centralized-marketing organizational structure The home-country headquarters retains decision-making power for marketing in all countries. channel of distribution The series of firms or individuals who facilitate the movement of the product from the producer to the final consumer. counterfeit markets Commerce areas where vendors purposely deceive buyers by altering products and then selling them as branded products at a bargain cost. country-of-origin effect A situation in which consumers use the country where a product was made as a barometer for evaluating the product s quality. Their perceptions of the country influence whether they perceive the product favorably or unfavorably and thus whether they ll purchase the product. decentralized-marketing organizational structure Local regional headquarters have the power to make marketing decisions affecting their region. direct channel The shortest channel of distribution, consisting of just the producer and the end consumer. The consumer buys the product directly from the producer. four Ps The four key elements of marketing product, price, promotion, and place. global brand The brand name of a product that has worldwide recognition. Some of the most recognized brands in the world include Coca-Cola, IBM, GE, and McDonald s. gray markets Commerce areas where, because of price differences across countries, consumers are able to cross international borders to legally purchase products at lower prices than in their home country. indirect channel Contains one or more intermediaries between the consumer and the producer. These intermediaries can include distributors, wholesalers, agents, brokers, retailers, international freight forwarders, and trading companies. 11
market segmentation The process of dividing a larger market into smaller markets that share a common characteristic, such as age, gender, income level, or lifestyle. marketing mix A combination of the four Ps (product, price, promotion, and place) that can be customized for different countries. offshoring Setting up operations in a low-cost country for the purpose of hiring local workers at lower labor rates. Offshoring differs from outsourcing in that the firm retains control of the operations and directly hires the employees. outsourcing The company delegates an entire process (e.g., accounts payable) to the outsource vendor. The vendor takes control of the operations and runs the operations as they see fit. The company pays the outsource vendor for the end result; how the vendor achieves the end result is up to the vendor. place The location at which the company offers its products for sale. price The amount of money that the consumer pays for the product. product Any physical good or intangible service that is offered for sale. product adaptation The company strategy of modifying an existing product in a way that makes it better fit local needs. product invention Creating an entirely new product for a given local market. In this strategy, companies go back to the drawing board and rethink how best to design a product for a specific country or region. promotion All the activities that inform and encourage consumers to buy a given product, including advertising (whether print, radio, television, online, billboard, poster, or mobile), coupons, rebates, and personal sales. reverse innovation Designing a product for a developing country and bringing that innovation back to the home country. safety stock Inventory the company holds to help ensure that it won t run out of products if there is a delay or crisis in a distant manufacturing region. stock-out Means that there is no more stock of the company s product. The product is unavailable to customers who want to buy it. straight product extension Taking the company s current products and selling them in other countries without making changes to the product. supply-chain management The planning and management of all activities involved in sourcing and procurement, conversion, and logistics. It includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and 12
customers, and integrates supply-and-demand management within and across companies. Chapter 8: Understanding the Roles of Finance and Accounting in Global Competitive Advantage Sharia Islamic law; in terms of finance, prohibits charging interest on money and other common business activities, including short selling. accounting standards A system of rules and principles that prescribe the format and content of financial statements. capital budgeting The process of financing long-term outlays such as are used for plant expansion or research and development. During the capital-budgeting process, firms examine the initial investment that will be required, the cost of capital, and the amount of cash flow or other gains which the project will provide. centralized depository A central location where the cash balances of a parent and its subsidiaries are pooled. centralized financial organization structure All finance decisions are performed at headquarters, which sets guidelines for subsidiaries to follow, pools funds, leverages the benefits of scale for investment and borrowing, and hires knowledgeable staff to make the most effective, firm-wide decisions. cost of capital The rate of return that a company could earn if it chose a different investment of equivalent risk. debt financing Raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-on interest at a specific date in the future. decentralized financial organization structure Subsidiaries or regions make financing or investment decisions for their region, taking advantage of local knowledge and moving quickly to respond to opportunities or uncertainties. equity financing Raising capital by selling shares of stock. financial structure The ways in which a multinational firm s assets are financed, including short-term borrowing as well as long-term debt and equity. generally accepted accounting principles (GAAP) Standards that are developed by the US Financial Accounting Standards Board (FASB) for reporting company financial results and that all US companies or companies operating in the US must follow. global equity market All the stock exchanges worldwide where firms can buy and sell stock for financing an investment. 13
indirect taxes Taxes that are shifted to another person or entity, like the value-added tax (VAT) and goods-and services tax (GST), which are levied on the seller but are passed on and paid by buyers. international financial reporting standards (IFRS) Standards that are developed by the International Accounting Standards Board (IASB) for reporting company financial results and that are followed by over one hundred nations throughout the world. stock market The organized trading of securities through exchanges. trade credit Lets the customer (in this case, the subsidiary buying the goods or services) defer payment on the good or services for a specified period of time, typically thirty or ninety days. transfer price The price that one subsidiary (or subunit of the company) charges another subsidiary (or subunit) for a product or service supplied to that subsidiary. transnational financing Seeking capital from a foreign sources. transnational investment Investing capital in foreign markets. 14
GAZDASÁGI ANGOL International Business Expressions ADRIENNE KŐHALMI Skype: adriennkohalmi Mail: adrienn.kohalmi@gmail.com 15