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IBT Chapters 8-1 2 Terms ONLY

Accountancy (Xavier University-Ateneo de Cagayan)

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CHAPTER 8 ENTRY STRATEGIES IN GLOBAL
BUSINESS
 Risk Profile- the potential financial loss that
entrepreneurs are willing to take in a
business.
 Export-Import Business- a relatively low-
risk business operation that involves
penetrating foreign markets (by exporting)or
importing merchandise (of all kinds) at
competitive prices for domestic
consumption.
 Licensing- the practices in w/c a company
or individual provides the foreign partner w/
the technology (patented technology,
copyright, process, trademark, etc.) to
manufacture and sell products or services in
a target country for an annual license fee.
 Franchising- the practice in w/c the parent
firm is obligated to provide specialized
equipment and/or service (e.g., product
specification and adaptation, pricing,
promotion, and distribution strategies) and
CHAPTER 9 CONTROL OF GLOBAL BUSINESS
sometimes to fund some startup costs, to
franchisees in return for an annual fee.
 Strategic Alliances- an agreement
between two or more films that do not
involve the creation of a separate entity w/
joint ownership and in w/c the firms stand to
gain revenues and maximize profits through
cooperation for a given period of time.
 International Joint Venture- a business
that is jointly owned and operated by two or
more firms (usually one from the host
country and the other from another country)
that pool their resources (labor, capital,
technology, and management) to penetrate
host country markets, generate and split
profits, and share commercial risk.
 Acquisition- purchase of established firms
abroad w/ the goal of using the existing
production, marketing and distribution
networks and of having instant access to
foreign markets that fit the purchasing firm’s
global strategy.
 Subsidiaries- new facilities built and
operated overseas that require large
investment of capital because these new
establishments are tailored to the exact
needs of the home country firm.
 Multinational Enterprises (MNEs)- firms
that are headquartered in one country, but
own and control manufacturing, services,
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R&D 9research and development) facilities,
or other business entities on foreign soil.
 Maximize Shareholder Wealth- to
maximize the net present value of future
cash flows of foreign investment adjusted
for exchange rate movements or to
maximize profits so that shareholders could
receive larger dividends and see their share
prices rise over time.
 Product Life Cycle Theory- explains what
happens to a product’s revenue and profits
at the different stages—introduction, growth,
maturity, and decline—before the product is
discontinued.
 Governance- describes how countries
exercise authority and how efficiently they
deliver basin infrastructure services like
water, sanitation, roads, electricity, security,
and the like for public as well as private
firms.
 Mission Statement- a written statement of
why a company exists and what it plans to
accomplish.
 Shareholder Model of Strategy
Formulation- strategy formulation model
that operates from the basic premise that
the key strategic purpose of a business is to
maximize financial returns for its
owners/shareholders.
 Stakeholder Model of Strategy
Formulation- strategy formulation model
that believes that businesses exist to benefit
not just their shareholders, but also various
groups, such as employees and customers,
that have a meaningful stake in their
operation.
 Operational Plans- very short-term, less
than one year, plans formulated for
implementing strategic goals.
 Tactical Plans- one-to-three-year plans
formulated for implementing strategic goals.
 Prospectors- organizations whose basic
strategic implementation involves extending
their success through global expansion and
finding new market opportunities.
 Defenders- organizations that implement a
basic market strategy of concentrating on
existing operations and generally defending
their home turf.
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 Reactors- organizations whose strategic  Division- a business subunit that consists

implementation involves responding to of a collection of functions or departments
strategic actions initiated by competitors. that share responsibility for producing a
 Analyzers- organizations that take a middle particular product or service.
group between being prospectors and  Functional Structure- an org. structure that
defenders. groups people together because they hold
 Tacit Knowledge- knowledge that is similar positions in a company, perform
informal in nature and difficult to similar tasks, or use the same kinds of
communicate. skills.
 Explicit Knowledge- knowledge that is  Divisional Structure- an org. structure in
codifiable and easy to communicate or write w/c functions are grouped together to serve
down. the needs of products, markets or
 Absorptive Capacity- the ability of geographical regions.
organizations to recognize, assimilate, and  Product Structure- a special case of the
apply new knowledge. divisional structure where products are
 Bureaucratic Controls- systems of rules grouped into separate divisions according to
and regulations promulgated within a global their similarities or differences.
business.  Market Structure- a special case of the
 Interpersonal Controls- involves divisional structure where products are
executives engaging in personal contact grouped into separate divisions according to
with subordinates as a way of managing an the needs of different customers.
organization.  Geographical Region Structure- a special
 Output Controls and Measurement- case of the divisional structure where
involves establishing specific goals on given products are grouped into separate
metrics and then measuring to what extent divisions according to the needs of the
these goals are being achieved at certain different geographical regions the company
time intervals. serves.
 Organizational Culture- the personality of  Hybrid Structure- a combination of
a given organization, its shared norms and different organizational structures.
values.  Matrix Structure- an org. structure in w/c
 Organizational Change- involves people are grouped simultaneously by
implementation of a different business function and by division.
cultural path for an organization.

CHAPTER 11 GLOBAL HUMAN RESOURCE

CHAPTER 10 THE ORGANIZATION OF GLOBAL MANAGEMENT
BUSINESS
 Outsourcing- involves a company
 Stateless Corporations- a new phase in subcontracting a certain production function
the evolution of the multinational to a third party.
corporation, where work is sourced  Offshoring- involves transferrin an
wherever it is most efficient and the organizational function to another country
corporation transcends nationality whether outsources or not.
altogether.  Parent Country Nationals- employees
 Organization- a tool that people use to from the home country sent to work for their
coordinate their actions to obtain something company overseas.
they seek or value.  Host Country Nationals- workers already
 Organizational Structure- the formal living in the foreign or host country where
system of task and authority relationships the parent company is opening operation.
that control how people coordinate their  Third Country Nationals- employees not
actions and use resources to achieve from parent or host country being employed
organizational goals. in a given host/foreign country, (e.g.
construction workers from France working in

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Great Britain for a company headquartered
in the US.
 Expatriates- employees working
countries other than their native country.
 Expatriate Failure- cases where an
expatriate does not complete his/her full
expatriate assignment.
 Repatriation- process that takes place
when the expatriate employee returns
home.
 Training- involves providing employees with
skills specific to the job they are going to be
doing.
 Development- involves preparing
employees for new future assignments or
higher-level positions.
 Performance Appraisal- assessing
employee performance.
 Balance Sheet Approach- keeping an
employee on the home country’s salary
structure and then providing additional
allowances.
 Labor Union- a formal org. representing a
group(s) of employees.
 Collective bargaining Agreements- a
contract comprehensively setting forth
employee terms and conditions of
employment at a given workplace or group
of workplaces.
 Multi-employer Bargaining- negotiations
in w/c a number of employers jointly bargain
with a given labor union.
 Co-determination- employee
representation on corporate boards of
directors.
CHAPTER 12 GLOBAL MARKETING
 Market Potential- the total number of units
of a product that could possibly be sold by
all companies doing business in a specific
international market.
 Sales Potential- the percentage of a
market potential that a specific company
expects to sell in a specific international
market.
 Marketing Research- information collected
at one particular time.
 Marketing Intelligence System (MIS)-
information collected regularly over time.
 Standardization- marketing strategies used
in international markets that are the same
as those used in its domestic market.
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 Glocalization- the marketing strategy that
involves pursuing a standardization strategy
in in foreign markets when possible and an
adaptation one when necessary.
 Global product- a product that can be sold
in most world markets.
 Concept Testing- the step in the new-
product development process in w/c the
new product idea is presented to a small
sample of the international market to gauge
its reaction.
 Business Analysis- the step in the new-
product development process in w/c
projections of potential revenues and profits
for a potential new product are made.
 Market Testing- the step in the new-product
development process in w/c the company
will develop the marketing mix for a new
product.
 Commercialization- the last step in the
new-product development process in w/c
the new product is manufactured, the
marketing mix is finalized, and the product
is introduced to the foreign market.
 Product Life Cycle- a depiction of the sales
and profits for a new product over its
lifetime.
 Product Elimination- a formal, written
procedure to determine w/c of a company’s
products should be dropped.
 Reverse Strategy- development of a new
product first for emerging markets, then
selling it to developed markets.
 Vertical Publications- magazine that
targets specific industries.
 Horizontal Publications- magazine that
targets a specific job in various industries.
 Indirect Strategy- the use of channels of
distribution to market products and services
to international markets.
 Direct Strategy- bypassing channels of
distribution by using marketing and sales
offices located in foreign countries.
 Agent- channel of distribution that
represents a company in a foreign market
and is paid by commission.
 Distributor- a channel of distribution that
purchases products from a company doing
business in a foreign market and then
resells them to other buyers.
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 Physical Distribution- storage and

transportation operations that are used in
moving products to a foreign market.
 Freight Forwarder- agents for companies
shipping products overseas who are chiefly
involved with physical distribution activities
and documentations.
 Containerization- shipping products to
overseas markets in trailer-sized containers.
 Intermodal Transport- international
shipments using different modes of
transportation.
 Gray Marketing- unauthorized importers
reselling a manufacturer’s product in the
manufacturer’s domestic market at a price
less than what the manufacturer charges in
that domestic market.
 Dumping- a price in a foreign market that
undercuts the prices of companies
competing there.
 Transfer Prices- a price a company
charges its overseas subsidiaries.
 Arms Length Price- a price that an
overseas market is willing to pay.
 Share of Wallet- the percentage of
purchases in a category a buyer gives to
one vendor.
 Reliability- performance of various aspects
of customer service that meets customer
expectations.
 Empowerment- aspect of customer service
that allows employees to take care of
customer problems immediately, without
having to consult superiors.

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