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IHRM Terminology

AsiaPacificEconomic Cooperation (APEC)


A confederation of 19 nations with less specific agreements on trade facilitation in the Pacific region.
Developed countries
Countries with mature economies, high GDPs, and high levels of trade and investment.
Developing countries
Countries with economies that have grown extensively in the past two decades.
Emerging markets
Countries that are currently between developed and developing countries and are rapidly growing.
European Union (EU)
Austria, Belgium, Bulgaria, Britain, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Romania, Spain, and Sweden, plus Norway and Switzerland in the related
European Free Trade Area.
Foreign direct investment (FDI)
Multinational firms ownership, in part or in whole, of an operation in another country.
General Agreement on Tariffs and Trade (GATT)
Tariff negotiations among several nations that reduced the average worldwide tariff on manufactured goods .

Global mindset
Mindset that requires managers to think globally, but act locally.
Globalization
The worldwide trend of cross border economic integration that allows businesses to expand beyond their
domestic boundaries.
ISO 14000
The current name for the environmental protection standards of the International Organization for
Standardization.
ISO 9001:2000 The current name for the technical and quality standards of the International Organization for
Standardization.
Less developed countries (LDCs)
The poorest nations, often plagued with unstable political regimes, high unemployment, and low worker skills.
Multinational company (MNC)
Any company that engages in business functions beyond its domestic borders.
Multinational management
The formulation of strategies and the design of management systems that successfully take advantage of
international opportunities and that respond to international threats.

North American Free Trade Agreement (NAFTA)


A multilateral treaty that links the United States, Canada, and Mexico in an economic bloc that allows free
exchange of goods and services.
Regional trade agreements
Agreements among nations in a particular region to reduce tariffs and develop similar technical and economic
standards.
Transition economies Countries in the process of changing from government controlled economic systems
to capitalistic systems.
TRIAD The worlds dominant trading partners: the European Union, the United States, and Japan.

World Trade Organization (WTO)


A formal structure for continued negotiations to reduce trade barriers and a mechanism for
settling trade disputes.

Comparative advantage
That arising from cost, quality, or resource advantages associated with a particular nation.
Contract manufacturing Producing products for foreign companies following the foreign companies
specifications.
Direct exporting
Exporters take on the duties of intermediaries and make direct contact with customers in the foreign market.
Export management company (EMC)
Intermediary specializing in particular types of products or particular countries or regions.
Export trading company (ETC)
Intermediary similar to EMC, but it usually takes title to the product before exporting.
Global integration solution
Conducting business similarly throughout the world and locating company units wherever there is high
quality and low cost.
Global platform
Country location where a firm can best perform some, but not necessarily all, of its value chain activities.
Globallocal dilemma
Choice between a localresponsiveness or global approach to a multinationals strategies.

Globalization drivers
Conditions in an industry that favor transnational or international strategies over multilocal or regional
strategies.
Greenfield investments
Starting foreign operations from scratch.
Indirect exporting
Intermediary or go between firms provide the knowledge and contacts necessary to sell overseas.
International franchising
Comprehensive licensing agreement where the franchisor grants to the franchisee the use of a whole business
operation.
International strategic alliance
Agreement between two or more firms from different countries to cooperate in any value chain activity from
R&D to sales.
International strategies
Selling global products and using similar marketing techniques worldwide.
Licensing
Contractual agreement between a domestic licenser and a foreign licensee. (Licenser usually has a valuable
patent, technological know how, a trademark, or a company name that it provides to the foreign licensee.)

International companies
Are importers and exporters, they have no investment outside of their home
country.

Multinational companies
Have investment in other countries, but do not have coordinated product
offerings in each country. More focused on adapting their products and service
to each individual local market.

Global companies
Have invested and are present in many countries. They market their products
through the use of the same coordinated image/brand in all markets. Generally
one corporate office that is responsible for global strategy. Emphasis on
volume, cost management and efficiency.

Transnational companies
Are much more complex organizations. They have invested in foreign
operations, have a central corporate facility but give decision-making, R&D
and marketing powers to each individual foreign market.