Key words

Disposable income- the amount of money a household has available to spend & save after paying taxes.

Economic growth- an increase in a country’s productive capacity.

Emerging economies- the economies of developing countries where there is rapid growth, but also significant risk.

Employment- people in paid work.

Human Development index (HDI)- a collection of statistics that are combined into an index, ranking countries according to their human development.

Income elastic- the percentage change in demand for a product is proportionately greater than the percentage change in income.

Literacy rate- the percentage of adults (over 15) who can read and write.

per capita- for each person; in relation to people taken individually.

Tertiary sector- the production of services in the economy.

Unemployment- the number of people who are not in work but are actively seeking a job.

Division of labour- different workers specialising in different productive activities.

Exports- goods or services that a firm produces in its home market but sells in a foreign market.

Foreign direct investment- investing by setting up operations or buying assets in businesses in another country.

Imports- goods or services that are bought into one country from another.

International trade- exporting (selling abroad) & importing (buying from abroad).

Invisible trade- trade in services rather than physical products.

Specialisation- a production strat where a business or country focuses on a limited number of products or services. This results in greater efficiency, allowing for goods & services to be produced at a lower cost per unit.

Tariffs- taxes that are imposed on imports.

Visible trade- trade in physical goods.

Brain drain- when highly educated & talented people find jobs overseas.

Economic Globalisation index- first measures the economic flows between a country and the rest of the world in terms of international trade and international investment. This shows whether a country exchanges a lot of goods, services and investments with other countries. Second, it measures the restrictions to trade and investment, such as tariffs and capital controls on international investment. Each dimension is based on several variables that are combined in one overall index that ranges from 0 to 100.

Free trade- trade between nations without restrictions from barriers.

Globalisation- the growing integration of the world’s economies.

Multinational companies (MNCs)- companies that own or control production or service facilities outside the country in which they are based.

Remittances- the money sent back to their country of origin by overseas workers.

Trade liberalisation- the removal of rules and regulations that restrict free trade.

World Trade Organisation (WTO)- an international organisation that promotes free trade by persuading countries to abolish tariffs & other barriers. It polices free trade agreements, settle trade disputes between governments and organises trade negotiations.

Administrative barriers- rules & regulations that make it difficult for importers 2 enter an overseas market.

Dumping- where an overseas firm sells large quantities of a product below cost in the domestic market.

Embargo- a complete ban on international trade.

Import quota- a physical limit on the quantity of imports allowed into a country.

Protectionism- an approach used by a government to protect domestic producers.

Subsidy- financial support given to a domestic producer to help compete with overseas firms.

Tax break- a tax advantage designed to help businesses.

Trade barriers- measures designed to restrict trade.

Trade war- where two of more countries try to damage each other’s international trade by imposing trade barriers.

Common market- a market where goods, labour & capital can move freely across the member states; tariffs are generally removed & non-tariff barriers eliminated, or at least reduced.

Customs union- a union where member states remove all trade barriers between themselves & members adopt a common set of barriers against non-members.

Economic and monetary union- an economic union that uses a common currency.

Economic union- a type of trading bloc involving both a customs union & a common market.

Free trade union (FTA)- a region where member states remove all trade barriers between themselves, but each member state nevertheless keeps different barriers against non-member states.

Single market- a market where most trade barriers between members have been removed & common laws or policies aim 2 make the movement of goods & services, labour & capital between countries as easy as the movement within each country.

Trading bloc- a group of countries that has signed a regional trade agreement 2 reduce or eliminate tariffs, quotas & other protectionist barriers between themselves.

Global consumer culture- a global culture where social status, values & activities are centred on the consumption of goods & services.

Offshoring- moving jobs to another country.

Outsourcing- moving jobs to other organisations.

Pull factors- factors that entice firms into new markets & the opportunities that businesses can take advantage of when selling into overseas markets.

Push factors- factors in the existing market that encourage an organisation to seek international opportunities.

Risk- the probability of a (bad) event happening x (negative) impact.

Saturation (saturated market)- the point where most of the customers who want to buy a product already have it, or there is limited remaining opportunity for growth in sales.

Demonetisation- to remove the value of a note or coin so that it is no longer able to be used as money,

Disposable income- the amount of money that a person has left over after they have paid their taxes, National insurance & other deductions.

Open economy- where a country allows the free movement of goods, services, capital & labour in and out of the economy.

Reshoring- bringing production back home after using foreign production facilities for a period of time.

Brand recognition- how people identify a brand by its features and attributes.

Copyright- a legal right that grants the creator of an original work the sole right 2 determine + decide whether, and under what conditions, this original work may be used by others.

Franchise- a business model in which a business (the franchisor) allows another operator (franchisee) to trade under their name.

Global mergers- where 2 or more businesses from different countries join together & operate as one.

Intellectual property- a product that is a creation of the mind, such as an invention, literary work or artwork, that the law protects from unauthorised use by others. Types include patents, copyrights, and trademarks.

Joint venture- where 2 or more businesses co-operate to share the costs and profits from a business venture.

Licensing- a contract with another firm to use its intellectual property or to produce its product or service in return for a fee.

Pricing power- the effect that a change in a firm’s product price has on the quantity demanded of that product.

Appreciation (of a currency)- a rise in the value of a country’s currency (making exports more expensive and imports cheaper).

Depreciation (of a currency)- the loss in value of a country’s currency (making exports cheaper and imports more expensive).

Devaluation (of a currency)- the adjustment of the value of a currency in relation to other currencies to make it weaker (usually by a government).

Economic risk- the risk that future cash flows will change due to unexpected exchange rate changes.

International competitiveness- the extent to which a business or a geographical area, such as a country, can compete successfully against rivals.

Revaluation (of a currency)- the adjustment of the value of a currency in relation to other currencies to make it stronger (usually by the government).

Skills shortages- where potential employees do not have the skills demanded by employers.

Ethnocentric approach- an approach to global marketing where a business makes little or no attempt to change or modify the product when selling into new foreign markets.

Geocentric approach- an approach to global marketing where a business uses a combination of the ethnocentric and polycentric marketing approaches when marketing a product in new foreign markets.

Global marketing strategy- the process of adjusting a company’s marketing strategies to reflect conditions, consumer tastes and demand in other countries.

Glocalisation - a combination of the world’s ‘globalisation’ and ‘localisation’. It involves the development and sale of products to customers around the world which reflect specific local customs, tastes and traditions.

Localisation- strategies that adjust products to fit with target customers.

Polycentric approach- an approach to global marketing where a business adapts the product to meet the slightly different needs of customers in new foreign markets.

Global niche market- a market made up of customers who live in more than one country and have particular needs that are not met fully by the global mass market.

Premium pricing- where a business is able to charge a higher price than normal- possibly because the product is perceived to be of higher quality.

Subculture- a culture group within a larger culture, often having slightly different product needs to those of the larger culture.

Barriers to communication- obstacles that prevent effective communication between the sender and receiver.

Cultural & social differences- the differences in beliefs and practices, customs, traditions and behaviours of people from different cultures.

Ethnocentrism- the way some people view their own cultures, ethics and norms as superior to those from different cultures.

Global marketing- involves the planning, producing, placing and promoting of a business’ products in a worldwide market.

High- context cultures- cultures that are relational, collectivist, intuitive and contemplative. The people emphasise interpersonal relationships. Developing trust is an important first step. (E.g. much of Middle East, Asia, Africa, and South America).

Low-context cultures- cultures that tend to say what they mean. A communication style that relies heavily on explicit and direct language. (E.g. North America and much of Europe).

Horizontal transfer- the transfer of knowledge across the same industry.

Repatriated profit- the return of the profit made by an MNC to the country where the MNC is based.

Reverse engineering- a method of analysing a product’s design by taking it apart.

Transfer pricing- a system operated by MNCs. It is an attempt to avoid relatively high tax rates through the prices which one subsidiary charges to another for components and finished goods.

Vertical transfer- the transfer of knowledge, backwards or forwards, along the chain of production in the same industry.

Code of conduct- a set of rules outlining the proper practices of an organisation that contribute to the welfare of key stakeholders and respect the rights of all affected by its operations.

Embezzlement- the theft of money or other belongings from a business by an employee who has control over such resources.

Green credentials- commitment to practices that do not damage the environment.

Institutional framework- the system of formal laws, regulations and procedures, and informal conventions customs and norms that shape activity and behaviour.