Term
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Definition
| the integration of markets |
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Term
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Definition
| national markets will turn into one huge global marketplace |
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Term
| Effects of globalization of markets |
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Definition
| preferences of consumers in different nations are beginning to converge on some global norm and helps create a global marketplace |
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Term
| Globalization of production |
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Definition
| the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor, energy, land, and capital) |
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Term
| Effects of globalization of production |
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Definition
| companies hope to lower their overall cost structure and/or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively |
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Term
| Corporate Social Responsiblity (CSR) |
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Definition
| concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment |
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Term
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Definition
| organizations will look for ways to improve the quality of life for employees and their families as well as for the local community and society |
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Term
| Enlightened self interest |
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Definition
| a philosophy in ethics which states that persons who act to further the interests of others (or the interests of the group or groups to which they belong), ultimately serve their own self-interest |
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Term
| Effects of enlightened self interest |
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Definition
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Term
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Definition
| the law of one price for all goods and services and is found from any individual set of prices |
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Term
| Effects of purchasing power parity |
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Definition
| comparing prices of identical products in different currencies; it would be possible to determine the “real” or PPP exchange rate that would exist if markets were efficient |
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Term
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Definition
| the “basket of goods” and is made the same way in 120 different countries. It is a good way to compare a country’s actual exchange rate with one predicted by the PPP thermo based on relative prices of Big Macs and is a test on whether a currency is undervalued or not. |
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Term
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Definition
| the impact of currency exchange rate changes on the reported financial statements of a company |
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Term
| Effects of translation exposure |
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Definition
| concerned with the present measurement of past events |
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Term
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Definition
| the extent to which the income from individual transactions is affected by fluctuations in foreign exchange values |
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Term
| Effects of transaction exposure |
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Definition
| obligations of the purchase or sale of goods and services at previously agreed prices and the borrowing or lending of funds in foreign currencies |
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Term
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Definition
| attempting to collect foreign currency receivables (payments from customers) early when a foreign currency is expected to depreciate and paying foreign currency payables (to suppliers) before they are due when a currency is expected to appreciate |
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Term
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Definition
| delaying collection of the payables if the currency is expected to depreciate |
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Term
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Definition
| currency that uses a floating exchange rate |
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Term
| Why does the U.S. require the currency to float? |
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Definition
| The U.S. requires a floating rate because any differences in supply and demand will automatically be corrected in the market. Another reason the U.S. requires it is because the efficient means of determining the long term value of a currency and creating equilibrium in the international market. |
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Term
| International Monetary Fund (IMF) |
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Definition
| international organization that oversees the global financial system by following the macroeconomic policies of its member countries; in particular those with an impact on exchange rates and the balance of payments |
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Term
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Definition
| people behave recklessly because they know they will be saved if things go wrong |
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Term
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Definition
| its rescue efforts are showing a problem known to economists as moral hazard. This has caused moral hazard because the banks are being helped and don’t learn the reason how to not get back into debt. |
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Term
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Definition
| a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking to a beneficiary |
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Term
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Definition
| often used for international transactions to ensure that payment will be received. They have become an important aspect of international trade, due to differing laws in each country and the difficulty of knowing each party personally. The bank also acts on behalf of the buyer, or holder of the letter of credit, by ensuring that the supplier will not be paid until the bank receives confirmation that the goods have been shipped. |
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Term
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Definition
| a transaction in which money does not change hands but we barter or swap goods |
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Term
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Definition
| the direct exchange of goods and/or services between two parties without a cash transaction. It is the simplest form, but most restrictive from of countertrade. It is trading with partners who are not credit worthy or trust worthy. |
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Term
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Definition
| a reciprocal buying agreement. It is when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made. |
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Term
| Total Quality Management (TQM) |
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Definition
| philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s |
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Term
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Definition
| It is important to look at all the processes around the world and at all the company’s locations and seeing which one introduces quality defects or if a step is necessary to have there and looking on how to improve them. |
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Term
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Definition
| economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before |
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Term
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Definition
| inventory on a global level could cut your costs into lower production costs and inventory costs by accessing different regional markets around the world and can access lower labor or manufacturing costs. |
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Term
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Definition
| the modern successor to TQM, is a statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company |
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Term
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Definition
| It eliminates errors through refining manufacturing processes and the intent is to eliminate all defects |
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Term
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Definition
| the price of borrowing money, which is the rate of return that borrowers must pay investors |
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Term
| How does the international market potentially reduce the cost of capital? |
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Definition
| The exchange rate is equal or favorable or the borrowing costs were less in the other country it could reduce this cost. |
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