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When a multinational organization elects to establish subsidiaries in different countries and allow each subsidiary to function as if it was a local firm, this is referred to as a multidomestic strategy. Each subsidiary acts as if it were a domestic firm in order to be able to respond more effectively to local conditions. In the final analysis each firm is still a member of the parent organization, but also has roots in the country in which it was formed. [ABSTRACT FROM AUTHOR]

Although human rights policies are normally associated with governmental functions, the plight of humankind has become of great concern in the international business world. Feelings about a country's treatment of its citizens, especially those who speak out against the government or seek changes or freedoms which other citizens may have, are often transferred to the businesses located in the country. For example, when South Africa had a poor record regarding human rights, foreign companies doing business in South Africa were criticized, boycotted, and some were even terrorized. Now that the system has changed, former investors are coming back to South Africa. [ABSTRACT FROM AUTHOR]

The success of a financial institution or other organization with high capital needs is closely tied to its ability to secure funds and the price paid for those funds. Banks and other large lenders and borrowers of capital are judged by debt-rating services as to their creditworthiness. A low debt rating results in funds being difficult to obtain, or obtained only at a high cost. An organization with a good debt rating will normally find funds readily available at favorable rates. [ABSTRACT FROM AUTHOR]

A service involves the provision of human thought in order to achieve a more effective or efficient use of resources. Service industries include consulting activities of all kinds, legal assistance, most medical care, as well as other areas where the human intellect can be used to accomplish tasks not related to producing a product. In many countries service industries are a major part of the economy. In fact some countries rely upon providing services as their major source of income. [ABSTRACT FROM AUTHOR]

One of the most important tasks associated with managing an international firm is the selection of employees to represent the firm overseas. EXPATRIATE selection is the process used to select employees who will have the best chances of success. Although many companies stress the importance of technical competence, many other factors should also enter into the selection equation. Improperly selected or improperly trained employees can do irreparable harm to an organization's overseas operations and image in a surprisingly short period of time. [ABSTRACT FROM AUTHOR]

A US government agency charged with responsibility for overseeing the offering and exchange of securities within the United States. The agency investigates claims of wrongdoing or other securities related problems. The SEC monitors the issuance of securities, especially in the area of full disclosure to prospective buyers. The SEC was established in 1934 and is governed by five presidentially appointed commissioners. [ABSTRACT FROM AUTHOR]

One country may agree to lower trade restrictions (duties, QUOTAS, etc.) in return for a second nation making similar reductions. When agreements are made to reduce BARRIERS in specific trade areas (sectors such as heavy equipment or automobiles) the exchange of concessions is known as sectoral reciprocity. Often, sectoral reciprocity is the stage from which broader and more widespread trade agreements may flow. [ABSTRACT FROM AUTHOR]

Tax considerations play a large role in international trade. One of the methods used by multinational firms to reduce the impact of taxes is to establish an OFFSHORE organization which acts as the receiver of imports for the parent corporation. The agent company is established in a country with favorable corporate tax rates and regulations. Goods purchased on behalf of the parent company are sold to the offshore company which then reinvoices the goods to increase their price to the parent company. [ABSTRACT FROM AUTHOR]

Showing concern for EXPATRIATE employees is very important for a business. One of the areas of concern for most employees is that family and friends be notified when they safely reach their destination. An employer can go a long way in showing real concern for employees by notifying selected persons of the expatriate's safe arrival at the ASSIGNMENT destination. This is a simple task, but one that can create goodwill and loyalty between employer and employee. [ABSTRACT FROM AUTHOR]

Over the years, international trade has increased substantially. This increase has been accompanied by problems arising in virtually all areas of the trade transaction. Problems are usually associated with protectionist actions of one or more countries (see BARRIERS). The Round of Trade Negotiations are a series of meetings between country representatives to develop new means to encourage free and open trade throughout the world. [ABSTRACT FROM AUTHOR]

This type of LETTER OF CREDIT is used for an exporter with whom the ISSUING BANK has had favorable past experience. The exporter also deals with customers of the issuing bank on a continuous basis over a period of time. Instead of issuing a new letter of credit each time the exporter sells to a given importer, the issuing bank arranges to offer a revolving letter of credit. This document allows the exporter to use the same letter for each transaction with the amount of payment on the letter being recredited after the completion of each transaction. [ABSTRACT FROM AUTHOR]

A revolving credit facility is a line of credit which is automatically reinstated as loans are paid off. The reinstated amount equals the amount of repayment. Revolving lines of credit have a maximum amount which may be outstanding at any one time. [ABSTRACT FROM AUTHOR]

When an employee returns to the home country after an extended ASSIGNMENT, he or she (or family members) may be subjected to what many refer to as reverse culture shock. Reverse culture shock occurs because things have changed in the home country. Friends and neighbors have moved, new schools are attended, fellow employees have gone into management or departed the company, the clothing fads are different, music has changed, and numerous other things have changed that the EXPATRIATE might have felt would be the same. CULTURE SHOCK may also be the result of a different standard of living than was achieved in the host country. [ABSTRACT FROM AUTHOR]

A restricted exchange market is heavily controlled by the government. The government allows the free market (demand and supply) to contribute to the overall valuation of its currency, but the major factor affecting the market is the government's willingness to buy or sell currency. A market could also be restricted by linking the value of a currency to that of another country's. Any restrictions by the second country would also restrict the first country's currency. [ABSTRACT FROM AUTHOR]

The workweek is not the same in all countries or for all levels of employees. One variation on the workweek is one which includes a rest day. In some countries employees are paid for a full seven days per workweek, but one or two of the days are considered paid rest days. Although the total wages paid take into consideration the productivity of the workers during their actual work time, an EXPATRIATE manager's failure to recognize this pay practice could result in embarrassment and potential labor problems. [ABSTRACT FROM AUTHOR]

Most international enterprises do not have actual production taking place in each of the countries. They also normally do not have their own employees in each country because the costs would be prohibitive for all but the largest of organizations. It is very common under these circumstances to use the services of an intermediary to sell a company's goods in overseas markets. Intermediaries who act on behalf of an organization to sell its products in a given country are referred to as resident selling agents. [ABSTRACT FROM AUTHOR]

Most organizations conducting international trade do not use their own employees to either buy or sell goods in various countries. The differences between business practices, language, and cultural problems usually make employee arrangements difficult at best. Instead of using employees, organizations may turn to intermediaries in each country to secure goods needed by the organization in its home country (or other country of production). Intermediaries who purchase goods for a foreign company (to be shipped to that foreign company) are referred to as resident buying agents. [ABSTRACT FROM AUTHOR]

This principle, based on a law of systems theory developed in cybernetics by W. R. Ashby, states that the regulator of a system must have as much or more variety as the system it regulates. Applied to management, this concept suggests that organizations have to be as complex as their environments (Osland, 2004). In international management, where the firm faces an exceedingly complex environment, designing heterogeneity and complexity within the firm helps it to perceive opportunities and solutions that a more homogeneous mindset would overlook. Yet, often, managers almost instinctively try to do the opposite when faced with a complex environment: they simplify by reducing internal variety to achieve consensus (Morgan, 1997). [ABSTRACT FROM AUTHOR]

Organizations commonly enter into international commerce with the expectation of transferring profits from the foreign market to their home country. Problems arise when foreign countries implement controls over transfer of profits or dividends outside their borders. The foreign country desires to keep investment returns within the country in order to foster further economic growth and stability. Repatriation controls, however, normally have the effect of reducing investor interest in that country. [ABSTRACT FROM AUTHOR]

This means moving an employee from a foreign country back to the home country. An EXPATRIATE is said to be repatriated when he or she is brought home after a foreign ASSIGNMENT. Great care must be taken when bringing expatriates back to the home country. Many employees suffer REVERSE CULTURE SHOCK due to being out of the country for an extended period of time. [ABSTRACT FROM AUTHOR]

INTERNATIONAL HUMAN RESOURCES MANAGEMENT involves preparing expatriates for transfer to overseas locations. The relocation and orientation process is carried out to insure that the EXPATRIATE suffers as little inconvenience as possible. One of the reasons for expatriate failure is improper preparation for the new assignment. Expatriates must be trained in the language, culture, values, forms of communication, and other nuances of the country of assignment. [ABSTRACT FROM AUTHOR]

Cultural relativism is a descriptive claim that ethical practices differ among cultures; that, as a matter of fact, what is considered right in one culture may be considered wrong in another. Thus truth or falsity of cultural relativism can be determined by examining the world. The work of anthropologists and sociologists is most relevant in determining the truth or falsity of cultural relativism, and there is widespread consensus among social scientists that cultural relativism is true. Moral relativism is the claim that what is really right or wrong is what the culture says is right or wrong. [ABSTRACT FROM AUTHOR]

Regulatory cost advantage occurs when the cost of complying with regulations governing an organization's actions is extremely high in the home country, whereas those regulations do not exist (or if in existence, the cost of compliance is far less) in a host country. Three current examples of regulatory cost advantage exist in the environmental pollution area, the legal liability arena, and health and safety work regulations. Do companies locate in countries because laws are less stringent than in the company's home country? There is some evidence to indicate that companies have moved because of what they consider an oppressive legal system in the United States (high cost of litigation; uncertainty; high liability insurance costs); because of strict pollution liability regulations and responsibility; because of requirements to provide social types of insurance and pension plans; because of reduced safety and loss control requirements; as well as for other reasons. [ABSTRACT FROM AUTHOR]

Sometimes called geographic structure, this term refers to a way of structuring an international business by separating responsibility areas into geographic divisions. This method of structuring an organization is commonly used when the organization feels that it is important to recognize cultural differences and local methods of doing business. By organizing on a geographic basis managers may be selected who are familiar with the region, speak the language, and are comfortable with any cultural differences. [ABSTRACT FROM AUTHOR]

This involves the move by groups of countries to establish agreements to reduce trade BARRIERS between the group members as well as to promote cooperation in establishing trade policies between the group and the rest of the world. Trading blocs are either the result of economic integration or the vehicle chosen to assist in achieving economic integration. Examples of successful regional economic integration include the EUROPEAN COMMUNITY, which has become one of the most formidable trading associations in the world, and the United States, Canada, and Mexico, who through NAFTA have strengthened economic ties. Regional economic integration allows countries to bring real strength of numbers to the international trade negotiating table, while at the same time encouraging internal development of each of the member countries. [ABSTRACT FROM AUTHOR]

Development banks are established by governments to foster economic growth in a particular country, region, or worldwide. There are five regional development banks: the AFRICAN DEVELOPMENT BANK; the ASIAN DEVELOPMENT BANK; the CARIBBEAN DEVELOPMENT BANK; the INTER-AMERICAN DEVELOPMENT BANK; the International Bank for Reconstruction and Development (IBRD or World Bank). These banks are also referred to as multilateral development banks (MDBs). The purposes of development banks are to foster the economic development of member countries and to assist in implementing the development programs of the United Nations. [ABSTRACT FROM AUTHOR]

A regiocentric approach to hiring selects management personnel from within a region of the world which most closely resembles that of the host country. The company has expanded its search beyond the borders of the host country, but has stopped short of seeking management personnel from its operations throughout the world. The theory behind this selection process is that nationals of the region in which operations actually take place are better able to deal with language and cultural problems than are managers from outside the region. The logic behind this hiring approach is probably sound, but it ignores the potential growth a manager goes through when forced to deal with different situations than those in which he or she is comfortable. [ABSTRACT FROM AUTHOR]

In order to protect itself from predatory pricing practices or DUMPING, the European Community (EC) has established minimum prices which must be charged for certain imported commodities. Agricultural commodities are the target of most reference prices. When the price of an import falls below its reference price, a surcharge is imposed on that item. Reference prices are part of the EC's attempt to protect local producers from foreign competition. [ABSTRACT FROM AUTHOR]

A re-entry VISA is issued to a foreign person who has been permitted to work in a country. If that person desires to leave the country for a short period of time a re-entry visa may be issued to expedite the person's readmittance to the host country. Re-entry visas are commonly issued to business people who must return to their home country periodically, but will be back to the host country in a short while to continue their work. Business persons will also have to have a work permit in most countries if they remain resident more than a minimum amount of time. [ABSTRACT FROM AUTHOR]

Often, an exporter does not have the funds to produce products to fill current orders. A LETTER OF CREDIT may have already been issued by the importer in anticipation of goods being exported. If allowed by the terms of the letter of credit, the exporter may draw upon the letter to obtain funds to produce goods. Once the goods are delivered the exporter may then submit the proper documentation to obtain the balance of the letter of credit. [ABSTRACT FROM AUTHOR]

A quotation is a statement by a seller as to the expected price (and terms of sale) of goods or services at a specific time. Because the quotation is not associated with an actual order, it is not binding. A quotation may become a binding price if the buyer seeks to enter into a formal purchase agreement. Failure to enter into an agreement in a timely manner usually makes the quotation useless. [ABSTRACT FROM AUTHOR]

A number of countries regulate the importation of animals and plants as a way of reducing the potentially harmful spread of disease. Animals commonly subject to quarantine are monkeys, birds, cats, and dogs. Quarantine requirements usually include a health certificate and possible actual quarantine for a specified number of days until the animal may be released to its owners. Exporters and importers (and owners moving to another country) of plants and animals must carefully check quarantine requirements or face the possibility of not being able to obtain permission to move some plants and/or animals across international borders. [ABSTRACT FROM AUTHOR]

One of the ways to constrain the free flow of goods into a country is to institute regulations restricting the numbers or units of goods which can be imported in any given period of time. Generally, such regulations are referred to as quotas. For example, a limit of 10,000 of a certain type of automobile is a quantitative restriction. [ABSTRACT FROM AUTHOR]

The term "quality of working life" (QWL) refers to people's reactions to work, particularly personal outcomes related to job satisfaction, mental health, and safety. Attention to QWL issues started initially in Scandinavia and Europe in the 1960s and spread to North America in the 1970s. The major impetus was the growing concern among industrialized nations for the health, safety, and satisfaction of workers. In Norway and Sweden, QWL has become a national movement fostered by cultural and political forces advocating employee rights to meaningful work and participation in work decisions. [ABSTRACT FROM AUTHOR]

The quadrilateral trade ministers represent a group of four economically powerful countries or regions which have the ability to dramatically affect international commercial activities. The group is commonly referred to as the Quad. The Quad is comprised of the Canadian Minister of International Trade, the European Community's Commissioner for External Relations, Japan's Minister of International Trade and Industry, and the United States Trade Representative. The Quad was originally referred to as the Group of Seven until the EUROPEAN COMMUNITY (which included four members of the group of seven: France, Germany, Italy, and the United Kingdom) elected to be represented by a single member. [ABSTRACT FROM AUTHOR]

Trade taking place between four regions or countries. Bilateral trade is trade taking place between two regions or countries. Multilateral trade is trade between unspecified numbers of regions or countries. [ABSTRACT FROM AUTHOR]

A put is the right to sell currency. An option is a specific amount of currency that may be purchased or sold at a stated price, at a stated time. Thus, a put option is the right to sell a stated amount of currency at a predetermined price within a certain period of time. [ABSTRACT FROM AUTHOR]

A business that was established for the Web, but had no prior physical presence. Amazon.com is an example of a pure play business. This is in contrast to a LEGACY BUSINESS: these businesses are the traditional businesses that are transforming to the Web. [ABSTRACT FROM AUTHOR]

A tax placed on imported goods to carry out protectionist activities of a government. Taxes increase the cost of imports to consumers, thereby reducing their demand. Properly applied duties will increase the development of local industry, as well as protect it from foreign competition. [ABSTRACT FROM AUTHOR]

A creative arrangement under which companies in different countries agree to cooperate in the production and distribution of a product. Differences in customs laws and the prices of resources make such cooperative agreements feasible. MAQUILADORA production in Mexico is an example of production sharing. Foreign countries ship unfinished or unassembled goods to plants located in special trade zones in Mexico. [ABSTRACT FROM AUTHOR]

When an employee is sent overseas a number of travel and other details have to be managed. The management of these details is referred to as processing. Details include travel documents (passports, health certificates, visas, etc.), transportation arrangements (airline tickets, etc.), arrival procedures (customs, person to meet EXPATRIATE, etc.), and shipment and/or storage of personal property (how much can be taken, any restrictions on certain property, etc.). Failure to process these items properly can make the beginning of an expatriate's ASSIGNMENT very stressful. [ABSTRACT FROM AUTHOR]

As the name implies, this program is aimed at encouraging the PRIVATIZATION of formerly governmental activities. It is believed that private/market oriented economies are more efficient and will assist overall economic development in a region more than a centralized economy approach. The PSDP is aimed at Latin American countries with hopes of eventually developing an effective economic force throughout the region. The program is intended to combine the resources and activities of the Inter-American Development Bank (IDB), the Inter-American Investment Corporation (IIC), and the INTERNATIONAL MONETARY FUND in the Latin American Region. [ABSTRACT FROM AUTHOR]

PEFCO is a private sector source of funding for financing exports from the United States. PEFCO was formed by a group of commercial banks with the assistance of the United States Export—Import Bank (EXIMBANK). The Eximbank provides loan guarantees and additional credit when necessary. [ABSTRACT FROM AUTHOR]

When a country sells goods in another country at much lower than market prices in either country the practice is called DUMPING. Dumping is an unfair trade practice which is subject to additional tax and other penalties. If goods are sold in the manner described above with the intent of putting local competition out of business, the practice is referred to as predatory dumping. Predatory dumping is used to achieve MARKET PENETRATION much more quickly than otherwise possible. [ABSTRACT FROM AUTHOR]

A buyer may decide that it is appropriate to inspect goods before they are delivered to a carrier for shipment. When this occurs the process is referred to as a pre-shipment inspection. Such inspections are normally carried out at the buyer's expense. [ABSTRACT FROM AUTHOR]

A pre-departure briefing is normally given to expatriates to make certain that important items have been taken care of, both as an individual and as an employee of the company. It is the final discussion and farewell before the employee leaves for an ASSIGNMENT. This briefing should emphasize the support systems for the employee and family members which are available, as well as bolster their confidence prior to the actual move. The real reason for a pre-departure briefing is to make certain that "surprises" during travel or upon arrival are kept to a minimum. [ABSTRACT FROM AUTHOR]

Polycentrism is the belief that managers and employees in a foreign operation should be from the host country. The feeling is that people native to the host country will not have problems with CULTURE SHOCK, knowing the language, realizing and adhering to the local customs, values, and attitudes, and being effective immediately instead of after a learning process has taken place. Key positions in the foreign operation are filled with host country nationals (HCNs). This saves money associated with recruiting, training, and transferring expatriates from other countries in which the company also has operations. [ABSTRACT FROM AUTHOR]