Harry Bindloss

UNIT 3 Key terms

Ansoffs Matrix: A method by which businesses can classify their
strategies for expansion. It includes; Market Penetration, Product
Development, Market Development and Diversification.
Backwards innovation: establishment of a product that is coming to
the end of its product life cycle in one market but can be launched into a
new market to start a product life cycle.
Backwards vertical merger: A firm merges with a firm closer to the
suppliers in a production process.
Barriers: There are tariffs and non-tariff barriers that are important to
consider when moving into international trade with countries.
Comparative advantage: The idea that countries can benefit from
specialising in the production of goods at which they are relatively more
efficient. In this way consumers within each country gain the maximum
benefit from international trade
Diseconomies of scale: The negative effects of increasing the scale of
production that results in higher unit costs.
Dumping: Selling goods on a foreign market below their costs of
production. This could be in order to destroy the domestic competition and
create a monopoly position in which prices can be raised.
Economies of scale: These are the benefits of producing on a large
scale resulting in lower unit costs. If nations specialise in what they are
best at not only will output rise due to comparative advantage but unit
costs will fall due to economies of scale. Therefore prices are lower and
consumers are better off.
Emerging Markets: Those that are not yet fully developed but have a
group of middle class consumers that is large enough to provide a market
for developed country products.
Ethnocentric: Looking at markets from primarily the perspective of ones
own culture. A business believes that what was a success story in its
domestic market will also be so in other countries in which it operates.
FDI: Foreign Direct Investment is the flows of private capital from one
country to another, normally funding for business ventures.
Forwards vertical merger: A firm merges with a firm closer to the
market or consumers in a production process.

Harry Bindloss

Geocentric: The potential market has both similarities and differences in

domestic and foreign markets.
Global Marketing: The marketing strategies used by businesses when
operating in global markets.
Global sourcing: This means a business can manufacture components in
overseas countries where labour is cheap before assembling the final
product domestically.
Globalisation: The internationalisation of goods, services, labours and
financial markets which has led to businesses being active in a global
economy.
Glocalisation: (Globalisation and Localisation) a global product or
services is more likely to succeed if it is adapted to the specific
requirements of local practices and cultural expectations.
HDI: The Human Development Index provides a measure of development
based on access to health care and education as well as national incomes.
Horizontal Merger: Firms joining at the same stage of the production
process.
Import Quotas: Limiting the quantity of a particular good that is allowed
into the country over a period of time.
Joint Venture: The cooperation of two or more individuals or businesses
in which each agrees to share profit, loss and control in a specific
enterprise.
Merger: The combining of two firms under one management a merger is
normally brought about by mutual agreement.
Minimum Wage: This is the lowest wage payable to employees in
general or to designated employees as fixed by law or by any union
agreement.
MNC: A multinational company is an enterprise operating in several
countries but still only managed from one country.
Niche Market: This is a market which is focused on particular products or
services. It may also be a market that has certain geographical limits.
Non-Tariff Barrier: All other measures employed to protect domestic
production other than tariffs.

Harry Bindloss

Outsourcing: This is the practice used by different companies to reduce

costs by transferring portions of work to outside suppliers rather than
completing it internally.
Polycentric: Each host country is unique. Each of its subsidiary
businesses develops their own unique business and marketing strategies
in order to suit these particular needs.
Protectionism: The intervention by governments in the free trade
between nations. The methods available usually attempt to reduce
imports (to protect domestic production) and are therefore often referred
to as trade barriers, although other methods may seek to encourage
exports.
Stakeholder: A person or group or organisation that has direct or indirect
stake in an organisation because it can affect or can be affected by the
organisations actions, objectives and policies.
Synergy: After a merger or a takeover, the performance of a combined
enterprise will exceed that of its previously separated parts. (2+2=5)
Takeover: One firm buying/owning a controlling share in another firm.
This can be done in a hostile or a friendly way.
Tariffs: Taxes levied by the government on imports of particular goods.
The effects of a tariff are decreased imports and this will mean that the
domestic producers are now protected.
The Boston Matrix: A method of analysing the current position of the
products within a firms portfolio, in terms of their market share and
growth within the marketplace. It consists of; Star, Cash Cow, Dog,
Problem Child.
The product life cycle: This shows the different stages that a product
passes through over time and the sales that can be expected at each
stage.
Trading Blocs: Groups of countries that want to trade without
restriction. For example NAFTA (North American Free Trade Association) or
EU.
WTO: The World Trade Organisation is a multi-lateral organisation and is
the only global international organisation dealing with the rules of trade
between nations. Their main goal is to promote free trade.