Glossary of terms used in International Business

Glossary of common Terms used in International Business

 

A
Accession- Becoming a member of the WTO, signing on to its agreements. New members have to negotiate terms: bilaterally with individual WTO members
multilaterally, (1) to convert the results of the bilateral negotiations so that they apply to all WTO members, and (2) on required legislation and institutional reforms that are need to meet WTO obligations.[1]

 

ACP- African, Caribbean and Pacific countries. Group of countries with preferential trading relations with the EU under the former Lomé Treaty now called the Cotonou1 Agreement.

 

ad valorem equivalent (AVE) 1 –A tariff that is not a percentage (eg, dollars per ton) can be estimated as a percentage of the price — the ad valorem equivalent.

 

ad valorem tariff1- A tariff rate charged as percentage of the price

 

Advertising – A paid form of non personal communication about an organization and/or its products that is transmitted to a target audience through a mass medium

 

Agenda 20001- EC’s financial reform plans for 2000-06 aimed at strengthening the union with a view to receiving new members.

 

Agenda 211- The Agenda for the 21st Century — a declaration from the 1992 Earth Summit (UN Conference on the Environment and Development) held in Rio de Janeiro.

 

Agent – A representative in a foreign market who attempts to sell your good or service through his or her network. Agents may be exclusive or represent many companies. They usually do not take responsibility for delivery or servicing of your product and are paid on a commission basis.

 

Amber Box1- Domestic support for agriculture that is considered to distort trade and therefore subject to reduction commitments. Technically calculated as “Aggregate Measurement of Support” (AMS).

 

Andean Community1- Bolivia, Colombia, Ecuador, Peru and Venezuela.

 

 

Anti-dumping duties1- GATT’s Article 6 allows anti-dumping duties to be imposed on goods that are deemed to be dumped and causing injury to producers of competing products in the importing country. These duties are equal to the difference between the goods’ export price and their normal value, if dumping causes injury.

 

APEC1 –Asia Pacific Economic Cooperation forum

 

Appellate Body1- An independent seven-person body that considers appeals in WTO disputes. When one or more parties to the dispute appeals, the Appellate Body reviews the findings in panel reports.

Applied tariff / Applied rates1- Duties that are actually charged on imports. These can be below the bound rates.

Article XX1- (i.e. 20) A GATT article listing allowed “exceptions” to the trade rules.

 

Air Bill (Air Waybill) – A shipping document used by the airlines for air freight. It is a contract for carriage that includes carrier conditions of carriage including such items as limits of liability and claims procedures. The air waybill also contains shipping instructions to airlines, a description of the commodity and applicable transportation charges. Air waybills are used by many truckers as through documents for coordinated air/truck service

Arms Length Price – The price at which two unrelated and non desperate parties would agree to a transaction

ASEAN1- Association of Southeast Asian Nations. Eight ASEAN members are members of the WTO — Brunei, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore and Thailand. The other ASEAN members — Laos and Vietnam — are negotiating WTO membership

 

ASEAN Free Trade Area – “The Association of Southeast Asian Nations (ASEAN) agreed in January 1992 to create a free trade area (ASEAN Free Trade Area, or AFTA) with use of a common effective preferential tariff. Under the agreement ASEAN members will cut tariff rates within 15 years

Automaticity1- In disputes, the “automatic” chronological progression for settling trade disputes in regard to panel establishment, terms of reference, composition and adoption procedures.

 

Automatic import licensing1- when applications for import licences are approved in all cases.

B

 

Balance of payments basis1- Trade data conforming with national income accounting methods (the value of trade in goods and services changing hands between residents and non-residents sometimes without crossing borders); the figures for goods trade are derived and adjusted from customs data (the value of goods trade crossing borders).

 

Basel Convention1- A multilateral environmental agreement dealing with hazardous waste.

Berne Convention1- Berne Convention A treaty, administered by WIPO, for the protection of the rights of authors in their literary and artistic works

BIT1- Bilateral investment treaties

Big Mac Index[2]– The index, published by the Economist  is based on the theory of purchasing-power parity, which says that exchange rates should eventually adjust to make the price of a basket of goods the same in each country. The Big Mac index works by calculating the exchange rate that would leave a Big Mac costing the same in each country.

Blue Box1- Amber Box types of support, but with constraints on production or other conditions designed to reduce the distortion. Currently not limited.

Border protection1- Any measure which acts to restrain imports at point of entry.

Bottom up1- drawing on members’ positions

Box1- In agriculture, a category of domestic support.

Green box: supports considered not to distort trade and therefore permitted with no limits.

Blue box: permitted supports linked to production, but subject to production limits, and therefore minimally trade-distorting.

Amber box: supports considered to distort trade and therefore subject to reduction commitments.

Bracketed1- In official drafts, square brackets indicate text that has not been agreed and is still under discussion.

BTA1- Border tax adjustment

 

 

Big Emerging Markets (BEMs) – A group of fast growing economies that the Department of Commerce has identified as major U.S. export.

Bill of Lading – A document issued by a carrier to a shipper, signed by the captain, agent, or owner of a vessel, furnishing written evidence regarding receipt of the goods (cargo), the conditions on which transportation is made (contract of carriage), and the engagement to deliver goods at the prescribed port of destination to the lawful holder of the bill of lading. A bill of lading is, therefore, both a receipt for merchandise and a contract to deliver it as freight. There are number of bills of lading: straight bill of lading, shipper’s order bill of lading, air waybill, clean bill of lading and closed bill of lading.

Bunker Adjustment Factor (BAF) – An adjustment in shipping charges to offset price fluctuations in the cost of bunker fuel

C

Cabotage1- In maritime transport, sea shipping between ports of the same country, usually along coasts.

Cairns Group1- Group of agricultural exporting nations lobbying for agricultural trade liberalization. It was formed in 1986 in Cairns, Australia just before the beginning of the Uruguay Round.
Current membership are : Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, Uruguay

CAP1- Common Agricultural Policy — The EU’s comprehensive system of production targets and marketing mechanisms designed to manage agricultural trade within the EU and with the rest of the world.

 

Caricom 1- The Caribbean Community and Common Market, comprising 15 countries

 

Carry forward1- When an exporting country uses part of the following year’s quota during the current year.

 

Carry over1- When an exporting country utilizes the previous year’s unutilized quota

 

Circumvention1- Getting around commitments in the WTO such as commitments to limit agricultural export subsidies. Includes: avoiding quotas and other restrictions by altering the country of origin of a product; measures taken by exporters to evade anti-dumping or countervailing duties.

CITES1- Convention on International Trade in Endangered Species. A multilateral environmental agreement.

Codex Alimentarius 1- FAO/WHO commission that deals with international standards on food safety.

commercial presence- Having an office, branch, or subsidiary in a foreign country. In services, “mode 3”

(see “modes of delivery”).

Compulsory licensing1- For patents: when the authorities license companies or individuals other than the patent owner to use the rights of the patent — to make, use, sell or import a product under patent (i.e. a patented product or a product made by a patented process) — without the permission of the patent owner. Allowed under the WTO’s TRIPS (intellectual property) Agreement provided certain procedures and conditions are fulfilled

 

Consumer price index (CPI)[3]A measure of a country’s general level of prices based on the cost of a typical basket of consumer goods and services

Convertibility2– The ability to freely use a currency for international transactions by the residents of any country

Counterfeit1- Unauthorized representation of a registered trademark carried on goods identical or similar to goods for which the trademark is registered, with a view to deceiving the purchaser into believing that he/she is buying the original goods.

Countervailing measures1- Action taken by the importing country, usually in the form of increased duties to offset subsidies given to producers or exporters in the exporting country.

CRTA1- Committee on Regional Trade Agreements

CTD1- The WTO Committee on Trade and Development.

 

CTE1- The WTO Committee on Trade and Environment.

CTG1- Council for Trade in Goods — oversees WTO agreements on goods.

 

C.I.F. (Cost Insurance and Freight) – An international trade term of sale in which, for the quoted price, the seller/exporter/manufacturer clears the goods for export and is responsible for delivering the goods to the named port of destination. However, once the goods pass the ship’s rail at the port of shipment, the buyer assumes responsibility for risk of loss or damage as well as any additional transport costs. The seller is also responsible for procuring and paying for marine insurance in the buyer’s name for the shipment. The Cost and Freight term is used only for ocean or inland waterway transport.

Carrier – An individual or legal entity that is in the business of transporting passengers or goods for hire. Shipping lines, airlines, trucking companies, and railroad companies are all carriers

Certificate of Origin – A document attesting to the country of origin of goods. A certificate of origin is often required by the customs authorities of a country as part of the entry process. Such certificates are usually obtained through an official or quasi official organization in the country of origin such as a consular office or local chamber of commerce. A certificate of origin may be required even though the commercial invoice contains the information

Channel Strategy – The broad principles by which the firm expects to achieve its distribution objectives for its target market(s).

Commercial Invoice – A document identifying the seller and buyer of goods or services, identifying numbers such as invoice number, date, shipping date, mode of transport, delivery and payment terms, and a complete listing and description of the goods and services being sold including prices, discounts and quantities

 

Common Law – Law that forms the foundation of the legal system in Anglo American countries; based on cumulative findings of judges in individual cases.

Competitive Advantage – A total offer, vis à vis relevant competition, that is more attractive to customers. It exists when the competencies of a firm permit the firm to outperform its competitors

Competitive Strategy – A plan that attempts to define a position for the business that utilizes the competitive advantages that the business has over its competitors

Complementary Products – The products that are manufactured together, sold together, bought together, or used together. One aids or enhances the other

Confirming Houses – An agent who assists the overseas buyer by confirming, as a principal, orders already placed.

Consular Invoice – An invoice covering a shipment of goods certified (usually in triplicate) by the consul of the country for which the merchandise is destined. This invoice is used by customs officials of the country of entry to verify the value, quantity, and nature of the merchandise imported.

Consumer Goods – Goods and services bought for personal use

 

Container Freight Charge – Charge made for the packing or unpacking of cargo into or from ocean freight containers

Contract Manufacturing – Process of outsourcing manufacturing to other firms to reduce the amount of a firm’s financial and human resources devoted to the physical production of its products.

Contractual Requirements – Agreements between the company and its foreign based agents/distributors, licensees/franchisees or joint venture partners.

CostPlus Pricing – A pricing method whereby the purchaser agrees to pay the vendor an amount determined by the costs Incurred by the vendor to produce the goods or services purchased, plus a fixed percentage of that cost for profit

Credit Risk Insurance – Insurance designed to cover risks of non payment for delivered goods.

 

Customs union1– Members apply a common external tariff (e.g. the European Union).

 

 

D

 

DDA1Doha Development Agenda, sometimes Doha Round. Unofficial name of the Doha Work Programme on negotiations and implementation

 

Demographic Environment – The human population characteristics that surround a firm or nation and that greatly affect markets. The demographic environment includes such factors as age distributions, births, deaths, immigration, marital status, sex, education, religious affiliations, and geographic dispersion — characteristics that are often used for segmentation purposes

Deficiency payment1- A type of agricultural domestic support, paid by governments to producers of certain commodities and based on the difference between a target price and the domestic market price or loan rate, whichever is the less.

de minimis1Minimal amounts of domestic support that are allowed even though they distort trade — up to 5% of the value of production for developed countries, 10% for developing.

Direct Exporting – Selling directly to an importer or buyer located in a foreign market area

Distortion1When prices and production are higher or lower than levels that would usually exist in a competitive market.

Dispatch – An amount paid by a vessel’s operator to a charter if loading or unloading is completed in less time than stipulated in the charter agreement

Disposable Income – Personal income minus income taxes and other taxes paid by an individual, the balance being available for consumption or savings

Distributor (Foreign Based) – The foreign distributor purchases the product and is always responsible for payment of the export item. They assume financial risk and generally provide support and service for the product. Distributors often buy to fill their own inventories and typically carry a range of non-competitive, but complementary products

Domestic support1– (Sometimes “internal support”.) In agriculture, any domestic subsidy or other measure which acts to maintain producer prices at levels above those prevailing in international trade; direct payments to producers, including deficiency payments, and input and marketing cost reduction measures available only for agricultural production.

 

 

Dock Receipt – A receipt issued by a warehouse supervisor or port officer certifying that goods have been received by the shipping company. The dock receipt is used to transfer accountability when an export item is moved by the domestic carrier to the port of embarkation and left with the international carrier for movement to its final destination.

Dumping1Occurs when goods are exported at a price less than their normal value, generally meaning they are exported for less than they are sold in the domestic market or third-country markets, or at less than production cost.

E

Embargo – A government prohibition against the shipment of certain products to a particular country for economic or political reasons

Emerging Markets2 – The capital markets of developing countries that have liberalized their financial systems to promote capital flows with nonresidents and are broadly accessible to foreign investors

Electronic commerce1The production, advertising, sale and distribution of products via telecommunications networks.

End User – The ultimate user for which something is intended

Entry Mode – Method selected by a firm to enter into a foreign market to conduct business.

European Union (EU) – A regional economic and political organization with a combined GDP of more than U.S. $7 trillion and a population of 370 million. Its 15 members are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

Ex Works – An international trade term of sale in which, for the quoted price, the seller/exporter/manufacturer merely makes the goods available to the buyer at the seller’s “named place” of business. This trade term places the greatest responsibility on the buyer and minimum obligations on the seller. The seller does not clear the goods for export and does not load the goods onto a truck or other transport vehicle at the named place of departure. The parties to the transaction, however, may stipulate that the seller be responsible for the costs and risks of loading the goods onto a transport vehicle. Such a stipulation must be made within the contract of sale. If the buyer cannot handle export formalities the Ex Works term should not be used. In such a case Free Carrier (FCA) is recommended.

Exclusive Distribution – A very highly selective pattern of distribution is used at each level of the marketing channel.

Export Controls – To exercise control over exports for statistical and strategic purposes, Customs enforces export control laws for the U.S. Department of Commerce and other Federal agencies

Export License – A document prepared by a government authority, granting the right to export a specified quantity of a commodity to a specified country. This document may be required in some countries for most of al exports and in other countries only under special circumstances.

Export Management Company (EMC) – An EMC is a private firm that serves as the export department for several manufacturers, soliciting and transacting export business on behalf of its clients in return for a commission, salary, or retainer plus commission. An EMC maintains close contact with its clients and is supply driven. An EMC may take title to the goods it sells, making a profit on the markup, or it may charge a commission, depending on the type of products being handled, the overseas market, and the manufacturer client’s needs

Export Merchant – A company that engages in export and buys and sells on its own account.

Export Price List – Shows the list price (retail) for the merchandise to give the importer an idea of what the items sell for to the consumer so the importer can plan the markup

Export Trading Companies – A corporation or other business unit organized and operated principally for the purpose of exporting goods and services, or of providing export related services to other companies. An ETC can be owned by foreigners and can import, barter, and arrange sales between third countries, as well as export.

F

Foreign Branch – A foreign affiliate that is legally a part of the parent firm. In the U.S. tax code, foreign branch income is taxed as it is earned in the foreign country

 

Foreign Exchange2– Any type of financial instrument that is used to make payments between countries is considered foreign exchange. Examples of foreign exchange assets include foreign currency notes, deposits held in foreign banks, debt obligations of foreign governments and foreign banks, monetary gold, and SDRs

 

 

FDI1Foreign direct investment.

Foreign Freight Forwarder – A person engaged in the business of assembling, collection, consolidation, shipping and distributing less than carload or less than truckload freight. Also, a person acting as agent in the trans shipping of freight to or from foreign countries and the clearing of freight through customs, including full preparation of documents, arranging for shipping, warehousing, delivery and export clearance.

Franchising – A parent company grants another independent entity the privilege to do business in a pre-specified manner, including manufacturing, selling products, marketing technology and other business approach.

Free Trade Zones – A generic term referring to special commercial and industrial areas at which special customs procedures allow the importation of foreign merchandise without the requirement that duties be paid immediately

Free-rider1

A casual term used to infer that a country which does not make any trade concessions, profits, nonetheless, from tariff cuts and concessions made by other countries in negotiations under the most-favoured-nation principle.

G

 

G71 – Group of seven leading industrial countries: Canada, France, Germany, Italy, Japan, United Kingdom, United States.

 

G81G7 plus Russia.

G151Group of 15 developing countries acting as the main political organ for the Non-Aligned Movement.

GATS- 1 The WTO’s General Agreement on Trade in Services.

 

GATT1General Agreement on Tariffs and Trade, which has been superseded as an international organization by the WTO. An updated General Agreement is now the WTO agreement governing trade in goods. GATT 1947: The official legal term for the old (pre-1994) version of the GATT. GATT 1994: The official legal term for new version of the General Agreement, incorporated into the WTO, and including GATT 1947.

General obligations1Obligations which should be applied to all services sectors at the entry into force of the GATS agreement.

Geographical indications1– Place names (or words associated with a place) used to identify products (for example, “Champagne”, “Tequila” or “Roquefort”) which have a particular quality, reputation or other characteristic because they come from that place.

Generic1 – Copies of a patented drug, or of a drug whose patent has expired (sometimes also related to trademarks).

GPA1– Government Procurement Agreement: a “plurilateral” agreement (ie, signed by only some WTO members) covering the procurement of goods, services and capital infrastructure by governments and other public authorities

GRULAC1 – Informal group of Latin-American members of the WTO

GSP1 -Generalized System of Preferences — programmes by developed countries granting preferential tariffs to imports from developing countries.

 

 

Global Involvement – Refers to the level and/or degree of commitment the company has made to the international marketplace. The company’s involvement increases as the company evolves from being an exporter to becoming a global company. The levels of involvement are: Accidental (casual) exporting, active exporting, licensing/franchising, foreign based branch, foreign based marketing subsidiary, and foreign production.

Global Marketing – A marketing strategy that consciously addresses global customers, markets, and competition in formulating a business strategy

 

Global Marketing Information Systems – A system designed to acquire, store, catalogue, analyze, and make available to decision makers information from global sources within and external to the firm for use as the basis for planning and decision making.

Global Strategy – A strategy that seeks competitive advantage with strategic moves that are highly interdependent across countries. These moves include most or all of the following: a standardized core product that exploits or creates homogenous tastes or performance requirements, significant participation in all major country markets to build volume, a concentration of value creating activities such as R&D and manufacturing in a few countries, and a coherent competitive strategy that pits the worldwide capabilities of the business against the competition.

Gross Cost of Merchandise Sold – The gross cost of merchandise handled less the closing inventory cost. The gross cost of merchandise sold is subtracted from net sales to calculate maintained mark-up. Maintained mark-up is then adjusted by cash discounts and workroom costs to determine gross margin of profit

Gross Domestic Product (GDP) – 1. An estimate of the total national output of goods and services produced in a single country in a given time period and valued at market price. 2. GDP equals gross national product less net property income from abroad.

Gross National Product (GNP)2-Gross national product was formerly used as a measure of a country’s overall economic activity, equal to GDP less compensation of employees and property income payable to the rest of the world plus the corresponding items receivable from the rest of the world; GNP has been renamed gross national income (GNI) in the System of National Accounts.

Gross Margin – The difference between net sales and total cost of goods sold

Gross Margin of Profit – The difference between net sales and total cost of goods sold.

Gross National Product – A measure of the market value of goods and services produced by the labor and property of a nation. Includes receipts from that nation’s business operation in foreign countries, as well as the share of reinvested earnings in foreign affiliates of domestic competition

Gross Profit – Net sales minus cost of goods sold

H

Harbour Maintenance Fee – Is an ad valorem fee assessed on cargo imports and admissions into foreign trade zones. The fee is 0.125 percent of the value of the cargo and is paid quarterly, except for imports which are paid at the time of entry. Customs deposits the harbour maintenance fee collections into the Harbour Maintenance Trust Fund. The funds are available, subject to appropriation, to the Army Corps of Engineers for the improvement and maintenance of U.S. ports and harbours.

Hard Currency – The currency of a nation which may be exchanged for that of another nation without restriction. Sometimes referred to as convertible currency. Hard currency countries typically have sizeable exchange reserves and surpluses in their balance of payments.

Harmonized System1An international nomenclature developed by the World Customs Organization, which is arranged in six-digit codes allowing all participating countries to classify traded goods on a common basis. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs and many other purposes

Harmonizing formula1Used in tariff negotiations for much steeper reductions in higher tariffs than in lower tariffs, the final rates being “harmonized” i.e. closer together.

HS 6-digit1– The World Customs Organization’s Harmonized System (HS) uses code numbers to define products. A code with a low number of digits defines broad categories of products; additional digits indicate sub-divisions into more detailed definitions. Six-digit codes are the most detailed definitions that are used as standard. Countries can add more digits for their own coding to subdivide the definitions further according to their own needs. Products defined at the most detailed level are “tariff lines”

I

Indirect Exporting – Using the services of independent marketing organizations, or cooperative organizations, located within the home country in exporting.

Industrial Goods – Goods or components produced for use primarily in the production of other goods.

Industrialized Countries (IC) – (Developed Countries) A term used to distinguish the more industrialized nations — including most OECD member countries — from developing or less developed countries. The developed countries are sometimes collectively designated as the Group B countries or the North, because most of them are in the Northern Hemisphere.

Insurance Certificate – A document indicating the type and amount of insurance coverage in force on a particular shipment. Used to assure the consignee that insurance is provided to cover loss of or damage to the cargo while in transit.

Intensive Distribution – As many outlets as possible are used at each level of the marketing channel.

International Court of Justice (ICJ) – The principal judicial organ of the United Nations. It settles disputes between the sovereign nations of the world but not between private citizens.

International Monetary Fund (IMF) – A multinational organization whose objective is to promote international financial cooperation and to coordinate the stabilization of exchange rates and the establishment of freely convertible currencies.

International Product Cycle – A model developed by Professor Raymond Vernon that shows the relationship of production, consumption, and trade over the life cycle of a product. Based on empirical data for pre 1967 era, the model showed how the location of production shifted from the United States to other advanced countries and then to less developed countries.

International Trade Product Life Cycle – A trade cycle model that suggests that many products go through a cycle in which high income, mass consumption countries are initially exporters, then lose their export markets, and finally become importers of the product.

Inflation2 – A sustained increase in the general price level, often measured by an index of consumer prices. The rate of inflation is the percentage change in the price level in a given period

ISO 9000 – ISO 9000 is the general name for the quality standard accepted throughout the European Economic Community. It was initially adopted in 1987. ISO is a series of documents on quality assurance published by the Geneva based International Standards Organization. The five documents outline standards for developing Total Quality Management and a Quality Improvement Process. 9000 consists of guidelines for the selection and use of the quality systems contained in 9001 9003. 9001 outlines model of quality assurance in design, development, production, installation, and servicing. 9002, outlines a model for quality assurance in production and installation. 9003 outlines model for quality assurance for final inspection and testing. 9004 is not a standard but contains guidelines for quality management and quality system elements.

Import licensing1 – the need to obtain a permit for importing a product; administrative procedures for obtaining an import licence.

Intellectual property rights (IPR) 1– Ownership of ideas, including literary and artistic works (protected by copyright), inventions (protected by patents), signs for distinguishing goods of an enterprise (protected by trademarks) and other elements of industrial property.

J

Joint Venture – A partnership between a domestic firm and a foreign firm and/or government

K

Key countries[4]– countries in which a sense is needed for global long-term competitiveness. E.g countries like China, the United States, Japan, Germany, France, India or the United Kingdom.

L

 

Less Developed Country (LDC) – A country showing: (1) a poverty level of income, (2) a high rate of population increase, (3) a substantial portion of its workers employed in agriculture, (4) a low proportion of adult literacy, (5) high unemployment, and (6) a significant reliance on a few items for export. Terms such as third world, poor, developing nations, and underdeveloped have also been used to describe less developed countries.

Lisbon Agreement1 -Treaty, administered by the World Intellectual Property Organization (WIPO), for the protection of geographical indications and their international registration.

Local-content measure1 –  Requirement that the investor purchase a certain amount of local materials for incorporation in the investor’s product.

Licensing – A contractual transaction where the firm (licensor) offers some proprietary assets to a foreign company (licensee) in exchange for royalty fees

Lingua Franca – English has emerged as the predominate common language, or lingua franca, of international business. (i.e. countries that have many linguistic groups, such as India and Singapore, have adopted English as an official language to facilitate communication among diverse groups

M

Management Contracts – Strategic alliance where a foreign based company operates a company in a local market for a local investor

Marginal – Cost Pricing A method of determining the sales price by adding a profit margin onto either marginal cost of production or marginal cost of sales.

Market Channel Structure – The group of channel members to which a set of distribution tasks has been allocated.

Madrid Agreement1 – Treaty, administered by the World Intellectual Property Organization (WIPO), for the repression of false or deceptive indications of source on goods.

MEA1–  Multilateral environmental agreement.

MERCOSUR1– Argentina, Brazil, Paraguay and Uruguay.

MFA1– Multifibre Arrangement (1974-94) under which countries whose markets are disrupted by increased imports of textiles and clothing from another country were able to negotiate quota restrictions.

MFN1– Most-favoured-nation treatment (GATT Article I, GATS Article II and TRIPS Article 4), the principle of not discriminating between one’s trading partners.

Modes of delivery1 – How international trade in services is supplied and consumed. Mode 1: cross border supply; mode 2: consumption abroad; mode 3: foreign commercial presence; and mode 4: movement of natural persons.

Money2- Anything that is generally accepted in exchange as payment for goods and services. While the key function of money is to act as a medium of exchange, money also serves as a store of value, unit of account, and standard of deferred payment

Montreal Protocol1A multilateral environmental agreement dealing with the depletion of the earth’s ozone layer.

Multilateral1 – In the WTO, involving all members

 

 

Multi-modal1Transportation using more than one mode. In the GATS negotiations, essentially door-to-door services that include international shipping

Market Penetration – A growth strategy designed to enhance competitive advantage by developing low risk improvement or revisions to the percent product range. These are proactive moves designed to identify and target changing customer requirements, or reactive moves for market defense triggered by competitive actions.

Market Positioning – Positioning refers to the customer’s perceptions of the place a product or brand occupies in a market segment. In some markets a position is achieved by associating the benefits of a brand with the needs of life style of the segments. More often, positioning involves the differentiated company’s offering from the competition by making or implying a comparison of the specific attributes.

Market Potential – The total amount of a product for all firms in an industry that customers will purchase within a specified period at a specific level of industry wide marketing activity.

Market Profile – A breakdown of a facility’s market area according to income, demography, and lifestyle.

Market Segmentation – The process of subdividing a market into distinct subsets of customers that behave in the same way or have similar needs. Each subset may conceivably be chosen as a market to

be reached with a distinct marketing strategy.

Market Share – The company’s total sales of the product or service divided by total market sales.

Market Structure – The pattern formed by the number, size, and distribution of buyers and sellers in a market.

Marketing Channel – The system composed of marketing organizations that connect a manufacturer to the final users in a foreign market.

N

NAFTA – The North American Free Trade Agreement (NAFTA) is an agreement creating a free trade area among the United States, Canada, and Mexico, with a total population of more than 380 million and a combined GDP of U.S. $7.5 trillion. NAFTA went into effect on January 1, 1994.

Negotiated Price – A price that is the result of negotiations between the buyer and the seller.

Newly Industrializing Countries (NICs) – Relatively advanced developing countries whose industrial production and exports have grown rapidly in recent years. Examples include Brazil, Hong Kong, Korea, Mexico, Singapore, and Taiwan. The term was originated by the Organization for Economic Co operation and Development (OECD).

Non Tariff Barriers (NTBs) – The ongoing administrative, discriminatory, and ad hoc safeguard actions and practices to protect home industries. Typical NTBs include exclusion orders, standards, exclusionary distribution, and administrative delays.

O

Ocean Bill (Ocean Bill of Lading (B/L)) – A receipt for the cargo and a contract for transportation between a shipper and the ocean carrier. It may also be used as an instrument of ownership (negotiable bill of lading) which can be bought, sold, or traded while the goods are in transit. To be used in this manner, it must be a negotiable “Order” Bill of Lading.

Offshore Sourcing – A company purchases major components from its foreign subsidiary and/or produces major components from independent suppliers overseas.

 

Oligopoly – A market dominated by a small number of participants who are able to collectively exert control over supply and market prices

P

Packing Slip (Packing List) – A documents prepared by the shipper listing the kinds and quantities of merchandise in a particular shipment. A copy is usually sent to the consignee to assist in checking the shipment when received. Also referred to as a bill of parcels.

 

Penetration Pricing – The strategy of setting a product’s price relatively low in order to generate a high sales volume. This strategy is commonly associated with pricing new products that do not have identifiable price market segments.

Piggyback Marketing – An agreement whereby one manufacturer obtains distribution of products through another’s distribution channels.

Power of Attorney – A written legal document by which one person (principal) authorizes another person (agent) to perform stated acts on the principal’s behalf. For example: to enter into contracts, to sign documents, to sign checks, and spend money, etc. A principal may execute a special power of attorney authorizing an agent to sign a specific contract or a general power of attorney authorizing the agent to sign all contracts for the principal.

Pro – forma Invoice An invoice provided by a supplier prior to a sale or shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, and similar characteristics). A pro forma invoice is used: (1) as a preliminary invoice together with a quotation; (2) for customs purposes in connection with shipments of samples, advertising materials, etc.

Product Attributes – The characteristics by which products are identified and differentiated. Product attributes usually comprise features, functions, benefits and uses.

Product Life Cycle (PLC) – The normal stages that a product passes through: research and development, growth, expansion, maturity, saturation, and decline. In the research stage, sales are slow and often need to be supplemented by heavy sales and advertising efforts. In the expansion stage, sales may grow more rapidly. In the maturity stage, sales start slowing down as most people who might want the product already have it, and there are few opportunities for increasing sales. In the decline stage, sales fall and the product eventually becomes obsolete.

Product Line – A group of closely related product items.

Promotion – The communication with individuals, groups, or organizations to directly or indirectly facilitate exchanges by influencing audience members to accept an organization’s products.

Promotional Mix – Combination of different marketing promotion activities used by the export/international marketer.

Protective Tariffs – A duty or tax imposed on imported products for the purpose of making them more expensive in comparison to domestic products, thereby giving the domestic products a price advantage.

Psychographic Segmentation – The process of dividing markets into segments on the basis of consumer lifestyles.

Publicity – Non – personal communication in news story form, regarding an organization and/or its products, that is transmitted through a mass medium at no charge.

Pull Strategy – A manufacturing strategy aimed at the end consumer of a product. The product is pulled through the channel by consumer demand initiated by promotional efforts, inventory stocking procedures, etc.

Purchasing Power Parity (PPP) 2 – A theory which relates changes in the nominal exchange rate between two countries currencies to changes in the countries’ price levels. The purchasing power parity theory predicts that an increase in a currency’s domestic purchasing power will be associated with a proportional currency appreciation, and that a decrease will be associated with a proportional currency depreciation

Push Strategy – A manufacturing strategy aimed at other channel members rather that the end consumer. The manufacturer attempts to entice other channel members to carry its product through trade allowances, inventory stocking procedures, pricing policies, etc.

Q

 

Quota – The quantity of goods of a specific kind that a country permits to be imported without restriction or imposition of additional duties

S

S.W.O.T. Analysis – An assessment of an organization’s strengths, weaknesses, opportunities, and threats.

Sales Representative or Agent – Generally, a representative or agent refers to a person who is responsible for closing the sale and taking orders on a commission basis. They do not take financial responsibility or collect payment for the goods sold, and they assume no risk or responsibility for the product.

Shipper’s Export Declaration – From required for all U.S. export shipments by mail valued at more than $500 and for non mail shipments with declared Value greater than $2,500. Also required for shipments requiring a U.S. Department of Commerce validated export license or U.S. Department of State license regardless of value of goods. Prepared by a shipper indicating the value, weight, destination, and other basic information about the shipment. The shipper’s export declaration is used to control exports and compile trade statistics.

Shipper’s Letter of Instructions – A form used by a shipper to authorize a carrier to issue a bill of lading or an air waybill on the shipper’s behalf. The form contains all details of shipment and authorizes the carrier to sign the bill of lading in the name of the shipper.

Skimming Price Policy – A method of pricing that attempts to first reach those willing to buy at a high price before marketing to more price sensitive customers.

Special Documentation – Documents, other than the standard ones, the may be required by the government of the importing or exporting country.

Strategic Alliances – An agreement between two or more individuals or entities stating that the involved parties will act in a certain way in order to achieve a common goal. Strategic alliances usually make sense when parties involved have complementary strengths.

Strategy – This describes the direction the business will pursue within its chosen environment and guides the allocation of resources and effort. It also provides the logic that integrates the perspectives of functional departments and operating units, and points them all in the same direction.

Substitute Products – The products that are viewed by the user as alternatives for other products. The substitution is rarely perfect, and varies from time to time depending on price, availability, etc.

T

Target Market – A specific group of customers on whose needs and wants a company focuses its marketing efforts.

Target Return Pricing – A method of pricing that attempts to cover all costs and achieve a target return.

Tariff – A tax assessed by a government in accordance with its tariff schedule on goods as they enter (or leave) a country. May be imposed to protect domestic industries from imported goods and/or to generate revenue. Types include ad valorem, specific, variable, or some combination.

Terminal Charge – A charge made for services performed at terminals.

Trade Discount – A discount from the list price of a commodity allowed by a manufacturer or wholesaler to a merchant.

Trade Show – A stage setting event in which firms present their products or services to prospective customers in a pre formatted setting. The firms are generally in the same industry but not necessarily of the same nationality. A distinguishing factor between trade fairs and trade shows is size. A trade show is generally viewed as a smaller assembly of participants.

U

Uruguay Round – Multilateral trade negotiations launched at Punta del Este, Uruguay in September 1986 and concluded in Geneva in December 1993. Signed by Ministers in Marrakesh, Morocco, in April 1994.

V

Value – Added Tax (VAT) An indirect tax on consumption that is assessed on the increased value of goods at each discrete point in the chain of production and distribution, from the raw material stage to final consumption. The tax on processors or merchants is levied on the amount by which they increase the value of items they purchase and resell.

 

W

Wharfage – A charge assessed by a pier or dock owner for handling incoming or outgoing cargo or the charge made for docking vessels at a wharf.

Wholly Owned Subsidiaries – A subsidiary in which the firm owns 100 percent of the stock.
[1] From the WTO glossary of Terms. Henceforth referred  to as  WTO. Available on  http://www.wto.org/english/thewto_e/glossary_e/glossary_e.htm

[2] Source: The Economist Magazine

[3] Source: IMF – Glossary of Terms . Available on http://www.imf.org/external/np/exr/glossary/showTerm.asp

[4] Lasserre, P., 2012. Global strategic management. p192.Palgrave Macmillan.