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E eclectic paradigm Argument that combining location-specific assets or resource endowments and the firm's own unique assets often requires FDI; it requires the firm to establish production facilities where those foreign assets or resource endowments are located. e-commerce Conducting business on-line through the Internet. economic exposure The extent to which a firm's future international earning power is affected by changes in exchange rates. economic risk The likelihood that events, including economic mismanagement, will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a particular business enterprise. economic union A group of countries committed to (1) removing all barriers to the free flow of goods, services, and factors of production between each other, (2) the adoption of a common currency, (3) the harmonization of tax rates, and (4) the pursuit of a common external trade policy. economies of scale Cost advantages associated with large-scale production. ecu A basket of EU currencies that serves as the unit of account for the EMS. efficient market A market where prices reflect all available information. ending rate The spot exchange rate when budget and performance are being compared. ethical systems Cultural beliefs about what is proper behavior and conduct. ethnocentric behavior Behavior that is based on the belief in the superiority of one's own ethnic group or culture; often shows disregard or contempt for the culture of other countries. ethnocentric staffing A staffing approach within the MNE in which all key management positions are filled by parent-country nationals. eurobonds A bond placed in countries other than the one in whose currency the bond is denominated. eurocurrency Any currency banked outside its country of origin. eurodollar Dollar banked outside the United States. European Free Trade Association (EFTA) A free trade association including Norway, Iceland, and Switzerland. European Monetary System (EMS) EU system designed to create a zone of monetary stability in Europe, control inflation, and coordinate exchange rate policies of EU countries. European Union (EU) An economic group of 15 European nations: Austria, Belgium, Great Britain, Denmark, Finland, France, Germany, Greece, the Netherlands, Ireland, Italy, Luxembourg, Portugal, Spain, and Sweden. Established as a customs union, it is now moving toward economic union. (Formerly the European Community.) exchange rate The rate at which one currency is converted into another. exchange rate mechanism (ERM) Mechanism for aligning the exchange rates of EU currencies against each other. exclusive channels A distribution channel that outsiders find difficult to access. expatriate failure The premature return of an expatriate manager to the home country. expatriate manager A national of one country appointed to a management position in another country. experience curve Systematic production cost reductions that occur over the life of a product. experience curve pricing Aggressive pricing designed to increase volume and help the firm realize experience curve economies. export management company Export specialists who act as an export marketing department for client firms. Export-Import Bank (Eximbank) Agency of the US government whose mission is to provide aid in financing and facilitate exports and imports. exporting Sale of products produced in one country to residents of another country. externalities Knowledge spillovers. externally convertible currency Nonresidents can convert their holdings of domestic currency into foreign currency, but the ability of residents to convert the currency is limited in some way. |
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