question

Exports

answer

domestically produced goods and services sold in other countries

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Imports

answer

foreign-made products purchased by domestic consumers

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Balance of trade

answer

difference between a nation's exports and imports

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Balance of payments

answer

overall flow of money into or out of a country

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Exchange rate

answer

is the rate at which its currency can be exchanged for the currencies of other nations

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Devaluation

answer

drop in a currency's value relative to other currencies or to a fixed standard

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Infrastructure

answer

refers to basic systems of communications, transportation, and energy facilities in a country.

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Tariffs

answer

taxes, surcharges, or duties on foreign products

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Quota

answer

limit set on the amounts of particular products that countries can import during specified time periods.

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Dumping

answer

selling products abroad at prices below production costs or below typical prices in the home market to capture market share from domestic competitors.

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Embargo

answer

total ban on importing specific products or a total halt to trading with a particular country

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Exchange control

answer

restriction on importation of certain products or against certain companies to reduce trade and expenditures of foreign currency.

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General Agreement on Tariffs and Trade (GATT)

answer

international trade accord that substantially reduced worldwide tariffs and other trade barriers.

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World Trade Organization (WTO)

answer

159-member international institution that monitors GATT agreements and mediates international trade disputes.

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World Bank

answer

organization established by industrialized nations to lend money to less-developed countries.

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International Monetary Fund (IMF)

answer

organization created to promote trade, eliminate barriers, and make short-term loans to member nations that are unable to meet their budgets.

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North American Free Trade Agreement (NAFTA)

answer

agreement among the United States, Canada, and Mexico to break down tariffs and trade restrictions.

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Central America-Dominican Republic Free Trade Agreement (CAFTA-DR)

answer

agreement among the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic to reduce tariffs and trade restrictions

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European Union(EU)

answer

28-nation European economic alliance

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Countertrade

answer

barter agreement whereby trade between two or more nations involves payment made in the form of local products instead of currency.

question

Franchise

answer

contractual agreement in which a franchisee gains the right to produce and/or sell the franchisor's products under that company's brand name if they agree to certain operating requirements.

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Foreign licensing agreement

answer

international agreement in which one firm allows another to produce or sell its product, or use its trademark, patent, or manufacturing processes, in a specific geographical area in return for royalties or other compensation.

question

Subcontracting

answer

international agreement that involves hiring local companies to produce, distribute, or sell goods or services in a specific country or geographical region.

question

Joint venture

answer

partnership between companies formed for a specific undertaking

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Multinational Corporation (MNC)

answer

firm with significant operations and marketing activities outside its home country

question

Global business strategy

answer

offering a standardized, worldwide product and selling it in essentially the same manner throughout a firm's domestic and foreign markets

question

Multi domestic business strategy

answer

developing and marketing products to serve different needs and tastes of separate national markets

question

How does a business decide whether to trade with a foreign country?

answer

A business will decide to trade with a foreign country if it feels like the trade will benefit them financially. Business's base decisions on availability, price, quality of labor, natural resources, capital, and entrepreneurship; the basic factors of production.

question

What are the key factors for participating in the information economy on a global basis?

answer

Three key decisions a company must make before reaching the final decision to go global are determining which foreign markets to enter, analyzing the expenditures required to enter a new market, and deciding the best way to organize the overseas operations.

question

Why have developing countries such as China and India become important international markets?

answer

Developing countries are becoming important international market due to their involvement in global business increases, potential to reach new consumers. China and India are so sought after because of their large markets of about 1.3 billion. Many firms are establishing operations in these and other developing countries to position themselves to benefit from local sales driven by expanding economies and rising standards of living.

question

What is the difference between absolute advantage and comparative advantage?

answer

Absolute advantage is the ability to produce something using fewer resources than other producers while comparative advantage is the ability to produce something at lower opportunity costs than other producers.

question

Example of absolute advantage:

answer

The French worldwide efficient wine Industry, due to having favorable climate, good soils, and accumulated expertise the French has the most efficient wine among the world. China's silk production.

question

Example of comparative advantage:

answer

China is profiting from its comparative advantage in producing textiles. India offers the services of its educated, English speaking tech workers at a lower wage.

question

Can a nation have a favorable balance of trade and an unfavorable balance of payments?

answer

Yes, as the balance of trade is only one part of the balance of payments. Other factors also affect the balance of payments, including overseas loans and borrowing, international investments, profits from such investments, and foreign aid payments.

question

Identify several potential barriers to communication when a company attempts to conduct business in another country.

answer

Barriers include countries regulations on business, different consumer demands, economic barriers, etc. Barriers to international trade can be broken down into 3 categories; Social and Cultural barriers, economic barriers, legal and political barriers.

question

How might these be overcome?

answer

...To overcome these barriers you should study the customs and symbols of the county you are doing business to assure you do not offend anyone.

question

balance of trade

answer

exports=imports

question

surplus of trade

answer

exports>imports

question

deficit of trade

answer

exports<imports

question

Home-based businesses

answer

firm operated from the residence of the business owner.

question

Business plan

answer

document that provides an orderly statement of a company's goals, methods, and standards.

question

Small Business Administration (SBA)

answer

principal government agency concerned with helping small U.S. firms.

question

Microloans

answer

small-business loans often used to buy equipment or operate a business

question

Business incubator

answer

local programs designed to provide low-cost shared business facilities to small start-up ventures.

question

Venture capital

answer

money invested in a business firm or group of individuals in exchange for an ownership share.

question

Franchising

answer

contractual business arrangement between a manufacturer or other supplier, and a dealer such as a restaurant operator or retailer.

question

Franchisee

answer

individual or business firm purchasing a franchise.

question

Franchisor

answer

firm whose products are sold to customers by the franchisee.

question

Sole proprietorship

answer

business ownership in which there is no legal distinction between the sole proprietor's status as an individual and his or her status as a business owner.

question

Partnership

answer

association of two or more persons who operate a business as co-owners by voluntary legal agreement.

question

Corporation

answer

legal organization with assets and liabilities separate from those of its owner(s).

question

S Corporation

answer

corporations that do not pay corporate taxes on profits; instead, profits are distributed to shareholders, who pay individual income taxes.

question

Limited-liability Corporation (LLC)

answer

corporation that secures the corporate advantage of limited liability while avoiding the double taxation characteristic of a traditional corporation.

question

Employee ownership

answer

business ownership in which workers own shares of stock in the company that employs them.

question

Not-for-profit corporations

answer

organization whose goals do not include pursuing a profit.

question

Stockholders

answer

owners of a corporation due to their purchase of stock in the corporation.

question

Preferred stock

answer

shares that give owners limited voting rights, and the right to receive dividends or assets before owners of common stock.

question

Common stock

answer

shares that give owners voting rights but only residual claims to the firm's assets and income distributions.

question

Board of Directors

answer

governing body of a corporation.

question

Merger

answer

agreement in which two or more firms combine to form one company.

question

Acquisition

answer

agreement in which one firm purchases another.

question

Vertical merger

answer

combines firms operating at different levels in the production and marketing process.

question

Horizontal merger

answer

joins firms in the same industry for the purpose of diversification, increasing customer bases, cutting costs, or expanding product lines.

question

Conglomerate merger

answer

combines unrelated firms, usually with the goal of diversification, spurring sales growth, or spending a cash surplus in order to avoid a takeover attempt.

question

Joint venture

answer

partnership between companies formed for a specific undertaking.

question

Describe how a small business might use innovation to create new jobs.

answer

they give people the opportunity and outlet for developing new ideas, which can turn into new industries which leads to more jobs.

question

What are the major nontariff restrictions affecting international business?

answer

quotas, embargoes, exchange controls. Quotas limit the # products that can be produced. Embargoes place a boycott on importing specific products. Exchange control places a restriction on importation of products or against certain companies.

question

Describe the difference between tariff and nontariff restrictions?

answer

Both tariffs and nontariff limit the importing of goods. However nontariff is a limit or barrier on an import whereas tariffs are taxation, surcharge of an import, basically a percentage of its revenue

question

What is NAFTA?

answer

is a free-trade area among the US, Canada, and Mexico. It is used to break down tariffs and trade restrictions.

question

How does NAFTA work?

answer

It works by eliminating all trade barriers and investment restrictions which make it much more possible to trade freely. After NAFTA was set in place trade has double among its partners.

question

How has the EU helped trade among European businesses?

answer

by promoting economic and social progress, introducing European citizenship as a complement to national citizenship, and giving the EU a significant role in international affairs. Unifying standards and laws can contribute to economic growth.

question

What are the key choices a company must make before reaching the final decision to go global?

answer

determining which foreign markets to enter, analyzing the expenditures required to enter a new market, and deciding the best way to organize the overseas operations.

question

Why do so many small businesses fail before they reach their tenth year?

answer

Management inexperience, inadequate financing, and the challenge of meeting government regulations.

question

What are the benefits of developing and writing an effective business plan?

answer

...The benefits of having a business plan include: * Helping you to clarify your vision and deciding whether or not to forge ahead with the idea. * Determining if your product and/or service has a sufficient market to support it and whether or not it will be profitable. * Providing an estimate of your start-up costs and how much you'll need to invest or finance. * Convincing investors and lenders to fund your business. * Defining your target market (who your customers are or will be) and how to best reach them through strategic marketing actions or expanding market coverage or reach. * Establishing or reevaluating your competitive position within the marketplace, by conducting a thorough analysis of the competition (finding out where your competitor's weaknesses are and how you can take advantage of them). * Defining corporate objectives and programs to achieve those objectives. * Helping your business make money from the start by developing effective operational strategies. * Understanding the risks involved and anticipating potential problems so you that can solve them before they become disasters. * Setting a value on a business for sale or for legal purposes.

question

What is the Small Business Administration?

answer

principal government agency concerned with helping small U.S. firms.

question

How does it assist small companies, financially and in other specialized ways?

answer

...The SBA guarantees business loans; helps small businesses compete for government set-aside programs; and provide business information, advice, and training to owners of small businesses. It also advocates for small-business interests within the federal government.

question

Describe how local governments and business incubators help small firms get established and grow.

answer

...Local government helps educate the business to help them be successful and create jobs for others. Local governments fund educational opportunities, small business administration, networking opportunities - make business successful to create jobs. Business incubator - opportunity for a business to work in predetermined structure to provide their infrastructure. Business incubator provide a protective environment that helps businesses grow and slowly teach them to run a business

question

Why are so many small-business owners attracted to franchising?

answer

...Starting a small, independent company can be a risky, time-consuming endeavor, but franchising can reduce the amount of time and effort needed to expand. Also the brand is often familiar to prospective customers.

question

Under what circumstances might it be better to start an entirely new business instead of purchasing a franchise?

answer

...Drawbacks for the franchisee include an initial outlay of expenses, problems due to failure on the part of the franchisor or other franchisees, and restrictive franchise agreements.

question

What are the benefits and drawbacks to traditional corporate structure?

answer

...? Because a corporation is a separate legal entity, its stockholders have limited financial risk. If the firm fails, they lose only the $ they invested. Also they are protected, personally, from lawsuits. If a suit is filed it goes against the company, not the owners of the company. A disadvantage is double taxation of corporate earnings. After a corporation pays all taxes its owners pay personal taxes on their profits they receive from the corporation in the form of dividends.

question

How do S corporations and limited liability corporations enhance the corporate legal structure?

answer

...These companies can elect to pay federal income taxes as partnerships while retaining the liability limitations typical of corporations. S corporations are taxed only once. S corporations do not pay corporate taxes on their profits. Instead, the untaxed profits of S corporations are paid directly as dividends to shareholders, who then pay the individual tax rate.

question

Cooperatives appear frequently in agriculture. Describe another industry in which you think collative ownership would be beneficial, and explain why.

answer

...FTD was founded as Florists' Telegraph Delivery in 1910, to help customers send flowers remotely on the same day by using florists in the FTD network who are near the intended recipient. It provides fresh flowers for people in different cities.

question

How are ownership and management separated in corporations?

answer

...The five levels are stockholders (own the corporation), board of directors (set overall policy and hires CEO), top management (CEO hire managers), middle management, and supervisory management.

question

How might a joint venture between a commercial firm and a not-for-profit organization help both achieve their goals?

answer

...Joint ventures give nonprofits the opportunity to raise capital outside of individual and corporate giving while offering third parties a stake in the enterprise; neither can be done directly with nonprofits since they are not "owned" and only distribute earnings for their respective charitable purposes. Not-for-profit organizations receive the funding, marketing exposure, and sometimes manpower the might not otherwise generate.

question

Entrepreneur

answer

risk taker in the private enterprise system; a person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business.

question

Classic entrepreneur

answer

person who identifies a business opportunity and allocates available resources to tap that market.

question

Serial entrepreneur

answer

person who starts one business, runs it, and then starts and runs additional businesses in succession.

question

Social entrepreneur

answer

person who recognizes societal problems and uses business principles to develop innovative solutions.

question

Lifestyle entrepreneur

answer

person who starts a business to gain flexibility in work hours and control over his or her life.

question

Seed capital

answer

initial funding used to launch a company.

question

Debt financing

answer

borrowed funds that entrepreneurs must repay.

question

Equity financing

answer

funds invested in new ventures in exchange for part ownership.

question

Venture capitalists

answer

business organizations or groups of individuals that invest in early-stage, high-potential growth companies.

question

Angel investors

answer

wealthy individuals who invest money directly in new ventures in exchange for equity.

question

Intrapreneurship

answer

process of promoting innovation within the structure of an existing organization.

question

Skunkworks

answer

project initiated by an employee who conceives an idea, convinces top management of its potential, and then recruits human and other resources from within the company to turn the idea into a commercial project.

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