Understanding Business–10th Edition–Chapter 3 – Flashcards
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importing
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buying products from oanoter country
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exporting
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selling products to another country
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free trade
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the movement of goods and services amon ations without political or economic barriers
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comparative advantage theory
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theory that states that a country should sell to tother countries those products that it produces most effectviely and efficiently and buy from other countries those products that it cannot produce as effectively/efficiently
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absolute advantage
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the advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more effciently than all other countries
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balance of trade
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the total value of a nation's exports compared to its imports measured over a particular period
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trade surplus
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a favorable balance of trade, occurs when teh value of a country's exports that of its imports
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trade deficit
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an unfavorable balance of trade, occurs when the value of a country's imports exceeds that of its exports
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balance of payments
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difference between money coming into a country (from exports) and money leaving the country (from imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment
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dumping
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selling products in a foregin country at lower prices than those charged in the producing country
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licensing
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a global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (royalty)
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contract manufacturing
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foreign country's production of a private label goods to which a domestic company then attaches its brand name or trademark, part of the broad category of outsourcing
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joint venture
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a partnership in which two or more companies (often from different countries) join to undertake a major project
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strategic alliance
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long term partnership between two or more companies established to help each company build competitive market advantages
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foreign direct investment (FDI)
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buying of permanent property and businesses in foreign nations
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foreign subsidiary
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company owned in a foreign country by another company, called the parent company
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multinational corportation
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an organization that manufactures and markets products in many countries and has multinational stock ownership and multinational management
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sovereign wealth funds (SWFs)
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investment funds controlled by governments holding large stakes in foreign companies
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exchange rate
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value of one nation's currency relative to the currencies of other countries
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devaluation
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lowering the value of a nation's currency relative to other currencies
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countertrading
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a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services
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trade protectionism
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the use of government regulations to limit the import of goods and services
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tariff
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a tax imposed on imports
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import quota
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a limit on the number of products in certain categories taht a nation can import
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embargo
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a complete ban on the import or export of a certain product, or stopping of all trade with a particular country
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General agreement on tariffs and trade (GATT)
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1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions
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World trade organization (WTO)
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international organization that replaced the GATT and was assigned te duty to mediate trade disputes among nations
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common market
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regional group of countries that have common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange, also called a trading bloc. (European Union)
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North American free trade agreement (NAFTA)
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agreement that created free trade area among US, Canada, and Mexico
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North American free trade agreement (NAFTA)
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agreement that created free trade area among US, Canada, and Mexico
