Business: A Changing World, Chapter 3 – Flashcards
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International Business
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The buying, selling, and trading of goods and services across national boundaries.
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Absolute Advantage
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A monopoly that exists when a country is the only source of an item, or the most efficient producer of an item.
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Comparative Advantage
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The basis of most international trade, when a company specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.
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Outsourcing
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The transferring of manufacturing or other tasks, such as data processing, to countries where labor and supplies is less expensive.
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Exporting
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The sale of goods and services to foreign markets.
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Importing
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The purchase of goods and services from foreign services
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Balance of Trade
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The difference in value between a nation's exports and its imports
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Trade Deficit
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A nation's negative balance of trade, which exits when that country imports more than it exports.
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Balance of Payments
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The difference between the flow of money into and out of a country.
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Exchange Rate
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The ratio at which one nation's currency can be exchanged for another nation's currency.
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Import Tariff
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A tax levied by a nation on goods imported into the country.
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Exchange Controls
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Regulations that restrict the amount of currency that can be bought or sold.
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Quota
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A restriction on the number of unites of a particular product that can be imported into a country.
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Embargo
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A prohibition on a particular product.
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Dumping
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The act of a country or business selling products at less than what it costs to produce them.
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Cartel
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A group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets.
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General Agreement on Tariffs and Trade (GATT)
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A trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations where international trade problems could be discussed and resolved.
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The World Trade Organizaiton (WTO)
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International organization dealing with the rules of trade between nations.
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North American Free Trade Agreement (NAFTA)
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Agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade between Canada, the US, and Mexico.
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European Union (EU)
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A union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.
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Asia-Pacific Economic Cooperation (APEC)
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An international trade alliance that promotes open trade and economic and technical cooperation among member nations.
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World Bank
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An organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries; formally known as the International Bank for Reconstruction and Development.
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International Monetary Fund (IMF)
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Organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.
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Countertrade Agreements
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Foreign trade agreements that involve bartering products for other products instead of for currency
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Trading Company
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A firm that buys goods in one country and sells them to buyers in another
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Licensing
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A trade agreement in which one company, the licensor, allows another company, the licensee, to use its company name, products, patents, etc. in exchange for a fee or royalty.
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Franchising
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A form of licensing in which a company, the franchiser, agrees to provide a franchisee a name, logo, methods of operation, advertising, etc. in return for a financial commitment and the agreement to conduct business in accordance with the franchiser's standard of operations.
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Contract Manufacturing
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The hiring of a foreign company to produce a specified volume of the initiating company's product to specification; the final product carries the domestic firm's name.
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Offshoring
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The relocation of business processes by a company or subsidiary to another country. Offshoring is different than outsourcing because the company retains control of the off shored processes.
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Joint Venture
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The sharing of the cots and operation of a business between a foreign company and a local partner.
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Strategic Alliance
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A partnership formed to create competitive advantage on a worldwide basis.
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Direct Investment
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The ownership of overseas facilities.
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Multinational Corporation (MNC)
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A corporation that operates on a worldwide scale, without significant ties to any one nation.
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Multinational Strategy
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A plan, used by international companies, that involves customizing products, promotion, distribution according to cultural, technological, regional, and national differences.
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Global Strategy (Globalization)
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A strategy that involves standardizing products for the whole world, as if it were a single entity.
