International Business chapter 1-3 – Flashcards
Unlock all answers in this set
Unlock answersquestion
international business
answer
A business whose activities are carried out across national borders
question
foreign business
answer
the operations of a company outside its home or domestic market
question
multidomestic company (MDC)
answer
an organization with multicountry affiliates, each of which formulates its own business strategy based on perceived market differences
question
global company (GC)
answer
an organization that attempts to standardize and integrate operations worldwide in all functional areas
question
international company (IC)
answer
A company that conducts business across national borders. global or multidomestic company
question
environment
answer
all the forces surrounding and influencing the life and development of the firm
question
uncontrollable forces
answer
External forces over which management has no direct control, although it can exert an influence
question
controllable forces
answer
Internal forces that management administers to adapt to changes in the uncontrollable forces
question
domestic environment
answer
all the uncontrollable forces originating in the home country that surround and influence the firm's life and development
question
foreign environment
answer
all the uncontrollable forces originating outside the home country that surround and influence the firm
question
international environment
answer
Interaction between domestic and foreign environmental forces or between sets of foreign environmental forces
question
self-reference criterion
answer
unconscious reference to one's own cultural values when judging behaviors of others in a new and different environment
question
foreign direct investment (FDI)
answer
direct investments in equipment, structures and organizations in a foreign country at a level that is sufficient to obtain significant management control; does not include mere foreign investment in stock markets
question
exporting
answer
the transportation of any domestic good or service to a destination outside a country or region
question
importing
answer
the transportation of any good or service into a country or region, from a foreign origination point
question
economic globalization
answer
the tendency toward an international integration of goods, tech, info, labor, and capital, or the process of making this integration happen
question
mercantilism
answer
an economic philosophy based on the belief that 1.a nations wealth depends on accumulated treasure, usually precious metals such as gold or silver and 2. to increase wealth, government policies should promote exports and discourage imports
question
absolute advantage
answer
theory that a nation has absolute advantage when it can produce a larger amount of a good or service for the same amount of inputs as can another country or when it can produce the same amount of a good or service using fewer inputs than could another country
question
comparative advantage
answer
theory that a nation having absolute disadvantages in the production of two goods with respect to another nation has a comparative or relative advantage in the production of the good in which its absolute disadvantage is less
question
offshoring
answer
locating activities in another nation
question
exchange rate
answer
The price at which one currency is exchanged for another.
question
currency devaluation
answer
the lowering of a currency's price in terms of other currencies
question
resource endowment
answer
Theory that countries export products requiring large amounts of their abundant production factors and import products requiring large amounts of their scarce production factors
question
overlapping demand
answer
theory that trade in manufactured goods will be greater between nations with similar levels of per capita income, and that the goods traded will be those for which consumers in both countries demand the same good
question
product differentiation
answer
the development of products that have unique differences, with the intent of positivity influencing demand
question
international product life cycle (IPLC)
answer
a theory explaining why a product that begins as a nations export eventually becomes its import
question
economies of scale
answer
situations where the average cost of producing each unit of output decreases as a plant gets larger and output increases
question
experience curve
answer
Reduction of unit costs of production as accumulated volume increases, due to improved efficiency resulting from increased cumulative experience and learning.
question
national competitiveness
answer
a nations relative ability to design, produce, distribute or service products within an international trading context while earning increasing returns on its resources
question
portfolio investment
answer
the purchase of stocks and bonds to obtain a return on the funds invested
question
direct investment
answer
the purchase of sufficient stock in a firm to obtain management control
question
monopolistic advantage theory
answer
theory that foreign direct investment is made by firms in monopolistic industries possessing technical and other advantages over indigenous firms
question
internalization theory
answer
the concept that to obtain higher return on its investment a firm will transfer its superior knowledge to a foreign subsidiary rather than sell it in the open market
question
dynamic capability
answer
theory that for a firm to successfully invert overseas, it must have not only ownership of unique knowledge or resources but the ability to dynamically create and exploit these capabilities over time
question
eclectic theory of international production
answer
theory that for a firm to invest overseas, it must have three kinds of advantages ownership specific internalization and location specific
question
new institutional theory
answer
understanding of institutions as social constructs, a collection of norms that structure the relations of individuals to one another
question
formal institutions
answer
institutions that influence behavior through laws and regulations
question
informal institutions
answer
institutions that influence behavior through norms, values, costumes and ideologies
question
united nations (UN)
answer
192 member organization dedicated to the promotion of peace and stability of the world
question
general assembly
answer
deliberative body of the UN made up of all member-nations, each with one vote regardless of size, wealth or power
question
security council
answer
main peacekeeping body of the UN, composed of 15 members including 5 permanent members
question
economic and social council (ECOSOC)
answer
UN body concerned with economic and social issues such as trade, development, education, and human rights
question
international court of justice (ICJ)
answer
UN body that makes legal decisions involving disputes between national governments
question
secretariat
answer
the staff of the UN, headed by the secretary-general
question
bretton woods
answer
1944 conference at which allied nations' treasury and central bank representatives met to establish the International Monetary Fund and the World Bank
question
International monetary Fund (IMF)
answer
institution that fosters global monetary cooperation, financial stability international trade, high employment and sustainable economic growth and reduction of poverty
question
world bank
answer
institution that lends money for development projects
question
special drawing rights (SDRs)
answer
an international reserve asset established by the IMF
question
per value
answer
stated value
question
world trade organization (WTO)
answer
an international organization that deals with rules pf trade between nations
question
Doha Development agenda
answer
WTO extended conference on trade
question
trade related intellectual property rights (TRIPS)
answer
refers to the WTO agreement that protects copyrights trademarks, trade secrets, and other intellectual property matters
question
organization for economic cooperation and development (OECD)
answer
group of developed countries dedicated to promoting economic expansion in its member nations
question
Free trade area (FTA)
answer
area in which tariffs among members have been eliminated but members keep their external tariffs
question
customs union
answer
collaboration that adds common external tariffs to an FTA
question
common market
answer
customs union that includes mobility of services, people, and capital within the union
question
complete economic integration
answer
integration on economic and political levels
question
north American free trade agreement (NAFTA)
answer
agreement creating a free trade area among canada mexico and the united states
question
mercosur or mercosul, the common market of the south
answer
a south american customs union of argentina paraguay brazil and uruguay
question
association of southeast asian nations (ASEAN)
answer
agreement among southeast asian nations that began as a security agreement and has developed toward a common market
question
european union (EU)
answer
a body of 27 european countries committed to economic and political integration
question
european monetary union (EMU) or economic and monetary union
answer
EU group that established use of the euro in the 17 country euro zone
question
european parliament
answer
EU legislative body whose members are popularly elected from member nations
question
council of the european union
answer
the EU's primary policy setting institution
question
european commission
answer
body responsible for the EU's day to day operations
question
european central bank
answer
the central bank for europe's single currency, the euro
question
european court of justice
answer
the highest court of the EU it interprets EU law
