International business, midterm-exam ch 1-9 – Flashcards
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Democracy
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Political system in which government is by the people exercised either directly or through elected representatives
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Market economy
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An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced
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Political economy
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refers to its political, economic and legal systems
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Mixed economy
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Includes some elements of a market economy and some elements of a command economy
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Main types of legal systems
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Common law, civil law, theocratic law
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Ethical systems
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A set of moral principles, or values, that are used to guide and shape behavior
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Free trade
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a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce or sell to another country
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International monetary found (IMF)
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Maintains order in the international monetary system (opprettholder orden i det internasjonale pengesystemet)
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World trade organization (WTO)
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polices the world trading system and ensures nations adhere to the rules established in two treaties
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what is driving the move toward greater globalization
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declining trade and investment barriers, and technological change
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foreign direct investments (FDI)
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occurs when a firm invests resources in business activities outside its home country
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regional economic integration
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agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other
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free trade area
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all barriers to the trade of goods and services among member countries are removes, but members determine their own trade policies with regard to nonmembers
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customs union
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eliminates trade barriers between member countries and adopt a common external trade policy.
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common market
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no barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production.
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economic union
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involves the free flow of products and factors of production between members the adoption of a common external trade policy, and in addition, a common currency, harmonization of the member countries tax´s rates, and a common monetary and fiscal policy
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political union
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independent states are combined into a single union, EU, U.S
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Trade creation
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occurs when low cost producers within the free trade area replace high cost domestic producers
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trade diversion
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occurs when higher cost suppliers within the free trade area replace lower cost external suppliers
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mercosur
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free trade pact between brazil and argentina
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NAFTA
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North america free trade agreement: u.s., canada, mexico.
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globalization of markets
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the merging of historically distinct and separate national markets into one huge global marketplace
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globalization of products
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the sourcing of goods and services from locations around the globe to take advantages of national
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exporting
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sales of products produced in one country to residents of another country. expensive to bring.
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globalization
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refers to the trend towards a more integrated global economic system
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licencing
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occurs when a firm licenses the right to produce its product, its production processes, or its brand name or trademark to another firm, in return for giving the licensee there rights, the licensor collects a royalty fee on every unit the licensee sells
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franchising
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a specialized form for licensing in which the franchiser sells intangible property to the franchisee and insists on rules to conduct the business
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cross cultural literacy
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an understanding of how cultural differences across and within nations can affect the way in which business is practiced
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culture
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system of values and norms that are shared among group of people and that when taken together constitute a design for living
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values
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provide the context within which a society´s norms are established and justified
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norms
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the social rules that govern the actions of people toward one another
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folkways
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the routine conventions of everyday life
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mores
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norms that are seen as central to the functioning of a society and to its social life
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social structure
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is the society´s basic social organization
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class
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the position a person has by birth, can be changed through achievement and luck
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caste
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social position is determined by the family into which a person is born, and change in that position is unlikely
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drivers of globalization
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declining trade and investments barriers, and technological change
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world bank
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promotes economic development
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international monetary found
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maintains order in the international monetary system
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political system
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system of government in a nation
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socialism
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karl marx. state ownership.
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capitalism
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fredrick von hayek
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totalitarianism
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form of government in which one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited
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collectivism
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a system that stresses the primacy of collective goals over individual goals
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individualism
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suggests individuals should have freedom over their own economic and political pursuits
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legal system
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refers to the rules, or laws, that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained. regulate business practices.
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common law
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based on tradition, precedent, and custom
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civil law
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based on a very detailed set of laws organized into codes
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theocratic law
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based on religious teaching
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property law
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protect property rights, which refers to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource
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contract law
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the body of laws that governs contract enforcement
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OECD
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organization for economic cooperation and developement
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foreign corrupt practices act
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limits corruption in U:S
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united nations convention on contracts for the international sales of goods
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CIGS. a set of rules governing certain aspects og the making and performance of commercial contracts between sellers and buyers who have their places of business in different nations
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tragedy of commons
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occurs when a resource held in common by all, but owned by no one, is overused by individuals resulting in its degradation
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social responsibility
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the idea that business people should take the social consequences of economic actions into account when making business decisions
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roots of unethical behavior
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societal culture, decision making process, leadership, unrealistic performance goals, organization culture, personal ethics
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mercantilism
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the first economic philosophy advocating that countries should simultaneously encourage exports and discourage imports. in a countries best interests to maintain a trade surplus, to export more than it imports
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absolute advantage
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when a country is more efficient than any other country in producing a product
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comparative advantage
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a country should specialize in the production of those goods that it produces most efficiently and buy the goods it produces less efficiently fro other countries. trade is a positive sum game in which all gain.
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adam smith
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promoted unrestricted trade. trade is not a sum-zero game. country´s should specialize in the production of goods for which they have an absolute advantage and then trade of these goods produced by other countries. countries differ in their ability to produce goods efficiently
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david ricardo
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comparative advantage
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heckscher and ohlin
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comparative advantage reflects differences in national factor endowments (the extent to which a country is endowed with resources such as land, labor, and capital)
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porter
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diamond. factors explain a nation´s dominance.
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quota rent
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the extra profits that producers make when supply is artificially limited by an import quota
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subsidy
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a government payment to a domestic producer
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local content requirement
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demands that some specific fraction of good can be produced domestically
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strategic trade policy
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in cases where there may be important first mover advantages, government can help firms from their countries attain these advantages
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import quota
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a direct restriction on the quantity of some good that may be imported to a country
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voluntary export restraints
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quota on trade imposed by the exporting country, typically at the request of the importing country´s governement
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FDI in the form of greenfield investment
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increases the level of competition in a market, drives down prices, improves the wellfare of consumers
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FDI in the form of acquisition
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quicker to execute. easier, less risky.
