Ch. 2 Business in a Borderless World Flashcards
Absolute Advantage
a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item
Asia–Pacific Economic Cooperation (APEC)
community established in 1989 to promote international trade and facilitate business; as of 2013, has 21 member countries
Association of Southeast Asian Nations (ASEAN)
trade alliance that promotes trade and economic integration among member nations in Southeast Asia
Association of Southeast Asian Nations (ASEAN)
trade alliance that promotes trade and economic integration among member nations in Southeast Asia
Balance of Payments
the difference between the flow of money into and out of a country
Balance of Trade
the difference in value between a nation’s exports and its imports
Cartel
a group of firms or nations that agree to act as a monopoly and not compete with each other in order to generate a competitive advantage in world markets
Comparative Advantage
the basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items
Contract Manufacturing
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
Counter Trade Agreements
foreign trade agreements that involve bartering products for other products instead of for currency
Direct Investing
the ownership of overseas facilities
Dumping
the act of a country or business selling products at less than what it costs to produce them
Embargo
a prohibition on trade in a particular product
Exchange Controls
regulations that restrict the amount of currency that can be bought or sold
Franchising
a form of licensing in which a company—the franchisor—agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with a franchiser’s business, in return for a financial commitment and the agreement to conduct business in accordance with the franchisor’s standard of operations
General Agreement on Tariffs and Trade (GATT)
a trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved
Global Strategy (globalization)
a strategy that involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity
Tariff
a tax levied by a nation on imported or exported goods
Infrastructure
the physical facilities that support a country’s economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems
International Monetary Fund (IMF)
organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation
Joint Venture
a partnership established for a specific project or for a limited time involving the sharing of the costs and operation of a business, often between a foreign company and a local partner
Licensing
a trade agreement in which one company—the licensor—allows another company—the licensee—to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty
Multinational Corporation
a corporation that operates on a worldwide scale, without significant ties to any one nation or region
Multinational Strategy
a plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences
North American Free Trade Agreement (NAFTA)
agreement that eliminated most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among Canada, the United States, and Mexico
Offshoring
the relocation of business processes by a company or subsidiary to another country; it differs from outsourcing because the company retains control of the offshored processes
Outsourcing
the transferring of manufacturing or other tasks—such as data processing—to countries where labour and supplies are less expensive
Quota
a restriction on the number of units of a particular product that can be imported into a country
Strategic Alliance
a partnership formed to create competitive advantage on a worldwide basis
Trade Deficit
a nation’s negative balance of trade, which exists when that country imports more products than it exports
Trade Surplus
a nation’s positive balance of trade, which exists when that country exports more products than it imports
Trading Company
a firm that buys goods in one country and sells them to buyers in another country
World Bank
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
World Trade Organization (WTO)
international organization dealing with the rules of trade between nations
