Ch. 7

Question 1

Balance of Trade

Answer 1

Difference between a nations exports and imports

Question 2

Surplus Balance Of Trade

             Vs Deficit balance of trade

Answer 2

Surplus = exports exceed imports

Deficit = Imports exceed imports

Question 3

Protectionism

Answer 3

Shielding one or more industries within a country’s economy from a foreign competition through the use of tariffs and quotas

Question 4

Tariffs

Answer 4

Goverment tax on products or services entering a country

Question 5

World Trade Organization

Answer 5

Permanent institution that sets rules for governing trade between members through panels of trade experts who decide on trade disputes

Question 6

Global competition type:

Strategic Alliance

Also read on global companies and global consumers! 170-171

Answer 6

Agreements between two or more independent firms to cooperate for the purpose of achieving common goals such as a competitive advantage or customer value creation.

Question 7

Licensing

Answer 7

Company offers the right to a trademark, patent, trade secrete, or other similarly valued items of intellectual property in return of a royalty.

Question 8

Joint Venture

Answer 8

When a foreign company and a local firm invest together to create a local business.

Question 9

Gross Domestic Product (GDP)

Answer 9

Monetary value of all products and services produced in a country during one year.

Question 10

Advantages of joint venture?

Answer 10

One company may not have the necessary financial, physical, or managerial resources to enter a foreign market alone

And a gov. May require or strongly encourage a joint venture before allowing foreign companies in the market

Question 11

Disadvantages of joint venture?

Answer 11

Companies disagree about policies or courses of action.

Question 12

Advantages of exporting

Answer 12

Allows company to make least amount of changes in product , organization, and goals.

Question 13

Disadvantages of export

Answer 13

Host countries don’t like this because of less employment of the local economy.

Question 14

Advantages of licensing

Answer 14

Low risk and capital free entry into a foreign country

License gives company competitive advantage

Foreign employment

Question 15

Disadvantages of licensing

Answer 15

Licensor forgoes control of products and reduces potential profits gained.

Creates own competition

Modifying license to enter market

Question 16

Direct exporting

Answer 16

When firms sell its domestic products in a foreign country w/o intermediaries

Question 17

Indirect exporting

Answer 17

When a firm sells products in a country through an intermediarie

Question 18

Product extension

Answer 18

Selling same product in a different country

Question 19

Product adaption

Answer 19

Changing a product in a way to make it more appropriate for country’s climate or consumer preferences

Question 20

Product invention

Answer 20

Invent totally new products to satisfy needs of markets