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Business Administration > Ch5 > Flashcards

Ch5 Flashcards

1
Q

globalization

A

process where the world economy is becoming a single, interdependent system

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2
Q

import

A

product made abroad but sold domestically

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3
Q

export

A

product made domestically but shipped and sold abroad

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4
Q

one of the earliest examples of trade

A

2000 BCE, when North African tribes traded dates and clothing in Assyria and Babylonia for olive oil and spices

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5
Q

forces that have made globalization easier

A

new technologies in travel and communication, Internet, competitive pressures

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6
Q

cons of globalization

A

businesses can exploit workers in developing countries and avoid domestic environmental and tax regulations
- potentially lead to loss of cultural heritage and benefits wealthy more than the poor

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7
Q

five key trends based on a report from McKinsey

A
  1. economic centre of gravity will shift away from North America/Europe/Japan to Asia and Latin America
  2. productivity imperative (improved productivity is essential in highly competitive marketplace(
  3. global grid (increasing complex global networks of ppl and $)
  4. increased importance of environmental sustainability
  5. increased controls on businesses and markets as govts try to cope with financial crisis
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8
Q

per-capita income

A

average income per person of a country

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9
Q

four classification categories used by the World Bank

A

high-income country: annual per-capita US $12 476+ (ex. Japan, Canada, U.S.)

upper-middle-income: annual pc btwn US$4036 and $12 457 (China, Colombia, Turkey)

lower-middle-income: annual pc btwn $1026 and $4035 (Albania, Guatemala, Vietnam)

low-income: $1025 or less (Bangladesh, Haiti, Ethiopia)

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10
Q

three major geographic regions with the world’s largest economies

A

North America, Europe, and Asia

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11
Q

North America as a business region

A

domained by US, and Canada and Mexico participate as well

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12
Q

Europe as a business region

A

divided into Western (domained by Germany, UK, Spain, France, and Italy), and Eastern Europe

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13
Q

Pacific Asia as a business region

A

consists of Japan, China, Thailand, Malaysia, Singapore, Indonesia, South K, Taiwan, Philippines, Vietnam, and Australia

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14
Q

BRIC

A

four important countries in global trade: Brazil, Russia, India, and China

  • concept created by Sachs
  • four countries hold unofficial summits and discuss strategies
  • later transformed to BRICS to include South Africa (for their minerals)
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15
Q

forms of competitive advantage

A

absolute advantage, comparative advantage, and national competitive advantage,

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16
Q

absolute advantage

A
  • the ability to produce smthg more efficiently than any other country
  • concept proposed by economist Adam Smith
  • ex. Saudi oil, Brazilian coffee beans, and canadian timber
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17
Q

comparative advantage

A
  • the ability to produce smthg more efficiently or better than other goods
  • Canada has comp advantage in farming, South Korea in electronics manufacturing
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18
Q

national competitive advantage

A

international competitive advantage stemming from a combination of factor conditions; demand conditions; related and supporting industries; and firm strategies, structures, and rivalries

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19
Q

factor conditions

A

factors of production (natural resources, human resources, entrepreneurs, capital)

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20
Q

demand conditions

A

large domestic consumer base that promotes strong demand for innovative products

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21
Q

related and supporting industries

A

strong local or regional suppliers and/or industrial customers

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22
Q

strategies, structures, and rivalries

A

firms and industries that stress cost reduction, products quality, higher productivity, and innovative new products

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23
Q

international competitiveness

A

the ability of a country to generate more wealth than its competitors in world markets

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24
Q

balance of trade

A

difference btwn country’s exports and imports

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25
Q

surplus

A

country exports more than it imports

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26
Q

deficit

A

country imports more than it exports

27
Q

balance of payments

A

flow of all money into or out of a country

28
Q

exchange rate

A

rate at which the currency of one nation can be exchanged for the currency of another nation

29
Q

managing

A

making decisions

30
Q

three basic decisions managers must make when faced with the idea of a global market

A
  1. whether to go international
  2. level of international involvement
  3. organization structure that will best meet its global needs
31
Q

exporter

A

firm that distributes and sells products to one or more foreign countries

32
Q

importer

A

firm that buys products in foreign markets and then imports them for resale in its home country

33
Q

basic level of involvement in international business

A

act as an exporter or importer, organize as an international firm, or operate as a multinational firm

34
Q

international firm

A

firm that conducts a significant portion of its business abroad

35
Q

multinational firm

A

firm that designs, produces, and markets products in many nations (planning is geared toward global markets)

36
Q

independent agent

A

foreign individual or organization that agrees to represent an exporter’s interests

  • often act as sales representatives
  • usually don’t specialize in a particular product or market
37
Q

licensing arrangement

A

arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country

38
Q

royalties

A

fees that an exporter receives for allowing a company in a foreign country to manufacture or market the exporter’s products
- usually calculated as a percentage of the licence holder’s sales

39
Q

branch office

A

a location that an exporting firm establishes in a foreign country to sell its products more effectively

40
Q

world product mandating

A

the assignment by a multinational of a product responsibility to a particular branch

41
Q

strategic alliance

A

company finds a partner in a foreign country where it wants to do business

42
Q

foreign direct investment (fdi)

A

buying or establishing tangible assets in another country

43
Q

three major barriers to international trade

A

social, economic, and political issues

44
Q

economic differences

A

amount of government involvement in business, economic development and financial infrastructure in a country (amount of credit card use, cash economy, etc)

45
Q

quota

A

a restriction by one nation on the total number of products of a certain type that can be imported from another country

46
Q

embargo

A

govt order forbidding exportation and/or importation of a particular product (or even all the products of a particular country)

47
Q

tariff

A

tax charged on imported products

- tariffs raise money for govt and raise price of imports

48
Q

subsidy

A

govt payment given to a domestic business to help it compete with foreign firms (ex. Bombardier)

49
Q

protectionism

A

protecting the domestic business at the expense of free market competition

50
Q

pros and cons of protectionism

A

pros – protects new industries until they are ready to compete internationally, other nations have similar measures, protect national security

cons – reduces competition and drives up prices, causes tension btwn nations

51
Q

local-content laws

A

laws requiring that products sold in a particular country be at least partly made in that country

52
Q

business-practice law

A

law or regulation governing business practices in given countries

53
Q

Corruption Perceptions Index

A
  • created by Transparency international, ranks countries based on amount of corruption perceived to exist, based on ratings by business ppl, academics, and risk analysts
54
Q

cartel

A

association of producers whose purpose is to control supply of and prices for a given product (example: Organization of the Petroleum Exporting Countries)

55
Q

dumping

A

selling a product for less abroad than in the producing nation
- often defined in legislation as selling products abroad at less than fair value, or if it harms domestic industry

56
Q

general agreement on tariffs and trade (gatt)

A

international trade agreement to encourage the multilateral reduction or elimination of trade barriers

57
Q

world trade organization (wto_

A

organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices

58
Q

three goals of wto

A
  1. promote trade by encouraging members to adopt fair trade practices
  2. reduce trade barriers by promoting multilateral negotiations
  3. establish fair procedures for resolving disputes among members
59
Q

european union (eu)

A

agreement among major Western European countries to eliminate or make uniform most trade barriers affecting group members

60
Q

north american free trade agreement (nafta)

A

agreement to gradually eliminate tariffs and other trade barriers among the united states, canada, and mexico
- eliminates trade barriers, promotes fair competition, and increases investment opportunities

61
Q

effects of nafta (1994)

A
  • nafta created a much more active North American market
  • direct foreign investment has increased in Canada
  • u.s. imports from and exports to mexico have increased
  • Canada has become an exporting powerhouse
  • trade btwn u.s. and Canada rose a lot (Canada gets a large trade surplus with U.S.)
62
Q

mercosur (1995)

A

free trade agreement btwn Argentina, brazil, uruguay, and paraguay
- venezuela joined in 2012

63
Q

other regional trade associations

A

ASEAN free trade area, asia-pacific economic cooperation, economic community of central african states, gulf cooperation council

Business Administration (14 decks)

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