Chapter 2

Question 1

Global Warming

Answer 1

A warming of the planet that will have disastrous effects on the planet

Question 2

World Trade

Answer 2

The flow of goods and services among different countries—the value of all the exports and imports of the world’s nations

Question 3

Foreign Exchange Rate (Forex Rate)

Answer 3

The price of a nation’s currency in terms of another currency

Question 4

Protectionism

Answer 4

A policy adopted by a government to give domestic companies an advantage

Question 5

Import Quotas

Answer 5

Limitations set by a government on the amount of a product allowed to enter a country

Question 6

Embargo

Answer 6

A quota completely prohibiting specified goods from entering or leaving a country

Question 7

Tariffs

Answer 7

Taxes on imported goods

Question 8

Gross Domestic Product (GDP)

Answer 8

The total dollar value of goods and services produced by a nation within its borders in a year

Question 9

Standard of Living

Answer 9

An indicator of the average quality and quantity of goods and services consumed in a country

Question 10

Developing Countries

Answer 10

Countries in which the economy is shifting its emphasis from agriculture to industry

Question 11

Developed Countries

Answer 11

A country that boasts sophisticated marketing systems, strong private enterprise, and bountiful market potential for many goods and services

Question 12

Group of 7

Answer 12

An informal forum of the seven most economically developed countries that meets annually to discuss major economic and political issues facing the international community. Formerly the G8, Russia was excluded from the group as a result of its invasion of Crimea in 2014

Question 13

Monopoly

Answer 13

A market situation in which one firm, the only supplier of a particular product, is able to control the price, quality, and supply of that product

Question 14

Oligopoly

Answer 14

A market structure in which a relatively small number of sellers, each holding a substantial share of the market, compete in a market with many buyers

Question 15

Monopolistic Competition

Answer 15

A market structure in which many firms, each having slightly different products, offer unique consumer benefits

Question 16

Perfect Competition

Answer 16

A market structure in which many small sellers, all of whom offer similar products, are unable to have an impact on the quality, price, or supply of a product

Question 17

Nationalization

Answer 17

When a domestic government reimburses a foreign company (often not for the full value) for its assets after taking it over

Question 18

Expropriation

Answer 18

When a domestic government seizes a foreign company’s assets without any reimbursement

Question 19

Local Context Rules

Answer 19

A form of protectionism stipulating that a certain proportion of a product must consist of components supplied by industries in the host country or economic community

Question 20

Consumer Ethnocentrism

Answer 20

Consumers’ feeling that products from their own country are superior or that it is wrong to buy products produced in another country.

Question 21

Export Merchants

Answer 21

Intermediaries a firm uses to represent it in other countries

Question 22

Licensing Agreement

Answer 22

An agreement in which one firm gives another firm the right to produce and market its product in a specific country or region in return for royalties

Question 23

Franchising

Answer 23

A form of licensing involving the right to adapt an entire system of doing business

Question 24

Strategic Alliance

Answer 24

Relationship developed between a firm seeking a deeper commitment to a foreign market and a domestic firm in the target country

Question 25

Joint Venture

Answer 25

A strategic alliance in which a new entity owned by two or more firms allows the partners to pool their resources for common goals

Question 26

Straight Extension Strategy

Answer 26

Product strategy in which a firm offers the same product in both domestic and foreign markets

Question 27

Product Adaption Strategy

Answer 27

Product strategy in which a firm offers a similar but modified product in foreign markets

Question 28

Product Invention Strategy

Answer 28

Product strategy in which a firm develops a new product for foreign markets

Question 29

Dumping

Answer 29

A company tries to get a toehold in a foreign market by pricing its products lower than it offers them at home

Question 30

Ethical Relativism

Answer 30

Suggests that what is ethical in one culture is not necessarily the same as in another culture

Question 31

Business Ethics

Answer 31

Basic values that guide a firm’s behavior

Question 32

Code of Ethics

Answer 32

Written standards of behavior to which everyone in the organization must subscribe

Question 33

Bribery

Answer 33

When someone voluntarily offers payment to get an illegal advantage

Question 34

Extortion

Answer 34

When someone in authority extracts payment under duress

Question 35

Green Customers

Answer 35

Those consumers who are most likely to actively look for and buy products that are eco-friendly

Question 36

Fair Trade Suppliers

Answer 36

Companies that pledge to pay a fair price to producers in developing countries, to ensure that the workers who produce the goods receive a fair wage, and to ensure that these manufacturers rely where possible on environmentally sustainable production practices

Question 37

Locavorism

Answer 37

The trend for shoppers to actively look for products that come from farms within 50 to 100 miles of where they live

Question 38

Sustainability Metrics

Answer 38

Tools that measure the benefits an organization achieves through the implementation of sustainability