Chapter 3

Question 1

Economic globalization

Answer 1

The increasing integration and interdependence of national economies around the world

Question 2

Economies of scale

Answer 2

Savings from buying parts and materials, manufacturing, or marketing in large quantities

Question 3

Balance of trade

Answer 3

Total value of the products a nation exports minus the total value of the products it imports, over some period of time

Question 4

Trade surplus

Answer 4

A favorable trade balance created when a country exports more than it imports

Question 5

Trade deficit

Answer 5

An unfavorable trade balance created when a country imports more than it exports

Question 6

Balance of payments

Answer 6

The sum of all payments one nation receives from other nations minus the sum of all payments it makes to other nations, over some specific period of time

Question 7

Exchange rate

Answer 7

The rate at which the money of one country is traded for the money of another

Question 8

Free trade

Answer 8

International trade unencumbered by restrictive measures

Question 9

Protectionism

Answer 9

Government policies aimed at shielding a country’s industries from foreign competition

Question 10

Tariffs

Answer 10

Taxes levied on imports

Question 11

Import quotas

Answer 11

Limits placed on the quantity of imports a nation will allow for a specific product

Question 12

Embargo

Answer 12

A total ban on trade with a particular nation (a sanction) or of a particular product

Question 13

Export subsidies

Answer 13

A form of financial assistance in which producers receive enough money from the government to allow them to lower their prices in order to compete more effectively in the global market

Question 14

Dumping

Answer 14

Charging less than the actual cost or less than the home-country price for goods sold in other countries

Question 15

Trading blocs

Answer 15

Organizations of nations that remove barriers to trade among their members and that establish uniform barriers to trade with nonmember nations

Question 16

Culture

Answer 16

A shared system of symbols, beliefs, attitudes, values, expectations and norms for behavior

Question 17

Ethnocentrism

Answer 17

Judging all other groups according to the standards, behaviors and customs of one’s own group

Question 18

Stereotyping

Answer 18

Assigning a wide range of generalized and often false attributes to an individual based on membership an a particular culture or social group

Question 19

Cultural pluralism

Answer 19

The practice of accepting multiple cultures on their own terms

Question 20

Tax haven

Answer 20

A country whose favorable banking laws and low tax rates give individuals and companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business

Question 21

Importing

Answer 21

Purchasing goods or services from another country and bringing them into one’s own economy

Question 22

Exporting

Answer 22

Selling and shipping goods and services to another country

Question 23

Licensing

Answer 23

Agreement to produce and market another company’s product in exchange for a royalty of fee

Question 24

Foreign direct investment (FDI)

Answer 24

Investment of money by foreign companies in domestic business enterprises

Question 25

Multinational corporations (MNCs)

Answer 25

Companies with operations in more than one country

Question 26

Multi-domestic strategy

Answer 26

A decentralized approach to international expansion in which a company creates highly independent operating units in each new country

Question 27

Global strategy

Answer 27

A highly centralized approach to international expansion, with headquarters in the home country making all major decisions

Question 28

Transitional strategy

Answer 28

A hybrid approach that attempts to reap the benefits of international scale while being responsible to local market dynamics

Question 29

What are the reasons a nation trades?

Answer 29

Focusing on relative strengths, Expanding market, Pursuing economies of scale, Acquiring materials, goods and services, Keeping up with customers, Keeping up with competitors

Question 30

What are the ways to intervene in international trade?

Answer 30

Tariffs, Import quotas, Embargos, Restrictive import standards, Export subsidies, Antidumping measures, and Sanctions

Question 31

Forms of international business activity

Answer 31

Importing and exporting, International licensing, International franchising, International strategic alliances and joint ventures, and Foreign direct investment

Question 32

Functional strategies for international expansion

Answer 32

Product, Customer support, Promotion, Pricing, and Staffing

Question 33

Machine translation

Answer 33

Any form of automated translation