chapter 3 Flashcards
competing in the global marketplace
absolute advantage
The situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product.
balance of payments
A summary of a country’s international financial transactions showing the difference between the country’s total payments to and its total receipts from other countries.
balance of trade
The difference between the value of a country’s exports and the value of its imports during a specific time.
buy-national regulations
Government rules that give special privileges to domestic manufacturers and retailers.
contract manufacturing
The practice in which a foreign firm manufactures private-label goods under a domestic firm’s brand name.
countertrade
A form of international trade in which part or all of the payment for goods or services is in the form of other goods and services.
devaluation
A lowering of the value of a nation’s currency relative to other currencies.
dumping
The practice of charging a lower price for a product in foreign markets than in the firm’s home market.
direct foreign investment
Active ownership of a foreign company or of manufacturing or marketing facilities in a foreign country.
embargo
A total ban on imports or exports of a product.
European integration
The delegation of limited sovereignty by European Union member states to the EU so that common laws and policies can be created at the European level.
European Union
Trade agreement among 28 European nations.
exchange controls
Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank.
exporting
The practice of selling domestically produced goods to buyers in another country.
exports
Goods and services produced in one country and sold to other countries.
floating exchange rates
A system in which prices of currencies move up and down based upon the demand for and supply of the various currencies.
free trade
The policy of permitting the people and businesses of a country to buy and sell where they please without restrictions.
free-trade zone
An area where the nations allow free, or almost free, trade among each other while imposing tariffs on goods of nations outside the zone.
G20
Informal group that brings together 19 countries and the European Union—the 20 leading economies in the world.
global vision
The ability to recognize and react to international business opportunities, be aware of threats from foreign competition, and effectively use international distribution networks to obtain raw materials and move finished products to customers.
import quota
A limit on the quantity of a certain good that can be imported.
imports
Goods and services that are bought from other countries.
International Monetary Fund (IMF)
An international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender of last resort for troubled nations.
joint venture
An agreement in which a domestic firm buys part of a foreign firm or joins with a foreign firm to create a new entity.
