Chapter 3-Business in a Borderless World Flashcards
International Business
the buying, selling, and trading of goods, services across national boundaries.
Absolute Advantage
a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.
Comparative Advantage
the basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.
Outsourcing
the transferring of manufacturing or other tasks-such as data processing-to countries where labor and supplies are less expensive.
Exporting
the sale of goods an services to foreign markets.
Importing
the purchase of goods and services from foreign sources.
Balance of Trade
the difference in value between a nation’s exports and its imports.
Trade Deficit
a nation’s negative balance of trade, which exists when that country imports more products than it exports.
Balance of Payments
the different between the flow of money into and out of a country.
Infrastructure
the physical facilities that support a country’s economic activities, such as railroads, highways, ports, airfields, utilities, and power plants, schools, hospitals, communication systems, and commercial distribution.
Exchange Rate
the ratio at which one nation’s currency can be exchanged for another nation’s currency.
Import Tariff
a tax levied by a nation on goods imported into the country.
Exchange Controls
Regulations that restrict the amount of currency that can be bought or sold.
Quota
a restriction on the number of units of a particular product that can be imported into a country.
Embargo
a prohibition on trade in a particular product.
Dumping
the act of a country or business selling products at less than what it costs to produce them.
Cartel
a group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets.
General Agreement on Tariffs and Trade (GATT)
a trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be resolved.
World Trade Organization (WTO)
international organization dealing with the rules of trade between nations.
North American Free Trade Agreement (NAFTA)
agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among Canada, the United States, and Mexico.
European Union (EU)
a union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.
Asia-Pacific Economic Cooperation
an international trade alliance that promotes open trade and economic and technical cooperation among member nations.
World Bank
an organization established by the industrialized nations in 1946 to loan money to the underdeveloped and developing countries; formally known as the International Bank for Reconstruction and Development.
Countertrade Agreements
foreign trade agreements that involve bartering products for other products instead of for currency.
Trading Company
a firm that busy goods in one country and sells them to buyers in another country.
Licensing
a trade agreement in which one company-the licensor-allows another company-the licensee-to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty.
Franchising
a form of licensing in which a company-the franchiser-agrees to provide a franchisee a name, logo, methods of operation, advertising, products, an other elements associated with a franchiser’s business in return for financial commitment and the agreement to conduct business in accordance with the franchiser’s standard of operations.
Contract Manufacturing
the hiring of a foreign company to produce a specified volume of the initiating company’s product to specification; the final product carries the domestic firm’s name.
Offshoring
the relocation of business processes by a company or subsidiary to another country; offshoring is different than outsourcing because the company retains control of the offshored processes.
Joint Venture
the sharing of the costs and operation of a business between a foreign company and a local partner.
Strategic Alliance
a partnership formed to create competitive advantage on a worldwide basis.
Direct Investment
the ownership of overseas facilities.
Multinational Corporation (MNC)
a corporation that operates on a worldwide scale, without significant ties to any one nation or region.
Multinational Strategy
a plan, used by interational companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences.
Global Strategy (globalization)
a strategy that involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity.
