Chapter 3: Competing in Global Markets Flashcards
Exporting
Selling products to another country
Importing
Buying products from another company
Free trade
the movement of goods and services among nations without political or economic trade barriers
Comparative advantage theory
A country should sell to other countries those products that it produces most effectively and efficiently, and buy from others those that it can’t produce as effectively or efficiently
Absolute advantage
A country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.
Balance of trade
A nation’s ration of exports to imports
Trade deficit
Whenthe value of a nation’s imports exceeds that of its exports
Favorable balance of trade
The value of a nation’s exports exceeds that of its imports
Balance of payments
the difference between money coming into a country and money leaving the country
Foreign direct investment
The buying of permanent property and businesses in foreign nations
Dumping
Selling products in a foreign country at lower prices than those charged in the producing company
Licensing
A firm gives the right to manufacture its product or use its trademark to a foreign company for a fee
Contract manufacturing
A foreign company’s production of private-label goods to which a domestic company then attaches its own brand name or trademark
Joint venture
Partnership in which two or more companies join to undertake a major project
Strategic alliance
A long-term partnership between two or more companies established to help each company build competitive market advantages
