Chapter 3 Competing In Global Markets

Question 1

Importing

Answer 1

Buying products from other countries

Question 2

Free trade

Answer 2

Movement of goods and services among nations without political or economic barriers

Question 3

Comparative advantage theory

Answer 3

Theory that states that a contest should sell to other countries those products that it products most effectively and efficiently

Question 4

Absolute advantage

Answer 4

Advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than other countries

Question 5

Balance of trade

Answer 5

Nations ratio of exports to imports

Question 6

Trade surplus

Answer 6

A favourable balance of trade occurs when the values of a country’s exports exceeds imports

Question 7

Trade deficit

Answer 7

Unfavourable balance of trade occurs when the value of imports exceeds that of its exports

Question 8

Licensing

Answer 8

Global strategy in which a firm allows a foreign company to produce its product in exchange for a fee(royalty)

Question 9

Contract manufacturing

Answer 9

Foreign country’s production of private label goods to which a domestic company than attaches it’s brand name or trademark

Question 10

Joint venture

Answer 10

A partnership in which 2 or more companies join to undertake a mouse project

Question 11

Strategic alliance

Answer 11

Long term partnership between 2 or more companies established to help each company build competitive market advantages

Question 12

Foreign direct investment

Answer 12

Buying of permanent property and businesses in foreign nations

Question 13

Foreign subsidiary

Answer 13

Company owned in a foreign country by the parent company

Question 14

Culture

Answer 14

Set of values, beliefs and rules and institutions held by a specific group of people

Question 15

Ethnocentricity

Answer 15

Attitude that ones own culture is superior to all others

Question 16

Devaluation

Answer 16

Lowering the value of a nations currency relative to other currency’s

Question 17

Counter trading

Answer 17

Complex form or bartering I which several countries may be involved, each trading goods for goods or services for services

Question 18

Trade protectionism

Answer 18

The use of government laws to limit import of goods and services

Question 19

Dumping

Answer 19

Selling products in another country at lower prices than the country producing the product

Question 20

Tariff

Answer 20

A tax imposed on imports

Question 21

Embargo

Answer 21

Complete ban on imports or exports of a certain product or stopping all trade with a country

Question 22

Exporting

Answer 22

Selling products to other countries