Chapter 3: Copeting In Global Markets

Question 1

Exporting

Answer 1

Selling products to another country

Question 2

Importing

Answer 2

Buying products from another country

Question 3

Free trade

Answer 3

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

Question 4

Comparative advantage theory

Answer 4

States that a country should sell to other countries those products that it produces most efficiently, and buy from other countries those products it cannot produce as efficiently

Question 5

Absolute advantage

Answer 5

If it has a monopoly or is able to produce it more efficiently than all other countries

Question 6

Balance of trade

Answer 6

Nations ratio of exports to imports

Question 7

Trade surplus

Answer 7

Occurs when the value of the countries exports exceeds that of its inputs

Question 8

Trade deficit

Answer 8

Occurs when the value of the countries imports exceeds that of its exports

Question 9

Balence of payments

Answer 9

Difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flow from other factors (foreign aid, military, tourism)

Question 10

Strategies for reaching global markets

Answer 10

(Least amount of commitment, control, risk, and profit potential)
Licensing 
Exporting 
Franchising 
Contract manufacturing 
International joint venture and strategic alliance 
Foreign direct investment 
(Most)

Question 11

Licensing

Answer 11

Global strategy in which a firm (the licensor) allows a foreign company (the licensee) to procure its products in exchange for a fee

Question 12

Contract manufacturing

Answer 12

A foreign countries production of private label goods to which a domestic company than attaches its brand name or trademark

Question 13

Joint venture

Answer 13

A partnership in which two or more companies (often in different countries) join to undertake a major project

Question 14

Strategic alliance

Answer 14

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

Question 15

Foreign direct investment

Answer 15

The buying of permanent property and businesses in foreign nations

Question 16

Foreign subsidiary

Answer 16

Company owned in a foreign country by the parent company

Question 17

Multinational corporation

Answer 17

An organization that manufactures and market products in many different countries and has multinational stock ownership and management

Question 18

Investment Canada act

Answer 18

Legislation that provides rules to review significant investment in Canada by non Canadians

Question 19

Exchange rate

Answer 19

Value of one nations currency relative to the currencies of other countries

Question 20

Devaluation

Answer 20

Lowering the value of a nations currency relative to other currencies

Question 21

Counter trading

Answer 21

Complex form of bartering in which several countries may be involved, each tradings goods or services for services

Question 22

Trade protectionism

Answer 22

The use of government regulations to limit the import of goods and services

Question 23

Dumping

Answer 23

Selling products in a foreign country at lower prices than those charged in the producing country

Question 24

Tariffs

Answer 24

Tax imposed on imports

Question 25

Embargo

Answer 25

Complete ban on the import or export of a certain product

Or the stopping of all trade with a particular country

Question 26

General agreement on tariffs and trades

Answer 26

1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions

Question 27

Globalization

Answer 27

Companies manufacture, finance, and market worldwide

Question 28

7 strategies for reaching global market (KNOW THIS IN ORDER)

Answer 28

Licensing 
Exporting 
Franchising 
Contract manufacturing 
International joint ventures 
Strategic alliances 
Foreign direct investment

(LEFCISF)

Question 29

Culture

Answer 29

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

Question 30

Ethnocentrism / ethnocentrcity

Answer 30

Attitude the ones culture is superior to all others

Question 31

Protective tariffs

Answer 31

Designed to raise retail prices of imported products

Question 32

Revenues tariffs

Answer 32

Designed to raise money for the government

Question 33

Import quota

Answer 33

Limits number of products in certain catagories that a nation can import

Only so many medial supplies

Question 34

Non-tariff barriers

Answer 34

Include restrictive standards or paperwork that detail exactly how a product most be sold in a country

Question 35

GATT

Answer 35

General agreement on tariffs and trade

Question 36

What does General agreement on tariffs and trade do

Answer 36

1948 agreement that established international forum for negotiating mutual reductions in trade restrictions

Question 37

WTO

Answer 37

World trade organization

Question 38

World trade organization

Answer 38

International organization, was assigned the duty to mediate trade disputes among nations

Question 39

International Monetary Fund (IMF)

Answer 39

International bank that makes short term loans to countries

Question 40

The world bank

Answer 40

United Nations agency that borrows money from richer countries and gives it to poorer countries

Question 41

Common markets

Answer 41

Regional group of countries that have a common external tariff, no internal tariffs, and a cordination of laws to facilitate exchange among countries
NAFTA and US-Mexico-Canada agreement

Question 42

North American free trade agreement

Answer 42

Agreement that created free trade among Canada, Uniates states, and Mexico

Question 43

BRIC

Answer 43

Brazil, Russia, India, China