Chapter 8 Flashcards
Global business
the buying and selling of goods and ser vices by people from different countries
Multinational corpora
tion a corporation that owns businesses in two or more countries
Direct foreign invest
ment a method of investment in which a company builds a new business or buys an exist ing business in a foreign country
Trade barriers
government imposed regulations that increase the cost and restrict the number of imported goods
Protectionism
a govern mentfs use of trade barriers to shield domestic companies and their workers from foreign competition
Tariff
a direct tax on imported goods
Nontariff barriers
nontax methods of increasing the cost or reducing the volume of imported goods
Quota
a limit on the number or volume of imported products
Voluntary export re
straints voluntarily imposed limits on the number or volume of products exported to a particular country
Government import standard
a standard osten sibly established to protect the health and safety of citizens but in reality often used to restrict imports
Subsidies
government loans grants and tax deferments given to domestic companies to protect them from foreign competition
Customs classifcation
a classifcation assigned to im ported products by government offcials that affects the size of the tariff and the imposition of import quotas
General Agreement on Tariffs and Trade (GATT)
a worldwide trade agreement that reduced and eliminated tariffs limited government sub sidies and established protec tions for intellectual property
World Trade Organiza tion (WTO)
the successor to GATT; the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade fows as smoothly predictably and freely as possible
Regional trading zones
areas in which tariff and nontariff barriers on trade between countries are reduced or eliminated
Maastricht Treaty of Europe
a regional trade agreement between most European countries
North American Free Trade Agreement (NAFTA)
a regional trade agreement between the United States Canada and Mexico
Dominican Republic Central America Free Trade Agreement (CAFTADR)
a regional trade agreement between Costa Rica the Dominican Republic El Salvador Guatemala Honduras Nicaragua and the United States
Union of South Ameri can Nations (UNASUR)
a regional trade agreement between Argentina Brazil Paraguay Uruguay Venezuela Bolivia Colombia Ecuador Peru Guyana Suriname and Chile
Association of Southeast Asian Nations (ASEAN)
a regional trade agreement between Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar the Philip pines Singapore Thailand and Vietnam
AsiaPacifc Economic Cooperation (APEC)
a regional trade agreement be tween Australia Canada Chile the Peoplefs Republic of China Hong Kong Japan Mexico New Zealand Papua New Guinea Peru Russia South Korea Tai wan the United States and all the members of ASEAN except Cambodia Laos and Myanmar
Global consistency
when a multinational company has of fces manufacturing plants and distribution facilities in different countries and runs them all using the same rules guidelines policies and procedures
Local adaptation
modify ing rules guidelines policies and procedures to adapt to differences in foreign customers governments and regulatory agencies
Exporting
selling domesti cally produced products to customers in foreign countries
Cooperative contract
an agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country
Licensing
an agreement in which a domestic company the licensor receives royalty payments for allowing another company the licensee to pro duce the licensorfs product sell its service or use its brand name in a specifed foreign market
Franchise
a collection of networked frms in which the manufacturer or marketer of a product or service the franchi sor licenses the entire business to another person or organiza tion the franchisee
Strategic alliance
an agreement in which companies combine key resources costs risk technology and people
Joint venture
a strategic alliance in which two existing companies collaborate to form a third independent company
Wholly owned affliates
foreign offces facilities and manufacturing plants that are 100 percent owned by the par ent company
Global new ventures
new companies that are founded with an active global strategy and have sales employ ees and fnancing in different countries
Purchasing power
the relative cost of a standard set of goods and services in different countries
Political uncertainty
the risk of major changes in political regimes that can result from war revolution death of political leaders social unrest or other infuential events
Policy uncertainty
the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business
National culture
the set of shared values and beliefs that affects the perceptions decisions and behavior of the people from a particular country
Expatriate
someone who lives and works outside his or her native country
