Chapter 8

Question 1

Global business

Answer 1

the buying and selling of goods and ser vices by people from different countries

Question 2

Multinational corpora

Answer 2

tion a corporation that owns businesses in two or more countries

Question 3

Direct foreign invest

Answer 3

ment a method of investment in which a company builds a new business or buys an exist ing business in a foreign country

Question 4

Trade barriers

Answer 4

government imposed regulations that increase the cost and restrict the number of imported goods

Question 5

Protectionism

Answer 5

a govern mentfs use of trade barriers to shield domestic companies and their workers from foreign competition

Question 6

Tariff

Answer 6

a direct tax on imported goods

Question 7

Nontariff barriers

Answer 7

nontax methods of increasing the cost or reducing the volume of imported goods

Question 8

Quota

Answer 8

a limit on the number or volume of imported products

Question 9

Voluntary export re

Answer 9

straints voluntarily imposed limits on the number or volume of products exported to a particular country

Question 10

Government import standard

Answer 10

a standard osten sibly established to protect the health and safety of citizens but in reality often used to restrict imports

Question 11

Subsidies

Answer 11

government loans grants and tax deferments given to domestic companies to protect them from foreign competition

Question 12

Customs classifcation

Answer 12

a classifcation assigned to im ported products by government offcials that affects the size of the tariff and the imposition of import quotas

Question 13

General Agreement on Tariffs and Trade (GATT)

Answer 13

a worldwide trade agreement that reduced and eliminated tariffs limited government sub sidies and established protec tions for intellectual property

Question 14

World Trade Organiza tion (WTO)

Answer 14

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

Question 15

Regional trading zones

Answer 15

areas in which tariff and nontariff barriers on trade between countries are reduced or eliminated

Question 16

Maastricht Treaty of Europe

Answer 16

a regional trade agreement between most European countries

Question 17

North American Free Trade Agreement (NAFTA)

Answer 17

a regional trade agreement between the United States Canada and Mexico

Question 18

Dominican Republic Central America Free Trade Agreement (CAFTADR)

Answer 18

a regional trade agreement between Costa Rica the Dominican Republic El Salvador Guatemala Honduras Nicaragua and the United States

Question 19

Union of South Ameri can Nations (UNASUR)

Answer 19

a regional trade agreement between Argentina Brazil Paraguay Uruguay Venezuela Bolivia Colombia Ecuador Peru Guyana Suriname and Chile

Question 20

Association of Southeast Asian Nations (ASEAN)

Answer 20

a regional trade agreement between Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar the Philip pines Singapore Thailand and Vietnam

Question 21

AsiaPacifc Economic Cooperation (APEC)

Answer 21

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

Question 22

Global consistency

Answer 22

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

Question 23

Local adaptation

Answer 23

modify ing rules guidelines policies and procedures to adapt to differences in foreign customers governments and regulatory agencies

Question 24

Exporting

Answer 24

selling domesti cally produced products to customers in foreign countries

Question 25

Cooperative contract

Answer 25

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

Question 26

Licensing

Answer 26

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

Question 27

Franchise

Answer 27

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

Question 28

Strategic alliance

Answer 28

an agreement in which companies combine key resources costs risk technology and people

Question 29

Joint venture

Answer 29

a strategic alliance in which two existing companies collaborate to form a third independent company

Question 30

Wholly owned affliates

Answer 30

foreign offces facilities and manufacturing plants that are 100 percent owned by the par ent company

Question 31

Global new ventures

Answer 31

new companies that are founded with an active global strategy and have sales employ ees and fnancing in different countries

Question 32

Purchasing power

Answer 32

the relative cost of a standard set of goods and services in different countries

Question 33

Political uncertainty

Answer 33

the risk of major changes in political regimes that can result from war revolution death of political leaders social unrest or other infuential events

Question 34

Policy uncertainty

Answer 34

the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business

Question 35

National culture

Answer 35

the set of shared values and beliefs that affects the perceptions decisions and behavior of the people from a particular country

Question 36

Expatriate

Answer 36

someone who lives and works outside his or her native country