Chapter 8 Global Business Flashcards
multinational corporation
a corporation that owns businesses in two or more countries
direct foreign investment
a company builds a new business or buys an existing business in a foreign country
trade barriers
government-imposed regulations that increase the cost and restrict the number of imported goods
protectionism
government’s use of trade barriers to shield domestic companies and their workers from foreign competition
nontariff barriers
nontax methods of increasing the costs or reducing the volume of imported goods
what are the five types of nontariff barriers?
quotas, voluntary export restraints, government import standards, government subsidies, and customs valuation/classification
quota
a limit on the number or volume of imported goods
voluntary export restraints
voluntarily imposed limits on the number or volume of products exported to a particular country
government import standards
standard ostensibly established to protect the health and safety of citizens but, in reality, is often used to restrict imports
subsidies
government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition
customs classification
classification assigned to imported products by government officials that affects the size of the tariff and the imposition of import quotas
General Agreements of Tariffs and Trade (GATT)
worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property
World Trade Organization (WTO)
only international organization dealing with the global rules of trade between nations; its main function is to ensure that trade flows 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
regional trade agreement among most European countries
United States-Mexico-Canada Agreement (USMCA)
regional trade agreement among the United States, Mexico, and Canada
Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)
regional trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States
Southern Common Market (MERCOSUR)
regional trade agreement among the primary countries of Argentina, Brazil, Paraguay, and Uruguay, with associated countries, Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Surinam
Association of Southeast Asian Nations (ASEAN)
regional trade agreement among Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Phillipines, Singapore, Thailand, and Vietnam
Asian-Pacific Economic Corporation (APEC)
regional trade agreement among Australia,Canada, Chile, the People’s Republic of China, Hong Kong, Japan, Mexico, New Zealand, Papua New Guinea, Peru, Russia, South Korea, Taiwan, the United States, and all the members of ASEAN except Cambodia, Lao PDR, and Myanmar
Tripartite Free Trade Agreement (TFTA)
a regional trade agreement among 27 African countries
global consistency
when a multinational company has offices, manufacturing plants, and distribution facilities in different countries and runs them all using the same rules, guidelines, policies, and procedures
local adaptation
modifying rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
what are the phases of globalization?
exporting, cooperative contracts, strategic alliances, and wholly-owned affiliates
