definations

Question 1

International business

Answer 1

all business activities that involve exchanges across national boundaries

Question 2

Absolute advantage

Answer 2

the ability to produce a specific product more efficiently than any other nation

Question 3

Comparative advantage

Answer 3

the ability to produce a specific product more efficiently than any other product

Question 4

Exporting

Answer 4

– selling and shipping raw materials or products to other nations

Question 5

Importing

Answer 5

purchasing raw materials or products in other nations and bringing them into one’s own country

Question 6

Balance of trade

Answer 6

the total value of a nation’s exports minus the total value of its imports over some period of time

Question 7

Balance of payments

Answer 7

the total flow of money into a country minus the total flow of money out of that country over some period of time

Question 8

Licensing

Answer 8

a contractual agreement in which one business permits another to produce and market its product and use its brand name in return for a royalty or other compensation

Question 9

Letter of credit

Answer 9

issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary

Question 10

Bill of lading

Answer 10

document issued by a transport carrier to an exporter to prove that merchandise has been shipped

Question 11

Draft

Answer 11

issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer’s bank

Question 12

Totally owned facilities

Answer 12

a business’s own production and marketing facilities in one or more foreign countries

Question 13

Strategic alliance

Answer 13

a partnership formed to create competitive advantage on a worldwide basis

Question 14

Trading company

Answer 14

provides a link between buyers and sellers in different countries.

Question 15

Multinational enterprise

Answer 15

a business that operates on a worldwide scale without ties to any specific nation or region

Question 16

Dumping

Answer 16

– exportation of large quantities of a product at a price lower than that of the same product in the home market

Question 17

Import duty (tariff)

Answer 17

a tax levied on a particular foreign product entering a country

Question 18

Non-tariff barrier

Answer 18

– a non-tax measure imposed by a government to favour domestic over foreign suppliers

Question 19

General Agreement on Tariffs and Trade (GATT)

Answer 19

an international organisation of 164 nations dedicated to reducing or eliminating tariffs and other barriers to world trade

Question 20

World Trade Organization (WTO)

Answer 20

powerful successor to GATT that incorporates trade in goods, services and ideas

Question 21

International Monetary Fund (IMF)

Answer 21

an international bank that makes short-term loans to developing countries experiencing balance-of-payment deficits

Question 22

intermediaries

Answer 22

people or agencies that
arrange agreements
between two other parties,
facilitating a deal or
outcome that suits everyone

Question 23

joint venture

Answer 23

a partnership formed to
achieve a specific goal or
to operate for a specific
period of time

Question 24

direct investment

Answer 24

a situation in which a
multinational company
sets up and runs it own
operations in a foreign
country

Question 25

countertrade

Answer 25

an international barter
transaction

Question 26

foreign-exchange
control

Answer 26

a restriction on the amount
of a particular foreign
currency that can be
purchased or sold

Question 26

embargo

Answer 26

a complete halt to trading
with a particular nation or in
a particular product

Question 27

currency devaluation

Answer 27

the reduction of the value
of a country’s currency
relative to the currencies of
other countries

Question 28

import quota

Answer 28

a limit on the amount of a
particular good that may
be imported into a country
during a given period of
time

Question 29

economic community

Answer 29

an organisation of countries
formed to promote the free
movement of resources
and products among its
members and to create
common economic policies

Question 30

ratification

Answer 30

formally agreeing to a
proposed decision or
action, to make it valid and
ready to implement

Question 31

stokvel

Answer 31

a peer-based savings or
investment scheme in
which individual members
pay a regular amount into a
pool of funds, and receive a
lump sum payment when it
is their turn to do so

Question 32

multilateral development
bank (MDB)

Answer 32

an internationally supported
bank that provides loans
to developing countries to
help them grow