Exam 1 Flashcards
International Business
Buying, selling, and trading of goods across national boundaries
Absolute advantage
a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.
Comparative advantage
when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items
Outsourcing
the transferring of manufacturing or other tasks to countries where labor and supplies are less expensive.
Balance of Trade
the difference in value between a nation’s exports and its imports.
Balance of Payments
the difference between the flow of money into and out of a country.
Exchange rate
the ratio at which one nation’s currency can be exchanged for another nation’s currency.
Import Tariff
tax levied by a nation on goods imported into the country
Exchange Controls
regulations that restrict the amount of currency that can be bought or sold.
Quota
a restriction on the number of units of a particular product that can be imported into a country
embargo
a prohibition on trade in a particular product.
dumping
the act of a country or business selling products at less than what it costs to produce them
Cartel
a group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets
General Agreement on Tariffs and Trade
a trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved
World Trade Organization
international organization dealing with the rules of trade between nations.
United States–Mexico–Canada Agreement (USMCA)
agreement that eliminates most tariffs and trade restrictions to encourage trade among the United States, Mexico, and Canada.
European Union
a union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.
Asia-Pacific Economic Cooperation (APEC)
an international trade alliance that promotes open trade and economic and technical cooperation among member nations.
Association of Southeast Asian Nations (ASEAN)
a trade alliance that promotes trade and economic integration among member nations in Southeast Asia.
World Bank
an organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries
International Monetary Fund (IMF)
an organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.
Countertrade Agreements
foreign trade agreements that involve bartering products for other products instead of for currency.
trading company
a firm that buys goods in one country and sells them to buyers in another country.
Licensing
a trade agreement in which one company—the licensor—allows another company—the licensee—to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty
Franchising
a form of licensing in which a company—the franchiser—agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with a franchiser’s business in return for a financial commitment and the agreement to conduct business in accordance with the franchiser’s standard of operations.
Contract Manufacturing
the hiring of a foreign company to produce a specified volume of the initiating company’s product to specification; the final product carries the domestic firm’s name.
Offshoring
the relocation of business processes by a company or subsidiary to another country; offshoring is different than outsourcing.
Joint Venture
a partnership established for a specific project or for a limited time.
Strategic Alliance
a partnership formed to create competitive advantage on a worldwide basis.
Direct Investment
the ownership of overseas facilities.
Multinational Corporation
a corporation that operates on a worldwide scale, without significant ties to any one nation or region
Multinational Strategy
plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences.
Global Strategy
a strategy that involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity.
Sole Proprietorships
Businesses owned and operated by one individual. (most common in the Us)
How many businesses in America are Sole Proprietorships?
Roughly 3/4
Do the Financial Reports of Sole Proprietors need to be disclosed?
No
Partnership
An association of two or more persons who carry on as cowers of a business for profit
What are the two types of partnership?
General Partnership and Limited partnership
General Partnerships
Involve a complete sharing in the management of a business
Limited Partnership
One general partner who assumes unlimited liability and one limited partner whose liability is is limited to their investment in the business
Articles of partnership
Legal documents that set forth basic agreements between partners
Corporation
A legal entity, created by the state whose assets and liabilities are separate from its owners
Stock
Parts of the business that are owned and shared by people
Dividends
How the money from a stock is distributed
Corporate Charter
a legal document that the state issues, and establishes a corporation
Private Corporation
corporation that is owned by one or a few people who are closely managing the business
C Corporation
a corporation whose stock anyone can buy sell and/or trade
Initial public offering (IPO)
becoming a public corporation by selling stock so that it can be traded in public markets
Quasi-Public corporations
Owned and operated by the federal, state, or local government
Nonprofit Corporations
focus on providing a service rather than earning a profit
Board of directors
Elected by the stockholders to oversee the general operation of the corporation
What are the two types of stock?
Preferred and Common
Preferred Stock
Stock whose owners have a claim to profits before other stockholders
common Stock
Stockholders have voting rights in the corporation yet do not receive preferential treatment regarding dividends
Joint Venture
A partnership established for a specific project or for a limited time
S Corporation
form of business ownership that is taxed as though it were a partnership. Also, the stock is private
Limited Liability Company
Business ownership that provides limited liability but is taxed like a partnership
Cooperative (Co-op)
An organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization
Merger
When two companies combine to form a new company
Acquisition
One company purchases another
Leveraged Buyout
A group of investors borrow money fin banks and other institutions to acquire a company
entrepreneur
the process of creating and managing a business to achieve desired objectives
Social Entrepreneurs
Individuals who use entrepreneurship to address social problems
small business
1.Independently owned and operated
2.non dominant in its competitive area
3.Less than 500 employees
sharing economy
An economy where the essential goods are shared
Gig economy
Economic model where contractors sell their services on demand
Undercapitalization
The lack of funds to operate a business normally
Venture Capitalists
persons or organizations that agree to provide some funds for a business to start up
Franchise
A license to sell another persons products or to use another name’s business
What is a Sole Proprietorship?
A business owned and operated by one individual.
Define Partnership.
A business organization in which two or more individuals manage and operate the business.
What is a Corporation?
A legal entity that is separate and distinct from its owners, offering limited liability to its shareholders.
What does LLC stand for and what is it?
Limited Liability Company; a hybrid business structure that offers the limited liability of a corporation and the tax benefits of a partnership.
What is a Franchise?
A business model where a business owner licenses trademarks and methods to an independent entrepreneur.
What is International Business?
Commercial transactions that occur across national borders.
Define Trade Barriers.
Government-imposed regulations such as tariffs, quotas, and embargoes that restrict international trade.
What are Exchange Rates?
The value of one country’s currency in terms of another currency.
What is Globalization?
The process by which businesses develop international influence or start operating on an international scale.
Define Multinational Corporation (MNC).
A company that operates in multiple countries.
What is Outsourcing?
The practice of contracting out certain business functions or operations to other companies, often in foreign countries.
What is a Merger?
The combination of two companies to form a new company.
Define Acquisition.
The purchase of one company by another.
What is Business?
An organized effort to produce and sell goods or services for profit.
What is Economics?
The study of how resources are distributed for the production of goods and services within a social system.
Explain Supply and Demand.
The relationship between the availability of a product (supply) and the desire for that product (demand).
What are Economic Systems?
The structure by which a society allocates resources and distributes goods and services.
Define Business Ethics.
Principles and standards that determine acceptable conduct in business.
What is Social Responsibility?
A business’s obligation to maximize its positive impact and minimize its negative impact on society.
What is a Code of Ethics?
Formalized rules and standards that describe what a company expects of its employees.
Define Whistleblowing.
The act of an employee exposing an employer’s wrongdoing to outsiders.
What is a business plan?
A plan that shows the business product, financial situation, mission, etc.
What are the two forms of financing?
Debt and Equity financing
Debt financing
Borrowing money and paying it back with interest. Do not give up a portion of ownership , but must pay back loans on time
Equity financing
No repayment, but company is financed through stocks. Lower risk
What are the three approaches to starting a business?
From scratch
Buying a franchise
Buying the whole business
Sarbanes-Oxley Act (SOX)
Sarbanes-Oxley Act of 2002, aims to protect investors by enhancing corporate governance and financial disclosure. The act requires senior corporate officers to personally certify the accuracy of financial statements and establish internal controls to ensure the adequacy of those controls.
