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International Business > Exam 3 > Flashcards

Exam 3 Flashcards

1
Q

International trade

A

purchase,sale, or exchange of goods and services across national borders

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2
Q

benefits of international trade

A

greater choice of goods and services

important engine for job creation in many countries

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3
Q

mercantilism

A

trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports

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4
Q

three pillars of mercantilism for successful implementation

A
  1. maintain trade surplus
  2. government intervention
  3. colonialism
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5
Q

absolute advantage

A

ability of a nation to produce a good more efficiently than any other nation

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6
Q

comparative advantage

A

inability of a nation to produce a good more efficiently than other nations but an ability to produce that good more efficiently than it does any other good

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7
Q

Porters’s Diamond Theory

A
  1. Factor Conditions
    - Basic Factors
    - Advanced Factors
  2. Demand Conditions
    - sophisticated buyers
  3. Related and Supporting Industries
    - clusters
  4. firm strategy, structure and rivalry government and chance
    - role of government
    - chance events
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8
Q

regional economic integration (regionalism)

A

process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people or capital

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9
Q

free trade area

A

removes all barriers to trade among members with each determining its own barriers against nonmembers

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10
Q

customs union

A

adds the requirement that all members set a common trade policy against nonmembers

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11
Q

common market

A

add the free movement of labor and capital and sets a common trade policy against nonmembers

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12
Q

economic union

A

requires members to harmonize their tax, monetary, and fiscal policies, create a common currency, and concede some sovereignty to the larger organization

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13
Q

political union

A

requires members to coordinate their economic and political policies against nonmembers, with a few exceptions

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14
Q

case for regional integration

A
  • trade creation
  • greater consensus
  • political cooperation
  • employment opportunities
  • corporate savings
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15
Q

case against regional intergration

A
  • trade diversion
  • shifts in employment
  • loss of national sovereignty
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16
Q

trade creation

A

is the increase in the level of trade among nations that results from regional economic integration

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17
Q

trade diversion

A

is the diverting of trade away from nations not belonging to a trading bloc and toward member nations.

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18
Q

European Union

A

Management Implications of the Euro:

  • the euro removes financial obstacles created by the use of multiple currencies
  • the euro makes prices among markets more transport
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19
Q

copenhagen criteria

A
  • stable institutions
  • functioning market economy
  • assume membership obligations
  • adopt rules of the community, court of justice and treaties
20
Q

european free trade association

A
  • feared a loss of national sovereignty
  • feared destructive rivlary
  • desired free-trade gains
  • cooperates with eu
21
Q

a country may receive membership in the european union once it meets certain criteria called what?

A

copenhagen criteria

22
Q

North American Free Trade Agreement (NAFTA)

A
  • effective in january 1994

- comprises a makrket with 450 million consumers

23
Q

effects of nafta

A
  • growing trade among the 3 participation nations
  • effect on employment and wages is not as easy to determine
  • claims of environment protection efforts
  • delays in NAFTA expansion
24
Q

3 nations that belong to NAFTA

A

Canada, Mexico and US

25
Q

Devaluation

A

intentionally lowering the value of a nation’s currency

lowers the prices of country’s export and increases the prices of imports

26
Q

revaluation

A

intentionally raising the value of a nation’s currency

27
Q

stable exchange rates

A

improve accuracy of forecasts and financial planning

28
Q

predictable exchange

A

reduce surprises of unexpected rate changes

29
Q

efficient market view

A

view that prices of financial instruments reflect all publicly available info at any given time

30
Q

inefficient market view

A

view that prices of financial instruments do not reflect all publicly available info

31
Q

Forecasting techniques

A

fundamental analysis

technical analysis

32
Q

fundamental analysis

A

technique that uses statistical models based on fundamental economic indicators to forecast exchange rates

33
Q

technical analysis

A

technique that uses charts of pasts trends in currency prices and other factors to forecast exchanges rates

34
Q

forecasting difficulties

A
  • unexpected events
  • human error
  • regulatory changes
35
Q

Law of one price

A

principle that an identical item must have an identical price in all countries when the price is expressed in a common currency

36
Q

Purchasing Power Parity (PPP)

A

PPP can be interpreted as the exchange rate between two nations currencies that is equal to the ration of their price levels

37
Q

arbitrage opportunity

A

an opportunity to buy a product at a specific price in one country and sell it at a higher price in another country

38
Q

Multinational corporation

A

a business that has direct investment abroad in multiple countries is a multinational corporation

39
Q

two factors of born global firm

A
  1. adopts a global perspective

2. engages in international business from at or near its inception

40
Q

globalization

A

trend toward greater economic, cultural,political and technological interdependence among national institutions and economies

41
Q

globalization of markets

A

convergence in buyer preferences in markets around the world

42
Q

globalization of production

A

dispersal of production activities worldwide to minimize costs or maximize quality

43
Q

benefits of globalization of markets

A
  • can reduce marketing costs (global strategy)
  • creates new market opportunities
  • levels uneven income streams
  • local buyer’s needs
  • global sustainability- meet current needs w/o compromising future generations
44
Q

benefits of globalization of productions

A
  • access lower-cost workers
  • access technical expertise
  • access production inputs
45
Q

what global organizations have helped expand globalization

A

GATT 1947 to WTO
International Monetary Fund
The world bank
regional trade alliances like NAFTA and EU

46
Q

People opposed to globalization say that is does what to national cultures?

A

homogenizes national cultures

International Business (2 decks)

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