Lesson 3, Chapter 7 Flashcards
global business
the buying and selling of goods and services by people from different countries
foreign direct investment
a method of investment in which a company builds a new business or buys an existing business in a foreign country
multinational corporations
corporations that own businesses in two or more countries
trade barriers
government-imposed regulations that increase the cost and restrict the number of imported goods
protectionism
a government’s use of trade barriers to shield domestic companies and their workers from foreign competition
nontariff barriers
nontax methods of increasing the cost or reducing the volume of imported goods
tariff
a direct tax on imported goods
quotas
limits on the number or volume of imported products
voluntary export restraints
voluntarily imposed limits on the number or volume of products exported to a particular country
customs valuation/classification
a classification assigned to imported products by government officials that affects the size of the tariff and imposition of import quotas
government subsidies
government loans, grants, investments, and tax deferments given to domestic companies to protect them from foreign competition
government import standards
standards ostensibly established to protect the health and safety of citizens but, in reality, often used to restrict imports
General Agreement on Tariffs and Trade (GATT)
a worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property
World Trade Organization (WTO)
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 flows as smoothly, predictably, and freely as possible
North American Free Trade Agreement (NAFTA)
a regional trade agreement between the United States, Canada, and Mexico
regional trading zones
areas in which tariff and nontariff barriers on trade between countries are reduced or eliminated
Europe’s Maastricht Treaty
a regional trade agreement between most European countries
Central America Free Trade Agreement (CAFTA-DR)
a regional trade agreement between Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States
Union of South American Nations (UNASUR)
a regional trade agreement between Argentina, Brazil, Paraguay, Uruguay, Venezuela, Bolivia, Colombia, Ecuador, Peru, Guyana, Suriname, and Chile
Association of Southeast Asian Nations (ASEAN)
a regional trade agreement between Bruinei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam
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
Asia-Pacific Economic Cooperation (APEC)
a regional trade agreement between 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 members of ASEAN except Cambodia, Lao PDR, and Myanmar
exporting
selling domestically produced products to customers in foreign countries
local adaptation
when a multinational company modifies its rules, guidelines, policies, and procedures to adapt to differences in foreign customers, governments, and regulatory agencies
cooperative contract
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
franchise
a collection of networked firms in which the manufacturer or marketer of a product or service, the franchisor, licenses the entire business to another person or organization, the franchisee
licensing
an agreement in which a domestic company, the licensor, receives royalty payments for allowing another company, the licensee, to produce the licensor’s product, sell its service, or use its brand name in a specified foreign market
wholly owned affiliates
foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company
joint venture
a strategic alliance in which two existing companies collaborate to form a third, independent company
strategic alliance
an agreement in which companies combine key resources, costs, risk, technology, and people
global new ventures
new companies that are founded with an active global strategy and have sales, employees, and financing in different countries
purchasing power
a comparison of the relative cost of a standard set of goods and services in different countries
national culture
the shared values and beliefs that affect the perceptions, decisions, and behaviour of the people of a particular country.
policy uncertainty
the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business
the risk of major changes in political regimes that can result from war, revolution, the death of a political leader, social unrest, or other influential events
expatriate
someone who lives and works outside his or her native country
