Midterm 3 Flashcards
1
Q
Importing
A
buying products from another country
2
Q
Exporting
A
selling products to another country
3
Q
Free trade
A
movement of goods and services among nations without political or economic obstruction
4
Q
Comparative advantage theory
A
Country should sell to other countries those products that it produces most effectively and efficiently and should buy from other countries that can produce as effectively
5
Q
Absolute advantage
A
a country is able to produce a specific product more efficiently that other countries
6
Q
Balance of trade
A
total value of a nations exports compared to its imports means period
7
Q
Trade surplus
A
exists when the value of a nation imports measured over a particular period
8
Q
Trade deficit
A
unfavorable balance of trade, it occurs when the value of a count of its exports
9
Q
Balance of payments
A
difference between money coming into a country from leaving the country for imports plus money flows from other factors such as tourism, expenditures, and foreign inv.
10
Q
Dumping
A
practice of selling products in a foreign country at lower prices than those charged in the producing country
11
Q
Licensing
A
a firm allows a foreign company to produce its products in exchange for a fee
12
Q
Contract manufacturing
A
involves a foreign country’s production of private label goods to which a domestic brand name or trademark
13
Q
Joint venture
A
partnership in which two of more companies join to undertake a major project
14
Q
Strategic alliance
A
long term partnership between two or more companies est. to help each company build competitive market advantages
15
Q
Foreign direct investment
A
buying permanent property and business in foreign nations
16
Q
Foreign subsidiary
A
company owned in a foreign country by another company
17
Q
Multinational corporation
A
organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management
18
Q
Exchange rate
A
value of one nations currency relative to the currencies of other countries
19
Q
Devaluation
A
lowering the value of a nation’s currency relative to other currencies
20
Q
Counter-trading
A
complex form of bartering in which several nations may be involved, each trading goods and services
21
Q
Trade protectionism
A
use of government regulations to limit the import of goods and services
22
Q
Tariff
A
tax on imports making imported goods more expensive
23
Q
Import quota
A
limit on the number of products in certain categories that a nation can import
24
Q
Embargo
A
complete ban on the import or export of a certain product or stopping all trade with that particular country
25
General agreement on tariffs and trade (GATT)
1948 agreement that est. mutual reductions in trade restrictions
26
World trade organization (WTO)
international org. that replaced the general agreement on trade and tariffs and was assigned the duty of mediating trade disputes.
27
Common market
regional group of countries that have a common external tariff, no internal tariffs and the coordination of laws among member countries
28
North american free trade agreement (NAFTA)
agreement that created free trade area among the US, Canada and Mexico
29
Entrepreneurship
accepting the risk of starting and running a business
30
Entrepreneural team
group of experienced people from different areas of business who join together to form a managerial team with the skills to develop, make and market a new prod.
31
Intrapreneurs
creative people who work as entrepreneurs within corporations
32
Micropreneurs
entrepreneurs willing to accept the risk of starting and managing the type of business that remains small
33
Entreprise zones
specific geographic areas to which governments try to attract private business investment by offering lower Gv and other gov. support
34
Incubators
centers that offer lowcost offices with basic business services
35
Small business
independently owned and operated, not dominate in its field of operation and meets certain standards of size
36
Business plan
detailed written statement that describes the nature of the business, target market, advantages the business will have in relation to competition and resources and qualifications of the owners
37
Venture capitalists
ind. or companies that invest in new businesses in exchange for partial ownership of those businesses.
38
Small business investment company program
program through which private investment companies licensed by the small business adm lend money to small businesses.
39
Market
consists of people with unsatisfied wants and needs who have both the resources and the willingness to buy
40
Service corps of retired executives
SBA office with volunteers from industry, trade associations, and education who counsel small businesses at no cost
41
Judiciary
branch of the government chosen to oversee the legal system through the court system
42
Business law
rules, statues, codes, and regulations that are est. to provide a legal framework within which business may be conducted and that are enforceable by court action
43
Statutory law
state and federal const. legislative enactments, treaties of the federal gov and ordinances, written law
44
Common law
body of the law that comes from decision handed down by judges, unwritten law
45
Precedent
involves decisions judges have made in earlier cases that guide the handling of new cases
46
Tort
wrongful act that causes injury to another person's body, property, or reputation
47
Intentional tort
willful act purposely inflicted that results in injury
48
Negligence
behavior that causes unintentional harm or injury
49
Product liability
part of tort law that holds businesses liable for harm that results from production, design, sale, or use of products it markets
50
Strict product liability
legal responsibility for harm or injury caused by product regardless of fault
51
Patent
document that gives inventors exclusive rights to their inventions for 20 yrs
52
Copyright
document that protects a creator's rights to materials such as books, articles, photos, and cartoons
53
Uniform commercial code
commercial law adopted by every state that covers sales laws and other commercial laws
54
Express warranties
special representations by the seller that buyers rely on regarding the goods they purchase
55
Implied warranties
guarantees legally imposed on the seller
56
negotiable instruments
forms of commercial paper that are transferable among businesses and ind. and represent a promise to pay a specific amount
57
Contract
legally enforceable agreement
58
Contract law
set of laws that specify what constitutes a legally enforceable agreement
59
Consideration
something of value, it is one of the requirements of a legal contract
60
Breach of contract
one party fails to follow the terms of the contract
61
Payment of damages
monetary settlement awarded to a person who is injured by a breach of contract
62
Consumerism
seeks to increase and strengthen the rights and powers of buyers in relation to sellers
63
Taxes
how gov. raises money
64
Bankruptcy
person, business, or gov. entity is unable to meet finical obligations is relieved of those by court that divides any assets among creditors, allowing them to get part of their money
65
Voluntary bankruptcy
legal procedures initiated by a debtor
66
Involuntary bankruptcy
procedures filed by a debtor's creditors
67
Deregulation
gov. withdrawal of certain laws and regulations that seem to hinder competition
68
Court system
US is org. at the federal, state and local levels
69
Trial courts
hear cases involving criminal and civil law
70
Criminal law
defines crimes, est. punishment and regulates prosecution
71
Civil law
involves legal proceedings that do not involve criminal acts
72
Appellate courts
hear appeals of trial court decisions
73
Strict liability
caused serious problems for manufactures of some products
74
Tort reform
businesses and insurance companies have called for this from huge losses in strict product liability suits
75
Legally protecting ideas
patents, copyrights and trademarks
76
Penalties
violating a patent can be severe
77
Submarine patent
intentionally delaying a patent application and waiting for others to develop the technology
78
Library of congress
copyrights are filled there
79
Exclusive copyright
the holder of that may charge a fee to anyone who wishes to use the material
80
Article 2 of UCC
warranties
81
Article 3 of UCC
negotiable instruments
82
Full warranty
seller to replace or repair a product at no charge if the product is defective
83
Limited warranties
limit the defects or mechanical problems that are covered
84
Negotiable inst. requirements
written and signed by the maker, payable on demand, payable to the bearer and unconditional promise
85
Endorsement
checks or other forms of negotiable inst. are transferred when the payee signs the back of a check
86
Legally binding
offer is made, voluntary acceptance, consideration, competent, legal and proper form
87
Consequences of breached contract
specific performance, payment of damages and discharge of obligation
88
Payment of damages
person violating contract may be required to live up to the agreement if no monetary award is adequate
89
Discharge of obligation
agreeing to drop the matter
90
Contract should
writing, specify mutual consideration, clearly offered and accepted
91
Exclusive dealing
selling goods with the condition that the buyer will not buy goods from a competitor
92
Tying contract
buyer to purchase unwanted items in order to purchase desired items
93
Interlocking directorate
board of directors includes members of the board of competing corporations
94
Wheeler lea amendment
gave the FTC additional jurisdiction over false or misleading advertising
95
Microsoft's competitive practices
have been criticized as being unfair competition, hindering competition in its dealings with computer manufactures
96
Gov use taxes to
fund gov operations, discourage citizens from doing harmful things and encourage businesses to hire new employees by offering a tax credit
97
Bankruptcy amendments of 1984
allow a person who is bankrupt to keep part of the equity in a house
98
2005 bankruptcy legislation
makes it more difficult for people to escape debt from credit cards, medical bills, student loans or other unsecured loans
99
Importance of international markets
many customers, US buys a ton from China and companies like UPS or Starbucks operate overseas
100
Third largest exporting nation
US
101
Competition is intense
the US must compete against aggressive global competitors
102
Why trade with other nations
no nation can produce all the products someone needs, meet new people
103
Mutually beneficial exchange
some nations have abundant natural resources and lack technological know how, others have sophisticated tech. but not a lot of resources, enable countries to produce what they can and buy the rest in a mutually beneficial exchange
104
small businesses
are the real potential in a global market, and generate about 30% of exports but only 1% of them take part
105
Exporting creates
great opportunities and boost the US economy
106
Favorable balance of payments
more money is flowing out of the country
107
Unfavorable balance of payments
more money is leaving than coming into the country
108
Since 1975 the US has run a
trade deficit
109
The US exports
a lower percentage of its products than other countries do
110
Advantages of licensing
company can gain additional revenues from a product, firm can sell start up supplies, materials and consulting services, spends little to no money to produce the product
111
Problems of licensing
firm must grant licensing rights to its product for an extended period, if a product has growth in foreign market the bulk of the revenue goes to licensee and if they learn the tech it may break the agreement and produce less
112
Export assistance centers
provide hands on exporting assistance and trade finance support for small and medium sized businesses
113
Export trading companies
match buyers and sellers from different countries
114
Franchising
contractual arrangement where someone with a idea for a business sells the rights to use its name
115
The use of contract manufacturing can cause a company to experiment in a new market
without heavy start up costs
116
Use contract manufacturing to temporary
meet an unexpected increase in orders
117
Benefits of joint venture
shared tech. and risk, shared marketing and management expertise and entry into markets where foreign companies are not allowed unless their goods produce local
118
Drawbacks of joint venture
1. partner can learn tech and practices of the other and leave to become a competitor
2. shared tech. may become absolute
3. partnership may be too large to be as flexible as needed
119
Legal requirements of both parent and foreign countries
must be observed
120
Advantage of foreign subsidiaries
company maintains complete control over any tech. or expertise it may possess
121
Shortcoming of foreign subsidiaries
firms assets could be expropriated, taken by foreign gov if the host country fails
122
Sovereign wealth funds
fastest growing forms of foreign direct investment , investment funds controlled by gov. holding large stakes in foreign companies
123
Ethnocentricity
attitude that our culture is superior to all others
124
Religion
have an impact on business operations (misunderstandings about someone culture)
125
Social-cultural differences
impact business decisions involving human resource management
126
High value of dollar
products of foreign producers would be cheaper but US produced goods would be expensive
127
Low value of dollar
foreign goods become more expensive because it takes more dollars to buy them
128
Floating exchange rate
currencies float according to supply and demand in global market for currency
129
Bartering
trading merchandise for merchandise with no money involved
130
Global markets are governed by a myriad of
laws and regulations that are often inconsistent
131
Business people are bound to follow
US laws and regulations in conducting business globally
132
Organization for economic cooperation and development and transparency international
led the effort to fight corruption and bribery in foreign markets
133
Physical and environmental forces
1. tech constraints may make it difficult to build a large global market
2. developing nations have primitive trans and storage systems that make distribution ineffective
3. certain tech. differences affect exportable products
134
Mercantilism
selling more goods to other nations than you bought from them, to have a favorable balance of trade
135
Protective tariffs
imported taxes designed to raise the price of imported products so that domestic products can be more competitively priced
136
Revenue tariffs
raise money for the gov
137
Non-tariff barriers
not as specific as tariffs but can still be detrimental to free trade
138
1986 Uruguay round of gatt talks
were convened to deal with the renegotiation of trade agreements
139
European union
group of 28 nations in western Europe
140
Association of southeast asian nations
creates economic cooperation among its five org. members
141
COMESA
19 member African trading bloc with a GPD of 658 bill. and pop. of 494 mill.
142
Objections of NAFTA
eliminate trade barriers, promote cond of fair competition, increase investment opp. provide effective protection of intellectual property rights
143
Central American free trade agreement
free trade zone with central american nations
144
Outsourcing
purchase of goods and services from sources outside a firm rather than providing them within the company
145
Offshore outsourcing
shifting functions to markets outside the US is more controversial
146
Good accountant
decide whether to buy or lease, provide tax planning and financial forecasting, choose sources of financing
147
Small business development centers
funded by the gov and ind states help evaluate the feasibility of you idea, develop your plan and complete your funding app.
148
Community development financial inst.
source of funding
149
Individual investors
primary source of capital for most entrepreneurs
150
Angel investors
private ind. who invest their own money in new businesses with potential
151
Functions of a business
planning, financing, knowing, managing and keeping records
152
Computer tech.
allows home based businesses to look and act as big corporations
153
Entrepreneural attributes
self direct, self nurturing, action oriented, highly energetic and tolerant of uncertainty
154
Ethics
standards of moral behavior that is accepted by society as right versus wrong
155
Relationship between workers and managers
fairness, honesty, openness, and more integrity
156
Compliance based ethics code
ethical standards that prevent unlawful behavior by increasing control and penalizing wrongdoers
157
Integrity based ethics code
stands that define the org. guiding values, create a good environment
158
Process help improve america's business ethics
top management must support, employees must understand expectations, managers, must be trained, ethics office must be set up, outsiders must be told the program and ethics code must be enforced
159
Corporate social responsibility
businesses concern for the welfare of society
160
Corporate philo
social resp. that includes charity donations
161
Corporate social initiatives
corporate philo directly related to the companies competencies
162
Corporate resp.
includes everything from hiring minority workers to making safe products
163
Corporate policy
position a firm takes on social and political issues
164
Basic rights of consumers
safety, be informed, choose, and be heard
165
Insider trading
unethical activity which insiders use private company info to further their own fortunes or those of their friends
166
Social audit
systematic evaluation of an org progress toward implementing socially responsible and responsive programs
167
Socially conscious investors
companies extend the companys own high standards to all their suppliers
168
Socially conscious research org.
analyze and report CSR efforts
169
Environmentalists
apply pressuring by naming names of companies that dont abide by their standards
170
Union officials
hunt down violations and force companies to comply to avoid negative publicity
171
Customers
take their business elsewhere if a company demonstrates irresponsible practices
172
Sole proprietorship
business that owned and usually managed by one person
173
Partnership
legal form of business with two or more owners
174
Corporation
legal entity with authority to act and have liability separate from its owners
175
Unlimited liability
responsibility of business owners for all of the debts of the business
176
Limited financial resources
limited to the funds that the sole owner can gather
177
Management difficulties
many owners are not skilled at management and with details such as accounting
178
Disadvantages of sole proprietorships
Unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth and limited life span
179
General partnership
all owners share in operating the business and in assuming liability for the businesses debts
180
Limited partnership
one or more general partners and one or more limited partners
181
General partner
owner who has unlimited liability and is active in managing the firm
182
Limited partner
invests money in the business but does not have any management responsibility or liability for losses beyond the investment
183
Limited liability
responsibility of a business's owners for losses only up to the amount they invest, limited partners and shareholders have limited liability
184
Master limited partnership
looks like a corporation but is taxed like a partnership and thus avoids the corporate income tax
185
Limited liability partnership
limits partners risk of losing their personal assets to only their own acts and omissions and the acts and omissions of the people under their supervision
186
Advantages of partnerships
more financial resources, shared management and pooled/complementary knowledge, longer survival and no special taxes
187
Disadvantages of partnerships
unlimited liability, division of profits, disagreements among parties, difficulty of termination
188
Conventional corporation
state chartered legal entity with authority to act and have liability separate from its owners
189
Advantages of corporations
limited liability, ability to raise more money for investment, size, perpetual life, ease of ownership change, ease of drawing talented employees, separation of ownership from management
190
Disadvantages of corporations
initial cost, expensive paperwork, double taxation, two tax returns, size, difficulty of termination, possible conflict with stockholders and board of directors
191
Corporation pays tax
on income before it can distribute any dividends to stockholders
192
Stockholders pay tax
income they receive from the corporation
193
S corporations
gov creation that looks like a corporation but is taxed like sole proprietorships and partnerships
194
S corporations must
have no more than 100 shareholders, shareholders are ind. or estates and are citizens or permeant residents of the US, one class of stock and have no more than 25% of income from passive sources
195
Limited liability company
similar to the s corporation but without the special eligibility requirements
196
Advantages of LLC
limited liability, choice of taxation, flexible ownership rules, flexible distribution of profits and losses, operating flexibilty
197
Disadvantages of LLC
no stock, limited life span, fewer incentives, taxes and paperwork
198
Merger
result of two firms forming one company
199
Acquisition
one company's purchase of the property and obligations of another company
200
Vertical merger
joining of two companies involved in different stages of related businesses
201
Horizontal merger
joins two firms in the same industry
202
Conglomerate merger
joining of firms in completely unrelated industries thereby diversifying business operations
203
Leveraged buyout
attempt by employees, management or group of investors to purchase an org primarily through borrowing
204
Franchise agreement
someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
205
Franchisor
company that develops a product concept and sells others the rights to make and sell the product
206
Franchise
right to use a specific business's name and sell its products or services in a given territory
207
Franchisee
person who buys a franchise
208
Advantages of franchises
management and marketing assistance, personal ownership, nationally recognized name, financial advice and assistance, lower failure rate
209
Disadvantages of franchises
large start up costs, shared profit, management regulation, coattail effects, restrictions on selling, fraudulent franchisors
210
Diversity in franchising
women in franchising, minority franchise ownership
211
Cooperative
business owned and controlled by the people who use it, producers, consumers, or workers with similar needs who pool their resources for mutual gain
