Ch 5 Flashcards
(25 cards)
Acquires essentially all of its resources and sells all of its products or services within a single country
Domestic Business
One based primarily in a single country but acquires some meaningful share of its resources, revenues, or both from other countries
International Business
Has a worldwide marketplace from which it buys raw materials, borrows money, where it manufactures its product, and sells its product.
Multinational business
One that transcends national boundaries and is not committed to a single home country.
Global Business
Advantages & Disadvantages with Internationalization
1) Importing/Exporting
2) Licensing
3) Strategic Alliances
4) Direct Investment
Arrangement whereby a firm allows another company to use its brand name, trademark, technology, patent, copyright, or other assets. In return, the licensee pays a royalty, usually based on sales.
Licensing
Two or more firms jointly cooperate for mutual gain.
Strategic Alliance
A firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country.
Direct Investment
Based on the private ownership of a business, and it largely allows market factors such as supply and demand to determine business strategy.
Market Economy
Clusters of countries that engage in high levels of trade with each other.
Market Systems
North American Free Trade Agreement (NAFTA)
Established a free trade zone in North America
Signed in 2018 and will eventually replace NAFTA. Primary goal is to increase exports from the US to Mexico (primarily) and Canada.
United States-Mexico-Canada Agreement
The EU
European Union
Trade agreement intended to promote international trade by reducing trade barriers and making it easier for all nations to compete in international markets.
General Agreement on Tariffs and Trade (GATT)
Came into existence on January 1, 1995. It replaced the GATT and absorbed its mission.
World Trade Organization (WTO)
Unique Challenges for the Economic Environment
1) Economic System
2) Natural Resources
3) Infrastructure
Tax on goods shipped across national boundaries
Tariffs
Limit on the number or value of goods that can be traded
Quota
Designed to persuade other governments to voluntarily limit the volume or value of goods exported or imported from a particular country.
Export Restraint Agreement
Set of countries that agree to markedly reduce or eliminate trade barriers among member nations.
Economic Communities
Person’s beliefs about the relative importance of the individual vs. the group to which that person belongs
Social Orientation
Beliefs that people in a culture hold about the appropriateness of power and authority differences in heirarchies such as a business organization
Power Orientation
The feeling people have about uncertain and ambiguous situations
Uncertainty Orientation
The manner in which people are motivated to work toward different kinds of goals
Goal Orientation
