Chapter 16 Vocabulary

Question 1

Resources, markets, and completion are worldwide in scope

Answer 1

Global economy

Question 2

The process of growing interdependence among elements of the global economy

Answer 2

Globalization

Question 3

The creation of domestic jobs by foreign employers

Answer 3

Insourcing

Question 4

Shifts local jobs to foreign locations to take advantage of lower-wage labor in other countries

Answer 4

Outsourcing

Question 5

Conducts commercial transactions across national boundaries

Answer 5

International business

Question 6

Firms purchase materials, manufacturing, or services around the world for local use

Answer 6

Global sourcing

Question 7

A network of a firm’s outsourcing suppliers and contractors

Answer 7

Global supply chain

Question 8

Moves foreign production and jobs back to domestic locations

Answer 8

Reshoring

Question 9

Local products are sold abroad

Answer 9

Exporting

Question 10

The process of acquiring products abroad and selling them in domestic markets

Answer 10

Importing

Question 11

One firm pays a fee for rights to make or sell another company’s products

Answer 11

Licensing

Question 12

A firm pays a fee for rights to use another company’s name and operating methods

Answer 12

Franchising

Question 13

Operates in a foreign country through co-ownership with local partners

Answer 13

Joint venture

Question 14

Each partner hopes to achieve through cooperation things they couldn’t do alone

Answer 14

Global strategic alliance

Question 15

A local operation completely owned by a foreign firm

Answer 15

Foreign subsidiary

Question 16

Establishes a foreign subsidiary by building an entirely new operation in a foreign country

Answer 16

Greenfield venture

Question 17

A global institution established to promote free trade and open markets around the world

Answer 17

World trade organization (WTO)

Question 18

Gives a trading partner the most favorable treatment for imports and exports

Answer 18

Most favored nation status

Question 19

Taxes governments levy on imports and exports

Answer 19

Tariffs

Question 20

Nontax policies that governments enact to discourage imports, such as quotas and import restrictions

Answer 20

Nontariff barriers

Question 21

A call for tariffs and favorable treatments to protect domestic firms from foreign competition

Answer 21

Protectionism

Question 22

Links Canada, the United States and Mexico in an economic alliance

Answer 22

NAFTA (North American Free Trade Agreement)

Question 23

A political and economic alliance of 28 European countries

Answer 23

EU (European Union)

Question 24

Links 21 nations to promote free trade and investment in the pacific region

Answer 24

APEC (Asia-Pacific Economic Cooperation)

Question 25

Links 14 southern African countries in trade and economic development efforts

Answer 25

SADC (Southern Africa Development Community)

Question 26

Has extensive international business dealings in many foreign countries

Answer 26

``` Global corporation Multinational Corporation (MNC) ```

Question 27

An MNC that operates worldwide on a borderless basis

Answer 27

Transnational corporation

Question 28

Where large global firms gain disproportionately from the global economy versus smaller firms

Answer 28

Globalization gap

Question 29

Involves illegal practices to further one’s business interests

Answer 29

Corruption

Question 30

Makes it illegal for U.S. firms and their representatives to engage in corrupt practices overseas

Answer 30

Foreign corrupt practices act

Question 31

Employ workers at low wages, for long hours, and in poor working conditions

Answer 31

Sweatshops

Question 32

The full-time employment of children for work otherwise done by adults

Answer 32

Child labor

Question 33

Possible profit loss because of fluctuating exchange rates

Answer 33

Currency risk

Question 34

Possible loss because of instability and political changes in foreign countries

Answer 34

Political risk

Question 35

Forecasts how political events may have an impact on foreign investments

Answer 35

Political-risk Analysis

Question 36

Culturally aware and informed on international affairs

Answer 36

Global manager