Chapter 3 Flashcards
(29 cards)
International business
All business activities that involve exchanges across national boundaries
Absolute advantage
The ability to produce a specific product more efficiently than any other nation
Comparative advantage
The ability to produce a specific product more efficiently than any other product
Exporting
Selling and shipping raw materials or products to other nations
Balance of trade
The total value of a nation’s exports minus the total value of it’s imports over a specified period of time
Importing
Purchasing raw materials or products in other nations and bringing them into one’s country
Trade deficit
A negative balance of trade
Balance of payments
The total flow of money into a country minus the total flow of money out of that country over a specified period of time
Licensing
A contractual agreement in which one firm permits another to produce and market its product and to use its brand name in return for a royalty or other compensation
Contract manufacturing
An arrangement in which one firm contracts with another business, often in another country, to manufacture products or product components to it’s specifications
Trading company
Provides a link between buyers and sellers in different countries
Countertrade
An international barter transaction
Outsourcing
An arrangement in which one firm contracts manufacturing or other activities to a firm in another country that specializes in those activities and can offer them at a lower cost than domestic firms
Strategic alliance
A partnership formed to create competitive advantage on a worldwide basis
Multinational corporation
A firm that operates on a worldwide scale without ties to any specific nation or region
Dumping
Exportation of large quantities of a product at a price lower than that of the same product in the home market
Tariff
A tax levied on a particular foreign product entering a country
Nontariff barrier
A nontax measure imposed by a government to favor domestic over foreign suppliers
Embargo
A complete halt to trading with a particular nation or of particular product
Import quota
A limit on the amount of a particular good that may be imported into a country during a given period of time
Currency devaluations
The reduction of the value of a nation’s currency relative to the currencies of other countries
Exchange control
A restriction on the amount of a particular foreign currency that can be purchased or sold
General agreement on Tariffs and Trade (GATT)
An international organization of nations dedicated to reducing or eliminating tariff is and other barriers to world trade
Export-important Bank of the United States
An independent agency of the U.S. government whose function is to assist in financing the exports of American firms
