Chapter 5

Question 1

Globalization

Answer 1

Process by which the world economy is becoming a single interdependent system.

Question 2

Import vs export

Answer 2

Product made or grown abroad but sold domestically vs Product made or grown domestically but shipped and sold abroad.

Question 3

Brics

Answer 3

A term denoting a group of five important and powerful emerging markets in the business world: Brazil, Russia, India, China, and South Africa.

Question 4

absolute advantage

Answer 4

The ability to produce something more efficiently than any other country

Question 5

comparative advantage

Answer 5

The ability to produce some products more efficiently than others.

Question 6

national competitive advantage

Answer 6

International competitive advantage stemming from a combination of factor conditions; demand conditions; related and supporting industries; and firm strategies, structures, and rivalries

Question 7

national competitive advantage is based on

Answer 7

Factor conditions (labour,
capital, entrepreneurs, natural resources, and information), demand conditions, related and supporting industries, strategies structures and rivalries

Question 8

balance of trade

Answer 8

The total of a country’s exports (sales to other countries) minus its imports (purchases from other countries)

Question 9

surplus (trade)

Answer 9

Situation in which a country exports more than it imports, creating a favourable balance of trade.

Question 10

Deficit (trade)

Answer 10

Situation in which a country’s imports exceed its exports, creating a negative balance of trade.

Question 11

balance of payments

Answer 11

Flow of all money into or out of a country.

Question 12

Exporter

Answer 12

Firm that distributes and sells products to one or more foreign countries

Question 13

Importer

Answer 13

Firm that buys products in foreign markets and then imports them for resale in its home country.

Question 14

International firm

Answer 14

Firm that conducts a significant portion of its business in foreign countries.

Question 15

Multinational firm

Answer 15

Firm that designs, produces, and markets products in many nations.

Question 16

independent agent

Answer 16

Foreign individual or organization that agrees to represent an exporter’s interests

Question 17

licensing arrangement

Answer 17

Arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country

Question 18

branch office

Answer 18

A location that an exporting firm establishes in a foreign country to sell the company’s products more effectively

Question 19

strategic alliance

Answer 19

a company finds a partner in a foreign country where it would like to conduct business. Each party agrees to invest resources and capital in a new business or else to cooperate in some way for mutual benefit.

Question 20

foreign direct investment (FDI)

Answer 20

Buying or establishing tangible assets in another country.

Question 21

quota

Answer 21

A restriction by one nation on the total number of products of a certain type that can be imported from another nation.

Question 22

Embargo

Answer 22

A government order forbidding exportation or importation of a particular product

Question 23

Tariff

Answer 23

A tax levied on imported products

Question 24

subsidy

Answer 24

A government payment to help domestic businesses compete with foreign firms.

Question 25

protectionism

Answer 25

Protecting domestic businesses at the expense of free-market competition.

Question 26

local-content laws

Answer 26

Laws requiring that products sold in a particular country be at least partly made in that country.

Question 27

business practice law

Answer 27

Law or regulation governing business practices in given countries.

Question 28

Cartel

Answer 28

Any association of producers whose purpose is to control supply of and prices for a given product.

Question 29

Dumping

Answer 29

Selling a product for less abroad than in the producing nation.

Question 30

General Agreement on Tariffs and Trade (GATT)

Answer 30

International trade agreement to encourage the multilateral reduction or elimination of trade barriers.

Question 31

World trade organization

Answer 31

Organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices.

Question 32

North american free trade agreement

Answer 32

Trade agreement to gradually eliminate tariffs and other trade barriers among the United States, Canada, and Mexico

Question 33

3 major marketplaces

Answer 33

North America, Europe, and Asia.