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Flashcards in Chapter 5 Deck (37):
1

Global Vision

The ability to recognize and react to international business opportunities, be aware of threats from foreign competition, and effectively use international distribution networks to obtain raw materials and move finished products to customers

2

Multinational corperations

Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located

3

Exports

Goods and services produced in one country and sold in other countries

4

Imports

Goods and services bought from other countries

5

Balance of trade

The difference between the value of a country's exports and the value of its imports during a certain time

6

Trade surplus

A favourable balance of trade that occurs when a country exports more than it imports

7

Trade defecit

An unfavourable balance of trade that occurs when a country imports more than it exports

8

Balance of payments

A summary of a country's international financial transactions showing the difference between the country's total payments to and total receipts from other countries

9

Floating exchange rates

A system in which prices of currencies move up and down based on the demand for and supply of the various currencies

10

Devaluation

A lowering of the value of a nation's currency relative to other currencies

11

Absolute advantage

The situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product

12

Principle of comparative advantage

The concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply

13

Free trade

The policy of permitting the people of a country to buy and sell where they please without restrictions

14

Protectionism

The policy of protecting home industries from outside competition by establishing artificial barriers such as tariffs and quotas

15

Preferential tariff

A tariff that is lower for some nations than others

16

Free trade zone

An area where nations allow free, or almost free, trade with each other while imposing tariffs on goods of nations outside the zone

17

NAFTA

North American Free Trade Agreement:
A 1993 agreement creating a free-trade zone that includes Canada, Mexico, and the United States

18

Mercosur

Trade agreement between Brazil, Argentina, Uruguay, Paraguay, and Venezuela

19

EU

European Union:
Trade agreement among 27 European nations

20

ASEAN

Association of Southeast Asian Nations:
The ASEAN as of 2012 included 10 member states

21

Exporting

The practice of selling domestically produced goods to buyers in another country

22

Licensing

The legal process whereby a company agrees to allow another company to use a manufacturing process, trademark, patent, trade secret, or other proprietary knowledge in exchange for the payment of a royalty

23

Contract manufacturing

The practice in which a foreign company manufactures private label goods under a domestic company's brand name

24

Joint venture

An agreement in which a domestic company buys part of a foreign company or joins with a foreign company to create a new entity

25

Foreign direct investment

Active ownership of a foreign company or of manufacturing or marketing facilities in a foreign company

26

Countertrade

A form of international trade in which part or all of the payment for goods or services is in the form of other goods and services

27

Dumping

The practice of charging a lower price for a product in foreign markets than in the company's home market

28

WTO

World Trade Organization:
An organization established by the Uruguay Round in 1994 to oversee international trade, reduce trade barriers, and resolve disputes among member nations

29

World Bank

An international bank that offers low interest loans, as well as advice and information, to developing nations

30

IMF

International Monetary Fund:
An international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender of last resort for troubled nations

31

Nationalism

A sense of national consciousness that boosts the culture and interests of one country over those of all other countries

32

Infrastructure

The basic institutions and public facilities on which an economy's development depends

33

Tariff

A tax imposed on imported goods

34

Protective tariffs

Tariffs that are imposed to make imports less attractive to buyers than domestic products

35

Import quota

A limit on the quantity of a certain good that can be imported; also known as a quantitative restraint

36

Embargo

A total ban on imports or exports of a product

37

Exchange controls

Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank