Chapter 5

Question 1

global business (globalization)

Answer 1

A strategy in which organizations treat the entire world or major regions of it as the domain for conducting business

Question 2

international business

Answer 2

The buying, selling, and trading of goods and services across national boundaries

Question 3

cartel

Answer 3

A group of firms or nations that agree to act as a monopoly and not compete with each other

Question 4

Webb-Pomerene Export Trade Act

Answer 4

Allows selected American firms desiring international trade to form monopolies in order to compete with foreign cartels

Question 5

Foreign Corrupt Practices Act (FCPA)

Answer 5

Outlaws direct payoffs to and bribes of foreign governments or business officials by American companies

Question 6

U.K. Bribery Act

Answer 6

All organizations with business operations in the United Kingdom can be held liable for bribery, even if the bribery did not occur within the united Kingdom

Question 7

Import tariff

Answer 7

tax levied by a nation on goods bought outside its borders and imported into the country

Question 8

exchange controls

Answer 8

Restrictions on the amount of a particular currency that may be bought or sold

Question 9

quota

Answer 9

the max number of units of a particular product that may be imported into a country

Question 10

embargo

Answer 10

suspension of trade in a particular product by the government

Question 11

dumping

Answer 11

occurs when a country or business firm sells products at less than what it costs to produce them

Question 12

Gross Domestic Product (GDP)

Answer 12

market value of a nations total output of goods and services for a given period

Question 13

infrastructure

Answer 13

physical facilities that support its economic activities

Question 14

exchange rate

Answer 14

ratio at which one nations currency can be exchanged for another nations currency or for gold

Question 15

World Trade Organization (WTO)

Answer 15

global association of member countries that promotes free trade

Question 16

World Bank

Answer 16

established and supported to by industrialized nations to loan money to underdeveloped and developing countries

Question 17

International Monetary Fund (IMF)

Answer 17

mission is to oversee the international monetary system and help ensure stable currencies and exchange rates throughout the world

Question 18

Organization of Economic Cooperation and Development

OECD

Answer 18

organization of 30 countries that accept free-market economies and representative democracy; recommends and promotes policies to improve the well-being of consumers and societies across the world

Question 19

exporting

Answer 19

the sale of goods and services to foreign markets

Question 20

importing

Answer 20

the purchase of goods and services from a foreign market

Question 21

countertrade agreements

Answer 21

exporting that involves bartering products for other products instead of currency

Question 22

trading company

Answer 22

acquires goods in one country and sells them to buyers in another country

Question 23

licensing

Answer 23

an agreement in which one company allows another company to use its company name, products, patents, brands in exchange for a fee

Question 24

franchising

Answer 24

form of licensing in which a company agrees to provide a franchisee a name, logo, methods of operation, and other elements associated with the franchisers’s business, in return for a financial commitment and the agreement business in franchiser’s standard for operations

Question 25

contract manufacturing

Answer 25

when a company hires a foreign company to produce a specified volume of the firms product; final product carries domestic company name

Question 26

joint venture

Answer 26

when a company wants to do business in another country and finds a local partner to share costs and operations of business

Question 27

strategic alliance

Answer 27

a partnership formed to create competitive advantage on a worldwide basis

Question 28

direct investment

Answer 28

purchase of overseas production and marketing facilities

Question 29

outsourcing

Answer 29

involves transferring manufacturing or other functions to countries where labor and supplies are less expensive

Question 30

multinational corporation (MNC)

Answer 30

corporation that operates on a worldwide scale without significant ties to any one nation or region

Question 31

North American Free Trade Agreement

Answer 31

effectively merged Canada, US, and Mexico into one market by eliminating most tariffs and trade restrictions on agricultural and manufactured products

Question 32

European Union

Answer 32

economic and political union of 28 member nations primarily located in Europe

Question 33

Association of Southeast Asian Nations (ASEAN)

Answer 33

10 southeast countries with the goal to promote economic growth and overall progress in the area

Question 34

Southern Common Market (Mercosur)

Answer 34

political and economic agreement among countries of Bolivia, Argentina, Venezuela, Uruguay, and Paraguay

Question 35

self-reference criterion

Answer 35

unconscious referencing to the way things are done in ones's own culture and experiences in making global business decisions