Chapter 5

Question 1

Globalization

Answer 1

The transformation of the world economy into a single, interdependent system.

Question 2

Imports

Answer 2

Products made or grown abroad, sold in Canada

Question 3

Exports

Answer 3

Products made or grown domestically and shipped abroad

Question 4

Where are the three major marketplaces in the world?

Answer 4

NA, EU, and Asia

Question 5

BRICS nations

Answer 5

Brazil, Russia, India, China, and South Africa. A political club with its own agendas, especially to meet against the recent policies from the US.

Question 6

Absolute advantage

Answer 6

Country is able to produce something more efficiently than any other country.

Question 7

Comparative advantage

Answer 7

Country is able to produce a good more efficiently than any other good.

Question 8

National competitive advantage

Answer 8

Reason for why countries engage in international trade.
When factor of production/ demand/ related and supporting industries/ strategies, structures, and rivalries conditions all exist in an industry, companies will engage in international business.

Question 9

International competitiveness

Answer 9

Ability of a country to generate more wealth than its competitors.

Question 10

Balance of payments

Answer 10

Money flowing into a country - money flowing out. Takes into account for foreign tourist spending and foreign investments, thus a favorable balance of trade does not mean favorable balance of payments

Question 11

Lowest level of international involvement

Answer 11

Exporter: Produces in one country, distribute/sell them in other countries
Importer: Firm that buys products in foreign markets, sells them domestically.

Question 12

Second level of international involvement

Answer 12

International firm: Conducts a sizable chunk of its business abroad, still, the main focus in the domestic market.

Question 13

Final level of international involvement

Answer 13

Multinational firm: most of planning and decisions are geared toward the global market

Question 14

Independent agent

Answer 14

Foreign individual or organization that represents a firm’s interests in foreign markets. No specialization in one product or market.

Question 15

Licensing agreements

Answer 15

Firm grants individuals/companies in foreign companies the exclusive right to manufacture their products in the area. Parent company receives royalties as payment.

Question 16

Branch offices

Answer 16

Firm sends some of their managers overseas, gaining more direct control.

Question 17

Strategic alliance

Answer 17

Company find partner in a foreign country to do business with; investing resources and capital or something else for mutual benefits.

Question 18

Foreign direct investment (FDI)

Answer 18

Buying or establishing tangible assets in another country

Question 19

Social/Cultural barriers to international trade

Answer 19

Foreign language, insufficient knowledge physical stature of citizens, and cultural misunderstandings

Question 20

Economic barriers to international trade

Answer 20

Amount of government involvement in the foreign market. The economic status and financial infrastructure in the country.

Question 21

Quotas

Answer 21

Restricts the total number of certain products that can be imported into a country

Question 22

Embargo

Answer 22

Forbidding exportation/importation of a product entirely

Question 23

Tariff

Answer 23

Tax charged on imported products

Question 24

Subsidy

Answer 24

Government payment given to domestic firms to compete with foreign companies

Question 25

Protectionism

Answer 25

Protecting domestic businesses, despite advocates and critics against it. Helps industries until they can compete internationally

Question 26

Local-content laws

Answer 26

Requires product sold in a country to at least partly made in that country.

Question 27

Business-practice laws

Answer 27

Strict regulations and bureaucratic laws that makes it difficult for new businesses to enter the country’s market

Question 28

Cartel

Answer 28

Association of producers that wants to control the supply and price of a product

Question 29

Dumping

Answer 29

Selling a product abroad for less than price charged in home country