ch. 3

What three barriers to trade fall into the ethical/legal/political category?

-Trade restrictions imposed on international trade -Different ethical values -International laws

The activities of U.S. firms that are engaged in international trade are governed by what?

-Treaties -Laws -regulations

______, which was established in 1989, promotes open trade and economic and technical cooperation among 21 member nations representing nearly 44% of world trade, and 54% of world GDP.

APEC

Which trade alliance, established in 1967, promotes trade and economic integration among member nations in Southeast Asia?

ASEAN

Embargo

An embargo is a complete ban on the import or export of a certain product, or the stopping of trade with a particular country.

import quota

An import quota is a limit on the number of products in certain categories that a nation can import.

OPEC, the Organization of Petroleum Exporting Countries, was founded in the 1960s to increase the price of petroleum throughout the world and to maintain high prices. OPEC is an example of a(n) _____.

Cartel

When a company hires a foreign company to produce a specified volume of the firm's product to specification; the final product carries the domestic firm's name, it is called _________ ___________

Contract manufacturing

This trade agreement, originally signed by 23 nations in 1947, provides a forum for tariff negotiations and a place where international trade problems can be discussed and resolved.

General Agreement on Tariffs and Trade (GATT)

The _______ was established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.

International Monetary Fund

What was the primary benefit for the European Union (EU) of adopting the euro as a common currency?

It eliminates the need for currency conversions.

Which of the following is NOT true about APEC? APEC promotes trade among 21 member nations. APEC nations represent nearly 44% of world trade and 54% of world GDP. APEC was established in 1989. Its common currency is the euro.

Its common currency is the euro.

A company that lacks sufficient resources to operate in another country may choose to form a _________ ________ by finding a local partner to share the costs and operation of the business.

Joint Venture

This is a trade agreement in which one company allows another company to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty.

Licensing

What strategy is a company using when it customizes its products, promotion, and distribution to fit cultural, technological, and other national differences?

Multinational

Which of the following are considered major hurdles to successful international trade? Political barriers Economic barriers Legal barriers Educational barriers

Political barriers Economic barriers Legal barriers

Then the North American Free Trade Agreement (NAFTA) went into effect in 1994, it merged which three countries into one free trade market?

The United States Mexico Canada

offshoring

The relocation of a business process by a company to another country whereby the company retains control of the process

outsourcing

The transfer of manufacturing or other tasks to companies in other countries where labor costs are lower

True or false: By linking sellers and buyers of goods in different countries, trading companies promote international trade among nations.

True

True or false: Some countries have strict laws limiting the amount of local currency that can be taken out of the country; while other countries limit how foreign companies can operate with the country.

True

Which organization, established in 1946, primarily serves to loan funds to underdeveloped and developing nations, where the funds are used to finance projects ranging from road and factory construction to the building of medical and educational facilities?

World Bank

The definition of _______ states: The sharing of the costs and operation of a business between a foreign company and a local partner.

a joint venture

import tariff

a tax levied by a nation on goods imported into the country

World Trade Organization

administers trade agreements and presents a forum for trade negotiations, monitors national trade policies, and provides training for developing countries.

If the United States were to prohibit Venezuela from selling its coffee in the United States, then the U.S. is establishing ______ on that particular product.

an embargo

_____ prohibits trade in a particular product and may be established for political, economic, health, or religious reasons.

an embargo

The total value of a nation's exports compared to its imports measured over a particular period is the definition of a ______.

balance of trade

Nonverbal, usually unconscious communication through gestures, posture, and facial expression is referred to as ___________ language.

body

A ___________ is a group of firms or nations that agree to act as a monopoly and not compete with each other in order to generate a competitive advantage in world markets.

cartel

An American jeans company hires a foreign firm to cut, sew, and finish the jeans before putting the American company's brand name on the product. This is an example of ______.

contract manufacturing

A _______________ agreement is a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.

countertrade

What type of agreement exists when trade involves bartering products for other products, instead of for currency?

countertrade agreement

Companies that want to retain control and are willing to invest resources in international business will consider ___________ investment, the ownership of overseas facilities.

direct

When Lowe's builds its home improvement stores in Australia and other countries, this level of international business is called ______.

direct investment

The act of a country or business selling products at less than what it costs to produce them is referred to as

dumping

A country that wants to restrict the amount of currency that can be bought or sold in its country would do so through the use of an __________

exchange control

When a country restricts the amount of currency that can be bought and sold it is implementing a(n) ______.

exchange control

absolute advantage

exists when a country has a monopoly on producing something

The buying, selling, and trading of goods and services across national boundaries is referred to as ______.

international business

When a company decides to do business outside its own country, it will encounter a number of barriers to international trade. Any firm considering international business must research the other country's economic, social, cultural, political,_________, and technological background

legal

When the NBA formed an agreement with adidas to allow the adidas be the official apparel provider of the NBA, this arrangement is referred to as ______.

licensing

comparative advantage

occurs when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items

Many American firms __________ manufacturing or other tasks to countries where labor and supplies are less expensive.

outsource

Trade restrictions imposed on international trade are an example of a _____ barrier.

political

The Uruguay Round of GATT negotiations provided new rules to ______.

prevent dumping

International Monetary Fund

promotes trade among member nations by eliminating trade barriers and fostering financial cooperation

World Bank

provides loans to underdeveloped and developing countries for the building of roads, factories, and facilities

A ___________ is a limit on the number of products in certain categories that a nation can import and is considered a form of trade

quota

A limit on the importation of a particular good brought into one country from another country is referred to as a(n) ______.

quota

If the United States restricts the number of garments imported from China in order to protect American producers and jobs, it is imposing a(n) ______.

quota

In order to discourage dumping (the act of a country or business selling products at less than what it costs to produce them), a country can implement which two things?

quotas and tariffs

A country may attempt to protect its own domestic industries by imposing a(n) _____, a type of tax, on imported products.

tariff

Hewlett Packard, Dell, and Lenovo are all companies that have been affected by competition stemming from ______ advances in developing countries.

technological

A(n) _______ promotes trade among member nations by eliminating or reducing barriers to trade.

trade agreement

NAFTA and the European Union are ______ that promote trade among member nations by eliminating tariffs and trade restrictions.

trade agreements

A(n) _____ buys goods in one country and sells them to buyers in another country.

trading company