Ch.1

The United States' key trading partners are (in order) ______, Germany, _____, and Mexico

China, Japan

_____ _____ ____ refers to the ownership and operation or effective control of the productive assets of an ongoing business by an individual or corporate investor who is a resident or national of another country - ex. the entire operation or operation's facility is going to the _____ ______ - these are _____ investments - contrary to licensing, this can be _____

Foreign direct investment, host country, active, seen

International trade agreement that lowers tariffs and promotes free trade worldwide - enacted by the ____ _____ organization and it ended up lowering _____ and increasing _____ across product categories - moved the global environment toward free trade, _____ economies

General agreements on tariffs and trades (GATT), world trade, prices, quality, market

Recent trends in US trade - More and more foreign firms have ______ presence - The United States has a trade deficit (more products are ______ than _____) in _____ (such as oil and automotive) and a trade surplus (more products are _____ than _____) in ______ - Overall the United States has an international trade _____ - The United States is the leading exporter of trade _______ (we have a comparative _____)

US, imported, exported, goods, exported, imported, services, deficit, services, advantage

Risks of international business - currency risks: currency _____ (not allowed to user other currency or take money out of certain countries), fluctuation of ______ rates - political risks: government takes ownership of private property or businesses for public use through ______ (just pay is made sometimes), _____ (private owners get just compensation), and ______ (no just pay is given). there is also exposure to foreign ____ and courts

controls, exchange, nationalization, expropriation, confiscation, laws

US companies that are importing need a US ____ _____ who acts as the intermediary between the company and the government's customs department to ensure companies follow the law on imports into the US

customs broker

Trade exports - _____ exporting: a type of exporting in which the exporter, often a manufacturer, assumes responsibility for most of the export functions including marketing, export licensing, shipping, and collecting payment - _____ exporting: a type of exporting in which the firm uses specialized intermediaries outside of their own organization to handle specific functions such as foreign marketing, foreign sales, finance, and shipping

direct, indirect

Indirect exporting - ____ ____ _____(aka international _____ _____): Firms that specialize in all aspects of import/export transactions either by buying goods on their own accounts for resale or by acting as middlemen to bring other buyers and sellers together - ______ ______ _____: Independent firms that assume a range of export related responsibilities (from just giving advice and training on exporting up to taking full responsibility for entire export sales process) for manufacturers, producers or other exporters - foreign sales representatives - foreign distributors

export trading companies, trading companies, export management companies

Forms of international business include the - trade of goods and services through _____ and _____ - ______ of intellectual property - ______ _____ ______ Put these in order of most to least risky

exporting, importing, licensing, foreign direct investment, order: FDI, licensing, trade (exports and imports)

Direct exporting - ______ _____ _____ are independent sales agents who solicit orders on behalf of their principals and receive compensation on a _____ basis - _____ _____ are independent firms, usually located in the country or region to which a firm is exporting, that purchase and take delivery of goods for resale to their customers - used when products require _____, local supply of spare parts, or if they are perishable or ______

foreign sales representative, commission, foreign distributors, service, seasonal

Types of foreign direct investments (name them) - a foreign company organized under the laws of a foreign host country, but owned and controlled by the parent corporation in the home country - several of the above owned by one parent are called - a business presence by the investor in the host country (is still a part of the home country entity (and is treated as such) but has operations in the host country) - a cooperative business arrangement between two or more companies for profits (may take form of partnership or corporation) - often used when the laws of a host country require some _______ ownership/participation/partnership

foreign subsidiary, affiliates, foreign branch, joint venture, local

Case lessons - Russian entertainment case: _____ _____ provision- if licensee of intellectual property makes improvement to the intellectual property then this improvement belongs to the _______ - In re Union Carbide case: to pierce the corporate veil it must be proven that the subsidiary is the ____ ____ of the parent or that it was being used by the parent to commit ______

grant back, licensor, alter ego, fraud

Trade exports matter because the industries that engage in trading exports make more than _____ of new US jobs and the wages of workers in export manufacturing industries are _____ higher

half, 17%

Case lessons Transatlantic corp: objective impracticability is when there is extreme _____ (financial or otherwise) added to complete performance to the point that it would be wiser to breach the contract while objective impossibility is that no one else would have been able to complete _______. Not everything that is impracticable is ______ Gaskin: Unconscionability can be proven through the ______ (how is contract presented to the consumer?) or the _____ (is the content of the contract grossly unfair?)

hardship, performance, impossible, process, substance

The country under whose laws the investing corporation is created or headquartered in is the _____ country while every other country is considered a _____ country

home, host

The United States is economically ______ on other countries

interdependent

Licensing - international _______ agreements - international ______ agreements - transfer of _______

licensing, franchising, technology

Foreign direct investments _____ corporations: firms that have significant foreign direct investment assets or that derive a significant portion of their revenues from more than one country - comprised of the _____ company in the home country and foreign _____ in host countries - usually not a single legal entity - some of these are not even actually ______

multinational, parent, affiliates, corporations

Free trade reduces _____ and enables ______ growth

poverty, economic

Licensing agreements are contracts by which the holder of intellectual property will grant certain _____ in that property to another party under specified conditions and for a specified time, in return for a consideration such as a fee or ______ or as a part of a larger business arrangement Franchising is a business arrangement that uses an agreement to license, control, and protect the use of the franchisor's ______, trademarks, copyrights, or business ____-how, combined with a proven plan of business _____ in return for royalties, fees or ______ - in this case the ____ travels instead of the goods and services (as is the case in trading exports and imports)

rights, royalty, patents, know, operation, commission, brand

Risks of international business - distance and logistics: payment risk (_____ risk) and credit/delivery risk (______ risk) - language and cultural differences - cross border trade controls: export controls (ex. export ____ requirement. used for certain goods such as tech piece that can have both military and civilian use) and ______ (cant do business with certain countries/companies), tariffs, _____ duties, taxes, non-tariff barriers (____ like done with cuba, ______, quotas)

sellers, buyers, licensing, sanctions, import, embargos, boycotss

Many countries moved toward free trade because of ______, transportation, and the fall of the _____ _____ among other reasons

technology, soviet union

The United States in international markets: - managers lacked commitment during the time where the US was still conquering _______ lands - once the US conquered these lands, managers looked to create relationships with _____ _____ - The US is a contributor to ____ trade - Social, cultural, and economic education is needed for both american and foreign _____ to successfully conduct international business

westward, foreign countries, free, managers