Intro to Business - Ch. 3

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

True

True or false: International business is the buying, selling, and trading of goods and services across national boundaries.

True

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

The purchase of goods and services from foreign sources is called _______, while the sale of goods and services to foreign markets is called _________.

Importing, exporting

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

International Monetary Fund (IMF)

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

International business

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?

Its common currency is the euro.

______, 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

A(n) ________ advantage exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item, while a(n) _________ advantage exists when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items. (Enter only one word in each blank.)

Absolute, comparative

The World Trade Organization

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

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

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

Canada, the United States, and Mexico

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

When a company hires a foreign company to produce a specified volume of the firm's product to specification and the final product carries the domestic firm's name, it is called _____ ____.

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

Which of the following are considered major hurdles to successful international trade? (Check all that apply.)

Economic, legal, political, social, cultural, technological backgrounds

The common currency adopted by the European Union is called the _________. It was created to eliminate the need of dealing with complex exchange rates.

Euro

Absolute advantage

Exists when a country has a monopoly on producing something

True or false: The Asia-Pacific Economic Cooperation (APEC) is a trade alliance that promotes trade and economic integration among member nations in Southeast Asia.

False

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 (answer is one word).

Legal

A country whose consumers are less likely to purchase nonessential products because they have a low per-capita income is considered to be ______.

Less-developed countries (LDCs)

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

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

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

Multinational

In 1994, ratification of which agreement created a free trade area among the United States, Mexico, and Canada?

North American Free Trade Agreement

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

What term describes the situation when an American firm transfers manufacturing and other tasks to companies in countries where labor costs are less expensive?

Outsourcing

________ is defined as transferring manufacturing or other tasks to countries where labor and supplies are less expensive.

Outsourcing

International Monetary Fund

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

The World Bank

Provides loans to undeveloped and developing countries for building roads, factories, and facilities

Advances in the development of computers, cell phones, and access to broadband Internet in developing countries are examples of _____ advances that are creating global marketing opportunities.

Technological

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

Technological

Offshoring

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

Offshoring is defined as ________.

The relocation of business processes by a company or subsidiary to another country

Outsourcing

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

The ________ __________ was established by the world's industrialized nations in 1946 to loan money to developed and developing countries.

World Bank

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

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

body

Differences in spoken and written language are a(n) ______ barrier to international trade.

cultural

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

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

joint venture

Tariffs and other trade restrictions are part of a country's ______ structure but may be established or removed for political reasons.

legal

Less developed countries are characterized by ______.

low per-capita income

When an international company customizes its product, promotion, and distribution according to cultural, technological, regional, and national differences, it is using a ______ strategy.

multinational

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

prevent dumping

For the United States, importing involves the purchase of goods and services from foreign sources while exporting involves ______.

selling goods and services to foreign markets

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

tariff

Balance of ______ is the difference in value between a nation's exports and its imports.

trade

The General Agreement on Tariffs and Trade (GATT) consists of more than 100 nations that abide by its rules and GATT sponsors rounds of negotiations aimed at reducing ________ restrictions. (one blank, one word)

trade

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

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