BUS 101 Chapter 3: Business in a borderless world

A(n) ___ is a complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.

Embargo

Which of the following are functions of the World Trade Organization?

-Mediate trade disputes among nations -Oversee cross-boarder trade issues

Which of the following are functions of the World Trade Organization?

-Oversee cross-boarder trade issues -Mediate trade disputes among nations

In less- developed countries

-Potentially profitable markets exist because the country may buy technology to improve it infrastructure. -Income per capital is lower than in industrialized countries such as the U.S and Canada -Consumers are less likely to purchase non-essential products

The benefits associated with strategic alliances is that they provide broad access to :

-Technical expertise -Markets -Capital

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

Balance of trade

What are the two indicators nations rely on to measure global trade?

Balance of trade & Balance of payments

When a gov't intentionally decreases the value of its currency in relation to other currencies, it is called ___.

Devaluation

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

Exchange Controls

The ratios at which one nation's currency can be exchanged for another nation's currency is called the:

Exchange Rate

Selling of products to another country is called:

Exporting

T/F: Exports either purchase products outright or take them on consignment, but are not responsible for storage and transportation of the product.

False

Buying products from another country is the definition of______.

Importing

Match terms:

Joint Ventures- partnership in which two or more companies (often from different countries) join to undertake a major project. Strategic Alliances- Long-term partnership between two or more companies established to help each company build competitive market advantages.

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 free or royalty.

Licensing

Balance of ____ is the difference between the flow of money into and out of a country.

Payments

A(n) ___ is a partnership formed to create competitive advantages on a worldwide basis.

Strategic Alliance: a joint venture is a partnership in which two or more companies (often from different countries) join to undertake a major project. Strategic alliances are formed to help each company build competitive market advantages

A(n) ____ is a tax imposed on imports.

Tariff

Offshoring is defined as:

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

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.

Trade

_____ ____ promote trade among member nations by eliminating or reducing barriers to trade

Trade Agreement

When a country imports more products than it exports, it has a negative balance of trade, or a ___ ____

Trade Deficit

When the value of a country's exports exceeds that of it's imports, the country exhibits a (n):

Trade surplus

The advantage that exists when a country has a monopoly on producing a specific product is called:

absolute advantage

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

bartering

When Lowe's builds its home improvement stores in Australia, it invests in the retail facilities. This level of international business is called:

direct investment

The selling of products in a foreign country at lower than production costs is called:

dumping

Although outsourcing has become politically controversial in recent years amid concerns over jobs lost to overseas workers, foreign companies transfer tasks and jobs to U.S companies--sometimes called ____ --far more often than U.S companies outsource tasks and jobs abroad.

insourcing

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

joint venture

A(n) __ corporation is an organization that manufactures and markets products in many different countries and has multinational stock ownership and management.

multinational

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

multinational

A(n) __ is a limit on the number of products in certain categories that a nation can import and is considered a form of trade protectionism

quota

Protective tariffs are typically imposed on imports in order to protect domestically produced products by

raising the price of the imported products

A trade ___ is an economic measure of a positive balance of trade, where a country's exports exceeds its imports.

surplus

The ___ ____ Organization was established to mediate trade disputes among nations, is headquartered in Geneva, and is an independent entity of 159 member nations whose purpose is to oversee cross- boarder trade issues and global business practices.

world trade

___, which was established in1989, promotes open trade and economic and technical cooperation among 21 member nations representing 41% of the world's population, 44% of world trade, and 54% of world GDP.

APEC ; Asia-Pacific Economic Coorperation

___, which was established in 1989, promotes open trade and economic and technical cooperation among 21 member nations representing 41% of the world's population, 44% of world trade, and 54% of world GDP.

APEC;Asia- Pacific Economic Coorperation

Which type of advantage occurs when a country specializes in products it can supply more efficiently or at a lower cost than it can produce other item?

Comparative Advantage

__ __ occurs when a company hires a foreign company to produce a specific volume of the firm's product to specification; the final product carries the domestic firm's name

Contract Manufacturing

___ is buying products from another country while ____ is selling products to another country.

Importing; Exporting

Match Org. with the role it plays in fostering international trade.

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 World Trade Org. - Administers trade agreement and presents a forum for trade negotiations, monitors national trade policies, and provides training for developing countries.

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

North American Free Trade

When Hewlett Packard transferred call center jobs from the U.S to India, where labor costs were lower, the company took part in practice called ____.

Outsourcing

Which of the following is a part of the infrastructure of a country and thus supports its economic activities?

Railroads, Hospitals, Schools

T/F: International business is the buying, selling, and trading of goods and services across national boundaries.

True

T/F: Maquiladoras are production facilities set up to take advantage of Mexico's low labor cost and proximity to the United States.

True