Chapter 18: Marketing in a Global Economy

Direct Exporting

a company takes complete responsibility for marketing its product in other countries

Standard of Living

a measure of the quality of life for a country's citizens

Subsidy

money a government provides to a business to assist in the development and sale of its products

Most of the products and services produced in the world are consumed by the people in the countries where they are produced

True

Preindustrial economies offer good opportunities for foreign businesses, but these opportunities are limited due to the economies' needs and resources.

True

Industrial Economy

economy in which the primary business activity is the manufacturing of products

Postindustrial Economy

economy that is based on a mix of business and consumer products and services produced and marketed in the global marketplace

Preindustrial Economy

economy that is based on agriculture and raw material development through activities such as mining, oil production, and cutting timber

Foreign Production

A company owns and operates production facilities in another country

Recession

A period of time in which the economy slows resulting in lower production, employment, and income

Joint Venture

Business relationships in which independent companies cooperate in common business activities

A company almost always markets products internationally in the same way it markets the same products within its home country.

False

A company involved in indirect exporting sells products to a business in one country where they are then exported to a second country

False

A country's gross domestic product is the same as its gross national product

False

In 2013 the U.S. balance of trade was positive while China's was negative

False

International free trade efforts include increasing the use of subsidies, quotas, and tariffs.

False

Multinational companies generally compete with the same set of competitors in every country where they sell their product and services.

False

One reason businesses get involved in international competition is that they can't find adequate competition in their home markets

False

The United States has the second largest economy in the world behind only the European Union

False

The decisions of businesses to become involved in international business are always very carefully planned.

False

Today, most countries have postindustrial economies

False

With foreign production, a company owns and operates production facilities in its home country and exports them to other countries.

False

Foreign Investment

Owning all or part of an existing business in another country

Business Cycles

Periods of expansion and decline in an economy that recur over time

Inflation

When prices increase faster than the value of goods and services and purchasing power declines

A foreign investment occurs when

an existing business in another country is purchased

Multinational Companies

businesses that have operations throughout the world and that conduct planning for worldwide markets

Quotas

limits on the numbers of specific types of products that foreign companies can sell in the country

Exports

products and services sold to another country

Imports

products or services purchased from another country

Negative Balance of Trade

shows that a country is sending more of its financial resources to other countries through the purchase of products abroad than it is receiving from the sale of products internationally. - Also demonstrates that businesses from other countries are satisfying the needs of consumers better than the country's own businesses

Tariffs

taxes a government places on imported products to increase the price for which they are sold

Purchasing Power

the amount of goods and services that can be purchased with a specific amount of money

Productivity

the average output by workers for a specific period of time

Consumer Price Index (CPI)

the change in the cost of a specified set of goods and services over time

Balance of Trade

the difference between the amount of a country's imports and exports

Indirect Exporting

the process in which marketing businesses with exporting experience represent the exporting company and arrange for the sale of products in other countries

International Trade

the sale of products and services to people in other countries

Gross National Product (GNP)

the total value of all goods and services produced by a country during the year, including foreign investments - sometimes referred to as gross domestic income (GDI)

Gross Domestic Product (GDP)

the total value of goods and services produced within a country during the year