Business: Chapter 4

European union

A European trading bloc

Product Life Cycle Theory

products and services go through four stages: introduction, growth, maturity, and decline

World Bank

provides low-cost, long-term loans to less-developed countries to develope basic industries and facilities

Capital account

records investment funds coming into and going out of a country

Current Account

records the value of goods and services exported and those imported from foreigners, as well as other incomes and payments

Subsidiary

Foreign branches

NAFTA

a free trade agreement between U.S., Mexico, and Canada that removed tariffs and other barriers to trade among the three nations

Balance of Payments

an accounting statement in which all international transactions are recorded

Trading bloc

an agreement between two or more countries to remove all restrictions between them on the sales of goods and services, while imposing barriers on trade and investment from countries that are not part of the bloc

World Trade Organization

an international organization that creates and enforces the rules governing trade among countries

International Monetary Fund

helps countries that are facing serious financial difficulties in paying for their imports or repaying loans

International licensing

occurs when one company allows a company in another country to make and sell prodcuts according to certain specifications

Comparative Advantage Theory

states that to gain a trade advantage, a country should specialize in products or services that it can provide more efficiently than can other countries

High-context culture

when communication tends to occur through non-verbal signs and indirect suggestions

Strategic Alliances

when firms agree to cooperate on certain aspects of business while remaining competitors on other aspects

Low-context culture

when people communicate directly and explicitly

Wholly-owned subsidiary

when the firm sets up a business abroad on its own without any partners

Joint Venture

when two or mor firms share the costs of doing business and also share the profits