Chapter 3 Exploring Global Business

Import quotas

is a limit on the amount of a particular good that may be imported into a country during a given period of time

trade deficit

is a negative balance of trade

Nontariff Barriers

is a non tax measure imposed by a government to favor domestic over foreign suppliers

foreign-exchange control

is a restriction on the amount of a particular foreign currency that can be purchased or sold

General Agreement on Tariffs and Trade (GATT)

is an international organization of nations dedicated to reducing or eliminating tariffs and other barriers to world trade

Importing

is purchasing raw materials or products in other nations and bringing them into one's own country

Dumping

is the exportation of large quantities of a product at a price lower than that of the same product in the home market.

Currency devaluation

is the reduction of the value of a nation's currency relative to the currencies of other countries

balance of payments

is the total flow of money into a country minus the total flow of money out of that country over some period of time

balance of trade

is the total value of its exports minus the total value of its imports over some period of time

letter of credit

issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary

draft

issued by the exporter's bank, ordering the importer's bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer's bank

a firm that buys some portion of its input from, or sells some portion of its output to, an organization located in a foreign country is doing what kind of business

International Business

What are the two types of tariffs

1. Revenue tariffs 2. Protective tariffs

What are the Types of Trade Restrictions

1. Tariffs 2. Non tariff Barriers

Which one of the following reasons might a country have trade restrictions?

1. To equalize a nation's balance of payments 2. To retaliate for another nations trade restrictions (trade war) 3. To protect domestic jobs

Country A exports $2.1 million in goods to Country B. Country A imports $2.5 million in goods from Country B due to a rising demand for the products of Country B. What is the result of this international business transaction for Country A?

A trade deficit

When a South American country produces coffee and exports the coffee to the rest of the world, what type of advantage might it have?

Absolute advantage

The illustrations of feet are regarded as despicable in Thailand. Is an example of

Cultural Barriers

What is another type of non tariff barrier is related to cultural attitudes

Cultural Barriers

the Pencil Makers Association, which represents eight U.S. pencil manufacturers, charged that low-priced pencils from Thailand and the People's Republic of China were being sold in the United States at less than fair value prices. Is an example of

Dumping

An earthquake and a subsequent tsunami devastated an Asian country's economy in 2011. Strong consumer demand and business investments have taken place in this country since these events. What is the economic outlook for this country?

Expected to increase

What create obstacles to the marketing of foreign goods in a country and increase costs for exporters

Non tariff Barriers

What set the stage in 2001 for WTO members to take an important step toward multilateral trade liberalization?

The Doha Round

Protective tariffs

imposed to protect a domestic industry from competition by keeping the price of competing imports level with or higher than the price of similar domestic products

embargo

is a complete halt to trading with a particular nation or of a particular product

Which of the following statements correctly characterizes changes in trade restrictions since the global financial crisis?

There are increases in import licensing and tariffs

In 2 Design, Inc., manufactures and sells unique kitchen and dining room table sets. The headquarters of the company is in Portland, Oregon, with manufacturing facilities in North Carolina. The owners are ready to expand their client base to Canada and Mexico, both logistically manageable with longer-term plans to expand to Europe. After some initial research, the owners of In 2 Design thought that offering their company name and logo to a foreign company to manufacture and sell their product line in return for a royalty would be beneficial for both parties. After more thought and discussion with other company owners who have contemplated doing the same thing, the owners of In 2 Design are even more unsure of what step to take next. The In 2 Design owners have ultimately chosen that a joint venture is their best strategy. All of the following are characteristics a joint venture would offer the company that licensing would not except

a much less complex arrangement

strategic alliance

a partnership formed to create competitive advantage on a worldwide basis

import duty (tariff)

a tax levied on a particular foreign product entering a country

International Business

all business activities that involve exchanges across national boundaries

A complete halt to trading with a particular nation is known as

an embargo

International Monetary Fund (IMF)

an international bank with member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits

Countertrade

an international barter transaction

multilateral development bank (MDB)

an internationally supported bank that provides loans to developing countries to help them grow

If Saudi Arabia were to trade crude oil for two 747 jets from U.S.-based Boeing, this international barter transaction would be known as a

countertrade

bill of lading

document issued by a transport carrier to an exporter to prove that merchandise has been shipped

the United States imposes a import duty on fresh Chilean tomatoes, an duty if tomatoes are dried and packaged, and nearly if tomatoes are made into ketchup or salsa. This is an example of

import duty (tariff)

Revenue tariffs

imposed solely to generate income for the government

Escribo Services, a small, independent publishing company is ready to expand into international business. Since the company is committed to proceeding slowly and starting at the most simple level, Escribo Services has decided that ___ is the best approach.

licensing

World Trade Organization (WTO)

powerful successor to GATT that incorporates trade in goods, services, and ideas

trading company

provides a link between buyers and sellers in different countries

Exporting

selling and shipping raw materials or products to other nations