Chapter 5
Quota
the maximum number of units of a particular product that may be imported into a country
Southern Common Market (MERCOSUR)
A political and economic agreement among the countries of Bolivia, Argentina, Brazil, Venezuela, Uruguay, and Paraguay
global business (globalization)
A strategy in which organizations treat the entire world or major regions of it as the domain for conducting business
UK Bribery Act
All organizations with business operations in the United Kingdom can be held liable for bribery, even if the bribery did not occur within the United Kingdom
Webb-Pomerence Export Trade Act
Allows selected American firms desiring international trade to form monopolies in order to compete with foreign cartels
European Union
An economic and political union of 28 countries that are located in Europe
Organization of Economic Cooperation and Development (OECD)
An international economic organization comprised of 30 countries that accept the basic principles of free-market economies and representative democracy; recommends and promotes policies to improve the well-being of consumers and societies across the world
International Monetary Fund (IMF)
Basic mission is to oversee the international monetary system and help ensure stable currencies and exchange rates throughout the world
World Bank
Formally known as the International Bank for Reconstruction and Development, it was established and supported by the industrialized nations in 1946 to loan money to underdeveloped and developing countries
Foreign Corrupt Practices Act
Outlaws direct payoffs to and bribes of foreign governments or business officials by American companies
Gross Domestic Product (GDP)
The market value of a nation's total output of goods and services for a given period; an overall measure of economic standing
North American Free Trade Agreement (NAFTA)
Went into effect on January 1, 1994, and effectively merged Canada, the US, and Mexico into one market of about 400 million consumers by eliminating most tariffs and trade restrictions on agricultural and manufactured products among the three countries
multinational corporation
a corporation that operates on a worldwide scale, without significant ties to any one nation or region
franchising
a form of licensing in which a company allows a foreign company to pay it a fee and a share of the profit in return for using the first company's brand name and a package of materials and services
World Trade Organization
a global association member countries that promotes free trade
Cartel
a group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets
strategic alliance
a partnership formed to create competitive advantage on a worldwide basis
import tariff
a tax levied by a nation on goods imported into the country
licensing
a trade agreement in which one company - the licensor - allows another company - the licensee - to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty
trading company
acquires goods in one country and sells them to buyers in another country
self-reference criterion
an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions
Association of Southeast Asian Nations (ASEAN)
comprised of ten Southeast Asian countries with the goal to promote economic growth and overall progress in the area via trade and security
countertrade agreements
exporting that involves bartering products for other products instead of for currency
outsourcing
involves transferring manufacturing or other functions to countries where labor and supplies are less expensive
contract manufacturing
occurs when a company hires a foreign company to produce a specified volume of the firm's product to specification; the final product carries the domestic firm's name
dumping
occurs when a firm sells a product in a foreign country below its domestic price or below its actual cost
exchange controls
restrictions on the amount of a particular currency that may be bought or sold
international business
the buying, selling, and trading of goods and services across national boundaries
infrastructure
the physical facilities that support a country's economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems
Importing
the purchase of goods and services from foreign sources
direct investment
the purchase of overseas production and marketing facilities; a company may control the facilities outright, or it may be the majority stockholder in the company that controls the facilities
exchange rate
the ratio ate which one nation's currency can be exchanged for another nation's currency or for gold
exporting
the sale of goods and services to foreign markets
embargo
the suspension of trade in a particular product of the government
joint venture
when a company that wants to do business in another country finds a local partner to share the costs and operation of the business
