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