International Business

Special Drawing Right (SDR)

A world currency created by the International Monetary Fund (IMF) to replace gold as a world standard. Valued by a "basket" of national currencies, the SDR has been called "paper gold."

Theocracy

A government controlled by religious leaders

subsidy

A government payment that supports a business or market

Subculture

A group of people with shared value systems based on common life experiences and situations

Civil Law

A law that governs relationships between individuals and defines their legal rights.

Common Law

A legal system based on custom and court rulings

Gold Standard

A monetary system in which paper money and coins are equal to the value of a certain amount of gold

intellectual property

A product of the intellect, such as an expressed idea or concept, that has commercial value.

Voluntary Export Restraint (VER)

A quota on trade imposed from the exporting country's side, instead of the importer's; usually imposed at the request of the importing country's government.

value added tax

A tax on increased value of the product at each stage of production and distribution rather than just at the point of sale.

Culture

Beliefs, customs, and traditions of a specific group of people.

technological dualism

suggests that the existence of vast unemployment in less developed economies is not due to the lack of effective demand but owing to the 'resource' constraint as well as technological backwardness.

social stratification

a system by which a society ranks categories of people in a hierarchy

World Trade Organization (WTO)

a trade organization that replaced the old General Agreement on Tariffs and Trade (GATT)

Brentton Woods Agreement

created in a 1944 conference of all of the World War II Allied nations. It took place in Bretton Woods, New Hampshire. Under the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar.

Cultural change occurs when people integrate into their culture the gestures, material objects, traditions, or concepts of another culture through ________.

cultural diffusion

anti-trust laws

laws that encourage competition in the marketplace

Trade unions claim that by permitting international firms to continually move to nations with ________, globalization reduces labor's bargaining power and forces overall labor standards lower.

lower labor standards

Ethnocentric Staffing

staffing policy in which individuals from the home country manage operations abroad

polycentric staffing

staffing policy in which individuals from the host country manage operations abroad

Which of the following is defined as a group of people who share a unique way of life within a larger, dominant culture?

subculture

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs indicates ________.

sustainability

Specific Tariff

tariff levied as a fixed charge for each unit of good imported

compound tariff

tariff levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit

Two major forces that underlie the expansion of globalization are falling barriers to trade and investment, and ________.

technological innovation

Supporters affirm that globalization ________.

tends to increase wealth and efficiency in all countries

Jamaica Agreement

the 1976 international monetary order that allowed countries to adopt different exchange rate systems including floating their currencies in world markets

absolute advantage

the ability to produce a good using fewer inputs than another producer

purchasing power

the ability to purchase goods and services

Ethnocentricity

the belief in the inherent superiority of one's own group and culture

Copyright

the exclusive legal right, given to an originator or an assignee to print, publish, perform, film, or record literary, artistic, or musical material, and to authorize others to do the same.

social construction

the process by which a concept or practice is created and maintained by participants who collectively agree that it exists

Globalization

the process by which businesses or other organizations develop international influence or start operating on an international scale.

Most companies today operate in an environment of increased transparency and scrutiny regarding their business activities. This is due to ________.

the rise of social media

Internationalization

the tendency of companies to systematically increase the international dimension of their business activities

international product life-cycle

theory stating that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle

National Competitive Advantage

trade theory stating that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade

Factor Proportions Theory

trade theory stating that countries produce and export goods that require resources (factors) that are abundant and import goods that require resources in short supply

Ad Valorum

A certain percentage of the price of a good. For example a sales tax 7% of price.

patent

(n.) exclusive rights over an invention; copyright; (v.) to arrange or obtain such rights; (adj.) plain, open to view; copyrighted

Trademark

A brand that has exclusive legal protection for both its brand name and its design

Mercantilism

An economic policy under which nations sought to increase their wealth and power by obtaining large amounts of gold and silver and by selling more goods than they bought

mixed economy

An economy in which private enterprise exists in combination with a considerable amount of government regulation and promotion.

trade deficit

An excess of imports over exports

Nationalization

Changing something from private to state ownership or control

________ refers to the replacement of one culture's traditions, folk heroes, and artifacts with equivalents from another.

Cultural imperialism

________ consists of specific learned norms based on attitudes, values, and beliefs of a group of people.

Culture

cultural imperialism

Domination of one culture over another by a deliberate policy that encourages cultural assimilation of neighboring foreign peoples or by economic or technological superiority.

market economy

Economic decisions are made by individuals or the open market.

________ markets are characterized by newly industrialized and developing countries whose economies have not yet reached the developed status. Often the market and economy are growing and changing due to migration to the cities by rural populations.

Emerging

Capacity Planning

Establishing the overall level of resources needed to meet customer demand

________ are all goods and services sold abroad and sent out of a country.

Exports

Expropriation

Forced transfer of assets from a company to the government with compensation

Which of the following accurately identifies a difference between GATT and the WTO?

GATT rules did not cover trade in services, but the rules of the WTO do

________ is increasing the pace of both cultural diffusion and cultural change.

Globalization

____________ is a trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies.

Globalization

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

GNP

Gross National Product - the sum of all goods and services produced in a nation in a year

Human Development Index (HDI)

Indicator of level of development for each country, constructed by United Nations, combining income, literacy, education, and life expectancy

Which of the following was originally created to regulate fixed exchange rates and enforce the rules of the International monetary system?

International Monetary Fund

Which of the following best defines international business?

It includes all business transactions involving two or more countries.

brain drain/gain

Large scale emigration/immigration by talented people

Vertical Integration

Practice where a single entity controls the entire process of a product, from the raw materials to distribution

facilities location planning

Selecting location for production facilities 1. Location economies, Centralized, Decentralized

Dumping

Selling goods in another country below market prices

Geocentric Staffing

Staffing policy in which the best-qualified individuals, regardless of nationality, manage operations abroad

Purchasing Power Parity (PPP)

The amount of money needed in one country to purchase the same goods and services in another country

economic development

The improvement of living standards by economic growth.

new trade theory

The observed pattern of trade in the world economy may be due in part to the ability of firms in a given market to capture first-mover advantages.

comparitive advantage

The situation where someone can produce a good at lower opportunity cost than someone else can

cultural diffusion

The spread of ideas, customs, and technologies from one people to another

Olive oil prepared in a small Italian oil press factory and sold by large supermarkets in the United States is an example of a ________.

U.S. import

The ________ is an agency created to provide financing for national economic development efforts.

World Bank

The ________ replaced the institution of GATT while retaining all of the former GATT agreements.

World Trade Organization

Under the WTO agreement, ________.

a dispute resolution mechanism allows countries to bring grievances to the WTO against countries that levy inappropriate trade discrimination measures

import quota

a limit on the number of products in certain categories that a nation can import

Which of the following is a cultural component that implies gauging the beauty and appeal of artwork?

aesthetics

planned economy

an economic system directed by government agencies

floating exchange rate

an exchange rate policy under which a government permits its currency to be traded on the open market without direct government control or intervention

World Bank

an international bank that offers low-interest loans, advice, and information to developing nations

International Monetary Fund (IMF)

an international organization that acts as a lender of last resort, providing loans to troubled nations, and also works to promote trade through financial cooperation

Embargo

an official ban on trade or other commercial activity with a particular country.

United Nations (UN)

an organization of independent states formed in 1945 to promote international peace and security

export quotas

barriers to free trade agreed to by two trading states to protect their domestic producers

Ethnocentricity can be defined as the ________.

belief that one's own ethnic group or culture is superior to that of others

location economies

benefits from locating value chain activities in the world's optimal geographies for a specific activity, wherever that may be

The rise of a new international entity called the ________ suggests that any company, regardless of age, experience, and resources, can engage in international business.

born global firm

Detailed knowledge about a culture that enables people to work happily and effectively within it is called ________.

cultural literacy

Process Planning

deciding the process that a company will use to create its product

facilities layout planning

deciding the spatial arrangement of production processes within production facilities

cultural literacy

detailed knowledge about a culture that enables a person to work happily and effectively within it

An established consumer market that primarily comprises the middle class and possesses efficient infrastructure is characteristic of ________ markets.

developed

Which of the following refers to the use of computer networks to purchase, sell, or exchange products; service customers; and collaborate with partners?

e-commerce

Globalization is criticized because it ________.

exploits workers in low-wage nations

A special region in which companies can engage in tariff-free importing and exporting is called a(n) ________.

export-processing zone

Hofstede Framework

framework for studying cultural differences along five dimensions, such as individualism versus collectivism and equality versus inequality

The value of all goods and services produced by a country's domestic and international activities over a defined period of time is the country's ________.

gross national product (GNP)

Goods and services purchased from another country (abroad) and brought into one's own country are called __________ .

imports

currency arbitrage

instantaneous purchase and sale of a currency in different markets for profit

free trade

international trade free of government interference

The term ________ refers to entities cooperating across national boundaries.

internationalization

A company/business that invests in/sets up manufacturing subsidiaries abroad in several countries is called a ________.

multinational corporation

The French Government promotes the concept of ________ by building museums and monuments to preserve the legacies of important events and people. A) subculture B) national culture C) popular culture D) monoculture

national culture

Global Product Structure

organizational structure that divides worldwide operations according to a company's product areas

culture shock

personal disorientation when experiencing an unfamiliar way of life

dual pricing

policy in which a product has a different selling price (typically higher) in export markets than it has in the home market

worldwide pricing

policy in which one selling price is established for all international markets

currency hedging

practice of insuring against potential losses that result from adverse changes in exchange rates

transfer price

price charged by one unit for a good or service provided to another unit within the organization

The purpose of the General Agreement on Tariffs and Trade (GATT) was to ________.

promote free trade

reverse culture shock

psychological process of readapting to one's home culture

administrative delays

regulatory controls or bureaucratic rules designed to impair the flow of imports into a country

currency controls

restrictions on the convertibility of a currency into other currencies

confiscation

seizure of property by authority

Whereas relocating production to low-cost locales traditionally meant production of goods almost exclusively, it increasingly applies to the production of ________.

services

It is most accurate to say that within most nations' borders, people largely share such essential attributes as ________ and ________.

values; language

trade surplus

when a country exports more than it imports

multidomestic strategy

when multinational firms enable individual subsidiaries to compete independently in domestic markets