Intro to Business Chapter 4
Balance of payment
the record of all economic transactions between the residents of the country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year)
Free trade
the unencumbered flow of goods and services across national borders. It's free from government intervention or other impediments that can block the flow of goods across borders
Embargo
total restriction on an import (or an export). Most heavy-handed government trade barrier/quota
Currency appreciation
an increase of value of a country's currency
comparative advantage
When a country produces the goods and services it can produce relatively more efficiently compared to other countries
global strategy
When companies sell a standardized product across the globe, they are pursuing this.
Wholly-owned subsidiary
a company that is completely owned by another company called the parent company or holding company. The parent company will hold all of the subsidiary's common stock
strategic alliance
a cooperative arrangement between actual or potential competitors. Typically, they are agreements for a specific period of time or the duration of a particular project.
Currency depreciation
a decrease in the exchange rate of a nation's currency. It has the opposite effect on the relative prices of exports and imports: exports become cheaper and imports become more expensive.
tariff
a tax imposed on an imported good or service. Governments prefer to impose tariffs because they raise tax revenues
Turnkey project
a type of project that is constructed so that it could be sold to any buyer as a completed product
Competitive advantage
an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Multinational enterprises
businesses that manufacture and market products in two or more countries
trade deficit
exists when the value of a country's imports exceeds the value of its exports.
Joint venture
formed when 2 firms team up to better take advantage of a business opportunity
subsidiary
formed when an investing firm purchases a foreign or domestic facility
Licensing
is an agreement in which a firm's intangible property may be sold or made available to another firm for a fee.
Political instability
likely to have an adverse effect on international trade. Companies do not want to invest in countries that are politically unstable.
Quota
limitation on the amount of an import allowed to enter a country.
Contract manufacturing
occurs when a firm subcontracts part or all of its goods to an outside firm as an alternative to owning and operating its own production facility.
trade surplus
occurs when the value of a country's exports exceeds the value of its imports.
transnational strategy
offer a standardized product globally to many countries, working simultaneously to sell it at the lowest possible price
offshoring
refers to moving production from a domestic site to a foreign location.
The globalization of production
refers to the trend of moving a firm's production to different locations around the globe to take advantage of lower costs or enhance the quality of products. Outsourcing is often part of the globalization of production.
Dumping
selling a product at a price below its cost in a foreign market. Can be difficult to prove and even harder to stop.
Absolute advantage
the ability of a party (an individual, or firm, or country) to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.
Outsourcing
the assignment of certain tasks, such as production or accounting, to an outside company or organization.
Balance of trade
the difference in value between a country's imports and exports
Globalization
the movement toward a more interconnected and interdependent world economy.
