Term
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Definition
| making, buying, and selling of goods and services within a country |
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Term
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Definition
| business activities that take place across the borders |
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Term
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Definition
| often referred as International Trade |
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Term
| Why have International Trade? |
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Definition
| one country can't produce everything in your typical lifestyle; consumers may expect goods and services from around the world |
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Term
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Definition
| country can produce goods/services at LOWER prices than other countries |
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Term
| How would a country have absolute advantage? |
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Definition
an abundance of natural resources or raw materials in a country
Ex: Saudi Arabia with oil production |
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Term
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Definition
| when a country specialize in production of goods/services at which it is more efficient |
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Definition
| items brought into a country |
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Term
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Definition
| goods/services sold to another country |
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Definition
| oil, bananas, cars, coffee beans |
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Term
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Definition
| airplanes, corn, soybeans, cars |
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Term
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Definition
| amount a country owes to other countries; countries try to balance income with expenses just like consumers |
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Term
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Definition
| difference between a country's total exports and total imports(exports-imports) |
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Definition
exports are more than imports
(favorable) |
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Definition
imports are more than exports
(unfavorable) |
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Term
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Definition
difference between the amount of money coming into a country and going out of it
(includes: investments, exports & imports, tourisms) |
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Term
| Positive Balance of Payments |
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Definition
| when a nation receives more money than it pays out |
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Term
| Negative Balance of Payments |
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Definition
| when a country sends more money out than it brings in |
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Term
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Definition
| the value of a currency in one country compared with the value in another (affected by supply & demand) |
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Term
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Definition
| banks that buy and sell different currencies throughout the world |
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Term
| Where can you exchange currency? |
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Definition
| airports, train stations, local bank, ATMs |
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Term
| 3 Factors that Effect Currency Exchanges |
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Definition
Balance of Payments
Economic Conditions
Political Stability |
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Term
| How does balance of payments effect currency exchange? |
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Definition
| favorable balance of payments means the value of its currency is rising |
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Term
| How does economic conditions effect currency exchanges? |
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Definition
| inflation reduces buying power of currency; interest rates- high interest rates reduce demand for its currency(reducing its value) |
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Term
| How does political stability effect currency exchanges? |
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Definition
| new laws may be put in place, political instability reduces confidence in that country's currency |
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Term
| 4 Factors of the International Business Environment |
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Definition
1. Geography
2. Cultural Influences
3. Economic Development
4. Political & Legal Concerns |
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Term
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Definition
| location, climate, terrain, seaports, and natural resources of the country |
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Term
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Definition
| language, religion, values, customs, social relationships |
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Term
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Definition
Literacy
Technology
Agriculutral Dependence |
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Term
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Definition
| better education = better goods/services provided to citizens |
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Term
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Definition
| better technology = more goods/services for citizens |
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Term
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Definition
| largely agricultural economy does not have the manufacturing base to provide many goods/services |
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Term
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Definition
| a nation's transportation, communication, and utility systems |
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Term
| Political & Legal Concerns |
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Definition
| type of government, stability of government, government policies towards business; governments regulate fair advertising and enforce contracts; safety inspections of food and medicine |
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Term
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Definition
| restrictions to free trade; can be created by government actions |
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Term
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Definition
caused by culture, traditions, and religion, NOT government
Ex: India - cows are sacred |
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Term
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Definition
| government restricts free trade; quotas, tariffs, and embargoes |
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Term
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Definition
| limit on quantity of a product that may be imported/exported within a given period |
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Term
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Definition
| keep supply low and keep prices at a certain level, express displeasure to that country, protect industries from competition |
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Term
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Definition
| tax on certain items; increases the price of imported product; lowers demand of product and reduces quantity of that import |
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Term
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Definition
| completely stop import/export of a product |
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Term
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Definition
| protect own industries from competition, prevent sensitive products to fall into the wrong hands, express disproval |
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Term
| 3 Common Efforts to Encourage International Trade |
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Definition
Free-Trade Zones
Free-Trade Agreements
Common Market |
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Term
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Definition
countries remove duties and barriers on items traded between or among them
Ex: NAFTA(U.S.,Canada,Mexico) |
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Term
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Definition
| selected area where products can be imported duty-free; usually located around airports and seaports |
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Term
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Definition
members do away with trade barriers, can invest freely in each member's country & allows workers to move freely across borders; GOAL is to expand trade among members and promote regional economic integration
Ex: European Union (EU) |
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Term
| Multinational Company (MNC) |
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Definition
| organization that does business in mulitple countries |
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Term
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Definition
same product and marketing strategy is used worldwide
Ex: Coca-Cola |
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Term
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Definition
| each country market is treated differently; product and marketing strategy is adapted to the customer, taste, buying habits |
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Term
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Definition
| larger amounts of goods available and more career opportunites; encourages understanding, communication, and respect among people of different nations |
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Term
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Definition
| MNC becomes too powerful and can control another country-host country depends on jobs from MNC and consumers become dependent on it for goods/services, can influence or control the political power of a country |
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Term
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Definition
selling the right to use some intangible property for a fee or royalty; low risk
Ex: sports teams emblems on hats, shirts, notebooks, etc... |
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Term
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Definition
right to use a company name or process in a specific way; company set up to look and run like parent company
Ex: McDonalds, Burger King, and Pizza Hut |
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Term
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Definition
agreement between two or more companies to share a business project
Ex: Ford Motor Company and Mazda Motor Corporation |
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Term
| Benefits of Joint Venture |
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Definition
| sharing raw materials, shipping facilities, management activities, production facilities |
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Term
| Drawbacks of Joint Venture |
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Definition
| sharing of profits, not as much control since multiple countries are involved |
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Term
| International Trade Organization |
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Definition
| made because international business activities are very complex |
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Term
| World Trade Organization (WTO) |
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Definition
| created in 1995 to settle trade disputes and enforce free-trade agreements between members; lower tariffs, eliminate quotas, assist poor countries |
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Term
| International Monetary Fund (IMF) |
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Definition
| promotes economic cooperation; maintains orderly system of world trade and exchange rates; prevents trade wars |
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Term
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Definition
| also known as International Bank for Reconstruction and Development; created in 1944 to provide loans for rebuilding after WWII; gives economic aid to less developed countries |
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