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15 Cards in this Set
- Front
- Back
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Globalized and Integrated world
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American consumers, for example, routinely purchase oil imported from Saudi Arabia and Nigeria, TV sets from Korea, automobiles from Germany and Japan, etc. Foreigners in turn, purchase American-made aircraft, software, movies, etc.
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Foreign exchange risk
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when firms and individuas are engaged in cross-border transactions
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Political risk
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ranges from unexpected changes in tax rules to outright expropriation of assets held by foreigners
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Market imperfections
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various frictions and impediments preventing markets from functioning perfectly
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Expanded opportunity set
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firms can locate production in any country or region of the world to maximize their performance and raise funds in any capital market where the cost of capital is the lowest
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Shareholder wealth maximization
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the firm makes all business decisions and investments with an eye toward making the owners of the firm--the shareholders--better off financially, or more wealthy, than they were before
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Corporate governance
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the financial and legal framework for regulating the relationship between a company's management and its shareholders
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European Central Bank
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formulates the common monetary policy for the euro zone; locacted in Frankfurt & closely modeled after the Bundesbank, the German Central Bank
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Theory of comparative advantage
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it is mutually beneficial for countries if they specialize in the production of those goods they can produce most efficiently and trade those goods among them
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General agreement on tariffs and trade (GATT)
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a multilateral agreement among member countries, has played a key role in dismantling barriers to international trade; founded in 1947
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World Trade Organization (WTO)
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has more power to enforce the rules of international trade
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European Union (EU)
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today includes 27 member states that have eliminated barriers to the free flow of goods, capital, and people
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North American Free Trade Agreement (NAFTA)
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founded in 1994, Canada, United States, and Mexico joined a free trade agreement
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Privatization
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when a country divests (removes) itself of the ownership and operation of a business venture by turning it over to the free market system; in a sense similar to denationalization
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Multinational Corporation (MNC)
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a business firm incorporated in one country that has production and sales operations in several other countries
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