International Business Final

Front 1

Globalization

Back 1

Trend away from distinct national economic units and towards one huge global market. Moe integrated and interdependent world economy.
CAUSES
Internet.www, containerization, lower barriers to trade, fall of communism.

Front 2

Globalization of Markets

Back 2

Merging of historically distinct and separate markets into one huge global marketplace. Falling barriers to trade make it easier to trade internationally. Tastes and preferences of consumers beginning to converge into one global norm. Helping create the global market.

Front 3

GLobalization of Production

Back 3

Sourcing goods and services from from different places around the globe to take advantage in differences in prices and quality on factors of production.

Front 4

Multinational enterprise

Back 4

A MNE is a firm that owns business operations in more than one county.

Front 5

International Trade

Back 5

When a firm exports goods or services to consumers in another country.

Front 6

Foreign Direct Investment

Back 6

DIrect investment in business operations in another country.

Front 7

World Trade Organization

Back 7

Organization that succeeded the GATT at the Uruguay round. it polices the world trading system and makes sure nations adhere to rules and laws of WTO.

Front 8

Location Economies

Back 8

Cost advantages from performing a value added creation in the optimal location for that activity. Can help firm lower costs and differentiate product.

Front 9

Economies of scale

Back 9

Cost advantages associated with large scale production. By spreading fixed costs over a high volume of product.

Front 10

Strategic alliances

Back 10

Cooperative agreements between two or more firms, ( joint venture, to short term contractual agreements to develop new product).

Front 11

Localization strategy

Back 11

Increasing the profitability by customizing the firms goods or services so that they provide a good match to the tastes and preferences in that national market. Low price pressure, high adaptation pressure.

Front 12

International Strategy

Back 12

Dont face reduction pressure or pressures to adapt, keep core competencies at home, minimal customization, serves universal needs. Ex( apple.

Front 13

Global standardization strategy

Back 13

Strong pressure to reduce cost and little pressure to adapt, highly standardized products, economies of scale, commodities.

Front 14

Transnational Strategy

Back 14

Tries to simultaneously achieve low costs through economies of scale and location economies and learning effects, while trying yo differentiate the product to account for local differences.

Front 15

Customs union

Back 15

a group of countries that Eliminates trade barriers between member countries and adopts a common external trade policy.

Front 16

Common Market

Back 16

NO trade barriers between member countries and adopts a common external trade policy. AND allows factors of production to move freely between members.

Front 17

Free Trade Area

Back 17

group of countries committed, All trade barriers are removed between each other.

Front 18

Single European act

Back 18

In 1987 Member nations of EC european community committed to establishing a single market by december 31 1992. had substantial impact.

Front 19

European commission

Back 19

European Commission is responsible for proposing EU legislation, implementing it and monitoring compliance by its member states. Headquartered in Brussels belgium, commissioners are appointed by each member county for a five year renewable term, there are 27 commissioners.

Front 20

Council of the european union

Back 20

Ultimate controlling a authority within EU, Draft legislation from the commission can become EU law only if the council aggress.

Front 21

European Parliament

Back 21

Has 732 members elected by populations of member states. primarily a consultive rather than legislative body, meets in france, recently increasing in power.

Front 22

trade creation

Back 22

occurs when high cost domestic producers are replaced by low cost producers within the free trade area.

Front 23

Trade diversion

Back 23

occurs when lower cost external suppliers are replaced by higher cost suppliers within the free trade area. FTA will benefit world only if the amount of trade it creates exceeds what it diverts.

Front 24

Treaty of rome

Back 24

the 1957 treaty that established the European community. ( became European union in 1994)

Front 25

Treaty of Lisbon

Back 25

Treaty signed in 2007 power of european parliament in increased. they are now the co-equal legislator for almost all european laws. Created new position of president of the European council.

Front 26

Optimal currency area

Back 26

Similarities in underlying economic activity and structure make is feasible to adopt a single currency and single exchange rate.

Front 27

Eurozone

Back 27

sed by 16 of the 27 member states of EU, must meet certain criteria to join. high degree of price stability, sound fiscal situation, stable exchange rates, converged long term interest rates.

Front 28

Fixed exchange rate

Back 28

A system in which the exchange rate for converting one currency to another is fixed.

Front 29

floating exchange rate

Back 29

when the foreign exchange market determines the relative value of a currency, continuously adjusted by demand and supply. ei us dollar, european euro.

Front 30

pegged exchange rate

Back 30

Means the value of the currency is fixed relative to a reference currency like dollar or euro.

Front 31

Gold standard

Back 31

pegging currencies to gold and guaranteeing convertibility exchange rate was easy to determine.
advantagr- contained a powerful mechanism for achieving balance of trade equilibrium by all countries.e

Front 32

Bretton woods system

Back 32

in 1944 countries met to design a new international monetary system, here they established the IMF and world bank. Fixed exchange rates were in place.

Front 33

IMF

Back 33

Task of IMF is to maintain order in the International monetary system.