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33 Cards in this Set

  • Front
  • Back
Trend away from distinct national economic units and towards one huge global market. Moe integrated and interdependent world economy.
Internet.www, containerization, lower barriers to trade, fall of communism.
Globalization of Markets
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.
GLobalization of Production
Sourcing goods and services from from different places around the globe to take advantage in differences in prices and quality on factors of production.
Multinational enterprise
A MNE is a firm that owns business operations in more than one county.
International Trade
When a firm exports goods or services to consumers in another country.
Foreign Direct Investment
DIrect investment in business operations in another country.
World Trade Organization
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.
Location Economies
Cost advantages from performing a value added creation in the optimal location for that activity. Can help firm lower costs and differentiate product.
Economies of scale
Cost advantages associated with large scale production. By spreading fixed costs over a high volume of product.
Strategic alliances
Cooperative agreements between two or more firms, ( joint venture, to short term contractual agreements to develop new product).
Localization strategy
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.
International Strategy
Dont face reduction pressure or pressures to adapt, keep core competencies at home, minimal customization, serves universal needs. Ex( apple.
Global standardization strategy
Strong pressure to reduce cost and little pressure to adapt, highly standardized products, economies of scale, commodities.
Transnational Strategy
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.
Customs union
a group of countries that Eliminates trade barriers between member countries and adopts a common external trade policy.
Common Market
NO trade barriers between member countries and adopts a common external trade policy. AND allows factors of production to move freely between members.
Free Trade Area
group of countries committed, All trade barriers are removed between each other.
Single European act
In 1987 Member nations of EC european community committed to establishing a single market by december 31 1992. had substantial impact.
European commission
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.
Council of the european union
Ultimate controlling a authority within EU, Draft legislation from the commission can become EU law only if the council aggress.
European Parliament
Has 732 members elected by populations of member states. primarily a consultive rather than legislative body, meets in france, recently increasing in power.
trade creation
occurs when high cost domestic producers are replaced by low cost producers within the free trade area.
Trade diversion
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.
Treaty of rome
the 1957 treaty that established the European community. ( became European union in 1994)
Treaty of Lisbon
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.
Optimal currency area
Similarities in underlying economic activity and structure make is feasible to adopt a single currency and single exchange rate.
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.
Fixed exchange rate
A system in which the exchange rate for converting one currency to another is fixed.
floating exchange rate
when the foreign exchange market determines the relative value of a currency, continuously adjusted by demand and supply. ei us dollar, european euro.
pegged exchange rate
Means the value of the currency is fixed relative to a reference currency like dollar or euro.
Gold standard
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
Bretton woods system
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.
Task of IMF is to maintain order in the International monetary system.