Intro To Business - Chapter 3

Front 1

Importing

Back 1

Buying products from another country.

Front 2

Exporting

Back 2

Selling products to another country.

Front 3

Free Trade

Back 3

The movement of goods and services among nations without political or economic barriers.

Front 4

Comparative Advantage Theory

Back 4

Theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently.

Front 5

Absolute Advantage

Back 5

The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.

Front 6

Balance of Trade

Back 6

The total value of a nation's exports compared to its imports measured over a particular period.

Front 7

Trade Surplus

Back 7

A favorable balance of trade; occurs when the value of a country's exports exceeds that of it's imports.

Front 8

Trade Deficit

Back 8

An unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports.

Front 9

Balance of Payments

Back 9

The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.

Front 10

Dumping

Back 10

Selling products in a foreign country at lower prices than those charged in the producing economy.

Front 11

Licencing

Back 11

A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).

Front 12

Contract Manufacturing

Back 12

A foreign company's production of a private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing.

Front 13

Joint Venture

Back 13

A partnership in which two or more companies (often from different countries) join to undertake a major project.

Front 14

Strategic Alliance

Back 14

A long-term partnership between two or more companies established to help each company build competitive market advantages.

Front 15

Foreign Direct Investment (FDI)

Back 15

A company owned in a foreign country by another company, called the parent company.

Front 16

Multinational Corporation

Back 16

An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.

Front 17

Sovereign Wealth Funds (SWF's)

Back 17

Investment funds controlled by governments holding large stakes in foreign companies.

Front 18

Exchange Rate

Back 18

The value of one nation's currency relative to the currencies of other countries.

Front 19

Devaluation

Back 19

Lowering the value of a nation's currency relative to other currencies.

Front 20

Countertrading

Back 20

A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.

Front 21

Trade Protectionism

Back 21

The use of government regulations to limit the import of goods and services.

Front 22

Tariff

Back 22

A tax imposed on imports.

Front 23

Import Quota

Back 23

A limit on the number of products in certain categories that a nation can import.

Front 24

Embargo

Back 24

A complete ban on the import of export of a certain product, or the stopping of all trade with a particular country.

Front 25

General Agreement on Tariffs and Trade (GATT)

Back 25

A 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.

Front 26

World Trade Organization (WTO)

Back 26

The international organization that replaced the General Agreement on Tariffs and Trade and was assigned the duty to mediate trade disputes among nations.

Front 27

Common Market

Back 27

A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. An example is the European Union.

Front 28

North American Free Trade Agreement (NAFTA)

Back 28

Agreement that created a free-trade area among the United States, Canada, and Mexico.