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23 Cards in this Set
- Front
- Back
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Explain the importance of importing and exporting.
What are some key terms used in global business? |
No country can produce all the products its people want and need. Global trade enables nations to produce what it is most capable of producing and buy what it needs from others in a mutually beneficial exchange relationship.
Importing Exporting Free Trade Comparative Advantage Theory Absolute Advantage |
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What is Comparative Advantage and what are some examples of this concept at work in global markets?
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Theory that states countries should sell products they are good at producing and buy products they can't or are poor at producing.
US has comparative advantage in producing software and engineering services, but lack comparative advantage for producing coffee and shoes. We buy most of our coffee and shoe products from other countries and sell our software and engineering services. |
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How are nation's balance of trade and balance of payments determined?
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Balance of trade is the total value of exports compared to its imports
Balance of Payments is the total money coming into a country (from exports, tourism etc) and money going out of a country (imports, foreign investments etc) |
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What is meant by the term 'dumping' in global trade?
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When a producer sells its products at lower prices in a foreign country than it sells in its own, producing country. Typically prohibited.
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What are two of the main arguments favoring the expansion of US businesses into global markets?
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Literacy rates have risen worldwide
Life expectancy in 3rd world countries have risen |
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What are the advantages to a firm of using licensing as a method of entry in global markets?
What are the disadvantages? |
Gain revenue not otherwise generated, and licensees often purchase start-up supplies, materials, and consulting services from the licensing firm. Licensors
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What services are usually provided by an export-trading company?
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Negotiating and establishing trading relationships buy matching buyers and sellers.
Deals with Foreign customs offices, documentation and even weights and measures conversions Assist exporters with warehousing, billing, and insuring. |
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What is the key difference between a joint venture and a strategic alliance?
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In a strategic alliance, the companies don't share costs, risks, management or profit.
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What makes a company a multinational corporation?
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Companies have to have manufacturing capacity, or some other physical presence, in other countries.
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What are the forces that affect trading in global markets?
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Sociocultural Forces
Economic and Financial Forces Legal and Regulatory Forces Physical and Environmental Forces |
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What are four major hurdles to successful global trade?
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Forces:
Sociocultural Economic and Financial Legal and Regulatory Physical and Environmental |
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What does ethnocentricity mean, and how can it affect global success?
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The belief that your own culture is superior to other cultures.
Failure to think globally or adapting to other cultures can lead to economic failures. Not understanding a culture can affect management of employees with a foreign manager. It can lead to faux pas that can cause offense in a particular market or just poor branding. |
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How would a low value of the dollar affect US Exports?
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Exports would increase because US goods become cheaper to foreign buyers because less foreign currency is needed to buy the products.
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What does the Foreign Corrupt Practices Act prohibit?
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1978:
Prohibits 'questionable' or 'dubious' payments to foreign officials to secure business contract. Or buying out the government officials to get a contract. |
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What is the primary purpose of the WTO?
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Mediate trade disputes among nations
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What is the key objective of a common market like the EU?
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To facilitate exchange among member nations with common external tariff, no internal tariff and a coordination of laws.
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What three nations comprise NAFTA?
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North American Free Trade Agreement:
United States of America Canada Mexico |
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What key challenges must India and Russia face before becoming global economic leaders?
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India: Difficult trade laws and inflexible bureaucracy.
Russia: Political, currency and social problems as well as most corrupt economy. |
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What does the acronym BRIC stand for?
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Brazil
Russia India China Expected to be some of the wealthier global economies by 2030. Largest areas of opportunities. Brazil and Russia will dominate global business as suppliers of raw materials, China and India of manufactured goods. |
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What are the two primary concerns associated with offshore outsourcing?
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Growing numbers of jobs in the US will be lost due to offshore outsourcing and the quality of products produced could be inferior.
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What are some ways in which a company can engage in global business?
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Ways of entering world trade include licensing, exporting, franchising, contract manufacturing, joint ventures and strategic alliances, and direct foreign investment
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How do multinational corp. differ from other companies that participate in global business?
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Unlike companies that only export or import, multinational corporations also have manufacturing facilities or other physical presence abroad.
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What are the different strategies to compete in global markets?
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Licensing
Exporting Franchising Contract Manufacturing International joint ventures Strategic Alliances Foreign subsidiaries Foreign Direct Investment |
