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39 Cards in this Set
- Front
- Back
exporting |
selling products to other countries
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importing |
buying products from other countries |
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free trade |
the movement of goals/services among nations without political or economic barriers |
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comparative advantage theory |
countries should sell products that the produce effectively and buy from others products that they cannot produce |
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absolute theory |
when a country has a monopoly on producing a specific products or able to produce it effectively |
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merchandise trade |
industrial goods & materials, machinery & equipment, energy products, automotive products, agricultural & fishing, forestry, other consumer goods |
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balance of trade |
a nation's ratio of exports to imports |
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trade surplus |
favorable balance of trade; exports exceed imports |
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trade deficit |
unfavorable balance of trade; imports exceed exports |
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balance of payments |
difference b/w money coming into the country (exports) & money leaving the country (imports) |
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licensing |
a firm allows a foreign company (licensee) to produce its product in exchange for a fee (a royalty) |
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Franchising |
an agreement that someone with a good idea for a business sells the rights to use the business name & sell a product or service in a given territory in a certain matter |
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contract manufacturing |
a foreign country's production of a private-label good to which a domestic country then attaches its brand name or trademark; also called outsourcing |
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joint venture |
a partnership where 2 or more companies join to undertake a major project |
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benefits of international joint ventures are clear |
1. shared technology & risk 2. shared marketing & management expertise 3. entry into markets where foreign companies are often not allowed unless goods are produced locally |
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strategic alliance |
long-term partnership b/w 2 or more companies established to help each company build competitive market advantages |
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foreign direct investment (FDI) |
buying of permanent property & businesses in foreign nations |
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foreign subsidary |
company owned in a foreign country by the parent company |
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multinational corporation |
an organization that manufactures & markets products in many different countries & has multinational stock ownership & multinational management |
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forces affecting trade in global markets |
sociocultural, economic, financial, legal, environmental, and physical |
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ethnocentriaty |
an attitude that one's culture is better than others |
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exchange rate |
value of one's currency compared to another |
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devaluation |
lowering the value of a nation's currency relative to other currencies |
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countertrading |
countries bartering for goods for goods or services for services |
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trade protectonism |
use of government regulations to limit the import of goods and services |
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dumping |
selling products in a foreign country at lower prices than those charged in the producing country |
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tariffs |
taxes of imports two kinds: protective and revenue |
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import quota |
limit on the number of products in certain categories that a nation can import |
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embargo |
complete ban on the import or export of a certain product or the stopping of all trade with a particular country |
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general agreement on tariffs and trade (GATT) |
an agreement that established an international forum for negotiating mutual reductions in trade restrictions |
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World trade organization (WTO) |
international organization that replaced the GATT & was assigned the duty to mediate trade disputes among nations |
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International monetary fund (IMF) |
international bank that makes short term loans to countries experiencing problems with their balance of trade |
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Producers' cartels |
organizations of commodity producing countries that are formed to stabilize or increase prices to optimize overall profits in the long run |
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common market (trading bloc) |
a regional group of countries that have a common external tariff, no internal tariffs & a coordination of laws to facilitate exchange |
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North American Free Trade Agreement (NAFTA) |
agreement that created a free trade agreement among Canada, USA and Mexico |
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sociocultural forces |
-cultures: values, beliefs, rules, institutions -manners & beliefs -issues with global marketing strategy |
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economic & financial forces |
-not all global opportunities are viable -no unified currency |
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legal forces |
-federal & provincial laws/ regulations heavily affect business practices of Canadian businesses globally |
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physical & environmental forces |
-technological constraints -getting to your customers |