international business final

  1. Tariffs
    represent a tax on items imported
  2. Quotas
    represent a limit on imports; also creating higher prices by limiting supply
  3. Protectionism
    Government actions and policies that restrict or restrain international trade often done with the intent of protecting local businesses and jobs from foreign competition. Methods are import tariffs, quotas, subsidies or tax cuts to local businesses and direct state intervention.
  4. Countervailing Duties
    a duty placed on imported goods that are being subsidized by the importing government. This helps to even the playing field between domestic producers and the foreign producers receiving subsidies
  5. Retaliatory Tariffs
    countries may set tariffs as a retaliation technique if they think that a trading partner has not played by the rules. Short run results: higher prices for goods can reduce consumption by individual consumers and by businesses. Businesses will profit and the govt. will see an increase in revenue from duties. Long run results: businesses may see a decline in efficiency due to lack of competition. May also see reduction in profits due to the emergence of substitutes to the product.
  6. Smoot-Hawley
    to protect American manufacturing a very restrictive tax on imports was signed by Hoover. This tax caused deflation and discouraged imports. Other countries retaliated and international trade virtually stopped.
  7. NAFTA
    (North American Free Trade Agreement) goal was to eliminate barriers to trade and investment between U.S., Canada, and Mexico
  8. GATT
    (General Agreement on Tariffs and Trade) minimized tariffs, quotas, preferential trade agreements between countries, and other barriers to international trade. GATTs functions were taken over by the WTO.
  9. WTO
    (World Trade Organization) an international body that administers trade laws and provides a forum for settling trade disputes among nations. Its main function is to ensure that trade runs smoothly, predictably, and freely as possible.
  10. Microfinance
    making small loans, usually less than $200 to individuals usually women to establish or expand a small self-sustaining business; an effective poverty reduction strategy
  11. Sustainability
    resolving the conflict between the various competing goals, and involves the simultaneous pursuit of economic prosperity, environmental quality, and social equity, known as three dimensions(triple bottom line)
  12. GDP
    (gross domestic product) the value of all final goods and services produced within a country’s borders within a single year. consumer and govt, purchases, private domestic investment, and net exports of goods and services
  13. Balance of Payments
    countries use this to record the money they receive from foreigners and the money they pay foreigners. payments received are credits and payments out are debits.
  14. Silent Spring
    book written by Rachel Carson in Sept. 1962. helped launch the environmental movement. Inspired widespread public concerns with pesticides and pollution of the environment. Facilitated the ban of pesticide DDT in the USThe bottom Billion- the bottom and poorest billion
  15. Traps and Solutions
    civil wars, dependence on natural resources, landlocked countries with bad neighborhoods, bad govt.; (solutions) aid agencies, military interventions, international charters, trade policy to encourage free trade.
  16. Dutch Disease
    economic concept that tries to explain the apparent relationship between the exploitation of natural resources and a decline in the manufacturing sector combined with moral fallout. The theory is that an increase in revenues from natural resources will deindustrialize a nation’s economy by raising the exchange rate, which makes the manufacturing sector less competitive and public services entangled with business interests
  17. Diversification
    a risk management technique that mixes a wide variety of investments within a portfolio. A portfolio with different kinds of investments will yield higher returns a pose a lower risk than any individual investment; good investments will neutralize bad investments.
  18. Risk Management
    economical application of resources to minimize, monitor, and control the profitability or impact of unfortunate events or to maximize the realization of opportunities.
  19. Vertical Organization
    occurs when companies perform steps in the production process at different places. Such as extracting oil on the way to making gasoline and plastic
  20. Conglomerate Organization
    multinationals that have expanded into different lines of business from where they started.
  21. Horizontal Organization
    a company making a product in one location begins making the same thing in another one.
  22. Investment Bankers
    arrange M&A transactions; assists in raising capital
  23. Mergers and Acquisitions
    brings separate companies together to form larger ones
  24. Economies of Scale
    when more units of a good or service can be produced on a larger scale at less input costs. Economic growth may be achieved when economies of scale is realized.
  25. Joint Venture
    the cooperation of two or more individuals or businesses, each agreeing to share profit, loss and control, in a specific enterprise. This is often done to circumvent import quotas.
  26. AOL/Time Warner
    argued to Federal Communications Commission that the merger will be good for consumers and serve as a catalyst to speed availability of high-speed internet and cable access. Company years later had an annual loss of $100 billion-largest annual loss in corporate history. 6 years after merging companies split.
  27. Exchange Rate
    rate at which one currency will be exchanged for another
  28. Fluctuations in Rates
    a market based exchange rate will change whenever the values of either of the two currencies change; the higher a country's interest rates, the greater demand for that currency
  29. The Tragedy of the Commons
    occurs when commonly owned natural resources are destroyed, overused, degraded or neglected because no one has the authority to limit access and overuse
  30. Thomas Malthus
    wrote the essay, The Principle of Population, and concluded that the earth’s population would grow so large that human life would no longer be sustainable. but in reality, populations tend to self correct through changes in birth rates.
  31. Donor Nations
    assume that giving money to an underdeveloped country should solve the problem
  32. The World Bank
    one of two major financial institutions created as a result of the Bretton Woods conference in 1944.
  33. International Monetary Fund
    an international organization that oversees the global financial system by following the macroeconomic policies of its member countries. Was formed to stabilize international exchange rates and facilitate development. Also offers highly leveraged loans mainly to poorer countries.
  34. Smith's concept of market correction
    merchants promote economic regulations to protect themselves from competition
  35. Economic Freedom
    fundamental right of every human to control his or her own labor and property; labor, capital, and goods move freely
  36. 10 indicators of economic freedom
    business, trade, and fiscal freedom, freedom from govt., monetary, financial, and investment freedom, property rights, freedom from corruption, and labor freedom.
  37. Effective business tax rate
    Congo(55.7), China(46.9), Argentina(44.3), Brazil(38.8), Germany(38.1), U.S.(38), Russia(37.6), Canada(36.6), Japan(32.2), France(32.1).
  38. Country income & level of freedom
    top 20%-27,726, second 20%-12,395, third 20%-6,973, fourth 20%-3,721, fifth 20%-4,794(bottom billion)
Card Set
international business final
International Business Final