Business 103 Chapter 3 Vocabulary

  1. Importing
    • Buying products from another
    • country.
  2. Exporting
    • Selling products to another
    • country.
  3. free trade
    • The movement of goods and
    • services among nations without
    • political or economic barriers.
  4. comparative advantage
    theory
    • 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.
  5. absolute advantage
    • The advantage that exists
    • when a country produces a
    • specific product more
    • efficiently than all other
    • countries.
  6. balance of trade
    • The total value of a nation’s
    • exports compared to its
    • imports measured over a
    • particular period.
  7. trade surplus
    • A favorable balance of trade;
    • occurs when the value of a
    • country’s exports exceeds that
    • of its imports.
  8. trade deficit
    • An unfavorable balance of
    • trade; occurs when the value of
    • a country’s imports exceeds
    • that of its exports.
  9. balance of payments
    • 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.
  10. dumping
    • Selling products in a foreign
    • country at lower prices than
    • those charged in the producing
    • country.
  11. licensing
    • 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).
  12. Franchising
    • Franchising is a contractual agreement whereby
    • someone with a good idea for a business sells others
    • the rights to use the business name and sell a product
    • or service in a given territory in a specified manner.
  13. contract manufacturing
    • A foreign company’s
    • production of private-label
    • goods to which a domestic
    • company then attaches its
    • brand name or trademark; part
    • of the broad category of
    • outsourcing.
  14. joint venture
    • A partnership in which two or
    • more companies (often from
    • different countries) join to
    • undertake a major project.
  15. strategic alliance
    • A long-term partnership
    • between two or more
    • companies established to help
    • each company build
    • competitive market
    • advantages
  16. foreign direct investment
    (FDI)
    • The buying of permanent
    • property and businesses in
    • foreign nations.
  17. foreign subsidiary
    • A company owned in a foreign
    • country by another company,
    • called the parent company.
  18. multinational corporation
    • An organization that
    • manufactures and markets
    • products in many different
    • countries and has multinational
    • stock ownership and
    • multinational management.
  19. sovereign wealth funds
    (SWFs)
    • Investment funds controlled by
    • governments holding
    • investment stakes in foreign
    • companies.
  20. exchange rate
    • The value of one nation’s
    • currency relative to the
    • currencies of other countries.
  21. devaluation
    • Lowering the value of a nation’s
    • currency relative to other
    • currencies.
  22. countertrading
    • A complex form of bartering in
    • which several countries may be
    • involved, each trading goods
    • for goods or services for
    • services.
  23. trade protectionism
    • The use of government
    • regulations to limit the import of
    • goods and services.
  24. tariff
    A tax imposed on imports.
  25. import quota
    • A limit on the number of
    • products in certain categories
    • that a nation can import.
  26. embargo
    • A complete ban on the import
    • or export of a certain product,
    • or the stopping of all trade with
    • a particular country.
  27. General Agreement on
    Tariffs and Trade (GATT)
    • A 1948 agreement that
    • established an international
    • forum for negotiating mutual
    • reductions in trade restrictions.
  28. World Trade Organization
    (WTO)
    • The international organization
    • that replaced the General
    • Agreement on Tariffs and Trade
    • and was assigned the duty to
    • mediate trade disputes among
    • nations.
  29. common market
    • 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.
  30. North American Free Trade
    Agreement (NAFTA)
    • Agreement that created a freetrade
    • area among the United
    • States, Canada, and Mexico.
Author
davecowman
ID
334257
Card Set
Business 103 Chapter 3 Vocabulary
Description
Chapter 3
Updated