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Business Ess. Chpt 4

TermDefinition
globalization process by which the world economy is being a single interdependent system
import product made or grown abroad but sold domestically
export product made or grown domestically, but ship and sold abroad
North American Free Trade Agreement (NAFTA) agreement to gradually eliminate tariffs and other trade barriers among the U.S., Canada, and Mexico
European Union (EU) agreement among European nations to eliminate or make uniform most trade barriers affecting group members
Association of Southeast Asian Nations (ASEAN) organization for economic, political, social, and cultural cooperation among southeast Asian Nations
General Agreement on Tariffs and Trade (GATT) international trade agreement to encourage the multilateral reduction or elimination of trade barriers
World Trade Organization (WTO) organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices
balance of trade economic value of all products a country exports minus the economic value of all products it imports
trade deficit situation in which a country's imports, exceeds its exports, creating a negative balance of trade
trade surplus situation in which a country's exports, exceeds its imports, creating a positive balance of trade
balance of payments flow of all money into or out of a country
exchange rate rate at which the currency of one nation can be exchanged for the currency of another nation
euro a common currency shared among most of the members of the European Union (excluding Denmark, Sweden, and United Kingdom)
absolute advantage the ability to produce something more efficiently than any other country can
comparative advantage the ability to produce some products more efficiently than others
national competitive advantage international competitive advantage stemming from a combination of factor conditions, demand conditions, related and supporting industries, and firm strategies, structures, and rivalries
outsourcing the practice of paying suppliers and distributors to perform certain business processes or to provide needed materials or services
offshoring the practice of outsourcing to foreign countries
exporter firm that distributes and sells products to one or more foreign countries
importer firm that buys products in foreign markets and then imports them for resale in its own country
international firm firm that conducts a significant portion of its business in foreign countries
multinational firm firm that designs, produces, and markets products in many nations
independent agent foreign individual or organizations than agrees to represent an exporter's interest
licensing arrangement arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country
branch office foreign office set up by an international or multinational firm
strategic alliance arrangement (also called joint venture) in which a company finds a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partner's country
foreign direct investment (FDI) arrangement in which a firm buys or establishes tangible assets in another country
quota restriction of the number of products of a certain type that can be imported into a country
embargo government order banning exportation and/or importation of a particular product or all products from a particular country
tariff tax levied on imported products
subsidy government payment to help a domestic business compete with foreign firms
protectionism practice of protecting domestic business against foreign competition
local content law law requiring that products sold in a particular country be at least partly made there
business practice law law or regulation governing business practices in given countries
cartel association of producers whose purpose is to control supply and prices
dumping practice of selling a product abroad for less than the cost of production
Created by: shelaynecarter