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Chapter 4:Globalizan
| Question | Answer |
|---|---|
| Globalization | The increasing connectivity and interdependence of the world's economies, societies, and cultures because of advances in communication, technology, trade, international investment, movement of currency, and migration. |
| E-Commerce | electronic commerce, the buying and selling of products and services through computer networks. |
| Free Trade | the movement of goods and services among nations without political or economic restrictions. |
| Global Economy | the increasing interaction of the world’s economies with one another as a single market instead of in many national markets. |
| Multinational Corporations | organizations with multinational management and ownership that manufacture and market products in many different countries. |
| Importing | when a company buys goods outside the country and resells them domestically. |
| Exporting | when a company produces goods domestically and sells them outside the country. |
| Self- Sufficient | when a country is able to produce by itself all of the products and services it needs or that its people want. |
| Absolute Advantage | exists when one country has a monopoly on producing a product more cheaply or efficiently than any other country can. |
| Comparative Advantage | meaning a country sells to other countries those products and services it produces most cheaply or efficiently and buys from other countries those it does not produce most cheaply or efficiently. |
| Balance of Trade | the value of a country’s exports compared to the value of its imports as measured over a particular period of time. |
| Trade Surplus | favorable balance of trade, exists when the value of a country’s total exports exceeds the value of its total imports. |
| Trade Deficit | unfavorable balance of trade, exists when the value of a country’s total imports exceeds the value of its total exports. |
| Balance of Payments Surplus | favorable balance of payments, exists when more money flows into a country than flows out. |
| Balance of Payments Deficit | unfavorable balance of payments exists when more money flows out of a country than flows in. |
| Countertrading | bartering goods for goods (or services) |
| Export Assistance Centers | support for small businesses |
| Export Management Companies | help in establishing trading relationships |
| Franchising | A company allows a foreign company to pay it a fee and share of the profits in return for using the first company’s brand name and a package of materials and services |
| Foreign Licensing | A company gives a foreign company permission, in return for a fee, to make or distribute the first company’s product or service |
| Outsourcing | contract manufacturing, is defined as using suppliers outside the company to provide goods and services. |
| Global Outsourcing | offshoring, is defined as using suppliers outside the U.S. to provide labor, goods, or services. |
| Joint Venture | also known as a strategic alliance, with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign county. |
| Foreign subsidiary | a company in a foreign country that is totally owned and controlled by the parent company. |
| Culture | the shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people |
| Culture Shock | the feeling of discomfort and disorientation associated with being in an unfamiliar culture |
| Nonverbal Communication | consists of messages sent outside of the written or spoken word. |
| Infrastructure | the physical facilities that form the basis for its level of economic development. |
| Developed Contries | first-world countries, those with a high level of economic development and generally high average level of income among their citizens |
| Less Developed Contries | developing countries, are third-world countries, those nations with low economic development and low average incomes |
| Currency Exchange Rate | the rate at which one country’s currency can be exchanged for the currencies of other countries |
| Floating Exchange Rate System | the values of all currencies are determined by supply and demand |
| Devaluation | when a nation’s currency is lowered relative to other countries’ currencies |
| Democratic Political System | rely on free elections and representative assemblies |
| Totalitarian Political System | ruled by a dictator, a single political party, or a special-membership group |
| Foreign Corrupt Practices Act | makes it illegal for employees of U.S. companies to make “questionable” or “dubious” contributions to political decision makers in foreign nations. |
| Trade Protectism | the use of government regulations, tariffs, quotas, and embargoes to limit the import of goods and services. |
| Tariff | a trade barrier in the form of a customs duty, or tax, levied mainly on imports. |
| Import Quota | a trade barrier in the form of a limit on the quantity of a product that can be imported. |
| Dumping | the practice of a foreign company’s selling its products abroad for less—even less than the cost of manufacture—than the price of the domestic product in than market. |
| Embargo | a complete ban on the import or export of certain products. |
| World Trading Organization (WTO) | consisting of 153 member countries, is designed to monitor and enforce trade agreements. |
| General Agreement on Tariffs and Trade (GATT) | an international accord firstsigned by 23 nations in 1947, which helped to reduce worldwide tariffs and other barriers. |
| World Bank | Purpose is to provide low-interest loans to developing nations for improving health, education, transportation, and telecommunications. |
| International Monetary Fund (IMF) | designed to assist in smoothing the flow of money between nations. |
| Common Market | also known as an economic community or a trading bloc, is a group of nations within a geographical region that have agreed to remove trade barriers with each other. |
| North American Free Trade Agreement (NAFTA) | a common market consisting of the 435 million people of the United States, Canada, and Mexico. |
| European Union (EU) | The world's largest free market; was formed in 1957 and presently consists of 27 trading partners in Europe. |
| Mercosur | the largest common market in Latin American and has four core members—Argentina, Brazil, Paraguay, and Uruguay, with Venezuela scheduled to become a full member—and five associate members, Bolivia, Chile, Colombia, Ecuador, and Peru. |
| Asia- Pacific Economic Cooperation (APEC) | a common market of 21 Pacific Rim countries whose purpose is to improve economic and political ties. |
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