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Chapter 5 (Intro): The Global Context of Business (Overcoming barriers to…
Chapter 5 (Intro): The Global Context of Business
Contemporary global economy
Globalization
Export
Import
Major world marketplace
Distinction based on wealth
Upper-middle-income countries
Low-middle-income countries
High-income countries
Low-income countries
Geographic clusters
Europe
Asia Pacific
North America
Emerging market: BRICS
Forms of competitive advantage
Comparative advantage: the ability to produce more than others
National competitive advantage
Demand conditions
Related and supporting industries
Factor conditions: factors of production
Strategies, structures, and rivalries
International competitiveness: competitive marketing of domestic products against foreign products
Absolute advantage: the ability to produce more than any other country
The balance
The balance of payment; flow of all money into or out of country
Exchange rates: rate at which the currency of one nation can be exchanged for the currency of another nation
The balance of trade
Surplus: exports > imports
Deficit: imports > exports
International business management
Level of involvement in international business
International firms: conducts a significant portion of its business in foreign countries
Multinational firms: designs, produces, and markets products in many nations
Exporters and importers
International organizational structures
Branch offices: a location that an exporting firm establishes in a foreign country to sell its products more effectively
Strategic alliances: a company finds a partner in a foreign country where it would like to conduct business
Licensing agreement: arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country
Foreign direct investment (FDI): buying and establishing tangible assets in another country
Independent agents: foreign individual or organization that agrees to represent an exporter' s interests
Going international
Gauging international demand
Adapting to customer needs
Barriers to international trade
Social and cultural differences
Physical stature
Shopping habits
Language
Religious and social differences
Legal and political differences
Local -content law: laws requiring that products sold in a particular country be at least partially made in that country
Business-practice laws
Cartels: any association of producers whose purpose is to control supply of and prices for a given product
Dumping: selling a product for less abroad than in the producing nation
Quotas, tariffs, and subsidies
Embargo: forbid exportation and/or importation of a particular product - or even all - of a particular country
Tariff: tax charged on imported products
Quota: restricts the total number of certain products that can be imported into a country
Subsidy: government payment given to domestic business to help it compete foreign firms
Protectionism: the practice of protecting domestic business at the expense of free market competition
Economic differences
Overcoming barriers to trade
General agreement on tariffs and trade (GATT)
international trade agreement to encourage the multilateral reduction or elimination of trade barriers
WTO: organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices
EU: agreement among major Western European nations to eliminate or make uniform most trade barriers affecting group members
NAFTA: agreement to gradually eliminate tariffs or other trade barriers among the US, Canada and Mexico