KSB-111 International Business

Globalization

The process of interaction and integration among people, companies, and governments worldwide.

Absolute Advantage

The ability of a country to produce more of a product using the same amount or fewer resources than other countries.

Comparative Advantage

The ability of a country or company to produce a specific product at a lower opportunity cost than another.

Quotas

A government restriction on the quantity of a good that can be imported.

Embargo

An extreme form of quota that bans the import of goods from a specific country.

Foreign Direct Investment (FDI)

The formal establishment of business operations in a foreign country.

Licensing Agreement

A legal contract that allows one company to produce the products of another company and to use its intellectual property.

Franchising

A business model where a company grants a foreign entity the right to use its brand and sell its products.

Contract Manufacturing

The practice where a U.S. company contracts a local company in a foreign country to manufacture its products.

Joint Venture

An alliance in which partners fund a separate company to manage a joint operation.

Strategic Alliance

An agreement between two companies to pool resources to achieve common goals.

Cultural Differences

Variations in the beliefs, values, and behaviors of different societies, important for international business.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

World Bank

An international financial institution that provides loans to developing countries for economic development.

International Monetary Fund (IMF)

An organization that aims to promote global economic stability by overseeing monetary exchange policies.

World Trade Organization (WTO)

An international body that regulates trade between nations and promotes free trade.

Trade Barriers

Government-imposed restrictions such as tariffs, quotas, and embargoes that affect international trade.

Trading Blocs

Groups of countries that promote free trade among themselves by eliminating trade restrictions.

Multinational Corporation (MNC)

A corporation that engages in business operations in multiple countries.

Free Trade Agreement (FTA)

An arrangement between two or more countries to reduce or eliminate tariffs on their mutual trade.

Visible Trade

Trade in goods that are tangible, such as cars and electronics.

Invisible Trade

Trade in services that cannot be physically touched, such as banking and tourism.

Foreign Exchange Market

The global marketplace for trading national currencies against one another.

Exchange Rate

The value of one currency for the purpose of conversion to another.