International Trade and Modern Business Vocabulary

Vocabulary flashcards covering key definitions and concepts from Chapter 1 and Chapter 2 of Unit 1: Introduction to International Trade.

Business

The manufacturing and/or sale of goods and/or services to satisfy the wants and needs of consumers to make a profit.

Transaction

An exchange of things of value between businesses or individuals.

Domestic Business

A business that makes most of its transactions within the borders of the country in which it is based.

International Business

The economic system of transactions conducted between businesses located in different countries, or a specific company that conducts business between countries.

Domestic Market

All of the customers who live in the country where a business operates.

Foreign Market

All the customers in a country other than the country where a business operates.

Trading Partner

A country whose businesses develop trade relationships with businesses in another country.

Duty (or Tariff)

A tax placed by a country on imported products to make the price of domestic goods competitive.

Globalization

A process whereby national or regional economies and cultures become integrated through global communication, foreign direct investment, trade, migration, transportation, and financial flows.

Interdependence

The reliance of two or more nations on each other for products or services that their industries cannot make or grow, or that other nations produce better.

Primary Industries

Industrial sector consisting of the extraction and initial processing of raw materials, including agriculture, fishing, forestry, energy, mining, and water.

Secondary Industries

Industries comprising primary manufacturing (processing) and secondary manufacturing that produce capital goods and consumer goods.

Branch Plant

A factory operated in a host country from a parent company located in a foreign country.

Branch-Plant Economy

An economy based heavily on businesses owned by foreign interests.

Tertiary Industries

Industries that do not extract or make physical products, but provide necessary services to businesses and consumers.

Service Sector

Another term for tertiary industries, encompassing retail sales, banking, construction, communications, and transportation.

Foreign Direct Investment (FDI)

Investment made by foreign entities to control some or all of a business's operations in another country.

Portfolio Investment

The purchase of stocks, bonds, and other financial instruments issued by domestic or foreign firms to earn dividends or interest.

Global Sourcing

The process of buying equipment, capital goods, raw materials, or services from around the world to lower costs, improve quality, or access new technology.

Importing

Bringing products or services into a country for internal business use or for resale.

Exporting

The sale of goods and services created in one country to businesses or consumers in another country.

Value Added

The amount of worth added to a product as it is processed, calculated as the difference between the cost of raw materials and the cost of the finished goods.

Licensing Agreement

A contract giving a company permission to use a product, service, brand name, or patent in exchange for a fee or royalty.

Exclusive Distribution Rights

A form of licensing agreement that permits a single company to be the sole distributor of a product in a specified geographic region or country.

Franchise

An agreement in which a franchisee pays a fee to use a parent company's (franchisor's) name, products, services, and marketing under strict rules.

Joint Venture

An arrangement where two businesses—usually one local and one foreign—form a new company with shared ownership.

Foreign Subsidiary

A company branch in another country that operates as an independent entity under financial targets set by the parent company.

Protectionism

The practice of shielding domestic industries and businesses from foreign competition through trade barriers such as tariffs and quotas.

Trade Quota

A government-imposed restriction on the quantity of a specific product that can be imported during a given timeframe.

Trade Embargo

A government-ordered ban on trade involving a specific product or with a particular country.

Investments Canada Act

Canadian legislation designed to review significant foreign direct investments to confirm they provide economic benefit to Canada.

Exchange Rate

The value of one country's currency relative to the currency of another country.

Floating Rate

A currency exchange system where supply and demand on foreign markets determine the value of a currency without a fixed exchange rate.

Currency Revaluation

An increase in the value of a floating currency caused by demand exceeding supply.

Currency Devaluation

A decrease in the value of a floating currency caused by supply exceeding demand.

Hard Currencies

Stable currencies that are easily converted into other currencies on global exchange markets.

Soft Currencies

Currencies that are difficult to convert into other currencies on international exchange markets.

Speculating

The practice of buying, holding, or selling foreign currencies to profit from expected changes in exchange rates.

MAPL System

A set of criteria used by the CRTC to identify Canadian content in music based on Music, Artist, Production, and Lyrics.