International Business law vocab ch.1

Ch. 1

Commercial risk

risk that one of the parties to a transaction will fail to perform as promised

Risk management

continuing process to identify, analyze, evaluate, and minimize loss exposures and to mitigate the adverse effects of loss

Transport risk

refers to the potential for unexpected shipping delays and expenses or to damage or loss to goods during ground, air, or marine transit

exchange rate risk

caused by fluctuation in relative value of two currencies when one is exchanged for other

Forward exchange contract

to buy or sell a currency on future date at an agreed exchange rate

Currency option

a contract to buy an amount of foreign currency on or before future date or to let it expire if funds aren’t needed

currency controls

restriction on foreign payments, prohibiting removal of foreign currency from country by individuals traveling abroad, or exchanging foreign currency for local currency at other than official rate of exchange and control foreign investors from removing profits to their home country

customs brokers

agent of an importer licensed to transact business w/ custom authorities and to clear goods for import across a national border

freight forwarders

agent of shippers to arrange transportation and insurance and in assisting in preparing doc for export

international banks

provide financing for international trade, security for international transaction, foreign payments, and foreign exchange services

trade

foreign involvement (least political, economic, and legal risk) where buy/sell goods or services to others in foreign countries

trade in services

delivery of services to customer in foreign country

trade in technology

transfer of patents, technical info, engineering and manufacturing processes and know-how, trade secrets and similar info to foreign firm

exporting

shipping of goods out of a country

export control

restriction on exports of goods, services, or technology to country or group of countries imposed for reasons of national security or foreign policy

sanctions

comprehensive trade and financial restrictions, targeting countries, groups or individual who engage in terrorism, threaten international peace, proliferate weapons of mass destruction or violate important principles of international law

direct exporting

assumes responsibility for most of the export functions

indirect exporting

involves outsourcing export functions

export management companies

independent firms that assume a range of export-related responsibilities for manufacturers, producers, or other exporters

export trading company

encourage private financing exports, intended to let them compete on equal footing with similar trading companies

international trading companies

firms market and sells goods/services of manufacturers or other companies, handling all aspects of marketing, distribution, and sales; wither buy goods for resale or acting like middlemen to bring buyers and sellers together

certificate of origin

custom doc, prepared or provided by an exporter or shippers; that attest to the country of origin of the goods being shipped

foreign sales representative

independent agents the procure orders for their principles on a commission basis

foreign distributor

independent firms that purchase and take delivery of goods for resale, take responsibility for local product services, maintenance and supplying spare parts

export plan

importing

entering goods into customs territory of a country or the receipts of services from foreign providers

tariff

import duty(tax) imposed on foreign goods for purpose of collecting revenue or influencing quantities of goods imported

quota

quantitative restrictions on imports that limits the quantity or value of an item that may enter country (annually)

embargo

total or near total ban on trade w/ another country

nontariff barriers

trade is often used to describe quotas, embargos, and other restrictions on imports

customs entry process

“clearing” goods through customs, require a specialized understanding of customs regulations, tariff rules, procedures, and documentation

global supply chain

network of companies in which different steps in the process of producing a finished product and delivering it to a consumer take place in different countries

intellectual property rights

legal rights which result from intellectual activity in the industrial, scientific, literary and artistic fields

IP licensing agreements

contracts by which owners of IP can grant specific rights in that property to another party under specified conditions and time for return of fee (royalties)

IP infringement

unauthorized reproduction, display, distribution, or use of intellectual property rights of another

franchising

business arrangement that uses an agreement to license, control, and protect the use of the franchisor’s patents, TM, Copyrights, or business know-howl combined w/ proven plan of business operation in return for royalties or commission

foreign direct investment (FDI)

refers to the ownership and operation or effective control of the productive assets of an ongoing foreign business

home country

country under whose laws the investing corp was created or where headquarters

host country

is the target of investment

national language laws

foreign branch

extension of your company in another country, such as branch office for sales

foreign subsidiary

separate legal entity organized under the laws of foreign host country but owned and controlled by parent corp in home country

affiliate

several subsidiaries owned by one parent

joint venture

cooperative business arrangement between 2 or more companies for profit

local participation

means that a share of business is owned by national of host country

multinational corp

firms that have significant foreign direct investment assets or that derive a significant portion of their revenue from more than 1 country

transnational corp

often used in. UN systems, reflects that the corp’s operation and interest “transcend” national boundariesnew

developing countries

newly industrialized, emerging economy

country risk

potential adverse impact that a foreign country’s social or political systems, or their vulnerability to climate change, can have foreign investors or other foreign firms doing business there

poiltical risk

political instability, civil unrest, political change, war or terrorism in foreign country

poiltical risk analysis

insight into how foreign country’s political process might affect the business environment there and the conditions could arise ro rapid or unstable political change

newly industrialized countries

rapid progress toward becoming industrialized or technology-based economies, typically transition from agricultural economies to industrial

least developed countries

lack many basic resources, utilizes, and infrastructure needed for development, and they require vast amounts of foreign aid from the wealthier nations