Exam 2 Global Business

TRIPS Agreement

Sets minimum standards for intellectual property protection among WTO members.

Doha Round

Focused on promoting economic development, especially for poorer nations.

Free Trade Area

Member countries remove trade barriers among themselves.

Customs Union

Members remove internal trade barriers and adopt a common external tariff.

Monetary Union

Countries share a common currency and monetary policy.

Schengen Area

Allows passport‑free movement across participating European countries.

USMCA Members

United States, Canada, and Mexico.

Largest Trading Partner of the Andean Community

The United States

ASEAN

Organization promoting regional economic integration in Southeast Asia.

Start‑Up Procedures: Rich vs Poor Countries

Poorer countries require more procedures to start a business.

Letter of Credit

Reduces transaction risks and costs by guaranteeing payment.

Foreign Acquisition

An equity‑based mode of FDI entry.

SME Definition (U.S.)

Firms with fewer than 500 employees.

Indirect Export Example

Using domestic‑based export intermediaries.

Entry Mode With Least Control Over Technology

Licensing

Harvest and Exit Strategy

Selling equity stakes or the entire firm to foreign entrants.

Developed Country With Lowest Start‑Up Rate

Japan

Franchising Agreements

Franchisor grants rights to use its brand and business model.

Customer Discrimination and Globalization

Globalization reduces customer bias against foreign firms.

Agglomeration

Clustering of economic activities in certain locations.

Stage Model

Firms internationalize gradually as they gain experience.

First-Mover Advantage

Benefits gained by entering a market before competitors.

Non-Equity Mode of Entry

Market entry without ownership, such as licensing or exporting.

Strategic Alliance

Cooperative agreement between firms, including licensing.

Disadvantage of Licensing

Loss of control over technology and brand use.

Turnkey Project

A firm designs, builds, and hands over a facility ready for operation.

Country-of-Origin effect

Consumer perceptions influenced by a product’s country of origin.

Country-of-Origin Example

Consumers preferring German cars for engineering quality.

Tacit Collusion

Firms indirectly coordinate actions without explicit communication.

Explicit Collusion

Firms directly coordinate actions through communication or agreements.

Prisoners Dilemma

A situation where rational decisions lead to worse outcomes for both players.

Competitor Analysis

Process of anticipating rivals’ actions.

Adam Smith on Collusion

Businesses rarely meet without conspiring against the public.

Game Theory

Analyzes strategic interactions among competing firms.

Industry Characteristics Supporting Collusion

Few firms, high entry barriers, and similar products.

Mutual Forbearance

Rivals avoid aggressive competition when they meet in multiple markets.

Resource Similarity and Market Commonality

High similarity increases competitive rivalry.

Resource‑Based Perspective Challenge

Understanding rivals exposes weaknesses that must be addressed.