International Business and Trade

A comprehensive vocabulary flashcard set covering foundational international business topics including trade theories, global business environments, political economy, and economic systems.

International Business

All commercial activities that take place between two or more countries involving the global exchange of goods, services, capital, technology, information, and human resources.

Scope of International Business

The broad range of activities comprising international trade, FDI, licensing, franchising, international marketing, finance, and global supply chain management.

International Trade

The exchange of goods and services between countries through exports and imports.

Exporting

Selling products manufactured or produced in one country to foreign markets.

Importing

Purchasing goods or services from other countries for use in the domestic market.

Foreign Direct Investment (FDI)

An investment made when a company establishes or acquires foreign business operations in another country.

Licensing and Franchising

Business arrangements where companies permit foreign firms to use their products, trademarks, or business models.

International Marketing

Promoting products and services across different countries while adapting strategies to local cultures and consumer preferences.

International Finance

The field of managing international monetary payments, foreign investments, exchange rates, and associated financial risks.

Global Supply Chain Management

Managing raw material movements, manufacturing, warehousing, transport, and product distribution across multiple countries.

Cross-border transactions

Commercial activities that cross national boundaries between two or more countries.

Multiple currencies

A characteristic of international business where transactions require handling and managing different national monetary systems.

Cultural diversity

A feature of international business requiring adaptation to diverse societal norms, languages, and values across nations.

Different legal systems

The varied legal frameworks and regulatory rules that firms must comply with across individual operating nations.

Greater business risks

Elevated exposure to political, financial, legal, and operational uncertainties when conducting cross-border operations.

Larger market opportunities

Expanded sales growth potential achieved by extending business operations beyond domestic borders.

Government regulations

Rules, policies, and trade restrictions set by authorities that govern cross-border commercial operations.

Larger customer base

An advantage of international business providing access to consumers beyond local national markets.

Technology transfer

The introduction and adoption of modern production technologies, machinery, and management systems across borders.

Language barriers

Communication obstacles resulting from different native languages spoken across foreign markets.

Currency fluctuations

Unpredictable changes in exchange rates between national currencies that create financial risk.

Political instability

Uncertainty or disruption in government governance that can result in business interruptions or investment losses.

Trade restrictions

Government measures such as tariffs, quotas, and embargoes that constrain cross-border commerce.

Transportation costs

Expenses tied to shipping raw materials and finished goods over extended international supply routes.

Philippine export earnings

Foreign exchange revenue generated by selling Philippine goods and services abroad.

Business Process Outsourcing (BPO)

A major Philippine service export sector providing external operational processes to foreign clients and employing millions.

Electronics manufacturing

An export industry highlighted as a major source of job creation and foreign exchange in the Philippines.

Saudi Arabia petroleum export example

An illustration of resource specialization where Saudi Arabia exports oil due to abundant natural petroleum reserves.

San Miguel products example

An example of market expansion where a company sells its goods in multiple foreign countries.

Sustainable development

International cooperation promoting responsible production, environmental protection, and inclusive economic growth.

Domestic business

Commercial activities conducted entirely within the geographic borders of a single country.

Familiar laws

An advantage of domestic business where management operates within well-understood national legal codes.

Lower transportation costs

A benefit of domestic trade resulting from shorter shipment routes within local boundaries.

Absolute Advantage Theory

Theory introduced by Adam Smith (1776) stating countries should specialize in producing goods they make more efficiently with fewer resources.

Adam Smith

The economist who published The Wealth of Nations (1776) and formulated Absolute Advantage Theory.

The Wealth of Nations (1776)

The seminal 1776 work by Adam Smith introducing absolute advantage and economic specialization concepts.

Comparative Advantage Theory

Theory developed by David Ricardo (1817) stating countries should specialize in goods with the lowest opportunity cost.

David Ricardo (1817)

The economist who established the Comparative Advantage Theory in 1817.

Opportunity cost

The trade-off or foregone output of alternative goods when allocating production resources.

Heckscher-Ohlin (H-O) Theory

Trade theory stating countries export goods using their abundant factors of production and import goods using scarce factors.

Eli Heckscher

Swedish economist who co-developed factor endowment theory alongside Bertil Ohlin.

Bertil Ohlin

Swedish economist who co-developed the Heckscher-Ohlin Theory based on national resource availability.

Factors of Production

The basic resource inputs required for production: land, labor, capital, and entrepreneurship.

Land

A factor of production representing all natural resources utilized in the creation of goods.

Labor

A factor of production representing human efforts, technical skills, and workforce participation.

Capital

A factor of production comprising tools, machinery, facilities, and financial assets used in manufacturing.

Entrepreneurship

A factor of production organizing land, labor, and capital to innovate and undertake commercial risks.

Resource endowments

The distinct set and quantity of natural, human, and capital factors available to a nation.

Labor-Abundant Country

A nation with an extensive workforce relative to capital that specializes in labor-intensive goods.

Capital-Abundant Country

A nation with rich financial assets and machinery relative to workforce size that specializes in capital-intensive goods.

Labor-Abundant Country Examples

Vietnam, Bangladesh, and the Philippines, identified as exporting labor-intensive products and services.

Capital-Abundant Country Examples

Japan, Germany, and the United States, identified as exporters of capital-intensive goods.

New Trade Theory

Theory developed by Paul Krugman (1979-1980s) attributing trade to economies of scale, product differentiation, and early market entry.

Paul Krugman (1979-1980s)

The economist who pioneered New Trade Theory in the late 1970s and 1980s.

Economies of Scale

The economic principle where mass production lowers the average cost incurred per individual unit.

Toyota production example

An illustration of economies of scale where manufacturing millions of vehicles lowers unit production costs.

First-Mover Advantage

The early market edge gained by pioneer firms via brand awareness, customer loyalty, and distribution control.

Brand recognition

A first-mover advantage where early market entrants build initial consumer identity and high awareness.

Customer loyalty

A competitive benefit where early market entrants retain consistent consumer preference and repeat demand.

Distribution networks

Established supply and sales channels secured by early market entrants to limit competitor access.

Market dominance

A state where a first-mover firm commands a commanding share of an industry or sector.

Apple smartphone example

An illustration of first-mover advantage achieved through early leadership and continuous mobile innovation.

Product Differentiation

Designing distinctive features and branding to satisfy varied consumer tastes across diverse market segments.

Competitive Advantage Theory

Theory developed by Michael Porter (1990) stating national success relies on firm innovation, productivity, and strategy.

Michael Porter (1990)

The economist who introduced Competitive Advantage Theory and Porter's Diamond Model in 1990.

Porter's Diamond Model

A framework outlining four determinants of national competitive advantage: factor, demand, supporting industry, and firm strategy conditions.

Factor Conditions

A determinant in Porter's model covering a country's skilled workforce, infrastructure, technology, and capital resources.

Demand Conditions

A determinant in Porter's model where sophisticated local consumers compel domestic companies to continuously innovate.

Related and Supporting Industries

A determinant in Porter's model referring to competitive local supplier networks that enhance industry performance.

Firm Strategy, Structure, and Rivalry

A determinant in Porter's model describing how local market competition drives innovation and organizational efficiency.

Economic Environment

The prevailing economic systems, conditions, and factors affecting business activities, purchasing power, and market potential.

Economic System

A malleable structure designed to regulate resource allocation, production, exchange, and distribution within a region.

Market Economy

An economic system driven by private business ownership and supply and demand pricing with minimal government intervention.

Command Economy

An economic system where a central government fully controls production, resource allocation, and pricing.

Mixed Economy

An economic system combining private business enterprise with government regulation, adopted by most countries.

Gross Domestic Product (GDP)

The combined economic value of all goods and services produced internally within a nation.

Indicators of growing GDP

Economic outcomes reflecting a strong economy, employment expansion, consumer spending growth, and enhanced business potential.

Inflation

The ongoing general increase in prices for consumer goods and commercial services.

Effects of inflation

Business challenges including higher production overhead, decreased consumer purchasing power, rising wages, and falling demand.

Exchange rate

The exact measure of a local currency's value relative to a target foreign currency.

Interest rates

The cost charged for borrowing capital, directly shaping enterprise loan decisions and consumer spending levels.

Infrastructure

The fundamental physical systems including roads, seaports, airports, electricity grids, internet networks, and telecommunications.

Tariffs

Taxes specifically assessed by governments on cross-border imported items.

Quotas

Government limits that cap the allowed quantitative volume of incoming imported products.

Embargoes

Complete political trade bans placed on doing commercial business with target foreign nations.

Free Trade Agreements

Pacts between nations designed to lower or eliminate mutual international trade barriers.

Political Risk

Operational uncertainty and financial exposure resulting from changes or actions in state governance.

Labor Laws

Legal regulations protecting worker rights, defining standard minimum wages, and guaranteeing safe work environments.

Environmental Laws

State regulations governing industrial pollution standards, waste handling, and sustainable business management.

Consumer Protection Laws

Statutes guaranteeing physical product safety, truth in marketing, and mandated clear product labeling.

Intellectual Property Laws

Legal measures designed to shield patents, registered copyrights, distinctive trademarks, and trade secrets.

Competition Laws

Regulatory laws prohibiting commercial monopolies, illegal price fixing schemes, and anti-competitive trade practices.

Cultural and Social Environment

The collection of values, customs, languages, religions, traditions, educational levels, and lifestyles shaping a society.

Cultural element: Language

A socio-cultural factor determining local marketing translations, product labeling, and successful commercial negotiations.

Cultural element: Religion

A social driver influencing regional dietary habits, official calendar holidays, workplace attire, and daily business practices.

Cultural element: Values and Beliefs

Core societal principles that fundamentally guide buyer behavior, product perception, and consumer choices.

Cultural element: Customs and Traditions

Local social conventions and ancestral practices that cross-border organizations must respect to maintain operations.

Cultural element: Education

A societal factor impacting local workforce talent levels, operational productivity, technical adoption, and buyer awareness.

Cultural element: Lifestyle

Living habits, personal routines, and social patterns that directly shape market purchasing trends.

Political Economy

A nation's government system studying how real-world history, culture, and social customs interact with economic theories.