International Trade: Key Concepts in Economics and Global Markets

Factors of production

International trade helps even out some of the resource imbalances among nations.

Reduced risk

Global trade reduces dependence on one economy, lowering the risk for multinational firms. Diversifying Portfolio

Inflow of innovation

International trade is a source of new ideas for companies.

Reduced Risk

A strategy to spread investments across various assets to diversify the portfolio.

Opportunity Cost

Giving up the second-best choice when making a decision.

Comparative advantage

The benefit a country has in a given industry when it can produce a product more efficiently than another nation with the same resources.

Absolute advantage

The benefit a country has in a given industry when it can make products at a lower cost than other countries.

Balance of trade

A basic measure of the difference in value between exports and imports of goods and services.

Trade surplus

Occurs when a nation's exports are higher than the total value of its imports.

Trade Deficit

A shortfall that happens when a nation's imports are higher than the total of its exports.

Exchange rates

A measurement of the value of a nation's currency against other nations.

Countertrade

Trading goods for goods, rather than money

Infrastructure

A country’s facilities that support economic activity

Sociocultural differences

Among cultures in languages, attitude, and finance

Tariffs

Taxes levied against imports

Quotas

Limitations on the amounts of specific products

Embargoes

Complete ban on international trade

Free trade

trading without tariffs, quotas, or embargoes

Business Ethics

Beliefs about right or wrong

Universal Ethical Standards

Ethical norms that apply all people across broad spectrum of situations

Whistle-Blowers

Employees who report their employers illegal or unethical behaviors usually anonymously

Code of Ethics

A formal, written document that defines the standards of an organization

Social Responsibility

A spectrum of ethical obligations of businesses to act in ways that benefit society and the environment

Stakeholders

Any groups that have a stake—or a personal interest—in the

performance and actions of an organization

Consumerism

A social movement that focuses on four key consumer
rights: (1) the right to be safe, (2) the right to be informed, (3) the right to choose, and (4) the right to be heard

Social Audit

A systematic evaluation of how well a firm is meeting its ethics
and social responsibility goals

Corporate Philanthropy

All business donations to nonprofit groups, including money,
products, and employee time

Cause-related marketing

Marketing
partnerships between
businesses and nonprofit
organizations, designed
to spike sales for the
company and raise
money for the nonprofit

Corporate Responsibility

Business contributions to
the community through
the actions of the
business itself rather
than donations of money
and time

Communication

The transmission of relevant information between a sender
and a recipient

Noise Barriers

Any interference that causes the message you send to be different from
the message your audience understands

Intercultural communication:

Communication among people with differing
cultural backgrounds

Nonverbal Communications

Communication that does not use words

Communication Barrier

Obstacles to effective communication, typically
defined in terms of physical, language, body language, cultural, perceptual, and
organizational barriers