MKTG 14th Edition - Chapter 5: Developing A Global Vision

Vocabulary flashcards covering key terms, economic theories, institutions, international agreements, and market-entry methods from Chapter 5: Developing A Global Vision.

Global marketing

Marketing that targets markets on a worldwide scale.

Global vision

Recognizing and reacting to international marketing opportunities, using effective global marketing strategies, and being aware of threats from foreign competitors in all markets.

Absolute advantage

When a country can produce a product or service at a lower cost than any other country or when it is the only country that can provide the product or service.

Principle of comparative advantage

The economic principle that each country should specialize in the products or services that it can produce most readily and cheaply and trade those products or services for goods and services that foreign countries can produce most readily and cheaply.

Free trade

A policy of permitting individuals and businesses in a country to buy and sell in other countries without restrictions.

Protectionism

An economic policy where a nation protects its home industries from foreign competitors by establishing artificial barriers, such as tariffs and quotas.

Gross domestic product (GDP)

The total market value of all final goods and services produced in a country for a given time period.

Outsourcing

Sending U.S. jobs abroad.

Inshoring

Returning production jobs to the United States.

Multinational corporation

A company that is heavily engaged in international trade, beyond exporting and importing, typically moving resources, goods, services, and skills across national boundaries.

Capital intensive

Using more capital than labor in the production process.

Global marketing standardization

Production of uniform products that can be sold the same way all over the world.

Multidomestic strategy

A strategy in which multinational firms enable individual subsidiaries to compete independently in domestic markets.

Balance of trade

The difference between the value of a country's exports and the value of its imports over a given period.

Balance of payments

The difference between a country's total payments to other countries and its total receipts from other countries.

Tariff

A tax levied on the goods entering a country.

Quota

A limit on the amount of a specific product that can enter a country.

Boycott

The exclusion of all products from certain countries or companies.

Exchange control

A law compelling a company earning foreign exchange (money) from its exports to sell it to a control agency, usually a central bank.

Market grouping

Occurs when several countries agree to work together to form a common trade area that enhances trade opportunities.

Trade agreement

An agreement designed to stimulate international trade.

MERCOSUR

The largest Latin American trade agreement; full members include Argentina, Brazil, Paraguay, and Uruguay.

United States – Mexico – Canada Agreement (USMCA)

A free trade agreement between the United States, Mexico, and Canada that replaces the North American Free Trade Agreement (NAFTA).

World Trade Organization (WTO)

A trade organization with $164$ nations established in 1995 that replaced the General Agreement on Tariffs and Trade (GATT) to foster global trade.

Uruguay Round

A trade agreement designed to dramatically lower trade barriers worldwide; it created the World Trade Organization (WTO) and the principle of 'most favored nation.'

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

A trade agreement between Canada and $10$ Asia-Pacific countries: Australia, Brunei Darussalam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

Regional Comprehensive Economic Partnership (RCEP)

A trade agreement launched in 2022 with $15$ member countries across the Asia-Pacific region, seven of which are also members of the CPTPP.

Pacific Alliance

A single region established for the free movement of goods, services, investment, capital, and people between Chile, Colombia, Mexico, and Peru.

Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)

A trade agreement instituted in 2005 that includes Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States.

European Union (EU)

A free trade zone encompassing $27$ European countries.

World Bank

An international bank that offers low-interest loans, advice, and information to developing nations.

International Monetary Fund (IMF)

An international organization that acts as a lender of last resort, providing loans to troubled nations, and works to promote trade through financial cooperation.

Group of Twenty (G20)

A forum for international economic development that promotes discussion between industrial and emerging-market countries on key issues related to global economic stability.

Risk Levels for Five Methods of Entering the Global Marketplace

The progression of foreign entry strategies from lowest risk and lowest return to highest risk and highest return: Exporting, Licensing, Contract manufacturing, Joint venture, and Foreign direct investment.

Exporting

Selling domestically produced products to buyers in other countries; it represents the least complicated and least risky global entry strategy.

Buyer for export

An intermediary in the global market that assumes all ownership risks and sells globally for its own account.

Export broker

An intermediary who plays the traditional broker's role by bringing buyer and seller together.

Export agent

An intermediary who acts like a manufacturer's agent for the exporter and resides in the foreign market.

Licensing

The legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge.

Contract manufacturing

Private-label manufacturing by a foreign company producing products to the domestic firm's specifications under the domestic brand name.

Joint venture

When a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity.

Foreign direct investment (FDI)

A business investment in a foreign country, either by establishing active business operations or by acquiring business assets in that country.

Exchange rate

The price of one country's currency in terms of another country's currency.

Floating exchange rates

A currency system in which prices of different currencies move up and down based on the demand for and the supply of each currency.

Dumping

The sale of an exported product at a price lower than that charged for the same or a like product in the 'home' market of the exporter.

Countertrade

A form of trade in which all or part of the payment for goods or services is in the form of other goods or services.