IBT Quiz 1

Vocabulary flashcards covering core terms, concepts, and business models for International Business and Trade Quiz 1 Prelims.

Economic Machine

A system that continuously produces goods, services, jobs, and income, helping the economy grow and function efficiently.

Economic Booster

Something that helps improve a country's economy by increasing business activities, investments, trade, or employment.

Engine of Growth

International business and trade comprise almost half of the global economic activity, that is why it is referred to as an “engine of growth.”

Growth Booster

A factor or activity that speeds up the growth of a business or an economy by creating more opportunities and increasing productivity.

International Business and Trade

involve the (1) buying, (2) selling, or (3) exchanging of (1) goods, (2) services, (3) capital, (4) labor, (5) resources, (6) ideas or (7) technology across national borders to (1) expand markets, (2) acquire resources, and (3) manage risks in a globalized economy.

International Business

refers to the operations of companies that conduct economic activities across national borders, including the (1) production, (2) purchase, and (3) sale of goods and services in multiple countries.

Minimizing Risks

Operating in multiple countries helps stabilize revenue and reduce the impact of local economic fluctuations. It spreads risk by spreading it across different markets, such that loss in one is offset by gain in another.

Expanding Markets

Accessing larger markets increases potential customers and revenue.

Diversification

process of a business enlarging or varying its range of products or field of operation.

Acquiring Resources

Firms seek foreign capital, technology, and raw materials that may be unavailable or more costly domestically.

Glocalization

While global markets converge in tastes and preferences, differences in culture, legal systems, and economic conditions require companies to localize products and strategies to fit specific markets.

Globalization

merges separate national markets into a global marketplace, standardizing products and sourcing worldwide to optimize costs.

Merging

The process of combining two or more separate markets, businesses, or organizations into one larger and more connected system.

Trade

International trade specifically involves the exchange of goods and services between countries, typically through imports and exports.

Business

An organization or activity that produces, buys, or sells goods and services to earn a profit.

Interdependence

Means that different countries, societies, economies, and people are depend with one another.

Interconnectedness

Means that different countries, societies, economies, and people are connected with one another.

Importing

The one doing the this is the importer who buys the products.

Exporting

selling products to a foreign market. The exporter is the one selling the product.

Direct Exporting

Companies directly sell their products to foreign customers. They handle logistics, distribution, and marketing themselves.

Indirect Exporting

Businesses collaborate with intermediaries such as export agents, distributors, or trading companies. These intermediaries have local expertise and networks.

Direct Importing

Companies directly purchase goods or services from foreign suppliers. They handle logistics, customs, and compliance.

Direct Investment

allows companies to have full control over their operations in foreign markets. By establishing subsidiaries or acquiring existing businesses, companies can tap into local resources, gain market knowledge, and build strong relationships with customers and suppliers.

Foreign Direct Investment

means that a firm is investing assets directly into a foreign country’s buildings, equipment, or organization. It is a long-term investment by an individual, company, or government from one country into a business in another country, typically involving at least $10\%$ ownership and active management control.

International Investing

refers the allocation of funds in assets, securities, or projects outside one's home country, aiming to diversify portfolios and capture opportunities in global markets.

Countertrade

This involves exchanging goods or services (barter) instead of using traditional currency.

E-trading

the buying and selling of financial instruments online through internet-connected platforms, replacing traditional floor and phone trading.

E-commerce

Initially, it was primarily about online retail, where consumers could purchase products over the internet. However, it has now expanded to include services, subscriptions, digital downloads, and even virtual goods.

Franchising

a contractual arrangement in which the franchisor permits the franchisee to use the business model or brand name for an initial fee and ongoing royalties, to conduct business as an independent branch of the franchisor.

Licensing

a contractual arrangement where the licensor sells the right to use intellectual property or manufacture a product to the licensee for royalty or fees.

Joint Venture

joint undertaking, much like a partnership, entered into by two or more parties, which otherwise retain their distinct identities. It is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or project.

Branch

office in another location. An international branch is an office in a foreign country.

Wholly-owned Subsidiary

a company whose common stock is $100\%$ owned by the parent company.

Greenfield Investment

when a company builds a brand-new venture in another country without relying on any existing structures.

Brown-field Investment

use existing structures.

Technology Transfer

the process of converting results stemming from scientific and technological research to the market place and to wider society along with associated skills and procedures.

Labor Migration

citizens of one country goes to another country to work.

Merger and Acquisition

In this model, companies acquire existing businesses in the target market. It provides a faster entry into the market and access to an established customer base, distribution networks, and intellectual property.

B2C (Business-to-Consumer)

This model involves selling products or services directly to individual consumers.

C2C (Consumer-to-Consumer)

Platforms like eBay enable individuals to buy and sell directly to each other.

B2B (Business-to-Business)

Here, businesses sell to other businesses.

Freemium Models

Basic services are free, but users pay for premium features.

Platform-as-a-Service (PaaS)

Companies provide infrastructure and tools for others to build and deploy applications.

Subscription Models

Companies offer recurring services or content for a subscription fee.

Marketplace Models

Platforms connect buyers and sellers.