Chapter 2: Doing Business in Global Markets

Flashcards covering key vocabulary and definitions from a lecture on doing business in global markets.

Importing

Goods that we bring into a country because we don't have them there.

Exporting

Goods that we have an abundance of and sell to other countries.

Free Trade

Movement of goods and services among nations without political or economic barriers.

Balance of Trade

Total value of a nation's exports compared to its imports over a particular period.

Trade Surplus

Favorable balance of trade; value of a country's exports exceeds that of its imports.

Trade Deficit

Unfavorable balance of trade; value of a country's imports exceeds that of exports.

Dumping

Used to reduce surplus products in a foreign market to gain a foothold in the market.

Licensing

Global strategy in which a firm (licensor) allows a foreign company (licensee) to produce its product in exchange for a royalty.

Franchising

Contractual agreement where someone with a good idea for a business sells others the rights to use the business name to sell a product or service in a given territory for a specified manner.

Foreign Direct Investment

Buying of permanent property and businesses in foreign nations.

Foreign Subsidiary

Company owned in a foreign country by another company (parent company).

Multinational Corporations

Firms that have manufacturing capacity or some other physical presence in different countries.

Ethnocentricity

The belief in the inherent superiority of one's own ethnic group or culture.

Exchange Rate

The value of one nation's currency relative to another.

Tariff

A tax on imports, making the imported good more expensive.

Protective Tariffs

Raise the retail price of the import so the domestic goods are competitively priced.

Revenue Tariffs

Raise money for the government.