Foundations of Business: Chapter 3 - Global Business

These flashcards cover key vocabulary and concepts from Chapter 3 of 'Foundations of Business', focusing on global business, international trade, and associated challenges and facilitators.

International business

All business activities that involve exchanges across national boundaries.

Absolute advantage

The ability to produce a specific product more efficiently than any other nation.

Comparative advantage

The ability to produce a specific product more efficiently than any other product.

Exporting

The process of selling and shipping raw materials or products to other nations.

Importing

The purchasing of raw materials or products in other nations and bringing them into one’s own country.

Balance of trade

The total value of a nation’s exports minus the total value of its imports over a specified period of time.

Trade deficit

A negative balance of trade when a country imports more than it exports.

Balance of payments

The total flow of money into a country minus the total flow of money out of that country over a specified period of time.

Multinational corporation

A firm that operates on a worldwide scale without ties to any specific nation or region.

Tariff

A tax levied on a particular foreign product entering a country.

Nontariff barrier

A nontax measure imposed by a government to favor domestic over foreign suppliers.

Import quota

A limit on the amount of a particular good that may be imported into a country during a given period of time.

Embargo

A complete halt to trading with a particular nation or of a particular product.

Trading company

An entity that provides a link between buyers and sellers in different countries.

Countertrade

An international barter transaction.

Licensing

A contractual agreement in which one firm permits another to produce and market its product and to use its brand name.

Joint venture

A partnership formed to achieve a specific goal or to operate for a specific period of time.

Direct investment

The firm builds or purchases manufacturing and other facilities in a foreign country to produce its own established products.

World Trade Organization (WTO)

A powerful organization that facilitates world trade among member nations by mediating disputes and reducing trade barriers.

General Agreement on Tariffs and Trade (GATT)

An international organization dedicated to reducing or eliminating tariffs and other barriers to world trade.

Economic community

An organization of nations formed to promote the free movement of resources and products among its members.

Export-Import Bank of the United States

An independent agency of the U.S. government that assists in financing the exports of American firms.

International Monetary Fund (IMF)

An international bank that makes short-term loans to developing countries experiencing balance-of-payment deficits.