Chapter 7: Global Business Vocabulary Flashcards

A set of 100 vocabulary flashcards covering the key concepts, organizations, and economic principles of global business as presented in Chapter 7 notes.

Globalization

The process of increasing economic and social integration between countries, and the increased flow of goods, services, and people across borders.

Absolute Advantage

A situation where a nation is the only source of a particular product or can make more of a product using fewer resources than other countries.

Comparative Advantage

Exists when a country can produce a product at a lower opportunity cost compared to another nation.

Opportunity Cost

The value of the next best alternative that must be given up to obtain something that is desired.

Balance of Trade

A calculation determined by subtracting the value of a country's imports from the value of its exports.

Trade Surplus

A favourable balance of trade that occurs when a country sells more products than it buys.

Trade Deficit

An unfavourable balance of trade that occurs when a country buys more products than it sells.

Deficit

When a government spends more money than it receives in revenue over a period of time.

Balance of Payments

The difference, over a period of time, between the total flow of money coming into a country and the total flow of money going out.

Current Account

A group of balance of payments accounts that records transactions in goods, services, primary income, and secondary income.

Capital and Financial Account

A group of balance of payments accounts that records capital transfers, acquisition or disposal of nonproduced, nonfinancial assets, and transactions in financial assets and liabilities.

Importing

The process of buying products overseas and reselling them in one's own country.

Exporting

The process of selling domestic products to foreign customers.

Customs

The process of declaring and paying taxes on imported goods.

International Licensing Agreement

An arrangement that allows a foreign company to sell the products of a producer or use its intellectual property in exchange for royalty fees.

Licensee

The foreign company that receives permission to sell products or use intellectual property under a licensing agreement.

Licensor

The producer that grants permission to a foreign company to use its intellectual property or sell its products.

Royalty Fees

Payments made to a licensor, often as a percentage of sales or a fixed amount per unit, in exchange for using intellectual property.

International Franchise Agreement

An arrangement where a franchiser grants a foreign franchisee the right to use its brand name and sell its products or services.

Master Franchisee

A third party in international franchising that is given the rights to open company-owned outlets and sub-franchise in a specific country or region.

Outsourcing

The practice of using foreign skilled labour to perform various business services such as software development or accounting.

Contract Manufacturing

A form of outsourcing where a domestic company identifies a foreign company to manufacture its products while retaining control of product design.

Strategic Alliance

An agreement between two companies or a company and a nation to pool resources to achieve business goals that benefit both partners.

Joint Venture

A collaborative arrangement where two or more companies form a new, independent legal entity to pursue a specific project, sharing ownership and risks.

Strategic Equity Alliance

A partnership where one company buys equity in another, or both buy equity in each other.

Non-equity Strategic Alliance

A partnership where two companies share resources and proprietary information without exchanging equity.

Foreign Direct Investment (FDI)

The formal establishment of business operations on foreign soil, such as building factories or sales offices to serve local markets.

Offshoring

Occurs when facilities in a foreign country replace domestic manufacturing facilities to produce goods that are sent back to the home country for sale.

Foreign Subsidiary

An independent company located in a foreign country that is owned by a parent firm.

Parent Company

A firm that owns and maintains control over a foreign subsidiary.

Foreign Acquisition

The purchase of a substantial ownership stake, typically $10\%$ or more, in a business located in another country.

Merger

A business relationship where two or more companies combine to form a single new legal entity with unified control and ownership.

Multinational Corporation (MNC)

A company that operates in many countries and often decentralizes decision-making to be sensitive to local market conditions.

Standardization

The practice of offering a single unified product globally to keep costs down and maintain a consistent brand image.

Adaptation

The practice of delivering a modified version of a product that considers local cultural, legal, and regional requirements.

Glocal

A term describing a company that retains global branding while making regional changes to its products or menu.

Cultural Environment

The set of factors, including shared beliefs, values, and customs, that shape how people interact within a society.

Culture

The system of shared beliefs, values, customs, and behaviours that govern the interactions of members of a society.

CQ (Cultural Quotient)

A measure used to determine professional success based on an individual's level of cultural intelligence.

High-context Culture

A culture that relies heavily on implicit messages, body language, and context for communication.

Low-context Culture

A culture that prioritizes explicit verbal communication and clarity.

Losing Face

A cultural concept involving embarrassment or loss of credibility, often avoided in indirect communication styles.

Economic Development

The process of improving the well-being of citizens by increasing income, reducing poverty, and expanding access to healthcare and education.

Upper-middle Income Countries

A World Bank income category for nations with an annual income per citizen between $\$4,516$ and $\$14,005$.

Lower-middle Income Countries

A World Bank income category for nations with an annual income per citizen between $\$1,146$ and $\$4,515$.

Infrastructure

A country's basic systems of communications, transportation, energy, and social facilities like schools and hospitals.

Foreign Exchange Rate

The value of one currency relative to another, determining how much of one currency is received in exchange for another.

Corruption of Foreign Public Officials Act (CFPOA)

Canadian law that prohibits the distribution of bribes and other favors to foreign officials in the conduct of business.

Corruption

Defined by Transparency International as the abuse of entrusted power for private gain.

Corruption Perceptions Index (CPI)

An annual rating by Transparency International that scores nations on a scale of $0$ (highly corrupt) to $100$ (very clean).

Trade Controls

Policies such as tariffs or quotas used by governments to restrict free trade.

Subsidies

Government payments given to domestic producers to help offset production costs and make their goods more competitive against imports.

Protectionism

The use of trade controls to protect domestic industries by reducing foreign competition.

Tariffs

Taxes imposed on imports to raise their price and make them less competitive while generating government revenue.

Quota

A trade limit that imposes restrictions on the quantity of a good that can be imported over a specific period.

Absolute Quota

A trade restriction that fixes a specific upper limit on the amount of a good that can be imported during a given period.

Tariff-rate Quota

A trade policy that permits the import of a specified quantity at a lower rate and then adds a high tax once the limit is reached.

Embargo

An extreme form of quota that bans the import or export of certain goods to or from a specific country for economic or political reasons.

Dumping

The practice of selling exported goods below the price producers charge in their home markets or below the cost of production.

General Agreement on Tariffs and Trade (GATT)

A $1947$ agreement that encouraged free trade by regulating and reducing tariffs among twenty-three nations.

World Trade Organization (WTO)

An organization based in Geneva that encourages global commerce, enforces trade rules, and provides a forum for resolving disputes.

International Monetary Fund (IMF)

An organization that loans money to countries with troubled economies on the condition that they institute financial and economic reforms.

World Bank

A source of economic assistance that provides loans, grants, and guarantees to poor and developing countries for social and infrastructure projects.

Trading Bloc

A group of countries that have joined together to allow goods and services to flow without restrictions across their mutual borders.

USMCA (CUSMA)

A free trade agreement between the United States, Mexico, and Canada that replaced NAFTA in July $2020$.

European Union (EU)

A unique economic and political union between $27$ countries that has eliminated internal trade barriers and enforced common tariffs.

Euro

A common currency adopted by most members of the European Union to facilitate trade and finance.

Eurozone

A group of countries within the European Union that have replaced their national currencies with the euro.

CPTPP

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade agreement among $11$ member countries aimed at increasing trade in Asia Pacific.

CETA

The Canadian-European Union Comprehensive Economic and Trade Agreement, which eliminates $98\%$ of tariffs on Canadian goods.

Mercosur

A trading bloc and customs union consisting of Argentina, Brazil, Paraguay, and Uruguay with which Canada resumed trade negotiations in $2023$.

Economies of Scale

The cost advantages that businesses achieve by increasing production, resulting in lower average costs per unit.

GDP (Gross Domestic Product)

A measure of the total value of goods and services produced within a nation over a specific period.

Federal Debt (Canada)

The difference between total liabilities and total assets of the federal government, which stood at $\$1,236.2\text{ billion}$ as of March $31, 2024$.

Federal Debt-to-GDP Ratio

The ratio of a government's debt to its gross domestic product, recorded at $42.1\%$ for Canada in $2024$.

Investment Income Surplus

An increase in the current account balance caused by higher profits earned by domestic investors abroad compared to payments made to foreign investors.

Trade in Goods Deficit

A situation where the value of imported merchandise exceeds the value of exported merchandise, recorded at $\$6.9\text{ billion}$ for Canada in $2024$.

Trans Mountain Pipeline Expansion

A project completed in May $2024$ that significantly increased Canada's exports of crude oil.

Inward Investment

Capital investment by multinational corporations into developing economies, which creates foreign currency and jobs.

Repatriating Profits

The practice by multinational corporations of sending profits back to their home countries rather than reinvesting them in host nations.

Monopolistic Practices

Business tactics used by large MNCs to dominate markets and push smaller, local businesses out of competition.

Body by Fisher

An American auto-body company slogan that was humorously mistranslated in Belgium as "Corpse by Fisher."

Chevy Nova

A car model that struggled in Puerto Rico because its name translates to "it doesn't go" in Spanish.

High-income Countries

World Bank category for nations with an annual income per citizen of $\$14,005$ or higher.

Low-income Countries

World Bank category for nations with an annual income per citizen of $\$1,145$ or less.

Transparency International

An organization that reports on global corruption and publishes the annual Corruption Perceptions Index.

Punitive Tariffs

Retaliatory taxes imposed by governments to drive up the price of imported goods suspected of being dumped.

EEC (European Economic Community)

The organized effort to integrate Europe's economic entities starting in the late $1950s$, which later became the European Union.

Fiscal Anchor

A government's policy goal, such as Canada's commitment to reducing the federal debt as a share of the economy over the medium term.

GATT Reduction Success

The achievement of substantial reductions in tariffs and quotas before being succeeded by the WTO in $1995$.

IMF Relieving Mexico

An example of conditional financial relief in the $1980s$ that required Mexico to privatize industries and deregulate.

World Bank Donor Countries

Wealthy nations including Canada, the US, Japan, Germany, and the UK that back economic assistance programs.

EU Passport Mobility

The right of individuals possessing an EU passport to work in any member nation of the European Union.

Legacy Currencies

Currencies that some EU members, like Denmark, chose to keep instead of adopting the euro to maintain financial independence.

Vodafone Idea Limited

A major telecommunications company created by the cross-border merger of Vodafone Group (UK) and Idea Cellular (India).

SIA and TATA

Two companies that entered a joint venture to form Vistara Airlines in India.

Gigafactory Strategic Alliance

A collaboration between Tesla and Panasonic to build a large-scale battery manufacturing plant in the United States.

Walmart and Flipkart Acquisition

A $2018$ transaction where Walmart acquired a $77\%$ majority stake in an Indian e-commerce platform for $\$16\text{ billion}$.

Japan Trade Surplus Paradox

A historical situation where high growth was driven by exports, while domestic consumers faced artificially high prices for Japanese-made goods.

Total World Trade Value (2023)

The combined value of merchandise and commercial services trade, which was $\$30.5\text{ trillion}$ in $2023$.