Globalization & Trade Agreements
What is globalization?
The process by which the world economy is becoming a single interdependent system.
Define imports and exports.
Imports = products brought in from abroad; Exports = products sold abroad.
What is a licensing agreement?
Allowing a foreign company to produce/sell your product using your brand or process.
What is culture in a business context?
Shared system of symbols, values, and beliefs of a people or country.
What is protectionism?
Protecting domestic businesses by limiting imports.
What is the purpose of the WTO?
To help member nations negotiate trade agreements and resolve trade disputes.
What is a positive balance of trade?
When a country exports more than it imports.
Define foreign direct investment.
Buying or establishing tangible assets in another country.
What is social orientation?
Belief about the importance of the individual vs. the group.
What is a quota?
A government-imposed limit on the amount of a product that can be imported.
Name two benefits of globalization.
Lower prices for consumers, wider product availability.
What is absolute advantage?
When a country can produce a product more efficiently than others.
What’s the difference between international and multinational firms?
Multinational firms operate fully in multiple countries; international firms primarily remain in one.
Define power respect.
Accepting authority because of one’s position in the hierarchy.
What is a subsidy?
Government payments to support domestic industries.
What does the EU aim to do economically?
Eliminate tariffs, quotas, and unify trade among member nations.
What are exchange rates?
The rate at which one nation’s currency is exchanged for another’s.
What is outsourcing?
Paying external companies (often abroad) to handle certain business functions.
What is uncertainty orientation?
Degree to which people are uncomfortable with ambiguity.
Define dumping.
Selling products in another country below cost to gain market share.
How does the World Bank support global economies?
Provides funding and resources to developing countries for economic development.
Name the 4 factor conditions contributing to national competitive advantage.
Labor, capital, entrepreneurs, physical resources.
Name two questions to ask before going international.
Is there a market? Can we adapt our product? Can we navigate the legal environment?
What is the difference between aggressive and passive goal orientation?
Aggressive = focus on material success; Passive = focus on relationships and quality of life.
What is a cartel?
A group of producers who control supply and pricing of a product.