COMMERCE 1E03 - Chapter 5

Competing In Global Markets

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Side ASide B
Selling goods and services to another country
Buying goods and services from another company
The movement of goods and services among nations without political or economic obstruction
Free Trade
Theory that states that a country should sell to other countries those products that it produces most effectively and efficiently and buy from other countries those products that it...
Comparative Advantage Theory
The advantage that exists when a country has the ability to produce a particular good or service using fewer resources (and therefore at a lower cost) than another country
Absolute Advantage 
A nation's ratio of exports to imports
Balance of Trade
Occurs when the value of a country's imports exceeds that of its exports
Trade Deficit Unfavourable Balance of Trade
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military...
Balance of Payments
A global strategy in which a firm allows a foreign company to produce its product in exchange for a fee (a royalty)
A foreign country's production of private-label good to which a domestic company then attaches its brand name or trademark
Contract Manufacturing Outsourcing
A partnership in which two or more companies join to undertake a major project or to form a new company
Joint Venture
A long-term partnership between two or more companies established to help each company build competitive market advantages
Strateigic alliance
The buying of permanent property and businesses in foreign nations
Foreign Direct Investment
A company owned in a foreign company by the parent company
Foreign Subsidiary
An organization that manufactures and markets products in many different countries and has mutinational stock ownership and mltinational management
Multinational Corporation
The set of values, beliefs, rules, and institutions held by a specific group of people
An attidude that one's own culture is superior to all others
The value of one nation's currency relative to the currencies of other countries
Exchange Rate
Lowering the values of a nation's currency relative to other currencies
A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services
The use of government regulations to limit the import of goods and services
Trade Protectionism
Selling products in a foreign country at lower prices than tose charge in the producing country
A limit on the number of products in certain categories that a nation can import
Import Quota
A complete ban on the import or export of a certain product or the stopping of all trade with a particular country
A 1948 agreement that established an international forum for negotiating mutual regulations in trade restrictions
General Agreement on Tariffs and Trade
The international organization that replaced the General Agreement on Tariffs and Trade, and was assigned the duty to mediate trade disputes among nations
World Trade Organization 
An international bank that makes short-term loans to countries experiencing problems with their balance of trade
International Monetary Fund
An autonomous United Nations agency that borrows money from the more prosperous countries and lends it to less-developed countries to develop their infrastructure
World Bank
Organizations of commodity-producing countries that are formed to stabilize or increase prices to optimize overall profits in the long run
Producers' Cartels
A regional group of countries that have a common external tarriff, no internal tariffs, and a coordination of laws to facilitate exchange
Common Market
Agreement that created a free-trade area among Canada, the United States, and Mexico
North American Free Trade Agreement

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