Comm 1800 Ch 5
Terms
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- globalization
- the evolution of businesses from operating in single country to operating in many countries
- domestic businesses
- businesses that have a value chain that is totally domestic
- international businesse
- businesses whose value chains have evolved to include selected international inputs, processes, and outputs
- global businesses
- buisness where the inputs, processes and outputs come from are in and go to markets throughout the world
- multi-national businesses
- businesses that are internaional or global
- free trade
- buying and selling of products in markets that are free from government invervention
- conparative advantage
- businesses in different countries have an advantage in producing certain products over others
- outsourcing
- when a businesses uses another business to build or service all or part of its products
- off-shoring
- when a business uses foerign factors of productions instead of or in addition to domestic factors of prodcution
- licensing
- a company that owns intellectual property(licensor), grants another company the right to use that property (licensee)
- joint ventures
- occur when two or ore parties, typically businesses enter into a buisness relationship for a single enterprise or transaction
- franchising
- occurs when a businesses, called a franchisor, sells the right to use its names, processes, and products to antoehr businesses
- strategic alliance
- when businesses in different countries agree o help each tohe rpduce and or sell multiple products over time
- direct foreign investment (DFI)
- when businesses directly invests money into assets to conduct business in a different country
- culture
- beliefes and norms of a society
- government regulation
- plays a major part in selecting the method of doing businesses with different countries
- trade barriesr
- options to limit the operations of foreign businesses
- protectionism
- actions to limit the operations of foreign businesse
- embargo
- gov does not permit the importing and or exporting of a product within its borders
- quota
- permits selected products to be imported and or exported but limits the amounts
- tariffs
- taxes on foreign businesses at higher rates than domestic businesses
- foreign exchange (FX)
- the act of exchaning one country's currency for antoher
- foreign exchange rate
- rate to convert one currency into another currency
- bartering
- exchanging one product for antoher product
- depreciated
- currency declining in value
- appreciated
- currency increasing in value
- balance of payments
- summary of the economic transactions in a period between that country and other countries
- current account
- exports and imports, facor paymets, and transfer payments
- balance of trade/trade account
- exports less imports
- factor payments
- payment of interest and dividands
- capital account
- financial assets transfered from one country to another and the transfer orf ownsership from one country to antoehr
- financial account
- direct foreign investment, buying and selling long term financial assets, buy and selling of short term financial assets (debt)
- negative trade balance/trade deficit
- country is supplying more of its currency and demanding more of other currencites
- positive trade balance/trade surples
- a country is supplying less of its currency and demanding less of other currencies
- purchasing power parity
- theory that holds that inflation in a country hurts the value of that country's currency
- floating exchange rate system
- a government permits the price of its currency to be determined by a free market
- managed floating exchange rate system
- when government takes preventative actions to stop currency from appreciating of depreciating
- fixed exchange rate system
- one government fixes or pegs the exchagne rate of its currency to another country's currency
- export-import bank (ex-im bank)
- us government angergy that facilitates us exports
- Private export funding Corportaion (pefco)
- owned by a group of private us banks that lend money to foegin companies that import us products
- overseas private investment corporation (opic)
- us goverment agency that ecouraages us companies to invest in foregin countries