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Comm 1800 Ch 5


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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
when a businesses uses another business to build or service all or part of its products
when a business uses foerign factors of productions instead of or in addition to domestic factors of prodcution
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
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
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
actions to limit the operations of foreign businesse
gov does not permit the importing and or exporting of a product within its borders
permits selected products to be imported and or exported but limits the amounts
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
exchanging one product for antoher product
currency declining in value
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

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