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Global business

Any activity that seeks to provide goods and services to others across national borders at a profit


Selling products to another country


Buying products from another country

Free trade

The movement of goods and services amongs nations without political or economic trade barriers

Global trade

The exchange of goods and services across national borders

Comparative advantage theory

A 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 cannot products as effectively or efficiently

Absolute advantage

The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries

Balance of trade

The total value of a nation's exports compared to its imports measured over a particular period

Trade surplus

A favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports

Trade deficit

An unfavorable balance of trade; occurs when value of a country's imports exceeds that of its exports

Balance of payments

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, foregin aid, military expenditures, and foreign investment


Selling products in a foreign country at lower prices than those charged in the producing country

Gray market

The flow goods in a distribution channel or channels other than those intended by the manufacturer or licensor

Trade protectionism

The use government regulations to limit the import of goods and services


A tax on imports

Harmonized tariff schedule

A schedule of costs for every product from every country that is published by the U.S. government

Import quota

A protectionist policy that limits the number of products in certain categories that a natin can import


A complete ban on the import or export of a certain product o the stopping of all trade with a particular country

Nontariff barriers

Restrictive standards that details exactly how a product must be sold in a country

General agreement on tariff and trade (GATT)

A 1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions

World trade orgaization (WTO)

The international organization that replaced the General Agreement on Tariffs and Trade and was assigned the duty of mediating trade disputes among nations

Common market (trading bloc)

A regional group of countries that have a common external tariff, no internal tariffs, and coordinated laws that aid trade among member countries

European union (EU)

A agreement among European member countries to eventually reduce all barriers to trade and become unified, both economically and politically

The organization of the petroleum exporting countres (OPEC)

An organization of 13 oil producing nations that work together to protect their interests

North american free trade agreement (NAFTA)

An agreement that created a free trade area among the United State, Canada,and Mexico


A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty)

Contract manufacturing

A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing

Join venture

A partnership in which two or more companies (often from different countries) undertake a major project

Greenfield investment

A form of foreign direct investment in which a company builds factories and offices in a foreign country on its own

Strategic alliance

A long term partnership between two or more companies established to help each company build competitive market advantage

Foreign direct investment (FDI)

The buying of permanent property and business in foreign nations

Foreign subsidiary

A company owned in a foreign country by another company,called the parent company


When a host government takes over a foreign subsidiary in a country

Multinational corporation

An organization that manufactures and markets products in many different countries and has multinational management


The set of values, beliefs, rules, and institutions held by a specific group of people


An attitude that one's own culture is superior to other cultures

Exchange rate

The value of one nation's currency relative to the currencies of other countries


A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services

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