Absolute Advantage

the ability to produce something more efficiently than any other country can

Association of Southeast Asian Nations (ASEAN)

organization for economic, political, social, and cultural cooperation among Southeast Asian nations

Balance of Payments

flow of all money into or out of a country

Balance of Trade

the economic value of all the products that a country exports minus the economic value of all the products it imports

Branch Office

foreign office set up by an international or multinational firm

Business Practice Law

law or regulation governing business practices in given countries

Cartel

association of producers whose purpose is to control supply and prices

Comparative Advantage

the ability to produce some products more efficiently than others

Dumping

practice of selling a product abroad for less than the cost of production

Embargo

government order banning exportation or importation of a particular product or all products from a particular country

Euro

a common currency shared among most of the members of the EU (excluding Denmark, Sweden, and the United Kingdom)

European Union (EU)

agreement among major European nations to eliminate or make uniform most trade barriers affecting group members

Exchange Rate

rate at which the currency of one nation can be exchanged for the currency of another nation

Export

product made or grown domestically but shipped and sold abroad

Exporter

firm that distributes and sells products to one or more foreign countries

Foreign Direct Investment (FDI)

arrangement in which a firm buys or establishes tangible assets in another country

General Agreement on Tariffs and Trade (GATT)

international trade agreement to encourage the multilateral reduction or elimination of trade barriers

Goal Orientation

the manner in which people are motivated to work toward different kinds of goals

Globalization

process by which the world economy is becoming a single interdependent system

Import

product made or grown abroad but sold domestically

Importer

firm that buys products in foreign markets and then imports them for resale in its home country

Independent Agent

foreign individual or organization that agrees to represent an exporters interests

International Firm

firm that conducts a significant portion of its business in foreign countries

Licensing Arrangement

arrangement in which firms choose foreign individuals or organizations to manufacture or market their products in another country

Local Content Law

law requiring that the products sold in a particular country be at least partly made there

Multinational Firm

firm that designs, produces, and markets products in many nations

National Competitive Advantage

international competitive advantage stemming from a combination of factor conditions, demand conditions, related and supporting industries, and firm strategies, structures, and rivalries

North American Free Trade Agreement (NAFTA)

agreement to gradually eliminate tariffs and other trade barriers among the United States, Canada, and Mexico

Offshoring

the practice of outsourcing to foreign countries

Outsourcing

the practice of paying suppliers and distributors to perform certain business processes or to provide needed materials or services

Power Orientation

the beliefs that people in a culture about the appropriateness of power and authority differences in hierarchies such as business organizations

Protectionism

practice of protecting domestic business against foreign competition

Quota

restriction on the number of products of a certain type that can be imported into a country

Social Orientation

a person's beliefs about the relative importance of the individual versus groups to which that person belongs

Strategic Alliance

arrangement (also called joint venture) in which a company finds a foreign partner to contribute approximately half of the resources needed to establish and operate a new business in the partner's country

Subsidy

government payment to help a domestic business compete with foreign firms

Tariff

tax levied on important products

Time Orientation

the extent to which members of a culture adopt a long-term versus short-term outlook on work, life, and other elements of society

Trade Deficit

situation in which a country's imports exceed its exports, creating a negative balance of trade

Trade Surplus

situation in which a country's exports exceed its imports, creating a positive balance of trade

Uncertainty Orientation

the feeling individuals have regarding uncertain and ambiguous situations

World Trade Organization (WTO)

organization through which member nations negotiate trading agreements and resolve disputes about trade policies and practices