commercial transaction that crosses the borders of two or more nations
goods and services purchased abroad and brought into a country
goods and services sold abroad and sent out of a country
business that has direct investments abroad in multiple countries
multinational corporation (MNC)
company that adopts a global perspective and engages in international business from or near its inception
born global firm
trend toward greater economic, cultural, political, and technological interdependence among national institutions and economics
development that meets the needs of the present without compromising the ability of future generations to meet their own needs
treaty designed to promote free trade by reducing both tariffs and nontariff barriers to international trade
General Agreement on Tariffs and Trade (GATT)
International organization that enforces the rules of international trade
World Trade Organization (WTO)
value of all goods and services produced b a domestic economy over a one-year period
gross domestic product (GDP)
value of all goods and services produced by a country's domestic and international activities over a one-year period
gross national product (GNP)
nation's GDP or GNP divided by its population
GDP or GNP per capita
agency created to provide financing for national economic development efforts
Agency created to regulate fixed exchange rates and to enforce the rules of the international monetary system
International Monetary Fund
use of computer networks to purchase, sell, or exchange products; to service customers; and to collaborate with partners
____ is a primary driver of societal and commercial change today.
Who are the key players in International Business?
Entrepreneurs and Small Businesses
Two areas of business in which globalization is having profound effects are the globalization of _____ and _____.
_____ refers to the convergence in buyer preferences in markets around the world.
globalization of markets
____ are products marketed in all countries essentially without any changes
The globalization of markets is important to international business because of the benefits it offers companies. What are these benefits?
reduces marketing costs (by standardizing certain market activities)
creates new market opportunities (explore new markets when the home market is saturated)
levels uneven income streams (reduce variations in sales between seasons)
local buyer's needs (adapted product for different countries)
global sustainability (development that meets the needs of the present without compromising the ability for future generations to meet their own needs)
What are the benefits that companies obtain from the globalization of production?
access lower-cost workers
access technical expertise
access production inputs
The world's population lives in three different types of markets:
markets that include the world's established consumer markets; population is solidly middle class; infrastructure is highly developed and efficient
markets that are racing to catch up to developed nations; population is migrating to cities for better pay and is overloading cities' infrastructures; rising incomes are increasing global demand for resources and basic products
globalization has bypassed these markets; population is mostly rural; infrastructure is very poor and there is little credit or collateral; people have almost no legal protections, and corruption prevails
What are the forces driving globalization?
falling barriers to trade and investment
Groups opposed to globalization blame it for ____, _____, & _____.
eliminates jobs in developed nations (outsourcing jobs)
lowers wages in developed nations (worker dislocation)
exploits workers in low-wage nations
Groups that are for globalization argue that it _____, ______, and _____.
increases wealth and efficiency in all nations
generates labor market flexibility in developed nations
advances the economics of developing nations
International business is special because it occurs within a dynamic, integrated system that weaves together four distinct elements:
the forces of globalization
the international business environment
many national business environments
international firm management
process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people, or capital
regional economic integration (regionalism)
economic integration whereby countries seek to remove all barriers to trade among themselves but where each country determines its own barriers against nonmembers
free trade area
economic integration whereby countries remove all barriers to trade among themselves and set a common trade policy against nonmembers
economic integration whereby countries remove all barriers to trade and to the movement of labor and capital among themselves and set a common trade policy against nonmembers
economic integration whereby countries remove barriers to trade and the movement of labor and capital among members, set a common trade policy against nonmembers, and coordinate their economic policies
economic and political integration whereby countries coordinate aspects of their economic and political systems
increase in the level of trade between nations that results from regional economic integration
diversion of trade away from nations not belonging to a trading bloc and toward member nations
European union plan that established its own central bank and currency
European monetary union
What are five potential levels of economic and political integration for regional trading blocs?