Global Business (Chapter 3)

International trade is defined as the,

• process by which businesses address supply and demand issues on an international stage

• process whereby each country trades the surplus goods and services it produces most efficiently for products in short supply

• process whereby goods and services are transported on big boats to other nations

• relationships of states with each other and with international organizations and certain subnational entities

International trade has increased steadily since,

• World War I

• World War II

• the Korean War

• the Vietnam War

Some countries are better equipped than others to produce a particular good or service. The ability to produce a specific product more efficiently while using less resources than any other nation is known as (an),

• absolute advantage

• comparative advantage

• national trade supremacy

• product dominance

Some countries are better equipped than others to produce a particular good or service. The ability to produce a specific product more efficiently than any other product is known as (an),

• absolute advantage

• comparative advantage

• national trade supremacy

• product dominance

Importing and exporting are the principal activities in international trade. Exporting is defined as,

• purchasing raw materials or products in other nations and bringing them into one’s own country

• selling and shipping raw materials or products to other nations

• the exchange of goods and services between countries

• the total value of exports minus the total value of imports

Importing and exporting are the principal activities in international trade. Importing is defined as,

• purchasing raw materials or products in other nations and bringing them into one’s own country

• selling and shipping raw materials or products to other nations

• the exchange of goods and services between countries

• the total flow of money into a country minus the total flow of money out of the country

Exporting and importing activities gave rise to a concept called the balance of trade, which is defined as,

• the international exchange of goods and services between countries

• the purchasing of raw materials or products in other nations and bringing them into one’s own country

• the total flow of money into a country minus the total flow of money out of the country

• the total value of exports minus the total value of imports over some period of time

The total flow of money into a country minus the total flow of money out of the country is known as a nation’s,

• balance of payments

• balance of trade

• trade deficit

• trade equilibrium

A firm that has decided to enter international markets can do so in several ways. One avenue is to enter into a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation. This is known as,

• countertrade

• joint venture

• licensing

• strategic alliance

Another way a business can enter the international market is to manufacture its products in its home country and export them for sale in foreign markets (usually sold through an export-import merchant). This is known as,

• countertrade

• exporting

• multinational firms

• strategic alliance