Chapter 4
International Business
By Boundless
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Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry.
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Absolute advantage and balance of trade are two important aspects of international trade that affect countries and organizations.
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Nations export products for which they have a competitive advantage in order to import products for which they lack a competitive advantage.
Trade barriers are government-induced restrictions on international trade, which generally decrease overall economic efficiency.
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Despite international trading laws and declarations, countries continue to face challenges around ethical trading and business practices.
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It is typically more difficult to do business in a foreign country than in one's home country due to cultural barriers.
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Standards-related trade measures, known in WTO parlance as technical barriers to trade play a critical role in shaping global trade.
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Some argue that imports from countries with low wages has put downward pressure on the wages of Americans and therefore we should have trade barriers.
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Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency.
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The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement regulating international trade.
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The European Union (EU) is an economic and political union made up of 27 member states that are located primarily in Europe.
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NAFTA is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
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APEC is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region.
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The World Bank is an international financial institution that provides loans to developing countries for various programs.
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The IMF seeks to promote international economic cooperation, international trade, employment, and exchange rate stability.
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A common market is the first stage towards a single market and may be limited initially to a free trade area.
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The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government.
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The price of one country's currency in units of another country's currency is known as a foreign currency exchange rate.
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The balance of trade is the difference between the monetary value of exports and imports in an economy over a certain period.
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Balance of payments (BOP) accounts are an accounting record of all monetary transactions between a country and the rest of the world.
When considering strategic entry into an international market, licensing is a low-risk and relatively fast foreign market entry tactic.
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Franchising enables organizations a low cost and localized strategy to expanding to international markets, while offering local entrepreneurs the opportunity to run an established business.
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Exporting is the practice of shipping goods from the domestic country to a foreign country.
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Imports are the inflow of goods and services into a country's market for consumption.
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In contract manufacturing, a hiring firm makes an agreement with the contract manufacturer to produce and ship the hiring firm's goods.
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In a joint venture business model, two or more parties agree to invest time, equity, and effort for the development of a new shared project.
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Outsourcing business functions to developing foreign countries has become a popular way for companies to reduce cost.
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Offshoring entails a company moving a business process from one country to another.
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With the advent of improved communication and technology, corporations have been able to expand into multiple countries.
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FDI is practiced by companies in order to benefit from cheaper labor costs, tax exemptions, and other privileges in that foreign country.
Countertrade is a system of exchange in which goods and services are used as payment rather than money.