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Consists of the import and export of goods and services. |
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The shipment of goods out of a country or the rendering of services to a foreign buyer located in a foreign country. |
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The entering of goods into the customs territory of a country or the receipt of services from a foreign provider. |
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Three Forms of International Business |
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1. Trade 2. International Licensing of Technology and Intellectual Property (trademarks, patents, and copyrights) 3. Foreign Direct Investment |
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States that nations should concentrate their efforts on producing those goods that they can make most efficiently, with a minimum of effort and waste. |
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Exists if the costs of production and price received for the goods allow the goods to be sold for a higher price in a foreign country than at home. |
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Refers to a type of exporting where the exporter, often a manufacturer, assumes responsibility for most of the export functions, including marketing, export licensing, shipping, and collecting payment. (Uses a foreign distributor) |
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Used by companies that do not have the experience, personnel, or capital to tackle a foreign market by themselves. (Uses an export trading company) |
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Independent firms, usually located in the country to which a firm is exporting, that purchase and take delivery of goods for resale to their customers. They assume the risks of buying and warehousing goods in their market and provide additional product support services. |
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Export Trading Company (ETC) |
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A company that market the products of several manufacturers in foreign markets. They have extensive sales contacts overseas and experience in international finance and shipping. |
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Export Management Company (EMC) |
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Independent firms that assume a range of export-related responsibilities for manufacturers, producers, or other exporters. They might do as little as render advice and training on how to export, or they might assume full responsibility for the entire export sales process. |
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Import duties or taxes imposed on goods entering the customs territory of a country. |
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Four Reasons Countries Impose Tariffs |
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1. The collection of revenue 2. The protection of domestic industries from foreign competition 3.Retaliation against another country or countries for imposing tariffs higher than agreed on for placing other unfair restrictions on their imports 4. To impose political or national security controls. |
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All barriers to importing or exporting other than tariffs. |
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Restriction imposed by law on the numbers or quantities of goods, or of a particular type of good. |
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Is generally used when referring to a total or near-total ban on trade with a foreign country or countries. |
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A refusal to trade or do business with certain firms, usually from a particular country, on political or other grounds. |
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A restriction on exports of goods, services, or technology to a country or group of countries imposed for reasons of national security or foreign policy. |
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Refers to the efforts of governments to reduce tariffs and non-tariff barriers to trade. |
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General Agreement on Tariffs and Trade (GATT) |
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An agreement between nations, first signed in 1947, and continually expanded since that time, that sets rules for how nations will regulate international trade in goods and services. |
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World Trade Organization (WTO) |
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Was created to administer the rules and to assist in settling trade disputes among its member nations. |
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International Property Rights (IPRs) |
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A grant from a government to an individual or firm of the exclusive legal right to use a copyright, patent, or trademark (known as intellectual propety or IP) for a specific time. They represent ownership rights in intellectual property. |
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Legal rights to artistic or written works, including books, software, film, or music, or to such works as the design of a computer chip. |
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Includes the legal rights to a name or symbol that identifies a firm or its product. |
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Governmental grants to inventors ensuring them the exclusive legal right to produce and sell their inventions for a period of years. |
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Contracts by which the holder of intellectual property will grant certain rights in that property to a foreign firm under specified conditions and for a specified time. |
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A business arrangement that utilizes an agreement to license, control, and protect the use of the franchiser's patents, trademarks, copyrights, or business know-how, combined with a proven plan of business operation, in return for royalties, fees, or commissions. |
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Foreign Direct Investment (FDI) |
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Refers to the ownership and operation or active control of the productive assets of an ongoing business by an individual or corporate investor who is a resident of a foreign country. |
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Multinational Corporation |
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Firms with significant foreign direct investment assets, comprised of a parent company in the home country and foreign affiliates located in host countries. |
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Four Types of Foreign Direct Investment (FDI) |
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1. Subsidiary 2. Joint Venture 3. Merger 4. Acquisition |
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A "foreign" corporation organized under the laws of a foreign host country corporation, but owned and controlled by the parent corporation in the home country. |
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A cooperative business arrangement between two or more companies for profit. A joint venture may take the form of a partnership or a corporation. |
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When two companies merge and form a new company, often with a new identity. |
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When one company purchases at least a majority interest in the stock of another company. |
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Generally have a high per capita income, have a high standard of living, and are in the later stages of industrialization. |
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Has certain characteristics in common: A lower per capita income than developed countries, a lower standard of living, more rapid population growth and a history of greater state of control over their economy. |
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Means that a share of the business is owned by nationals of the host country. |
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Local Participation Requirements |
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Government controls prohibiting a foreign firm from owning a 100 percent interest of a local firm. |
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Refers to the legal requirement that an investing firm not remove, or repatriate, profits from the host country to the home country of the parent company. |
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The exchange of technology and manufacturing know-how between firms in different countries through arrangements such as licensing agreements. |
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The taking by a government of privately owned assets, such as real estate, factories, farms, mines, or oil refineries. |
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Refers to the transfer of private-sector firms to government ownership and control, usually with payment to shareholders and pursuant to a larger plan to restructure a national economy. |
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In a sense, is the opposite of nationalization. It refers to the process by which a government sells or transfers government-owned industries or other assets to the private sector. |
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Newly Industrialized Country |
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Developing countries that have made rapid progress toward becoming an industrialized or technology-based economy. |
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Lacks many of the basic resources needed for development and requires vast amounts of foreign aid from the wealthier nations. |
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