BUSN-4-Business Without Borders Flashcards
Key Reasons For International Trade
- Access to factors of production
- Reduced risk
- Inflow of innovation
Key Reasons Against International Trade
- Loss of jobs
- Loss of industries
- Increase in foreign ownership
Opportunity cost
the opportunity of giving up the second-best choice when making a decision
Absolute advantage
when a country can produce more of a good than other nations, using the same amount of resources
Comparative advantage
the benefit a country has in a given industry if it can make products at a lower opportunity cost
Porter’s Five Forces model of competition
- Buyers
- Substitute products
- Competitive Rivalry
- Supplier Power
- Threat of new Competition
Barriers to International Trade
- Social/cultural differences
- Economic differences
- Political and legal differences
Social/Cultural Differences
- Nonverbal communication
- Forms of address
- Attitudes toward punctuality
- Religious celebrations
- Business practice/gifts
Economic Differences
- Population
- Per capita income
- Economic growth rate
- Currency exchange rates
- Stage of economic development
- Infrastructure
Political and Legal Differences
- Political regimes differ around the world
- Laws and regulations
- Political climate
- International trade restrictions
Trade Restrictions
- Tariffs
- Quotas
- Voluntary export restraints(VER)
- Embargos
World Bank
made up of 188 member countries; provides financial assistance and low-interest loans
International Monetary Fund (IMF)
supports stable exchange rates and facilitates international payments
