chapter 3 Flashcards
why do nations trade
–> due to economic globalization
–> an increase in interdependance of national economies
why do companies trade internationally
- focusing on relative strenghs: produce goods/services where they escel and trade products they need
- market expansion–> increases revenues
- economies of scale–> producing goods at lower costs by purchasing higher quantities
- acquire materials, goods, services not available at home
- keep up with customers
- keep up with competitors
How international trade is measured
- by BALANCE OF TRADE
—> total value of products a nation exports - total value value of imports over some period of time - by BALANCE OF PAYMENTS
–> total flow of money into country-total flow of money out of the country
trade surplus vs trade deficit
trade surplus–> country exports more than it imports (positive)
trade deficit-> imports more than it exports
define exchange rate
- rate in which money of one country is traded for money from another country
- strong currency: higher exchange rate
- weak currency: low exchange rate
define free trade
international trade without restrictions
define protectionism
restricting free trade
why?–> shield country indusrty from foreign competition (protect local companies)
6 important ideas about free trade
- exists conflict between nations: some are against it and other not
- conflict within nations
- asymmetrical wins and losses
- broader business environment
- global interconnectedness
types of trading blocs
european union
USMCA (united states, canada, mexico agreement
association of southeast asian members (ASEAN)
Asia-pacific economic cooperation (APEC)
greater arab free trade area (GAFTA)
Gove
culture
shared systems of symbols, beliefs, attitudes and values.
tax haven definition
country whose banking law and low tax rates gives individuals + companies the opportunity to shield some of their income from higher tax rates.
how to accept multiple cultures
- avoiding assumptions
- avoiding judgements
- acknowledge distinctions
bribery definition
paying gov officials to secure contracts or gain advantage
importing vs exporting
-importing–> buying from another country
- exporting–> selling products outiside country it was produced.
the 5 forms of international business activity
- importing &exporting
- international licensing–> agreement to produce and market another’s company product in exchange for royalty or fee.
- international franchising
- international strategic alliances and joint ventures
- foreign direct investments: launching a new company in another country
types of organizational strategies for international expansion
- multi-domestic strategy: creating highly independent business operating units in each new country.
- global strategy: viewing the world as a single integrated market.
- transnational strategy: acting glocally
5 functional startegies for international expansion
- products: customized or standardised
- promotion–> ads, promotional efforts
- pricing
- staffing
define translation technologies
- forms of automated translation
- text translation and real-time voice translation.
