Chapter 5 Flashcards
what are the growing complexity in the global business environment
due to several factors like:
- technological advances
- globalization
- economic shifts
- political instability
varying regulatory environments across regions
what are the major world marketplaces
- North America: Led by the U.S., it is a key driver in global finance, technology, and energy.
- Europe: A major market for goods, services, and financial products, with countries like Germany, France, and the UK at the forefront.
- Asia: Particularly driven by China, Japan, and South Korea, Asia has become a hub for manufacturing, technology, and innovation.
- Latin America and Africa: Emerging markets with growing consumer bases, rich natural resources, and significant potential for expansion.
what are the evolving roles of emerging markets
- critical drivers of global economic growth
they have: - increasing demand
- expanding middle classes
- greater investment in infrastructure
- they are offering new opportunities for global businesses
what important role does the BRICS nations play
- includes Brazil, Russia, India, China, and South Africa
- key role due to their size, economic potential and strategic importance
- contribute to reshaping global trade dynamics
- hold significant influence in sectors like energy, agriculture, technology, and manufacturing
how does different forms of competitive advantage determine the ways in which countries and businesses respond to the international environment
- businesses that leverage unique resources, technologies, or efficiencies can dominate global markets
- can be based on cost leadership, differentiation, or access to specific resources
how does different forms of import-export balances determine the ways in which countries and businesses respond to the international environment
- countries with strong export industries tend to accumulate wealth and reinvest in other sectors
- those in trade deficits may face economic constraints
how does different forms of exchange rates determine the ways in which countries and businesses respond to the international environment
- fluctuations in currency values affect pricing, costs, and profits in international trade
- weaker currency can make a country’s exports cheaper and more competitive
- a stronger currency can increase purchasing power for imports
how does different forms of foreign competition determine the way in which countries and businesses respond to the international environment
- increased competition from abroad forces businesses to innovate , reduce costs, and improve quality to maintain market share
what are the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure
- market potential: assessing the demand for products and services in foreign markets
- Cultural and Social Factors: Understanding local customs, behaviors, and consumer preferences.
- Political and Legal Environment: Stability of governments, regulatory frameworks, and trade policies.
- Economic Environment: Currency stability, inflation, and GDP growth rates.
- businesses must also decide whether to fully enter a market through direct investment (FDI), form partnerships or joint ventures, or enter via export
- organizational structure should match the strategy whether its global, transnational, or multi-domestic
what are some says in which social, cultural, economic, legal, and political differences act as barriers to international trade
- social and cultural barriers: differences in language, values, and communication styles can lead to misunderstandings and ineffective marketing
- economic barriers: currency fluctuations, varying tax systems, and economic instability can defer trade
- legal barriers: differing regulations, intellectual property laws, and business practices complicate cross-border trade
- Political Barriers: Protectionism, tariffs, and government policies can restrict the free flow of goods and services.
how does free trade agreements assist world trade
- (FTAs) reduce or eliminate tariffs, quotas and other trade barriers between member countries promoting exchange of goods and services
- provide legal framework to protect intellectual property, resolve disputes and ensure fair competition, facilitating smoother and more predictable international trade
- ex. NAFTA (now USMCA) and European Union’s single market
Globalization
process by which the world economy is becoming a single interdependent system
Imports
products made or grown abroad but sold domestically
Export
product made or grown domestically but shipped and sold abroad
BRICS
term denoting a group of five important and powerful emerging markets in the business world: Brazil, Russia, India, China, and South Africa
absolute advantage
the ability to produce something more efficiently than any other country
Comparative advantage
the ability to produce some products more efficiently than others
National competitive advantage
international competitive advantage stemming from a combination of factors of conditions; demand conditions; related and supporting industries; and firm strategies, structures, and rivalries
International competitiveness
competitive marketing of domestic products against foreign products
Balance of trade
the total of a country’s exports minus its imports
Surplus (trade)
situation in which a country exports more than it imports, creating a favourable balance of trade
Deficit (trade)
situation in which a country’s imports exceed it exports, creating a negative balance of trade
Balance of payments
flow of all money into or out of a country
Exchange rate
rate at which the currency of one nation can be exchanged for the currency of another nation
