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2000 International Business > Chapter 5 Trade theories > Flashcards

Chapter 5 Trade theories Flashcards

1
Q

goal was to increase a nations wealth by imposing government regulation (achieve trade surplus)
- main economic system of trade utilized from the 16th to 18th century
- nations strenght could be maximized by limiting imports

A

mercantalism

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2
Q

phiosopher who wrote a book with the goal to upheld the mercantalism system

A

adam smith

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3
Q

the production of a product when it is more effiicent than any other country in producing it

A

absolute advantage
(adam smith)

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4
Q

it may be beneficial for two countries to trade as long as one is relatively more efficient at producing a product needed by the other

A

comparative advantage

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5
Q

an economys ability to produce a particular good or service at a lower opportunity cost than its trading partners

A

comparative advantage

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6
Q

the law of comparative advantage is popularly attributed to who

A

david ricardo

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7
Q

showed a country should export Products that use relatively abundant factors of production and import goods that use relatively scarsProducts that use relatively abundant factors of production and import goods that use relatively scarce factors of production

A

H/O theory (1919)

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8
Q

And economic theory that states that a countries exports do not reflect the commodity that is most abundant in that country

A

leontief paradox (1950s)

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9
Q

Each product and its manufacturing technologies go through stages of evolution: introduction, maturity, and standardization

A

International product life cycle theory (1966)

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10
Q

Suggest that a critical factor and determining international patterns of trade substantially economies of scale and network effects that can occur in key industries

A

New trade theory (1970s) (Paul Krugman)

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11
Q

A concept that describes how companies average cost to decrease as it expands

A

economies of scale

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12
Q

Business principle that describes how the value of a product of service increases as more people use it

A

network effects

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13
Q

The two ways nations can enhance their competitive advantage

A
  1. national competitive advantage
  2. Firm level competitive advantage
    (competitive economies today possess a combination of both)
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14
Q

Is world leadership and specific industries
Which ways nations can enhance their competitive advantage is this?

A

National competitive advantage

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15
Q

Superior performance relative to other competitors in the same industry or industry average
Which weighs nations can answer competitive advantage is this?

A

Firm level competitive advantage

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16
Q

the sum of national comparative advantages and competitive advantage of a nation firms collectively

A

National competitiveness

17
Q

Location specific advantage arises from an abundance and a country
- valuable natural resources (Brazil)
- arable or buildable land (Canada)
- strategic location (Hong Kong)

A

Comparative advantage

18
Q

Firm specific advantage for ownership specific advantage

A

Competitive advantage
- specific knowledge
- specific capabilities
- certain types of skills

19
Q
  • mining in Brazil
  • forest products in Canada
  • tourism in Spain
  • exporting/importing in Hong Kong
A

National competitiveness

20
Q

help explain the development of national competitive advantage
1. The competitive advantage of nations.
2. The determinants of national competitiveness.
3. And national industry policy.

A

Contemporary theories

21
Q

wrote the competitive advantage of nations book in 1990

A

Michael Porter

22
Q

A model that attempts to explain why one nation state is more successful than another for particular industry

A

Porters diamond model

23
Q

what are the 4 things that contribute to national competitve advantages in porters diamond of national competitive advantage

A
  1. Competitive intensity and focal industry.
  2. Demand conditions.
  3. Related and supporting industries/complementors
  4. Factor conditions.
24
Q

The nations resources, such as labor, natural resources, and advanced factors such as capital, technology, entrepreneurship, advanced, workforce skills and know how
which one of porters 4 diamonds is this ?

A

Factor conditions

25
Q
  • nature of home market demand for specific products and services
  • the presence of demanding customers pressures firms to innovate fast and produce better products
    which one of porters 4 diamonds is this ?
A

Demand conditions

26
Q
  • companies that face a highly competitive environment at home, tend to outperform global competitors that lack such intense domestic competition
    which one of porters 4 diamonds is this ?
A

Competitive intensity and focal industry

27
Q

Industrial clusters are characterized by a critical mass of human talent or other factor endowments
Examples include the fashion industry and northern Italy, and consumer electronics in Japan
which one of porters 4 diamonds is this ?

A

Related and supporting industries

28
Q

Refers to a concentration of businesses, suppliers, and supporting firms in the same industry located as a particular geographical location

A

Industrial cluster

29
Q
  • describes how companies expand abroad
  • according to this model internationalization takes place incremental stages over a long. Period.
  • firms gradually progress to foreign direct investment the most complex entry strategy
  • the progression from exporting the FDI coincides with increasing levels of both risk and control
A

Internationalization process model

30
Q

An internationalization strategy in which the firm establishes a physical presence abroad

A

Foreign indirect investment (FDI)

31
Q
  • domestic focus
  • pre-export stage
  • experimental involvement
  • active involvement
  • committed involvement
A

Stages in the internationalization process of the firm

32
Q
  • exporting
    (less investment control)
A

Contract based

33
Q
  • long-term contracts
  • license
  • franchising
  • Equity alliances
  • joint ventures
    (mid at investment and control)
A

Strategic alliances

34
Q
  • acquisition
  • Greenfield
    ( more investment and control)
A

Subsidiary

35
Q
  • internationalized, their operations from their start
  • can generate at least a quarter of their revenues from overseas within the first three years
  • many tech companies follow this
  • spotify, Uber Airbnb, and Mojang are examples
A

Born global firms

36
Q

two main reasons born global firms have emerged in large numbers

A
  1. Globalization has made doing international business easier than ever before.
  2. Advances in communication and transportation technologies have reduced the cause.

2000 International Business (9 decks)

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