FBP C3 - Importing and Exporting Flashcards
Why should nations trade with other nations?
- No country is self sufficient
- Other countries need products that prosperous countries produce
- Natural resources and technological skills are not distributed evenly around the world
competitive advantage
That a country should make then sell those products it produces most efficiently but buy those it cannot produce efficiently
absolute advantage
It exists if a country produces a specific product more efficiently than any other country.
What products can be imported and exported?
Literally any product can be imported / exported
Exporting
selling products to other countries
Importing
buying products from other countries
Dumping
selling products for less in a foreign country than in your own country.
Favorable balance of trade / trade surplus
occurs when exports exceeds imports
Balance of payments
is the balance of trade plus other money flows such as tourism and foreign aid.
Balance of trade
is the relationship of exports to imports
What are some ways in which a company can engage in global business?
- Licensing
- Exporting
- Franchising
- Contract manufacturing
- Joint ventures
- Strategic alliances
- Direct foreign investment
How do multinational corporations differ from companies that participate in global business?
Unlike companies that only export or import, multinational corporations also have manufacturing facilities or other physical, presence in global markets
Licensing
a firm (the licensor) may decide to compete in a global market by licensing the right to manufacture its products or use its trademark to a foreign company ( the licensee) for a fee (royalty)
Franchising
contractual agreement whereby someone with a good idea for a business sells others the right to use the business name and sell a product or service in a given territory in a specific manner
Contract manufacturing
a foreign company produces private labels goods to which a domestic company then attaches its own brand name or trademark
Joint venture
is a partnership in which two or more companies ( often from different countries) join to undertake a major project.
Foreign direct investment
is the buying of permanent property and business in foreign nations
Foreign subsidiary
the most common form of FDI. A company is owned in a foreign company country by another company, called a parent company.
What are some forces that can discourage participation in global business?
- Sociocultural forces
- Economic forces
- Financial forces
- Legal and regulatory forces
- Physical and environmental forces
Exchange rate
is the value of one nations currency relative to the currencies of other countries.
Countertrading
is a complex form of bartering in which several countries each trade goods or services for other goods or services.
Trade protectionism
is the use of government regulations to limit the import of goods and services. Advocates believe it allows producers to grow, producing more jobs. The key tools of protectionism are tariffs, import, quotas and embargoes.
Tariffs
taxes on foreign products. Protective tariffs raise the price of froing products and protect domestic industries: revenue tariffs raise money for the government
Embargo
prohibits the importing or exporting of certain products to a particular country
Import quota
limits the number of products in certain categories a nation can import
Is trade protectionism good for domestic producers?
Debatable. Trade protectionisms offer pluses and minuses.
Why do governments continue such practices?
The theory of mercantilism started the practice of trade protectionism, and it has persisted through in a weaker form ever since.
World trade organization
meditate trade disputes among nations
Common market / trading bloc
a regional group of countries with a common external tariff, no internal tarrif.
Outsourcing
the purchase of goods and services from outside a firm rather than providing them from inside the company.
Why is outsourcing a major concern for the future?
People fear jobs in the US will be lost due to increased outsourcing and the quality of products will decrease.
Free trade
is the movement of goods and services among nations without political or economic barriers.
The guiding principal of free economic change is
comparative advantage theory
Job seekers intrested ingworking in global trade should consider applying to
small businesses
large businesses
A foreign countrys production of private label goods to which a domestic company then attaches its brand name or trade mark is called
contract manufactering
Us business people are often accused of ethnocentricity is the belief that
your own culture is superior to other cultures
ethnocentricity
your own culture is superior to other cultures
Threats to global trade include
terrorism
rouge states
Income inequity
Strategies to reach global markets from least to most amount of commitment, control, risk and profit potential
Least
- Licensing
- Exporting
- Franchising
- Contract Manufactering
- Joint ventures and strategic alliences
- Forign direct investment
