international trade Flashcards
what is international trade
importing and exporting
what are imports
products brought from overseas
money goes back to foregin country where the product came from
so money is flowing out of an economy
what are exports
products sold overseas
get money from person or busienss that they sold it to
results in money flowing into an economy
businesses use as a way to expand-increase market size
ways a business can gain a competitive advanateg)
produce hgher quality products
speciialist staff
loweer costs
what is a competitive advanatge
something that allows a business to generate more sales and be more profitbale than its rivals
what types of firms is it really imporant for to have a compeitti advanatge
internalitonal makret as face much more competition
domestic makret less comp
what is speciailsiation
where a firm focuses on producing just one product or a narrow range of prosucts
adv of specilisation
imporves efficiney as workers become highly skilled t making a particular product
speed and quality is bound to increase
therefore, reduces cost per unit, allows price to reduced, profit margin to be increased
producing higher quality products may aslo mean can charge more premium prices and get more sales
dis of specialisation
lose sales if decrease in demand for that product, wont have other cources of revenue to make up for loss
increases cost of training staff-may need extsntive trainign to become specialised at making the product
what is FDI (foreign direct investment)
when a firm in one country invests in businss in another country
either be by merging with or taking over an existing foreging business, opening office or branch overseas, or starting new enterprise in another country
to be classed FDI, investing frim has to have some managerical control of a business in a foreign country
adv of FDI of the business deciding to operate in foreign firm
gives a firm access to new markets-increase sales as more people to sell to
recuce frims costs e.g production and labour costs are cheaper in the foregin country
take advanatge of skilled local labour in the foreign country, can increase productivity
obtain first hand knowledge about a natopns legal system, consumer tastes and markets
help them overcome internatonal trade barriers e.g tarrifs and quotas which can prevet access toa market
adv of FDI on economy they are investing in
in developing and emerging economies
improve standards of libing
cause economic growth
increase GDP
be spent on increasing schools and healthcare
