Business Chapter 3 Competing in Global Markets Flashcards

It means that a country has the ability to produce a particular good or service using fewer resources (and therefore at a lower cost) than another country.
Ex. Zambia has an absolute advantage over many countries in the production of copper due to its copper ore reserves.

Just about any kind of product can be imported or exported

Exporting is selling goods and services.Importing is buying goods and services from other countries.The balance of trade is the relationship of exports to imports.The balance of payments is the balance of trade plus other money flows such as tourism and foreign aid.Dumping is selling products for less in a foreign country than in your own country.Trade protectionism is the use of government regulations to limit the importation of products.

Ways of entering world trade include exporting, licensing (which includes franchising), manufacturing, joint ventures and strategic alliances, and direct foreign investment.

Unlike other companies that are involved in exporting or importing, multinational corporations also have manufacturing facilities or some other type of physical presence in different nations.

1) no country is self-sufficient2) other countries need products that prosperous countries produce3) natural resources and technological skills are not distributed evenly across the world

The theory argues that a country should make and then sell those products it produces most efficiently but buy those it cannot produce efficiently.

- Sociocultural (religion)- Economic (disposable income) - Rules and Regulatory (law on bribery)- Technological (internet usage)

The use of government regulation to limit the import of goods and services. Advocates believe that it allows domestic producers to survive and grow, producing more jobs. The key tools of protectionism are tariffs, import quotas, and embargoes.

Tariffs are taxes on foreign products. There are two kinds of tariffs:1) Protective tariffs: designed to raise the retail price of imported products so that domestic products will be more competitively priced 2) Revenue tariffs: used to raise money for the government, commonly used by developing countries.
Non-tariff barriers include safety, health, and labeling standards.

The WTO replaced the GATT. The purpose of the WTO is to mediate trade disputes among nationsThe IMF is an international bank that makes short-term loans to countries experiencing problems with their balance of trade. The World Bank is a United Nations agency that borrows money from more prosperous countries and lends it to less-developed countries to develop their infrastructures.

Expanding markets such as China, India, and Russia.

Outsourcing is the purchase of goods and services form outside a firm rather than providing them inside the company. It has been a large part of business for many years. Today, more businesses are outsourcing manufacturing and services offshore.