introduction to business

introduction to business - CHAPTER 3 Competing in Global...

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CHAPTER 3 Competing in Global Markets
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Definitions Importing : is buying products from another country . Exporting : is selling products to another country . Free Trade : is the movement of goods and services among nations without political or economic obstruction .
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Why Trade With Other Nations 1 - No nation can produce all the products it needs . 2 - Nations demand trade with countries to meet the needs of their people . 3 - Trade relations enable countries to produce what they can and buy the rest in a mutually beneficial exchange . 4 - Theories of advantage .
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The Theories of Comparative and Absolute Advantage Comparative Advantage Theory : It asserts that a country should produce and sell to other countries those products that it produces most efficiently and should buy from other countries those products it can’t produce as effectively or efficiently .
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The Theories of Comparative and Absolute Advantage (Contd Absolute Advantage Theory : Exists when a country has a monopoly on producing a product or is able to produce it at a cost below that of all other countries .
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Measuring Global Trade Balance of Trade vs. Balance of Payment Balance of trade : is the relationship of exports to imports . ** Trade deficit: is buying more goods from other nations than are sold to them (imports are more than exports ±. Balance of payment : is the difference between money coming into a country (from exports, tourism, foreign aid, and military expenditures± and money leaving the country for imports .
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Measuring Global Trade Balance of Trade vs. Balance of Payment (Contd Favorable balance of payment: means more money is flowing into than flowing out of the country . Unfavorable balance of payment: means more money is flowing out of the country than coming into the country . Dumping: is the practice of selling products for less in a foreign country than is charged in the producing country .
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Modes of Entry into the Global Markets 1 - Foreign Direct Investment : is the buying of permanent property and businesses in foreign nations . * Point of weakness: foreign purchase of
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This note was uploaded on 01/29/2012 for the course BUSINESS A bus102 taught by Professor Samia during the Spring '11 term at MSA University.

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introduction to business - CHAPTER 3 Competing in Global...

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