Chapter 4 - Chapter 4 Competing in Global Markets Learning Goals 1 Explain international business and why nations trade 2 Discuss types of

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Chapter 4 Competing in Global Markets Learning Goals 1. Explain international business and why nations trade 2. Discuss types of advantage in international trade 3. Describe measurements of international trade and exchange rates 4. Identify the major barriers that confront global businesses Why Nations Trade -Boosts economic growth -Expands markets - More efficient production systems -Less reliance on economies of home nations - Exports: Domestically produced goods and services sold in markets in other countries. - Imports: Foreign made products and services purchased by domestic consumers International Sources of Factors of Production - Decisions to operate abroad depend upon availability, price and quality of : a. Labor b. Natural Resources c. Capital d. Entrepreneurship -Companies can spread risk throughout nations Size of the International Marketplace - As developing nations expand into the global marketplace, opportunities grow - Many developing countries have posted high growth rates of annual GDP -USA 4.4% -China 11.1% - India 9.4% Population Size and Prosperity Though developing nations generally have lower per capita income, many have strong GDP growth rates and their huge populations can be lucrative markets. Absolute and Comparative Advantage Absolute advantage: Country can maintain a monopoly or produce at a lower cost than any competitor. Comparative advantage: Country can supply a product more efficiently and at a lower cost than it can supply other goods compared with other countries. Measuring Trade Between Nations Balance of trade: Difference between a nation's imports and exports Balance of payments: Overall flow of money into or out of a country Balance of payments surplus: More money into country than out Balance of payments deficit: More money out of country than in Major US Exports and Imports -US demand for imported goods is partly a reflection of the nation's prosperity and diversity - US imports more goods than it exports, but exports more services than it imports
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This note was uploaded on 02/01/2012 for the course ADMINISTRA 100 taught by Professor Reeves during the Fall '11 term at Rutgers.

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Chapter 4 - Chapter 4 Competing in Global Markets Learning Goals 1 Explain international business and why nations trade 2 Discuss types of

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