Chapter 4 - INTRO TO BUSINESS CHAPTER 4: Competing in World...

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INTRO TO BUSINESS 02/03/12 CHAPTER 4: Competing in World Markets Learning Goals Explain the importance of international business and the primary reasons nations trade and discuss the concepts of absolute and comparative advantage in international trade. Describe how nations measure international trade in the significance of exchange rates. Identify the major barriers that confront global business. Explain how international trade organizations and economic communities reduce barriers to international trade. Compare the different levels of involvement used by businesses when entering global markets. Distinguish between global business strategy and a multi domestic business strategy. Why Nations Trade Boots economic growth Expands markets More efficient production systems Less reliance of the economies of home nations International Sources of Factors of Production Decisions to operate abroad depend upon availability, price, and quality of: Labor Natural resources Capital Entrepreneurship Companies doing business overseas must make strategic decisions. Additional Environmental Factors to which Companies are Exposed New social and cultural factors Economic and political environments Legal restrictions Companies can expand their markets, seek growth opportunities in other nations, make their production and distribution systems more efficient, and reduce their dependence on the economies of their home nations. Size of the International Marketplace As developing nations expand into the global marketing, opportunities grow. Many developing countries have posted high growth rates of annual GDP. United States 4.4% China 11.1% India 9.4%
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Population Size and Prosperity Through developing nations generally have lower per capita income, many have strong GDP growth rates and their huge populations can be lucrative markets. Top 10 Trading Partners with U.S. Canada 40 billion China 35 billion Mexico 29 billion Japan 14 billion Germany 11 billion United Kingdom 8 billion South Korea 6 billion France 5 billion Taiwan 4.6 billion Brazil 4.3 billion Absolute and Comparative Advantage Absolute advantage: Country can maintain a monopoly or produce at a lower cost
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This note was uploaded on 02/13/2012 for the course ART HISTOR 105 taught by Professor Kenfield during the Spring '11 term at Rutgers.

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Chapter 4 - INTRO TO BUSINESS CHAPTER 4: Competing in World...

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