Chapter 3: Doing Business in Global Markets

Which country is the largest importing nation in the world?

• China

• United States

• Canada

• Mexico

The United States is the largest importing nation in the world, purchasing goods from various countries to meet domestic demand.

What is importing?

Importing is the process of buying goods and services from another foreign country

What is exporting?

Exporting is the process of selling goods and services to another foreign country.

What is an advantages in trading with other nations?

it enables countries to produce what is capable of producing and BUY what it needs from others in a mutually beneficial exchange relationship.

What is Free Trade?

the movement of goods and services among nations without political or economic barriers

What is comparative advantage theory

It states that a country should sell to other countries those products it produce most effectively and efficiently ,while buying goods that other countries produce more efficiently.

The US has a comparative advantage in producing _______

goods and services such as software development

What is an absolute advantage

The ability of a country to produce a good more efficiently than another country, using fewer resources.

How much do small business in the US account for in total US exports

Small businesses in the US account for about ¼ of total US exports.

According to US economist C. Fred Bergsten how much richer is the US economy due to its integration with the world economy

1 trillion dollars per year.

Exports represent about ____ percent of U.S GDP and _____ million Jobs

11%; $9 million

In measuring global trade what two key indicators do nations rely on

Balance of Trade & Balance of Payments

What is a balance of trade?

total value of a nation’s exports compared to its imports measured over a particular period of time

A Favorable balance of trade is considered a ______ and it occurs when ….

trade surplus and it occurs when the VALUE OF EXPORTS is MORE than IMPORTS

An UNFAVORABLE balance of trades is considered a ______ and it occurs when ….

TRADE DEFICIT and it occurs when VALUE OF EXPORTS is LESS than IMPORTS

HOw much spending power does Gen Z contribute

$360 billion

What is the balance of payments

Difference between money coming into country (from exports) and money leaving the country (from imports)

What is the goal in the balance of payments

a favorable balance of payments which means more money flwoign into country than out

What is an unfavorable balance of payments

When MORE MONEY is FLOWING OUT than in

What is the largest exporting nation in the world

US

In order to support free trade, Dumping is prohibited. what is dumping?

Dumping is selling products in a foreign country at a lower pirce than those charged in the producing country

What US departmentwas created to help with exporting and trade financing for small and medium businessses directly

Export Assistance Centers EAC

What is contract manufacturing?

when a foreign company makes private label good for another company to sell under its brand name. FOXCONN makes APPLE, XBOX and more

What is a joint Venture

a partnership in which 2 or more companies(from dif. countries) join together to undertake a major project. If you want to do business in CHina you have to make a joint venture

What are 3 benefits from joint ventures

1) shared technology and risk

2) Shared marketing and management expertise

3) ENtry into markets where foreign companies are usually not allowed in unless goods are produced locally

What is a Strategic Alliance?

a long term partnership between two or more countries established to help each company build competitive market advantages. It doesnt share the cost and risk like a joint venture. more good will like

What is an FDI

Foreign Direct Investment, buyung permanent property and business in foreign nations, often to gain a foothold in a new market and benefit from local resources or labor.

What is the most common form of FDI

foreign subsidary a company owned in a foreign company by another company, called. a parent company

What is Sovereign wealth fund SWF

investment funds managed by the gvmt. holding investment stakes in foreign companies, real estate, and other investment.

What is Trade protectionsim

use of governement regulations and policies to restrict imports and promote domestic industries, often to protect local jobs and economies.

what are tariffs

Taxes imposed on imported goods to increase their prices, thereby protecting domestic industries.

What are protective tariffs

Tariffs specifically designed to protect domestic industries by raising the cost of imported goods, making them less competitive.

what are revenue tariffs

designed to raise money for the governement. Tax is paid by the importer, so us companies would have to pay the tariff bill

What is an import quota

limits the number of products in a certain categories a nation can import . Used to ensure us jobs and protect us companies

What is an Embargo

complete BAN on import or export of a certain PRODUCT or country . like russia

What is GATT

General Agreement on Tariffs and Trade- made in 1948 to promote international trade by reducing tariffs and other trade barriers.

What did the Uruguay ROund establish to mediate disputes among nations

World Trade Organization WTO not very powerful; :(

What is a common Market

regional group of countries with a common external traiff, no internal tariffs and cordinatined laws

Which of the following is NOT an example of a common market?

• European Union (EU)

• Mercosur

• Association of Southeast Asian Nations (ASEAN) Economic Community

• North American Free Trade Agreement (NAFTA)

NAFTA is a free trade agreement, not a common market.