MKTG 336 Chapter 2
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FlashcardsFDI (Foreign Direct Investment)
Investment to gain significant management control.
Magnitude of International Trade
$1.5 trillion U.S. FDI from 2013-2017.
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27 Terms
FDI (Foreign Direct Investment)
Investment to gain significant management control.
Magnitude of International Trade
$1.5 trillion U.S. FDI from 2013-2017.
COVID-19 Trade Impact
2020 crisis caused $1.0 trillion trade decrease.
China's Export Dominance
Largest exporter, lifted 500 million from poverty.
Service Exports Growth
Increased in dollar value across primary regions.
Regional Trade Associations
Groups like ASEAN and EU enhance regional trade.
Top U.S. Trading Partners
Top 10 partners accounted for 64% exports.
Mercantilism
Wealth is precious metals; promote exports, limit imports.
Absolute Advantage Theory
Nation produces more efficiently than another for less.
Comparative Advantage Theory
Less efficient nation specializes in less disadvantageous good.
Exchange Rate
Price of one currency in terms of another.
Currency Fluctuations
Variations in currency value affecting trade dynamics.
Resources in Trade
Land, labor, capital, and production factors available.
Overlapping Demand
Similar preferences among nations with similar incomes.
Intra-Industry Trade
Trade within industries due to product differentiation.
International Product Life Cycle (IPLC)
Product evolves from export to import over time.
Four Stages of IPLC
Export, foreign production, foreign competition, import competition.
Economies of Scale
Cost per unit decreases as production increases.
Experience Curve
Efficiency improves with cumulative production experience.
Portfolio Investment
Buying stocks/bonds for returns without management control.
Greenfield Investment
Building new facilities from scratch in foreign markets.
Cross-Border Acquisition
Purchasing existing businesses in foreign countries.
Monopolistic Advantage Theory
FDI occurs in industries with few competitors.
Internalization Theory
Firms control knowledge transfer to foreign subsidiaries.
Dynamic Capabilities Theory
Ability to create and exploit unique resources over time.
Eclectic Theory of International Production
Investment advantages: ownership, location, internalization.
International Future Challenges
Supply chain disruptions and geopolitical tensions ahead.