Marketing

Absolute advantage

Being better at producing something than someone else. You can make more of it with the same resources.

Comparative Advantage

Being able to produce something at a lower opportunity cost than someone else. You give up less to make it.

Tariffs

tax on goods coming in from other countries (imports). They make those foreign goods more expensive, so people are more likely to buy the stuff made at home. This protects businesses in the country.

Quotas

Limits on how much can be imported. By limiting the supply, quotas can make those imported goods more expensive and harder to find. This helps domestic producers

Embargoes

Bans on trade with a specific country. Are often used for political reasons, and they seriously disrupt trade. They can cause shortages and economic problems for both countries involved.

Protectionism

Policies that protect domestic industries from foreign competition. Can take many forms, including tariffs, quotas, and subsidies. It makes it harder for foreign companies to compete, which can stifle innovation and keep prices higher.

Protectionism with subsidies

Giving money to domestic businesses to help them compete. Subsidies can make domestic goods artificially cheap, making it hard for foreign companies to compete fairly.

Protectionism with retaliation:

Responding to another country's trade barriers with your own. Can lead to a trade war, where both countries keep adding more and more restrictions. This hurts businesses and consumers in both countries and can damage the overall economy.

World Trade Organization (WTO):

It’s like a global club with rules for international trade. It helps countries trade fairly, settles trade disputes, and encourages lower trade barriers.

North America Free Trade Agreement (NAFTA)

it focuses on reducing trade barriers between the US, Mexico, and Canada. It aims to make trade easier and cheaper between these countries.

European Union (EU)

A group of European countries that have eliminated most trade barriers among themselves. It has created a single market with free movement of goods, services, capital, and people between member states. This means there are very few trade barriers within the EU.

Importing

Buying goods or services from a business in another country and bringing them into your own country.

Exporting

Selling goods or services produced in your country to businesses or consumers in another country.

Licensing

Giving a foreign company the right to use your intellectual property (like patents, trademarks, or copyrights) in exchange for a fee.

Contract Manufacturing

Hiring a foreign company to manufacture your products according to your specifications. You retain control of the design and marketing of the product.

Joint Venture

Two or more companies from different countries forming a new business entity together, sharing ownership, risks, and profits.

How do importing, exporting, licensing, contract manufacturing, and joint venture relate to each other?

These are all different ways that businesses can engage in international trade and expand their operations globally. They represent varying levels of involvement and commitment to foreign markets.

Infrastructure

The basic physical and organizational structures a country needs to operate. Think roads, bridges, airports, internet access, and reliable power grids.

Good infrastructure means you can easily transport goods, communicate effectively, and have reliable access to essential services. Poor infrastructure can mean delays, higher costs, and a lot of headaches.

Labor Force

The pool of available workers in the country. Consider factors like skill level, education, and the cost of labor.

You need to find workers with the right skills for your business. Also, labor costs vary significantly between countries, which can impact your profitability.

Employee Benefits

Things like healthcare, retirement plans, paid vacation, and other non-wage compensation.

These vary greatly from country to country. Generous benefits can attract good employees but also increase your costs. You'll need to factor them into your budget.

Taxes

The various taxes you'll need to pay to the government, including corporate income tax, property tax, and payroll tax.

Taxes can significantly impact your profits. Different countries have different tax rates and regulations, so you'll need to research the specific tax laws in your target country

Standard of Living

The overall quality of life in a country, including factors like income, access to healthcare, education, and safety.

A high standard of living can attract skilled workers and create a desirable consumer market. It can also mean higher costs for your business.

Foreign Exchange Rate

The value of one currency compared to another. For example, how many U.S. dollars you can get for one Euro.

Fluctuations in exchange rates can affect your profits and the cost of doing business. If your home currency weakens against the foreign currency, your costs will increase, and vice versa.