Chapter 1

\ Exports: Domestically produced goods and services sold in markets in other countries. Imports: Foreign-made products and services purchased by domestic consumers.

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 lower cost than it can supply other goods, compared with other countries.

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

Exchange Rates

  • Domestic economic and political conditions
  • Central bank intervention
  • Balance-of-payments position
  • Speculation over future currency values

Political and Legal Differences

  • Political Climate
  • Legal Environment
  • International Regulations

Types of Trade Restrictions

  • Tariffs - taxes, surcharges, or duties on foreign products.
  • Nontariff Barriers - also called administrative trade barriers   — Quotas limit the amount of a product that can be imported over a specified time period.   — Dumping is the act of selling a product abroad at a very low price.   — An embargo imposes a total ban on importing a specified product or all   — Exchange controls through central banks or government agencies regulate the buying and selling of currency to shape foreign exchange in accordance with national policy.

Organizations Promoting International Trade

  • General Agreement on Tariffs and Trade (GATT)
  • The World Trade Organization succeeded GATT
  • World Bank
  • International Monetary Fund (IMF)

International Economic Communities

  • North American Free Trade Agreement (NAFTA)
  • Central America-Dominican Republic Free Trade Agreement (CAFTA)
  • European Union

\ Click-through rate - percentage of people presented with a Web banner ad who click on it. Conversion rate - percentage of visitors to a website who make a purchase.

Benefits of B2C E-Business

  • Lower Prices
  • Convenience
  • Personalization

Business-to-Business (B2B)

Business-to-business e-business (B2B) Electronic business transactions between businesses using the Internet

Electronic Data Interchanges, Extranets, & Private Exchanges

Electronic data interchange (EDI) is a computer-to-computer exchange of invoices, purchase orders, price quotations and other sales information.

Extranets offer an efficient way for business to collaborate with vendors, partners and customers.

Private Exchanges are the next generation of extranets where all types of data related to e-business is shared.

Business Web Sites

  • Increase a firm’s visibility, promote its offerings, and provide information to interested parties.
  • Build customer goodwill and assist retailers and other resellers in their marketing efforts.
  • Disseminate financial information to investors.
  • Enable prospective employees to apply online for jobs.

What is E-Business/E-Commerce?

  • E-tailing (internet perakendeciliği) , or virtual storefronts (sanal vitrin) on Web sites.
  • Online business-to-business transactions.
  • Electronic data interchange (EDI), the business-to-business exchange of data using compatible software.
  • E-mail, instant messaging, and other Web-enabled communication tools and their use as media for reaching prospective and existing customers.
  • The gathering and use of demographic, product, and other information through Web contacts.

Capabilities and Benefits of E-Business

  • Global Reach. Goods and services can be sold to customers worldwide.
  • Personalization. Companies can customize products and reduce inventory.
  • Interactivity. Customers and suppliers can negotiate prices online.
  • Right-time and integrated marketing. Online retailers provide products when and where customers want them and promotions can be directed to individual customers.
  • Cost savings. E-business can reduce costs.

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