2.1: international business

imports: goods and services purchased abroad
exports: goods and services sold abroad
trade balance: the difference between a country’s imports and exports * trade surplus — imports < exports * trade deficit — imports > exports * US currently in a deficit
GDP: gross domestic product * US currently has the largest economic value by GDP * value created in a given country’s economy
free trade areas — facilitate international trade * USMCA replaced NAFTA * EU
protectionism * tariff: a tax on imports * quota: a restriction on the quantity of goods that can enter a country * embargo: a total ban on the import of a good from a particular country

absolute advantage: the ability of a producer to produce more of a good than another producer with the same quantity of inputs * inputs include land, labor, and capital * entities will benefit from specialization based on their comparative advantages
comparative advantage: the idea that producers should produce the goods that they are most efficient at producing * includes opportunity cost (absolute advantage does not) * eg. US — imports simple manufactured goods and exports sophisticated, high tech products
diamond in national advantages * factor conditions — labor, infrastructure → ability to compete in an industry * significant impact on entrepreneurship and productivity * demand conditions — demand for products/services in market * related/supporting industries — presence/absence of competitors * firm strategy, structure, and rivalry — nature of domestic rivalry and how companies are created/organized/managed * bankruptcy: US → liquidation vs. reorganization (how to best pay off debts)

direct export * market product internationally, export directly to consumer * eg. google ads * easy to advertise to people abroad * can be very specific with target market
foreign intermediary * someone who understands business in a given country who can help you run a business there * may be employee or free agent
licensing agreement * an agreement with a parent company to run a business in a certain way while giving up ownership
strategic alliance/joint venture * share with other countries in a given country * eg. airlines may share websites
multinational corporations * have officials globally * need to have expertise in each country * deal with language barriers, differing laws
cultural differences — note Geert Hofstede’s cultural dimensions * individualism vs. collectivism * long- vs. short-term orientation * masculinity vs. femininity * high vs. low power distance * high vs. low uncertainty avoidance

advantages of working abroad * career advancement * exciting work environment * working with different people * exciting place to live (food, culture)
disadvantages of working abroad * language barrier * safety * differing customs/culture shock * different currency * leaving family and friends
expatriates (expats) * citizens of one country who temporarily live/work in another
businesses encourage international work via * raises * time off to travel home * covering travel expenses * building expat communities abroad that mimic home cultures * providing security personnel