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Intro to business
Chapter 3: Doing business in global markets
| Question | Answer |
|---|---|
| Why should nations trade with other nations? | (1) No country is self-sufficient, (2) other countries need products that prosperous countries produce, and (3) natural resources and technological skills are not distributed evenly around the world |
| What is the theory of comparative advantage? | The theory of comparative advantage contends that a country should make and then sell those products it produces most efficiently but buy those it cannot produce as efficiently. |
| What is absolute advantage? | Absolute advantage means that a country has a monopoly on a certain product or can produce the product more efficiently than any other country. There are few examples of absolute advantage. |
| What kinds of products can be imported and exported? | Though it is not necessarily easy, just about any kind of product can be imported or exported. |
| What terms are important in understanding world trade? | Export-selling products to other countries.Import-buying products from other country.balance of trade-relationship of exports to imports.balance of payments-balance of trade+other money flows such as tourism and foreign aid.Dump-selling for less elswhere |
| What are some ways in which a company can engage in global business? | Ways of entering world trade include licensing, exporting, franchising, contract manufacturing, joint ventures and strategic alliances, and direct foreign investment. |
| How do multinational corporations differ from other companies that participate in global business? | Unlike companies that only export or import, multinational corporations also have manufacturing facilities or other physical presence abroad. |
| What are some of the forces that can discourage participation in global business? | Potential stumbling blocks to world trade include sociocultural forces, economic and financial forces, legal and regulatory forces, and physical and environmental forces. |
| What is trade protectionism? | Trade protectionism is the use of government regulations to limit the import of goods and services. Advocates believe it allows domestic producers to grow, producing more jobs. The key tools of protectionism are tariffs, import quotas, and embargoes. |
| What are tariffs? | Tariffs are taxes on foreign products. Protective tariffs raise the price of foreign products and protect domestic industries; revenue tariffs raise money for the government. |
| What is an embargo? | An embargo prohibits the importing or exporting of certain products. |
| Is trade protectionism good for domestic producers? | That is debatable. Trade protectionism offers pluses and minuses. |
| Why do governments continue such practices as trade protectionism? | The theory of mercantilism started the practice of trade protectionism and it has persisted, though in a weaker form, ever since. |
| What is offshore outsourcing? Why is it a major concern for the future? | Outsourcing is purchase of goods and services from outside a firm rather than providing them inside the company. Many fear that growing numbers of jobs in the US will be lost due to offshore outsourcing and the quality of products made could be inferior |
Created by:
Ericamarggraf