chapter 3

Question 1

why do nations trade

Answer 1

–> due to economic globalization
–> an increase in interdependance of national economies

Question 2

why do companies trade internationally

Answer 2

1. focusing on relative strenghs: produce goods/services where they escel and trade products they need
2. market expansion–> increases revenues
3. economies of scale–> producing goods at lower costs by purchasing higher quantities
4. acquire materials, goods, services not available at home
5. keep up with customers
6. keep up with competitors

Question 3

How international trade is measured

Answer 3

1. by BALANCE OF TRADE
   —> total value of products a nation exports - total value value of imports over some period of time
2. by BALANCE OF PAYMENTS
   –> total flow of money into country-total flow of money out of the country

Question 4

trade surplus vs trade deficit

Answer 4

trade surplus–> country exports more than it imports (positive)
trade deficit-> imports more than it exports

Question 5

define exchange rate

Answer 5

• rate in which money of one country is traded for money from another country
• strong currency: higher exchange rate
• weak currency: low exchange rate

Question 6

define free trade

Answer 6

international trade without restrictions

Question 7

define protectionism

Answer 7

restricting free trade
why?–> shield country indusrty from foreign competition (protect local companies)

Question 8

6 important ideas about free trade

Answer 8

1. exists conflict between nations: some are against it and other not
2. conflict within nations
3. asymmetrical wins and losses
4. broader business environment
5. global interconnectedness

Question 9

types of trading blocs

Answer 9

european union
USMCA (united states, canada, mexico agreement
association of southeast asian members (ASEAN)
Asia-pacific economic cooperation (APEC)
greater arab free trade area (GAFTA)

Question 9

Gove

Question 10

culture

Answer 10

shared systems of symbols, beliefs, attitudes and values.

Question 12

tax haven definition

Answer 12

country whose banking law and low tax rates gives individuals + companies the opportunity to shield some of their income from higher tax rates.

Question 13

how to accept multiple cultures

Answer 13

1. avoiding assumptions
2. avoiding judgements
3. acknowledge distinctions

Question 14

bribery definition

Answer 14

paying gov officials to secure contracts or gain advantage

Question 15

importing vs exporting

Answer 15

-importing–> buying from another country
- exporting–> selling products outiside country it was produced.

Question 16

the 5 forms of international business activity

Answer 16

• importing &exporting
• international licensing–> agreement to produce and market another’s company product in exchange for royalty or fee.
• international franchising
• international strategic alliances and joint ventures
• foreign direct investments: launching a new company in another country

Question 17

types of organizational strategies for international expansion

Answer 17

1. multi-domestic strategy: creating highly independent business operating units in each new country.
2. global strategy: viewing the world as a single integrated market.
3. transnational strategy: acting glocally

Question 18

5 functional startegies for international expansion

Answer 18

1. products: customized or standardised
2. promotion–> ads, promotional efforts
3. pricing
4. staffing

Question 19

define translation technologies

Answer 19

• forms of automated translation
• text translation and real-time voice translation.

Question 20

global startegy vs multidomestric strategy

Answer 20

- global strategy is focused on offering standardized products or services worldwide, a - multidomestic strategy focuses on tailoring products and services to meet the unique needs and preferences of each local market.

Question 21

dumping meaning

Answer 21

when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter's domestic market.

Question 22

floating exchange rate system

Answer 22

currency values fluctuate based on market supply and demand

Question 23

purpose of import quotas

Answer 23

establish a standard price for imported goods.