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Lecture 7

Lecture 7

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McGill University
Management Core
MGCR 382
John Saba

International Business Lecture 7Homework 9 read page 240257 thProject due March 24 Final Exam Tuesday April 12thChapter 6International Tradeand Investment contObjective 3 Use the Modern Firmbased Theories of international trade to describe global strategies adopted by businessesSee figure 66 page 168 We now cover the Firmbased theories which explains intraindustry tradeModern firmbased trade theories were developed after WWII and includeCountry similarity theory Product life cycle Global strategic rivalry National competitive advantageAfter WWII international business research has focused on the role of the firm rather than the country in promoting international tradeFirmbased theories were developed for 2 key reasons1Growing importance of MNCs 2They are able to explain and predict the existence and growth of intra industry trade which accounts for about 40b of the world trade Note country level theories are only useful in explaining interindustry trade among countriesWhen explaining trade flows firmbased theories unlike countrybased theories incorporate factors such asQualityTechnologyBrand namesCustomer loyaltyBecause firms not countries are the agents of international trade the newer theories explore the firms role in promoting exports and importsOverviewThere are 4 modern Firmbased trade theories that have developed1Country similarity theory 2Poduct life cycle theory 3Global strategic rivalry theory 4Porters national competitive advantage theory
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