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Lecture 5

BUS 201 Lecture Notes - Lecture 5: Cash Flow, General Agreement On Tariffs And Trade, Foreign Direct Investment

Business Administration
Course Code
BUS 201
Peter Tingling

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Chapter 5: The Global Context
of Business
Week 5
1)The Contemporary Global Economy
Total volume of world trade $15 trillion/yr
• Globalization
othe integration of markets globally
othe world is becoming a single interdependent system
odiversity of gods and services available from international trade
• Imports
oproducts purchased in Canada that are manufactured in other
• Exports
oproducts made in Canada that are purchased by consumers in other
Major World Marketplaces
oPer-capital income
Average income per person in a country, to make distinctions
among countries.
High-income countries
Annual per-capital income greater than US
Canada, United States, most European countries,
Australia, Japan, South Korea, Israel, Kuwait, the
United Arab Emirates, Oman
Upper-middle income countries
Annual per-capital income between US $$4036
and US $12475.
China, Columbia, Lebanon, Turkey, Argentina,
South Africa
Low-middle income countries
Annual per-capital income between US $1026 and
US $4035.
Albania, Armenia, Guatemala, Vietnam
Low income countries
Annual per-capital income of US $1025 or less.
Bangladesh, Ethiopia, Haiti and Afghanistan
Due to low literacy rates, weak infrastructure,
unstable governments and related problems
Less attractive for international business
oGeographic Clusters
Major marketplaces where North America Europe and
Pacific/Asia are relatively upper-middle-income and high-

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Largest economies, biggest corporations, influential financial
markets and highest income consumers.
North America
our largest trading partner is the United States
trade with Mexico is increasing
Most stable economy in the world
Western and Eastern
North vs. South
Japan, China, and India
2)Emerging Markets
oRisen in international trade
Brazil is strong in commodities and agriculture
Russia is a powerful energy supplier
China is a major hub of manufacturing activity
India has become a leading service provider at various level
ranging from basic customer service call centres to engineering
solutions provider
South Africa is rich in minerals resources, something that these
emerging markets need to sustain growth
oBrazil, Russia, India, China, South Africa
Other Important Emerging Markets include:
oSouth Korea
3.1) Forms of Competitive Advantage
Absolute Advantage
a country can produce something more efficiently than any other
The ability to produce something more efficiently than any country
Comparative Advantage
The ability to produce some products more efficiently than others
a country can produce certain items more efficiently (cheaper) than it
can other items.
Theory of National Competitive Advantage
ofocus on four key conditions
Factor Conditions
Are the factors of production
Demand Conditions
Reflect a large domestic consumer base that promotes
strong demand for innovative products
Related and Supporting Industries
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