Textbook Notes (367,747)
Canada (161,363)
Commerce (1,683)
Rita Cossa (83)
Chapter 3

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Department
Commerce
Course
COMMERCE 1B03
Professor
Rita Cossa
Semester
Winter

Description
Chapter 3 - Competing in Global Markets exporting - selling products to another country importing - buying products from another country free trade - the movement of goods and services among nations without political or economic barriers comparative advantage theory - a theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently absolute advantage - the advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries The Canada Border Services Agency deals with importers across the whole range of goods and services that enter our country. These products are subject to compliance with certain conditions imposed by the federal/provincial gov'ts. balance of trade- is a nation's ratio of exports to imports trade surplus - occurs when the value of the country's exports exceeds that of its imports (favourable) trade deficit - an unfavourable balance of trade; occurs when the value of a country's imports exceeds that of its imports the goal is always to have more money flowing into the country rather than out of the country the key strategies to compete in global markets include licensing, exporting, franchising, contract manufacturing, creating international joint ventures and strategic alliances, and engaging in foreign direct investment. licensing - a global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty) the firm can gain revenues it would not otherwise have generated in its home market licensors spend little to no money to produce and market their goods if remarkable growth in the foreign market for a product, the bulk of the revenues earned belong to the licensee if a foreign license learns the company's technology or product secrets, it may break the agreement and start producing a similar product of their own exporting no matter how the company starts exporting, it must develop some goals and some strategies for achieving these goals franchising - is a contractual agreement whereby someone with a good idea for a business sells the right to use the business name and sell a product or service in a given territory in a specified manner ex. Molly Maid, Tim Hortons contract manufacturing - a foreign country's production of private-label goods to which domestic company then attached its brand name or trademark; also called outsourcing enables a company to experiment in a new market without incurring heavy start-up costs such as building a manufacturing plant international joint ventures and strategic alliances joint venture - a partnership in which two or more companies (often from different countries) join to undertake a major project benefits - shared technology and risk, shared marketing and management expertise, entry into markets where foreign companies are often not allowed unless goods are produced locally drawbacks - one partner can learn the other's technology and practices, and then use what it learned to its own advantage. the joint venture may also become too large to be as flexible as needed strategic alliance - a long term partnership between 2 or more companies established to help each company build competitive market advantages don't share costs, risks, management or even profits foreign direct investment - is buying permanent property and businesse
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