BUS 201 Chapter Notes - Chapter 5: Canadian Dollar, Absolute Advantage, Developed Country

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BUS 201 – Ch. 5
LO 1 – Describe the growing complexity in the global business environment
and identify the major world marketplaces.
- globalization = process by which the world economy is becoming a single
interdependent system
- import = prod made/grown abroad but sold domestically
- export = prod mad/grown domestically but shipped & sold abroad
- international trade becoming increasingly central to fortunes of most nations &
- 3 major marketplaces: North America, Europe, Asia Pacific
 these incl more of upper-middle-income & high-income nations
 largest economies, biggest corps, influential financial markets, highest-
income consumers
 US dominates N. Am business region, largest marketplace, most stable
economy in the world for decades
LO 2 – Identify the evolving role of emerging markets and highlight the
importance of the BRICS nations.
- BRICS = Brazil, Russia, India, China, South Africa; powerful emerging markets in
business world
 Brazil: commodities & agri
 Russia: energy supplier
 China: manufacturing
 India: leading service provider (from customer service call centres to
engineering solutions providers)
 South Africa: rich in minerals resources
- growth & quick market dvlpt of consumer market in these nations also providing
great sales opportunities for foreign companies that manufacture cars high-end
clothing brands, etc
LO 3 – Explain how different forms of competitive advantage, import-export
balances, exchange rates, and foreign competition determine how countries
and businesses respond to the international environment.
- absolute advantage = ability to prod sth more efficiently than any other country
 Saudi oil, Brazilian coffee beans, Canadian timber
 countries should focus on prod goods & services that they have an absolute
advantage in & buy others
 true absolute advantage rare, majority relative
- comparative advantage = ability to produce some prod more efficiently than others
 all countries have comparative advantage in some products but no country
has in all prod
 MEDC have comp adv in high-tech prod, LEDC have comp adv in making
prod that req lots of low-cost labour
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