AFM131 Chapter Notes - Chapter 3: Private Label, Small Business, International Monetary Fund
14 Jun 2018
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Chapter 3
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: Suggested by David Ricardo. 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 trade
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. Short-lived or non-existent today
because of new tech and competition.
Canadian exports: Account for 2.4 percent (458 billion US) of world
merchandise trade and 1.7 percent (78 billion US) of world services trade.
Exports account for one in three Canadian jobs. Canada ranks 11th in the
world in exporting merchandise. Small business sector is the majority of
exporters in Canada.
Canadian imports: Canada ranks 13th in the world in importing
merchandise.
Balance of Trade: A nations ratio of exports to imports
Trade Surplus: A favorable balance of trade; occurs when the value of a
countrys exports exceeds that of its imports
Trade Deficit: An unfavorable balance of trade; occurs when the value of a
countrys imports exceeds that of its exports.
Balance of Payments: The difference between money coming into a
country (from exports) and money leaving the country (for imports) plus
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money flows from other factors such as tourism, foreign aid, military
expenditures, and foreign 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
(royalty)
Contract Manufacturing: A foreign countrys production of private label
goods to which a domestic company then attaches its brand name or
trademark; also called outsourcing
Joint Venture: A partnership in which two or more companies (often from
different countries) join to undertake a major project.
Advantages to Joint Ventures:
- Shared technology and risk
- Shared marketing and management expertise
- Entry into markets where foreign companies are often not allowed unless
goods are produced locally
Strategic Alliance: A long-term partnership between two or more
companies established to help each company build competitive market
advantages. They do not share tech, risk, marketing, management or
profits.
Foreign Direct Investment (FDI): The buying of permanent property and
businesses in foreign nations.
Foreign Subsidiary: A company owned in a foreign country by the parent
country. Foreign subsidiaries are large investments, with barriers of foreign
legal requirements and risk of expropriation.
Multinational Corporation: An organization that manufactures and
markets products in many different countries and has multinational stock
ownership and multinational management
Culture: The set of values, beliefs, rules, and institutions held by a specific
group of people.
Ethnocentricity: An attitude that ones own culture is superior to all others.
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Document Summary
Free trade: the movement of goods and services among nations without political or economic barriers. 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 trade. 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. Short-lived or non-existent today because of new tech and competition. Canadian exports: account for 2. 4 percent (458 billion us) of world merchandise trade and 1. 7 percent (78 billion us) of world services trade. Exports account for one in three canadian jobs. Canada ranks 11th in the world in exporting merchandise. Small business sector is the majority of exporters in canada. Canadian imports: canada ranks 13th in the world in importing merchandise.
