Textbook Notes (368,440)
Canada (161,878)
MGTA01H3 (583)
Chapter 5

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Management (MGT)
Bill Mc Conkey

Chapter 5 – The Rise of International Business Globalization – the integration of markets globally; refers to the process by which the world economy is fast and becoming a single interdependent entity. The rise of international business – there are more and more business firms engaged in international business. The global economy is characterized by rapid growth in the exchange of information and trade in services. Major World Marketplaces – North America, Western Europe (dominated by Germany, the UK, France, and Italy), and Asia-Pacific (dominated by Japan) Per Capita Income – the average income per person of a country  High-income countries – per capita income greater than US $10 065  Upper-middle income countries – per capita income between US $3 255-$10 065  Low middle-income countries – per capita income between US $825-$3 255  Low-income countries – per capita income of less than US $825 Forms of Competitive Advantage  Absolute Advantage – a nation’s ability to produce something more cheaply or better than any other country  Comparative Advantage – a nation’s ability to produce some products more efficiently or better than other goods  National Competitive Advantage – country will be motivated to engage in international trade when the four conditions are favourable Factor Conditions – factors of production Demand Conditions – reflects a large domestic consumer base that promotes strong demand for innovative products Related and Supporting Industries – include a strong local or regional suppliers and/or industrial customers Strategies, structures, and rivalries - refer to firms and industries that stress cost reduction, product quality, higher productivity, and innovative new products International Competitiveness - the ability of a country to generate more wealth than its competitors in world markets Import-Export Balances Balance of Trade – difference in value between its total export and its total imports  Trade Surplus occurs when a country exports more than it imports, a favourable balance of trade  Trade Deficit occurs when a country imports more than it exports, an unfavourable balance of trade *United States is the largest trading partner with Canada; the World Trade Organization found that Canada’s economic dependence on the US is growing, leaving Canada vulnerable Balance of Payments – refers to the flow of money in to or out of a country as a result of trade and other transactions Factors leading to a favourable balance of payments  Exports  Foreign tourist spending within the domestic country  Foreign investments within the domestic country  Earnings from overseas investments All these must be greater than  Imports  Canadian tourist spending overseas  Foreign aid grants  Military spending abroad  Investments made by domestic firms  Earning of foreigners from their investments in Canada Exchange Rates – the rate at which the currency of one nation can be exchanged for that of another Euro – common currency shared among most of the members of the European Union (excludes Denmark, Sweden, and the UK) International Organizational Structures Independent Agents – a foreign individual, or organization, who agrees to represent an exporter’s interests in foreign markets; they act as sales representatives Licensing Arrangement – an arrangement by an owner of a process or product to allow another business to produce, distribute, or market it for a
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