Chapter 5 Textbook Notes

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University of Toronto Scarborough
Management (MGT)
Ingrid L.Stefanovic

MGTA03 01 Chapter 5: Understanding International Business The Rise of International Business (pg. 67 78) - Globalization is when the world economy is becoming a single interdependent system. The integration of markets globally - Imports are products made or grown abroad but sold in Canada (eg. shoe made in China) - Exports are products made or grown in Canada that is then sold abroad The Contemporary Global Economy - International business is nothing new. In fact, trade between nations can be traced back as far as 2000 BCE when North African tribes took dates and clothing to Assyria and Babylonia in the Middle East and traded them for olive oil and spices - MIT professor Paul Krugman states that we ar0349L3,30[97020O,.9L;0JO4-,O econom-0.,:80L25479834Z43O705708039,8OLJK9OKLJK075745479L4341*!9K,3 they did 100 years ago and that capital mobility (the movement of money from country to country) is about the same as it was in 1914 - International trade has become more central in the fortunes of most nations of the world. Countries are now encouraging international trade and there are incentives offered to make their domestic business internationally - As industries and market become global, firms compete in them are also becoming global - Factors such as new technology which has made international travel, communication, and commerce easier has sparked and sustain globalization - Sometimes a firm must enter foreign markets in order to keep up with its competitors The Major World Marketplaces - North America, Europe, and Asia Pacific are the three major marketplaces in which the 0.434270;4O;08,74:3 %K0,70K420949K0Z47O8O,7J0890.4342L08-LJJ089 multinational corporations, most influential financial markets, and highest income consumers - The World Bank uses per capita income, the average income per person of a country, as a measure to divide countries into one of four groups o High income countries are those with per capita income greater than U.S. $10 065. These countries include Canada, United States, most countries in Europe, Australia, Japan, South Korea, Hong Kong, Singapore, Taiwan, Israel... o Upper middle income countries are those with per capita income between U.S. $3225 and U.S. $10 065. Countries include Greece, Poland, Mexico, South Africa, Hungary, Turkey, Argentina, Czech Republic... o Low middle income countries are those with per capita income between U.S. $823 and U.S. $3225. Countries include Thailand, China, Colombia... These countries have large populations and are seen as potentially attractive markets o Low income countries (often called developing countries) are those with annual per capita income of less than U.S. $825. An example is the East African nation of Somalia. These countries are less attractive to international business because they have weak infrastructures, unstable governments, and low literacy rates North America
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