Textbook Notes (368,125)
Canada (161,663)
MGTA01H3 (583)
H Laurence (25)
Chapter 5

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Management (MGT)
H Laurence

Chapter 5 Understanding International BusinessGlobalization the integration of markets globallyEconomy revolves around 3 major markets North America Europe and AsiaPacificWorld Bank an agency of United nations uses per capita average as a measure to divide countries into one of the four groupsohigh income countrieswith per capita income greater than US 10 065 such as Canada US SK Kuwait Europe Australia New Zealand Japan UAE Singapore Taiwanoupper middle income countries per capita income between 325510065 such as Czech Republic Greece Mexico Hungary Poland Turkeyolow middle income countries per capita between 8253255 such as Colombia Guatemala Samoa and ThailandoLow income countries per capita less than 825 Due to low literacy rate weak infrastructure unstable govtEuropeoften regarded as Western Europe and Eastern EuropeGermany UK France and ItalyBut with the transformation of EU It has increased regions importanceAsiapacificJapan china Thailand Malaysia Singapore Indonesia SK Taiwan Philippines Australia and New ZealandrdChinese economy is 3 largest after US and JapanTechnology companies in this area are strugglingAbsolute AdvantageAbsolute advantage a nations ability to produce something more cheaply or better than any other countryComparative AdvantageComparative Advantagea nations ability to produce some products more cheaply or better than it can othersNational Competitive advantageNational competitive advantage is the reason why nations engage in international tradeNational competitive advantage a country will be include to engage in international trade when factor conditions demand condition related and supporting industries and strategiesstructures rivalries are favorableoFactor conditionsare the factors of productionoDemand conditions reflecta large domestic consumer base that promotes strong demand for innovative productsoRelated and supporting industries include strong local or regional suppliers andor industrial customersoStrategies structures and rivalries refer to firms and industries that stress cost reduction product quality higher productivity and innovative new productsInteraction of 4 elements determines the environment in which a nations firms competeInternational competitiveness the ability of a country to generate more wealth than its competitors in world markets2006 top three countries in global competitiveness ranking were Switzerland Finland SwedenBalance of TradeBalance of trade the difference in value between a countrys total exports and its total importsTrade surplus occurs when a country exports more than it importsTrade deficit occurs when a country imports more than it exportsUS accounts for more than 85 of Canadas exports and 23 of its importsBalance of Payments
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