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MGTA01H3 (583)

Ch 5 Notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Friday, October 30, 2009 TN: Chapter 5 [MGTA03] The Rise of International Business Globalization: The integration of markets globally Imports: Products that are made or grown abroad and sold in Canada Exports: Products make or grown in Canada that are sold abroad The Contemporary Global Economy Globalization allows businesses to expand internationally, but competition, since more businesses Factors That Sustain Globalization a) Benefits of Globalization: more businesses want to participate b)New Technology: travel, communication, commerce is faster and easier ( more likely to happen) c) Competitive Pressures: when a firm must enter foreign markets to keep up with its competitors The Major World Marketplaces Per Capita Income: average income per person High-income countries Greater than US $10,065 Canada, US., Europe,Australia Uppermiddle-income countries US $3255 - US $10,065 Greece, Hungry, Poland Lowmiddle-income countries US $825 - US $ 3255 Columbia, Thailand Low-income countries Less than US $825 EastAfrican Nations North America > Europe > Asia-Pacific Forms of CompetitiveAdvantage Countries export products that they can produce better or less expensively than other countries and import products that they cannot produce efciently I. AbsoluteAdvantage:Anations ability to produce something more cheaply or better than any other country (e.g., wines in France compared to wines in CaliforniaOntario) II. ComparativeAdvantage:Anations ability to produce some products more efficiently or better than it can other (e.g., South Korea has no fertile land ( does not farm) but can manufacture electronics) III. National CompetitiveAdvantage: 1. Factor Conditions: (aka factors of production) 2. Demand Conditions: consumer demand for innovative products 3. Related and Supporting Industries: strong suppliersindustrial customers 4. Strategies, Structures and Rivalries: firms that force efficiencynew products These determine the time of environment the firm competes International Competitiveness: ability of a country to generate more wealth than its competitors in world markets Import-Export Balances Balance of Trade: The difference in value between a countrys total exports and its total imports A) Trade Surplus: exports are greater than imports B)Trade Deficit: imports are greater than exports Canada depends on US too much since most exports go there Balance of Payments: The difference between money flowing in to and out of a country Our exports to them > their exports to us 1 www.notesolution.com
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