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Chapter 5

Chapter 5 Readings


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Murphy Lawrence
Chapter
5

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CHAPTER 5
ôc9 the integration of markets globally.
ôcî Products that are made or grown abroad and sold in Canada
ôcp Products made or grown in Canada that are sold abroad.
CONTEMPORRAY GLOBAL ECONOMY
ôcînternational business is nothing new. Trade can be traced back as far as 2000 BCE, when
North Africa tribes took dates and clothing to Assyria and Babylonia in the middle and
traded them.
ôcînternational trade is becoming increasingly central to the fortunes of most nations of the
world.
ôcToday more and more countries are encouraging international trade. Countries are more
feely opening their borders to foreign business, offering incentives fro their own domestic
business to expand international and making it easier for foreign firms to partner with local
firms through various alliances.
ôcueveral forces have sparked this sustainability of globalization. For one thing governments
and business have simply become more aware of the benefits of globalization to their
countries and shareholders. Technology has also made it simpler.
MAJOR WORLD MARKETPLACEu
ôcContemporary world economy revolves around three major marketplaces: North America,
Europe, and Asia pacific -> home to largest economies.
ôcWorld bank uses per capita income to divide countries into 4 groups:
gcHigh-income countries; countries with per capita higher than $10 065. Ex: Canada,
Us, Korea, Japan
gcUpper middles income; capita between $3255 and 10065. Ex: Greece, Hungary,
Poland, Mexico, Turkey
gcLowe middle income; capita between $825-3255. X: Colombia, Guatemala, Thailand
gcLow income; capita below $825. Ex: uomalia

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¦
ôcUuA dominates the North American business region. ît is the single largest market place and
enjoys stable economy. Canada also plays a major role in the international economy. UuA &
Canada are each others largest partners: general motors, Procter & gambler, Bombardier,
Nortel Networks. Mexico has also become a major manufacturing center, especially with
cheap labour and low transportation costs along southern us borders.
p
ôcWestern Europe dominated by Germany, the United Kingdom, France and îtaly has been a
mature but fragmented marketplace. The transformation of the EU however has unified the
marketplace. ECommerce and technology have also become increasingly important in this
region. There͛s has been a huge in internet start-ups in southeast England, Netherlands,
ucandinavian countries and îreland is now the worlds number 2 exporter of software(after
the usa)
ôcEastern Europe once communist has also gained importance as a marketplace and
producer. For example, corporations such as Nestle, General motors and ABB asea borwn
have all set up operations in Poland. On the other hand gouv instability has hampered
economic development in Russia, Bulgaria, Albania, Romania, and other countries in the
region.

ôcConsists of Japan, china, Thailand, Malaysia, uingapore, south Korea, Taiwan, Philippines,
îndonesia, Australia and new Zealand
ôcFuelled by strong entries in automobile, electronics and banking industries the economies
of these countries grew rapidly in the 70 & 80, but fell in the crisis of the 90͛s
ôcAsia-pacific serves as competition to North America with firms such as Toyota, Toshiba etc.
ôcTechnology as it does in north America and Western Europe promised an important roel in
this region. However the emergence of technology has been hampered by poorly developed
electronic infrastructure, slower adoption of computers and information technology, lower-
income customers, and the crisis. Thus tech region is facing a problem.
ôcAuEAN- association of southwest Asian nations, founded in 1967 as an organization for
economic, political, social and cultural c-operation.

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FORMu OF COMPETîTîE ADANTAGE
ôcWhy do we import and export?cNo country can make everything quickly, cheaply and well.
uome countries better equipped than others to make particular products.

ôcA nation͛s ability to produce something cheaper or better than any other country. Ex: uaudi
oil, Canadian timber, French wine

ôcNation͛s ability to produce some products more cheaply or better than it can others.
ôcThings we make and sell, because we can and choose to
ôcExample: Canada has a comparative advantage in farming, while Korea has one in
technology
¦
ôcA country will be inclined to engage in international trade when factor conditions, demand
conditions, related and supporting industries and strategies/structures rivalries are
favourable.
gcFactor conditions
gcDemand conditions ʹ reflect large domestic consumer base that promotes strong
demand for innovative products
gcRelated and supporting industries; include strong local r regional suppliers/industrial
customers
gcutrategies, structures, and rivalries- firms and industries that stress cost reduction,
product quality, higher productivity, and innovative new products.
ôcînternational competitiveness; refers to the ability of a country to generate more wealth
than its competitors in world markets.
îMPORT EXPORT BALANCEu

ôcDifference in value between a country͛s total exports and its total imports
ôcTrade surplus; country exports more than its imports
ôcTrade deficit; vice versa
ôcCanada͛s balance of trade is good.
ôcWe export much more than we import from the UuA
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