ECON

• Globalization


  A process where the economies of different countries are interconnected, and consumers in one country can easily buy products from other countries
• Multinational or transnational company


  • Enjoys a large customer base from different countries and does not have to depend on a single country for resources
• Barriers to entry in the international market

  • Tariffs
  • Quota
  • Political
  • Socio-cultural
  • Economic
  • Other factors that affect international business
• Domestic Trade


  The business transaction that occurs within the geographical limits of the country
• International Trade


  One whose manufacturing and trade occur beyond the borders of the home country
• Imports


  Goods and services a business or customer purchases from another country
• This results in an outflow of funds from the country that is purchasing foreign goods and services
• Globalization


  Derived from the word "globalize"
• Comparative Advantage


  Countries will benefit by concentrating on the production of goods in which they have a relative advantage
• Domestic Trade


  Also known as internal business or sometimes as home trade
• Tariff


  Tax on imported goods or services
• Seven reasons for growing globally

  • Reduce dependence on your local market
  • Increase chances of success
  • Increase productivity
  • Increase efficiency
  • Innovation
  • Growth
  • Economic advantage
• Quota


  Limits the amount of an imported good allowed into the country. Supply is decreased and price increases
• Why do we need to export? Increase sales and profits, present an opportunity to capture significant global market share
• International Trade represents a significant share of GDP
• Absolute Advantage


  The ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time, or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than its competitors
• Exports and imports make up a country's balance of trade
• Comparative Advantage


  Refers to a country's ability to produce a good at a lower opportunity cost than another country
• Domestic Trade

  Trade which takes place within the geographical boundaries of the country
• International Trade

  Known as a multinational or transnational company
• Imports/Importing raw materials and goods is one of the paths of increasing the profit margins
• The role and importance of international trade

  • Raises standard of living of the people
  • Generate Employment opportunities
  • Equality of prices
  • Ensures quality and standard goods
  • To improve quality of low products
  • Availability of multiple choices
• Problems or difficulties in international trade

  • Distance
  • Different languages
  • Risk in transit
  • Intense competition
  • Difficulties in payments
  • Import and Export Restrictions
  • Transport and Communications
  • Lack of information about International Traders
• Globalization


  The growth of international trade is a fundamental component of globalization
• International Trade


  Exchange of capital, goods, and services across international borders or territories
• Globalize


  This term refers to the emergence of an international network of economic systems
• Globalization


  Process of international integration, its development is due to increased exchange of products, services, etc. at global level, also with the influences of other aspects related to cultural and social environment
• Introduction stage


  First time customers are introduced to the new product
• Introduction stage


  • Characterized by growing demand, an increase in production, and expansion in its availability
• Growth stage


  Product becomes more popular and recognizable, results in increased sales and higher revenue
• Maturity stage


  Competition is at the highest level, rival companies have had enough time to introduce competing and improved products, and competition for customers is usually highest
• Decline stage


  Product sales begin to drop due to market saturation and alternative products, company may choose to not pursue additional marketing efforts as customers may already have determined whether they are loyal to the company's products or not
• Decline stage


  Company will stop generating support for it and will entirely phase out marketing endeavors
• Decline stage


  Company may decide to revamp the product or introduce a next-generation, completely overhauled model
• A company must generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits, especially if it is broadly unknown what the item will do
• Staffan B. Linder


  Proponent of theory of volume of trade and demand pattern
• People are given the opportunity to buy all the goods and services that money can buy
• International trade takes place because of differences in the availability of certain products among countries
• Theory of absolute advantage

  Exists when one country is good at producing one item, while another country is good at producing another item
• Adam Smith supported free trade while he attacked mercantilism