INTRODUCTION TO BUSINESS
CHAPTER 3
Import Buying products from other countries
Export Selling products to other countries
Best countries for business : Ireland, New Zealand, Hong Kong
Free trade is ..
The movement of goods and services between countries without political
or economic boundaries
Reasons for doing international trade:
1. Complementing each other's differences in resources,
2. Each country has different expertise (production can be more effective
and efficient)
Theory of Comparative Advantage
The state sells products that can be produced efficiently and effectively,
buys those that cannot be produced efficiently and effectively
Absolute Advantage Theory
A country can produce a product more efficiently than another country
Measuring international trade:
1. Trade balance
Total value of exports and imports in one period
Trade surplus : export >import
Trade Deficit : import>export
2. Balance of payments
The difference between money coming in and out of a country (from
the service sector, investment, and grants)
Dumping Selling in another country at a lower price than the country
of origin (already prohibited)
Strategy to reach global market:
1. Licensing : Production permit in exchange for royalty
2. Export
3. Franchising: Permission to use a name and sell in an area
4. Contract manufacturing: Like outsourcing well-known brands
5. International Joint Venture & Strategic Alliance
Joint venture is two or more companies join for a project.
Advantages of joint ventures :
