international business
4 Two macro factors seem to underlie the trend toward greater globalization.The first is the decline in barriers to the free flow of goods,services,and capital that has occurred since the end of World War II.The second factor is technological change,particularly the dramatic developments in recent years in communication,information processing,and transportation technologies.
7 In a pure market economy all productive activities are privately owned,as opposed to being owned by the state.The goods and services that a country produces,and the quantity in which they are produced,are not planned by anyone.Production is determined by the interaction of supply and demand and signaled to producers through the price system.If demand for a product exceeds supply,prices will fall,signaling producers to produce less.In this system consumers are sovereign.The purchasing patterns of consumers,as signaled to producers through the mechanism of the price system,determine what is produced and in what quantity.
12 Porter theorizes that four broad attributes of a nation shape the environment in which local firms compete,and these attributes promote or impede the creation of competitive advantage.These attributes are
○Factor endowments---a nation’s position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry.
○Demand conditions---the nature of home demand for the industry’s product or service.
○Relating and supporting industries---the presence or absence of supplier industries and related industries that are internationally competitive.
○Firm strategy,structure,and rivalry---the conditions governing how companies are created,organized,and managed and the nature of domestic rivalry.
13 A tariff is a tax levied on imports.Tariffs fall into two categories.Specific tariffs are levied as a fixed charge for each unit of a good imported (for example,$3 per barrel of oil).Ad valorem tariffs are levied as a proportion of the value of the imported good.The European Union has imposed such a tariff on imports of bananas from Latin America; the tariff amounts to 15 to 20 percent by value on the first 2.5 million tons of imports of bananas from Latin America.
14 The important thing to understand about a tariff is who suffers and who gains.The government gains,because the tariff increases government revenues.Domestic producers gain,because the tariff affords them some protection against foreign competitors by increasing the cost of imported foreign goods.Consumers lose because they must pay more for certain imports.
17 A variant on the import quota is the voluntary export restraint (VER).A voluntary export restraint is a quota on trade imposed by the exporting country,typically at the request of the importing country’s government.