Chapter 9 Global Marketing 1 Questions Why does any international trade occur o Reduce competition for domestic firms more profit Why not just pass a law that bans all international o More jobs for workers higher overall public welfare trade 2 Theories of Trade Mercantilism o To export is good to import is bad o Smoot Hawley Tariff Act Signed into law June 17 1930 Raised tariffs on over 20 000 goods best at Absolute Advantage o Countries should specialize in producing what they are Comparative Advantage between two countries o the relative cost of doing business is different o Opportunity cost refers to what you sacrifice in making an economic choice In this case it refers to the value of the goods you sacrifice in deciding to produce one good instead of another o Comparative advantage refers to a country s ability to produce a particular good with a lower opportunity cost 3 Trade Barriers Import tariff in Quota accept o duty on goods bought outside the country and brought o limit on amount of goods an importing country will Embargo Exchange Controls o government suspension of trade o government restrictions on amount of particular currency 4 Acronyms BRIC ROW o Brazil Russia India and China o Rest of world 5 Balance of Trade 6 Gross Domestic Product GDP difference in value between nation s imports and exports measure of overall economic standing based on total output of goods and services 7 Issues 8 Dumping predominant cultural focus of marketing within global market selling products in domestic markets at higher prices than in foreign markets 9 Cultural relativism defining business practices as right or wrong based on differing moralities within particular cultures 10 World Trade Organization predictably and freely as possible between nations made up of member nations that promotes free trade Negotiated reduced trade barriers and established trade rules Main function is to ensure that trade flows as smoothly Serves as a forum for dispute resolution Customization views countries as being very different that Globalization tries to use the same strategy worldwide need unique strategies 11 Customization vs Globalization
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