1. Distinguish between an absolute advantage and a comparative advantage. Cite an illustration of a state that has an absolute advantage and one with a comparative advantage.

Absolute advantage is when a monopoly exists in a state when it is the lone beginning and merchandise of an point. Meanwhile. a comparative advantage is when a state can provide merchandises more expeditiously and at a lower cost than it can bring forth other points. South Africa has an absolute advantage because of its diamonds. The United States has a comparative advantage because of the many merchandises we produce.

3. What consequence does devaluation hold on a nation’s currency? Can you believe of a state that has devaluated or revaluated its currency? What have been the consequences? Devaluation decreases the value of currency in relation to other currencies. Mexico is a state that has devalued their currency. The consequence of this is to do things less expensive.

4. How do political issues affect international concern? Political issues affect international concern by it helps to sell merchandises overseas.

5. What is an import duty? A quota? Dumping? How might a state usage import duties and quotas to command its balance of trade and payments? Why can dumping consequence in the infliction of duties and quotas? An import duty is a revenue enhancement made by the state on goods imported into the state. A quota limits the sum of merchandises that can be imported into a state. Dumping is a state merchandising merchandises at less than what it costs to bring forth them. A state uses import duties to protect domestic merchandises by raising the monetary value of imported 1s. A state uses quotas by voluntary understanding or by authorities edict. Dumping can ensue in the infliction of duties and quotas because it permits speedy entry into the market or a firm’s merchandise is excessively little to hold a certain degree of production.

6. How do societal and cultural differences create barriers to international trade? Can you believe of any extra societal or cultural barriers ( other than those mentioned in this chapter ) that might suppress international concern? Social and cultural differences create barriers to international trade by cultural differences in spoken and written linguistic communications are different. A certain phrase in America can be defined as something really different and sometimes inappropriate in another civilization. Body linguistic communications and personal infinite are besides an affect. These differences can do misinterpretations or uncomfortable feelings toward a specific concern. Another cultural barrier may be a certain faith and something that individual believes in. A concern may be mocking a faith without cognizing anything about it.

8. At what degrees might a steadfast get involved in international concern? What degree requires the least committedness of resources? What degree requires the most? A house might acquire involved in international concern at many degrees. it depends on the committedness and attempt a certain company decides to affect itself in international trade. The least committedness of resources is a little company on the degree of less than 100 employees. The degree which requires the most is a big company with more than 500 employees.

9. Compare and contrast licensing. franchising. contract fabrication. and outsourcing.

Licensing is a trade agreement in which on company allows another to utilize its company’s name. merchandises. patents. trade names. hallmarks. natural stuffs. and many others in exchange for a fee or royalty. Franchising is a signifier of licensing in which a company agrees to supply their name. logo. methods of operation. advertisement. merchandises. and other elements in return for a fiscal committedness and the understanding to carry on concern in conformity with the original criterion of operations.

Contract fabrication is when a company hires a foreign company to bring forth a specified sum of the firm’s merchandise to specification. Outsourcing is reassigning fabrication or other undertakings to companies in states where labour and supplies are less expensive. All of these thoughts are similar in the manner it helps concerns expand their work into more countries of their ain states or in foreign states every bit good.

10. Compare transnational and planetary schemes. Which is best? Under what fortunes might each be used? Multinational schemes are programs used by international companies that involve custom-making merchandises. publicity. and distribution harmonizing to cultural. technological. regional. and national differences. Global strategies involve standardising merchandises for the whole universe. The best is planetary schemes because it helps the universe acknowledge different civilizations and understand the manner one civilization believes to another. A planetary scheme is used by American vesture. films. music. and cosmetics. A Multinational scheme is used by famous persons being advertised in one state but can’t be advertised in another because of the strangeness.

Book: Business Organization and Management