Read the textbook of chapter 3 and answer the following questions:
1. List the definitions of 30 key terms in Chapter 3 and show them as a table
(trade protectionism, comparative advantage theory, absolute advantage, free
trade, licensing, counter trading, ...)
Term Definition
Exists when a country can produce a specific product more
Absolute Advantage
efficiently than any other country.
The difference between money coming into a country from
Balance of
exports and money leaving the country for imports, plus
Payments
other money flows like tourism and foreign aid.
The total value of a nation's exports compared to its imports
Balance of Trade
over a particular period.
A theory that states that a country should sell the products it
Comparative
produces most efficiently and buy the products it cannot
Advantage
produce efficiently.
A form of international trade where goods and services are
Countertrade exchanged for other goods and services without using
money.
Selling products in a foreign country at lower prices than
Dumping
those charged in the producing country.
A complete ban on the import or export of a certain product
Embargo
or stopping all trade with a particular country.
Exporting Selling products to another country.
The movement of goods and services among nations without
Free Trade
political or economic barriers.
Importing Buying products from another country.
A global strategy in which a firm allows a foreign company to
Licensing
produce its product in exchange for a fee (royalty).
Term Definition
A company that manufactures and markets products in many
Multinational
different countries and has multinational stock ownership
Corporation
and management.
Taxes imposed on imports, making imported goods more
Tariffs
expensive to consumers.
The use of government regulations to limit the import of
Trade Protectionism
goods and services.
A partnership in which two or more companies (often from
Joint Venture
different countries) join to undertake a major project.
A long-term partnership between two or more companies
Strategic Alliance established to help each company build competitive market
advantages.
Foreign Direct The buying of permanent property and businesses in foreign
Investment (FDI) nations.
A foreign company's production of private-label goods to
Contract
which a domestic company then attaches its own brand
Manufacturing
name or trademark.
Limits the number of products in certain categories that a
Import Quota
nation can import.
Licensing A contract where the licensor allows the licensee to use a
Agreement trademark or brand in exchange for a fee.
NAFTA (now An agreement that created a free-trade area among the
USMCA) United States, Canada, and Mexico.
Offshore The practice of moving some of a company’s operations to
Outsourcing another country.
World Trade An international organization dealing with the rules of trade
Organization (WTO) between nations.
Term Definition
A regional group of countries that have a common external
Common Markets tariff, no internal tariffs, and a coordination of laws to
facilitate exchange.
The value of one nation’s currency relative to the currencies
Exchange Rate
of other countries.
A contractual agreement where someone with a good idea
Franchising for a business sells others the rights to use the business
name and sell a product or service in a given territory.
The trend towards greater economic, cultural, political, and
Globalization technological interdependence among national institutions
and economies.
Occurs when the value of a country’s exports exceeds that of
Trade Surplus
its imports.
Occurs when the value of a country’s imports exceeds that of
Trade Deficit
its exports.
These involve the values, beliefs, and behaviors that
Sociocultural Forces
influence a market.
2. What are the key strategies for reaching global markets?
Please briefly describe each strategy to compete in the global market.
The following strategies are used to compete in global markets:
Licensing: A firm allows a foreign company to produce its product in
exchange for royalties.
Exporting: Selling domestically produced goods to foreign buyers.
Franchising: A franchisor sells others the rights to use the business name
and model in a foreign market.
Contract Manufacturing: Outsourcing production to foreign manufacturers.
Joint Ventures: Two or more companies from different countries partner to
undertake major projects.
Foreign Direct Investment (FDI): Buying permanent property and
businesses in foreign countries.
3. Foreign direct investment (FDI) is playing an indispensable role in the context
of trade globalization and global economic integration. In that context, Vietnam
is a potential market and increasingly attracting foreign investment.
Please list current FDI attraction sectors of Vietnam and analyze the strengths -
weaknesses - opportunities - and challenges (SWOT) in FDI investment in
Vietnam.
Vietnam is attracting Foreign Direct Investment (FDI) across multiple sectors,
including:
1. Manufacturing and Processing: Electronics, textiles, and automobiles.
2. High-tech industries: Including IT and telecommunications.
3. Renewable energy: Solar and wind energy sectors.
4. Real estate: Development of industrial parks, housing, and urban projects.
5. Retail: Consumer goods and e-commerce.
6. Tourism and hospitality: Resort developments and entertainment services.
7. Agriculture: High-tech farming and food processing.
SWOT Analysis of FDI in Vietnam:
Strengths:
o Strategic location with access to global shipping routes.
o A young, growing workforce with competitive labor costs.
o Preferential policies for foreign investors, including tax incentives.
Weaknesses:
o Underdeveloped infrastructure in some regions.
o Legal and bureaucratic hurdles that complicate business operations.
o Limited supply of skilled labor in advanced industries.
Opportunities:
o Expansion in high-tech and value-added industries.
o Participation in global supply chains, particularly in electronics and
consumer goods.
o Increasing consumer demand driven by a growing middle class.
Challenges:
o Competition from neighboring countries for FDI.
o Potential policy changes and regulatory inconsistencies.
o Environmental concerns, particularly in industries like manufacturing.
4. Please analyze the 4 market forces affecting trading in global markets
1. Economic Forces: Exchange rates, inflation, and global economic cycles
influence international trade.
2. Technological Forces: Advances in technology can reduce barriers to trade
and improve efficiency but may also increase competition.
3. Sociocultural Forces: Consumer preferences, cultural differences, and local
customs impact product acceptance and marketing strategies.
4. Legal and Regulatory Forces: Trade policies, tariffs, and international
regulations can facilitate or hinder cross-border transactions.
5. Give 5-7 examples of current commercial organizations including their main
functions and participating members, such as WTO, CPTPP, AFTA, ...
- World Trade Organization (WTO): Facilitates international trade
agreements and resolves disputes among member countries.
Functions: Oversees global trade rules, promotes free trade, and
negotiates trade agreements.
Members: 164 countries.
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP): A trade agreement between 11 countries aimed at reducing tariffs
and promoting economic integration.
Functions: Trade liberalization, promoting free markets, and fostering
economic cooperation.
Members: Countries such as Japan, Canada, Australia, and Mexico.
- ASEAN Free Trade Area (AFTA): Promotes regional economic integration
among ASEAN countries.
Functions: Tariff reduction and the creation of a single market and
production base.
Members: 10 ASEAN countries, including Vietnam, Indonesia, and
Thailand.
- European Union (EU): A political and economic union aimed at fostering
economic cooperation, with a single market allowing for the free movement
of goods, services, capital, and labor.
Functions: Customs union, common policies on agriculture, and a single
monetary system (Eurozone).
Members: 27 European countries.
- North American Free Trade Agreement (NAFTA), replaced by USMCA:
Facilitates trade between the U.S., Canada, and Mexico.
Functions: Eliminating tariffs and reducing trade barriers.
Members: United States, Canada, and Mexico.
