Unit 2Chapter 4

International Trade

Global Marketplace Exists because countries need to

trade with one another. Continues to expand

• Because of the reduction in trade restrictions

Makes people all around the world potential customers and employees

International trade The exchange of goods and services

among nations. Imports – Goods and services

purchased from other countries Exports – Goods and services sold to

other countries

Benefits of International Trade

Consumers• Competition of the foreign companies• Encourages high quality, lower prices.

Producers• Expand business by working with other

countries• 1/3 of profits of US businesses come from

international trade

Benefits - Continued Workers

• Leads to higher employment rates Example – Toyota (a Japanese company) has

generated 50,000+ jobs in the United States

Nations• Improves the standard of living for that

countries people• Individuals have more options when making

purchasing decisions.

Balance of Trade The difference in value between

exports and imports of a nation Surplus – when a nation exports more

than imports Trade Deficit – when a nation imports

more than it exports

Trade Barriers Tariff - A tax on imports

• Also called a duty Embargo

• A total ban on specific goods coming into and leaving a country

• A lot of times for health reasons

Trade Agreements World Trade Organization (WTO)

• A coalition of nations that makes rules governing international trade.

NAFTA – North American Free Trade Agreement• International trade agreement between US,

Canada, and Mexico European Union

4.2 The Global Marketplace

Licensing• Letting another company use a trademark,

patent, formula, company name, for a fee or royalty

Contract Manufacturing• Hiring a foreign manufacturer to make

products Joint Venture

• A business enterprise that companies set up together

Globalization Selling the same product and using

the same promotion methods in all countries.

Adaptation Adaptation – a company’s use of an

existing product and/or promotion to which changes are made to better suit the characteristics of a country or region

Assignment Page 91

• # 7, 9, 10 Page 92

• #16