International Trade ECO 372 University of Phoenix There are many contributing factors to the stabilization and prosperity of our global market. We, the United States, are living in a time of severe trade deficit, meaning that we are importing many more goods than we are exporting. While it is nice to be able to buy foreign products at a lower price, there is risk in doing so. When we purchase foreign goods over domestic at lower prices it forces our domestic companies to sell their goods at lower prices to remain competitive. These lower prices may lend to making enough profit to sustain the current workforce.
| Countries are similar in their ability to produce goods efficiently | B. | International trade is rarely beneficial to a country | C. | Potential world production is greater with unrestricted free trade than it is with restricted trade | D. | Trade is a zero-sum game | | |
Both strategies failed, therefore it is necessary to analyze what were their mistakes. • Core Competencies: Trexel has the know-how to development of different product better than its competitors (lower production cost), so it is necessary to consider the cost savings of the different alternatives. • Competitive Advantage: Because of Trexel has the know-how to produce high-quality products at low production cost, they are better positioned that its competitors. Also Trexel have protected their intellectual property through patents, which allow maintaining a sustainable competitive advantage in the time. For these reasons, it is necessary to analyze the competitive advantage of the different options presented.
More and more companies are doing business in China due to the lower production costs. When doing business in a different country, they could have some policies and regulations that are different than the ones in the United States. They are many officials in these countries that will take a bribe in order to ensure a fast turnaround time in order for your company to receive a license. The Foreign Corrupt Practices Act of 1977 (FCPA) was empowered by the United States to investigate allegations of bribery anywhere in the world and are stepping up their activities in China (Roberts 2010). Technically, China does have some laws against taking bribes but there is a fine line between bribes and gift giving.
* Diverse products Diverse products and revenue should help shield the business from shocks in any one part of their business. Different products have different characteristics. Those characteristics do not always match; therefore, a company can lower their risk by investing in a business with low correlations with other products. This lowers risk and increases the value of the business over the long-term. WEAKNESS: * Company size "Company Size" will have a long-term negative impact on this entity, which subtracts from the entity's value.
One of the reasons companies outsource workers, and thus help imperialize foreign countries, is for cheap labor. Western corporations can have multiple sources for a given item, in order to allow continued production once one region realizes it is being treated unfairly and strikes. Oddly, it is argued that these companies could survive without any foreign connection—capitalism without imperialism. But, this would lower profits and prevent “advanced capitalism.” The decision to claim that cultures with what is considered modern technology is defined by military power rather than which culture is actually superior. It is this force that essentially created this gap.
Chapter 13 discusses labor markets and the basic models of labor supply and demand but the labor market for unskilled workers is changing. For businesses, the labor supply curve has dramatically shifted to the right especially with the implementation of NAFTA (North American Free Trade Agreement) and the rise of China. There is a surplus of labor supply so the business is able to go along the demand curve to the cheaper wage available, usually in another country. (See attached graph) This loss of jobs for the unskilled workers and increasingly for higher-educated workers is widening the income gap. This shifting of the labor market has other effects too, outside of the labor market.
The decline has cause many smaller companies to push their company less and not worry of about effectiveness and stock prices because there is less push from takeovers. This can be bad for investors. In the end I don't think takeovers are such a bad thing because it can force businesses to really push to achieve higher stock prices but sometimes these takeovers can lead to putting employees and the smaller company at high risk. When Executive Turns Buyout Adviser, Alarm Bell Go
However, because foreigners are willing to work for less money, it gives them a more adept position in the American economy and working force, regardless of their education. Therefore, the abundance of labor creates a shortage of jobs which in turn leads to a “rough estimate that suggested that as many as 42 million jobs, or nearly one-third of the nation's total, were susceptible to offshoring” (Gosselin, pg 2). In essence, it doesn’t matter how much you know, but rather how little you will work for. The Social Problems textbook states that “the globalization of the economy is not a neutral process. Decisions are based on what will maximize profits, thus serving the owners of capital, and not necessarily workers or the communities where factories are located” (Social Problems, pg 427).
IMMIGRATION Immigration is a controversial topic to discuss because each person has a different opinion of that, but it can be supported in real information, such as, economic growth of the country that receive immigrants, among others. Entering in context, people that think that immigration only affect the country, only have a lack of tolerance and ignorance, because they only see the bad aspects of it and don’t evaluate the benefits that it can has. Immigration is a benefit to the country and it depends of the way in which you prefer to see the situation. In effect, the integration of people of different countries and cultures enrich the host country because allow that the country become multicultural. One of the reasons because immigration