International Trade

Topics: International trade, Globalization, Investment Pages: 2 (508 words) Published: February 5, 2013
IBE Week 2 Review – Chapter 2 – International Trade and Foreign Direct Investment Questions and Answers…..

1. How has trade in merchandise and services changed over the past decade? What have been the major trends? How might this information be of value to a manager?

The volume of international trade in merchandise and services exceeded $4 trillion in 1990. Fourteen years later (2004), international merchandise trade had more than doubled to $11 trillion! In 2011, the dollar value of world merchandise trade advanced 19% to $18.2 trillion, surpassing the previous peak of $16.1 trillion from 2008*. The value of world commercial services exports increased by 11% in 2011 to $4.2 trillion, with strong differences in annual growth rates for particular countries and regions*.

The significance of world trade cannot be overlooked. The trends are many and varied, and include trade within regional blocks. It is critical that managers understand these trends in order to develop a competitive strategy to take advantage of this growth. Also, because of increased trade, management must be prepared to face stiff competition in markets abroad as well as the home market.

2. Knowing the nation is a major trade partner of another signifies what to a marketing analyst?

The following is a listing in no particular order of the advantages to focusing on a marketing analyst:

✓ Business climate in the importing nations must be relatively favorable. ✓ Import regulations must not be insurmountable.
✓ Cultural objections to buying exported goods are not great. ✓ Satisfactory transportation facilities exist along with businesses that are experienced in handling import shipments from the exporter’s area. ✓ Foreign exchange is available.

3. What are the different components of foreign investment Investment into different countries can be divided into two components: portfolio...
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