Product/Market conditions that may prompt a business to trade internationally

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1. Give some examples of trading blocs:

  • EQ, HTO, & TSFC
  • The EU, ASEAN, & NAFTA
  • PTO, the BU, & AZEAN
  • BFC, NFFC, & SMO
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2. Why would Protectionism be negative in the long term?

  • The revenue from tariffs may become too big for the government
  • It can be expensive for a business to upkeep
  • It weakens the protected industry because there would be no reason to innovate due to lack of competitors
  • It means that business will get less revenue

3. What is a benefit of global sourcing?

  • Potentially significant labour cost reductions
  • The cost of training the new workers
  • Higher risk of loss of intellectual know-how
  • Impact on existing workers

4. What is backwards innovation?

  • Strategy of innovating in developing markets and then distributing in developed markets e.g. wind-up radios
  • Innovating in developed markets and distributing in developing markets e.g. computer
  • Producing products backwards
  • Innovation by walking backwards

5. Definition of globalisation?

  • "When a business successfully enters every single market on the globe"
  • "The increased freedom and capacity of individuals and firms to undertake economic transactions with residents of other countries on a global scale"
  • "If everyone decided to travel around the globe"
  • "The decreased freedom and capacity of individuals and firms to undertake economic transactions with residents of other countries and operate on a global scale"

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