Chapter 5
Competitive Advantage
Distinctive assets or competencies of a firm that are hard to imitate;i.e. specific knowledge, capabilities, skills, superior strategies
Absolute Advantage Principle
A country benefits by producing only those products in which it has competitive advantage or can produce using fewer resources than another country
Country Risk
Loss or adverse effects on company operations caused by a country's political and/or legal environments
Socialism
Collective welfare of people outweighs the welfre of the indiividual
Rule of Law
Legal system based on clear rules and fair enforcement
Comparative Advantage
Superior features of a company that provide unique benefits in global competition; natural endowments or deliberate national policies
Comparative advantage principle
It can be beneficial for two countries to trade without barriers as long as one is more efficient at producing goods or service needed by the other
Iraq or Japan?
This country has a high degree of political risk
Democratic
Private property rights and limited government
Common Law
Legal system based on legel precedents and past practices set by nation's courts
Mercantilism
Belief that national prosperity is the result of a positive balance of trade by maximizing exports and minimizing imports
International Product Life Cycle theory says
Each product and manufacturing technologies goe through Introduction, Maturity, and Standardization
Venezuela or Canada?
A country with a low degree of political risk
Most widespread form of religious law
Sanction
type of trade penalty imposed on one county to another
Trade surplus
Export more goods than they import
Porter says a nation's factor endowments help determine its
National Competitive Advantage
Three major types of current political systems
Totalitarianism, Socialism, and Democracy
Confiscation
seizure of corporate assets without compensation
Embargo
Offical ban on exports or imports from a particular country in order to punish it.
Outcome of Free Trade
Increases overall prosperity of poor countries
Born Global Firms
Companies that skip the domestice stage of internationalization process
A Totalitarian government seeks
to control all economic and political matters AND attitudes, values and beliefs of citizenry
Expropriation
Seizure of corporate assets with compensation
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