Module 1 Hw

Topics: International trade, Export, International economics Pages: 4 (1353 words) Published: May 2, 2013
Module 1 Homework

1. Describe three or four benefits of globalization.
Globalization is increasing interdependency of nations and businesses throughout the world. It has had a profound effect on both markets and production. It has lowered or eliminated government barriers to export-import trade. Gives firms access to the worlds vast offerings of food, clothing, and other manufactured goods. Companies can also benefit from foreign manufacturing, shifting factory production to less developed, cheaper labor countries.

2. What are three reasons that globalization and export-import business are important to the United States? Trade is critical to America’s prosperity, fueling economic growth and supporting jobs at home. Trade with foreign countries can provide domestic jobs, increase in the standard of living by providing a wide assortment of goods and services. It can also raise the nations overall production as measured by its GDP.

3. Describe the two major components of international business with an example of each. One major component of international business is foreign direct investment. Foreign direct investment occurs when an investor, or a company gains equity or ownership, interest in a foreign operation. For example Specialty retailer Banana Republic recently expanded globally into Singapore, part of the parent company Gap’s expansion into Indonesia, South Korea, Turkey, and Saudi Arabia; these branches, along with Gap’s other stores are examples of foreign direct investment.

Another component of international business is a joint venture. A joint venture is a direct investment in which two or more partners share ownership. For example, In India, Wal-Mart stores and India’s Bharti Enterprises negotiated an agreement, a 50-50 joint venture for a wholesale operation.

4. Explain the relationship between a nation’s exports and imports and its balance of trade. Exports represent the sales of goods and services that flow out of a...
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