Please enable JavaScript.
Coggle requires JavaScript to display documents.
The Global Business Environment - Coggle Diagram
The Global Business Environment
Differences
Trade Deficit
Occurs when a country imports more than it exports
Economic measure = Positive trade balance
Net inflow of domestic currency from foreign markets
Country’s currency demand in terms of international trade is low
Lower demand for currency makes it less valuable in the international markets.
Trade Surplus
Occurs when a country exports more than it imports
Economic measure = Negative trade balance
Net outflow of domestic currency from foreign markets
High demand for a country’s goods in the global market
Pushes the price of those goods higher
Leads to a direct strengthening of the domestic currency.
Calculation to determine surplus & deficit
Trade Balance = Trade value of exports
-
Trade value of imports
Trade Agreements & Alliances
North American Free Trade Agreement (NAFTA)
Promote conditions of fair competition
Grant the signatories status
Eliminate barriers to trade and facilitate the cross-border movement of goods and services
Increase investment opportunities
Provide protection and enforcement of intellectual property rights
Create procedures for the resolution of trade disputes
Establish a framework for further trilateral, regional, and multilateral cooperation to expand the trade agreement's benefits
European Union (EU)
Promote goals like a competitive global market and social progress.
Promote peace
Establish a unified economic and monetary system
Promote inclusion and combat discrimination
Break down barriers to trade and borders
Encourage technological and scientific developments
Association of Southeast Asian Nations (ASEAN)
Regional economic growth, social progress and cultural development in the region
Regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region
Collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific, and administrative fields
Mutual assistance through training and research facilities in the educational, professional, technical, and administrative spheres
Agricultural collaboration among the ASEAN member countries
World Trade Organisations (WHO)
To implement rules and provisions related to trade policy review mechanism
To provide a platform to member countries to decide future strategies related to trade and tariff
To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade
To administer the rules and processes related to dispute settlement
To ensure the optimum use of world resources
To assist international organizations such as, IMF and IBRD for establishing coherence in Universal Economic Policy determination
Forms of Competitive Advantage
Absolute Advantage
Absolute advantage is when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than other producers
Comparative Advantage
Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners
National Competitive Advantage
The strategic advantage one business entity has over its rival entities within its competitive industry