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BSA 501 INTERNATIONAL BUSINESS AND TRADE, . - Coggle Diagram

- - - - The United States was putting pressure on the global trading system. The ongoing trade imbalance in the greatest economy in the world, the United States, was putting pressure on the global trading system. Foreign competitors progressively surpassed domestic firms in market share.
      - One of the reasons for the trend toward greater protectionism was that many countries found ways to get around GATT regulations.
      - Japan was in ruins when the GATT was created.
- - - - Value creation of for the business could be done in multiple ways, such as product enhancement, cost reduction, improving business strategies, and furthermore.
    - - The primary activities of the value chain include inbound logistics, operation outbound logistics, marketing and sales, and service.
    - - Secondary activities or the support activities include firm infrastructure, human resources management, and procurement
      - Economies of scale are cost advantages companies experience when production becomes efficient, as costs can be spread over a larger amount of goods.
      - When pressures for local responsiveness are high and pressures for global integration are low, the global model is appropriate. One of the advantages of exporting is that it provides scale economies.
    - - Cost pressures refers to reducing the cost when a firm is competing in the global market.
    - - Value of the business isn't merely based in product enhancement, but mainly due to consumers perception of its benefits.
- - - - Currency speculation involves quickly shifting funds between currencies to make a profit from exchange rate changes.
      - Companies invest surplus cash in foreign money markets for higher returns.
      - Companies need foreign currency to pay foreign suppliers for products or services.
      - Companies get foreign money from exports, foreign investments, or licensing deals. To use it at home, they exchange it for their local currency.
    - - The Law of One Price: It says identical products should have the same price when converted to the same currency.
      - Purchasing Power Parity (PPP): It predicts exchange rates based on the prices of a basket of goods in different countries
      - Money Supply and Inflation: An increase in a country's money supply can lead to inflation and affect exchange rates.
    - - Efficient Market School: Some believe forward exchange rates are the best predictors of future rates and that professional forecasts aren't reliable.
      - Inefficient Market School: Others think forward rates aren't the best predictors, so professional forecasts might be more useful, but they're not always accurate.
    - - Free Convertibility: Most countries allow easy conversion of their currency.
      - Non-Convertibility: Some countries restrict currency conversion, which can be problematic for international business.
      - Restrictions are used to maintain foreign exchange reserves and avoid capital flight (when people rush to convert domestic currency to foreign currency). It's done to stabilize their economy.