Chapter 2 With Notes

8/2/2019 Chapter 2 With Notes

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If a country has a trade agreement with another,

tariffs do not have to be paid


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These are classes listed 1 being lowest, 4 being

Highest


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High infant mortality rates are also a characterization in

these low income countries

Foreign aid is often needed


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You see a family in Somalia.

As you look at these pictures, I like you to think about the

daily life in these countries. Pay attention to what peopleown, how they are dressed, how many people are in thefamily, and the type of food they might be displaying inthe pictures as these details provide us clues aboutopportunities in these countries. Think about: What wecan sell to these people? What do they buy? What dothey eat? What do they need?


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You see a family of about 15 people in Mali.


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Some similar standards, but have industrialized slightly.


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Have electricity

Motorcycle

refrigeration


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Collectivist cultures they prefer to stay together as

large families


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Family size shrinks, but more food per individual


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A lot of items

Dryer & washer

minivan


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.packaged consumer goods most in these countries are

employed and dont have time to cook from scratch


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Which is LEAST attractive? -


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GNI gross national income


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Markets are now reaching their saturation points, so

expansion to lower markets is a good option, such as

mentioned in selling to the poor and unilever case.

Hermes working in amazons to create natural rubber

bags ($15k) and communicating the idea of social

good by helping poor countries.workers

CSR


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In PPP, it wants all currencies to be equal to others in

value, but it almost never is.


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*Be mindful of currency exchange rates and its impact on

the bottom line

*Contract is as important as the exchange rates


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Options:

*deal with countries with stable currency

*develop real estate in the country

*trade with commodities

*engage in forward markets & hedging

*Apply an exchange rate pass through

Exchange rate Pass through an increase of prices inresponse to currency fluctuations (encouraged to avoid)


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4 types of Trade Agreements:

Free trade area (FTA) will not charge tariff or quotas

(i.e. Mexico, Canada and US are trade partners, where

shipping costs are the only thing paid)

Customs Union allows to trade w/o tariffs, but also

allows companies to apply to external companies

together. (i.e. Argentina & Brazil can enter trade

agreement to apply tariffs to other countries but not

within themselves) make countries equally attractive

Common Market in EU allowed workers to travel within

other european countries w/o passports or any extra

documentation/paperwork


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Economic Union EU ppl and money now can freely and

completely move within EU with the same economic and

governmental regulations/standards across markets


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Can we use NAFTA to get to MERCOSUR to get America

product to Argentina?

No, but if it was made in Mexico, we could get it to

Argentina*Mexico does no belong to MERCOSUR


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Documents

Chapter 2 With Notes