Chapter 3

1.      In international trade, what is the difference between an absolute advantage and a comparative advantage? 

An absolute advantage exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.  A comparative advantage occurs when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.

2.      What cultural issues should a manager consider before doing business in a foreign country? 

Body language, personal space and family roles.  Different countries have different cultural backgrounds so it varies from country to country.  Depending on the country you are dealing with depends on what you should or should not do.

3.      What is the International Monetary Fund (IMF)? 

The International Monetary Fund was established to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.  It also makes short-term loan to member countries that have balance-of-payment deficits and provides foreign currencies to member nations.

4.      Explain the different levels of organizational involvement in international trade. 

Exporting and importing, trading companies, licensing and franchising, contract manufacturing, joint ventures, direct investment, and multinational corporations.

5.      Explain the phrase "Think globally, act locally." 

While being aware of the total picture, they adjust their firms’ strategies to conform to local needs and tastes.