Author Question: The ________ states that it can be beneficial for two countries to trade without barriers as long as ... (Read 103 times)

imowrer · **on:** Jul 7, 2018

The ________ states that it can be beneficial for two countries to trade without barriers as long as one is relatively more efficient at producing goods or services needed by the other.

A) monopolistic advantage theory
B) internalization theory
C) absolute advantage principle
D) comparative advantage principle

Question 2

Summarize each benefit a company might obtain from the globalization of markets.

What will be an ideal response?

blakcmamba · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

D

Answer to Question 2

The globalization of markets refers to convergence in buyer preferences in markets around the world.
The benefits of the globalization of markets for companies include:
1. Reduces marketing costs-Companies that sell global products can reduce costs by standardizing certain marketing activities. A company selling a global consumer good can make an identical product for the global market and then simply design different packaging to account for the language spoken in each market. Companies can achieve further cost savings by keeping an ad's visual component the same for all markets but dubbing TV ads and translating print ads into local languages.
2. Creates new market opportunities-A company that sells a global product can explore opportunities abroad if its home market is small or becomes saturated. Seeking sales growth abroad can be absolutely essential for an entrepreneur or small company that sells a global product but has a limited home market.
3. Levels uneven income streams-A company that sells a product with universal, but seasonal, appeal can use international sales to level its income stream. By supplementing domestic sales with international sales, the company can reduce or eliminate wide variations in sales between seasons and steady its cash flow.
4. Local buyers' needs-The benefit of serving customers with an adapted product may outweigh the benefit of a standardized one.
5. Global sustainability-It ensures that development meets the needs of the present without compromising the ability of the future generations to meet their own needs. Most companies today operate in an environment of increased transparency and scrutiny regarding their business activities. The rise of social media is partly responsible for this trend.