Competing In World Markets

For the GWC Valves organization, they are a retailer who sells different valves for heavy duty machinery therefore they need to have a good understanding of why nations trade since they do deal with international clients. Nations trade because it is beneficial for the economy and individual businesses due to it boosting the economic growth. It boosts the economic growth along with expanding markets, more efficient production systems and there is less reliance on the economies of home nations. Exports is when domestically produced goods and services are sold in other countries and important are foreign goods and services that get purchased by domestic customers.

International sources of factors of production all depend on the decisions to operate abroad which depend on the availability of price, and quality of the labour, entrepreneurship, capital and natural resources. Companies can spread their investment risk by going global and when they do business overseas they must make strategic decisions. There are different environmental factors to which companies are exposed and these include social and cultural practices, economic and political environments and legal restrictions. Companies are able to expand their markets, seek growth opportunities in order nations, make their production and distribution systems more efficient and reduce their dependence on economies in their home nations.

In order for a country to be in the world top 10, they need to develop nations and have a lower per capita income, many have strong GDP growth rates, huge populations can be lucrative markets. There is absolute and comparative advantage which means that a country has absolute advantage in a product when it has monopoly on making that product or when it can be produced at a lower cost than in any other country. Nations on the other hand can develop a comparative advantage when it can supply its products more efficiently and at a lower price than it can supply other goods compared to the outputs of other countries.