Nicolle Machado
INTERNATIONAL TRADE
Bonus question
1) What is an argument that supports the idea that globalization increases pollution? (4
points)
Globalization has increased the amount of consumption of products this has an impact on the
ecological cycle. The increase in the production of goods has put a stress on the environment.
Plastic is a major pollution toxic because the product is non-biodegradable. It creates a problem
because plastic is a toxic and is persistent in the environment. The reason why it has increased
pollution is due to the fact that it is of immense use because of packaging and it preserves the
goods that are to be exported. Plastic is lightweight and cheap, it is convenient. Globally it is
estimated that the goods are wrapped in 207 million tonnes of packaging each year (Sherwin,
G.).1 This has increased the use of plastic, causing widespread environment pollution. Most of
the plastic that is used does not reach the official or standard waste disposal channels such as
landfill, Incineration and recycling, instead the plastic ends up in the ocean. The demand of
plastic in one country can be the environmental degradation of another country, as we do not
know where it will end up.
One another important factor that supports the idea that globalization increases pollution is
that when you go internationally, you have to deliver your good in the place that you want to
export. This cycle dos not happen by magic but happens by transportation.
Transportation is not the only factor that increases pollution but is the basic one. It is
impossible to delivery goods from one place to another without transportation.
Looking to this factor, all of them are harmful to the environment. As transportation by trucks,
which emit nitrous oxide and particulates, creating air pollution.
1
Sherwin, G. (2017, October 12). Globalization: Both the Problem and the Solution to Plastic
Pollution in Our Ocean. Retrieved from [Link]
problem-solution-plastic-pollution-ocean/
2) Under what market conditions would it be appropriate for a company to implement a
global standardization strategy? (4 points)
First of all, to understand under what market conditions would be appropriate for a company to
implement a global standardization strategy, it´s needed to know what standardization is.
When the company has the opportunity to use the same market strategy in different countries,
even with different cultures, it´s called standardization.
It´s true that with internet´s help the differences between countries are less than years ago,
however, it still exists. And when the matter is export products, the company has to decide
whether is better to use a single strategy to all places or to use an adaptation for each place
that the company will export.
The point that makes a difference in each strategy (standardize or adaptation) is about the type
of products. The standardize strategy applies effectively within products that are denominated
as durable goods, as fashion, technologies, luxury goods. In these cases, the product can be sold
in different markets without change its strategy. One reason is that because normally, when
consumers are looking for this product, they are looking for determined brands.
However, nondurable goods are more sensitives, 2 which is better for the company captive
what are the preferences of each market that they are selling and customize it.
The good point of those strategies is that a company does not have to choose one or another.
The company has to match each part of the market strategy with the strategy that better serve
all.
2
[Link]
3) Describe two reasons why companies engage in international business. (4 points)
In the market there is a few points that make companies to export their products. One could be
related to another and it does not have to fulfill just one necessity.
One reason that companies decide to go internationally is to expand sales. If the company has a
desire to be recognized internationally, or to improve their revenues. And the desire to increase
the revenues does not mean that the revenue of the company in its country it´s not good. The
company can have a great revenue where is working, but decide to expand, expecting to have
more revenue. In this case, what companies have to think is that if they do not expand
internationally, competitors will expand. And if the competitor gains international market,
maybe you could lose the market in your own country, which will directly affect your revenues.3
Other reason that makes companies to expand their brand is because of saturation of the
market. The market sometimes is fulfilled with determined product, which creates a big
competition between brands. When you have a saturation, the company have to sacrifice some
points to better attend customer. Sometimes the company does not have more customers to
gain. The only company’s option is to go internationally.
It´s true that the pressure on the company to increase sales and profits will not cease, because
it´s the company’s goal, so the company has to expand their options to increase the sales and
the profit.
3
[Link]
4) What two elements are the root cause of the benefit from international trade? (4
points)
The two benefits from international trade are a variety of goods and the outlet for surplus.
Variety of goods from international trade allows countries to access goods that are not
available within their country or cities. For example, raw materials are only available from some
countries such as oil from Qatar, metals, fish from Iceland, without trade this country would not
benefit from their raw materials and countries in need of these materials would not have
access to them. The variety of goods stretches across all sectors of the economy, it ends up
giving consumers more choice in the items they wish to purchase, and it also exposes then to
new products.
The outlet for surplus, without international trade, the company targeted market is limited to
its population that resides within the country that it operates with. With international trade the
companies are able to expand to all of its potential market size. This way the manufacturers
can market to their own country and also maintain an international outlet for its products when
their sales with the country are slow.
5) Explain the benefits of country specialization – give 3 examples (4 points)
There are two main reasons why specialization is considered as favorable. The first reason is
based on the concept of comparative advantage proposed by David Ricardo, which he says that
countries have different resource and productivity level. These two differences will determine
what the company will produce that is less costly.
The second reason is based in economic of scale, which emphasizes that a how much more a
scale of product is, it turns to be more efficient and lowers the cost of each unit. Overall, if the
company produces more, it will be more effective and cost less per unit.
Specialization is considered good because it enhances what the country already has, using the
resources available to produce what other countries need. It is smart because the country does
not have to pay for a raw material that they do not have in their country. Other benefit is that
the time spent in the production of the product is shorter, considering that the country does
not have to wait for the raw material come from another place. 4
4
[Link]