Pestle Analysis - Marketing Plan

1169 Words Oct 12th, 2013 5 Pages
SCHOOL OF BUSINESS

Course Name : International Business
Course Code : CSAD 471
Student Name : Francis K. Adu-Boahen
Index No : 10135024

Mid-Semester Assignment

ANSWER 1
International trade allows a country to specialize in the manufacture and export of products or services that it can produce or services efficiently, and import products that can be produced more efficiently in other countries
The various theories have differing prescriptions for government policy on trade. Mercantilism makes a crude case for government involvement in promoting exports and limiting imports. Smith, Ricardo, and Heckscher-Ohlin promote unrestricted free trade.
Mercantilism is a bankrupt theory that has no place in the modern world.
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Taxes or Tariffs
These are taxes imposed on imported goods and services. Tariffs are used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers. Governments may impose tariffs to raise revenue or to protect domestic industries from foreign competition, since consumers will generally purchase cheaper foreign produced goods. Tariffs can lead to less efficient domestic industries, and can lead to trade wars as exporting countries reciprocate with their own tariffs on imported goods.

Import duties imposition
This policy is also used to limit trade by imposing taxes on imported goods and services which will lead to an increase in price of these goods and services. Consumers being rational will prefer purchasing locally produced goods.

Embargo
Embargo is a prohibition by a government on certain or all trade with a foreign nation. It is meant to prevent entirely, the importation or the consumption of a particular commodity in a country. It becomes illegal in a country when such goods or services are brought into the country.

These tariff barriers above are used by the government to restrict or limit trade to a country. The reasons why these policies or restrictions are made by the government are to: Provide employment, raise revenue, for protection, redistribution of income and
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