Foster better relations between trading partners, as trading partners want to exchange with each other and protect their trade. Costs of Free Trade unemployment Cheaper Imports can replace domestic firms as there Is more competition Government wont assist them External Balance Need protection to maintain external balance unable to compete in global markets.Australia Increase import spending which will not Improve external balance no support, no tariffs, unable to compete and don’t have experience Nikkei Case Study Why does a company like Nikkei seek to globalize operations? Access new markets- Access more consumers Increase their global sales, which resulted in increase in profits. Lower input Costs Cost production cheaper overseas Lowering costs is management objective because it will increase profit margin.
Important to seek more efficient ways of producing that particular product.Greater Access Resources Easier to produce resources from other countries Holder Case Study Tariffs have become lower and greater competition within the local market. The cost of Holder cars was too high and imported cars were cheaper in other countries. Labor costs were too high, small export market relied on local scales which were excelling, more importing cars Local manufacturing economics of scale, down in tariffs on imported cars. Imported cars became far cheaper.