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  • 1. pp. 146-159 Chapter 10 Business in a Global Economy
  • 2. Learning Objectives After completing this chapter, you’ll be able to:
    • Explain why nations need to trade with each other.
    • Describe how currency exchange works.
    continued
  • 3. Learning Objectives After completing this chapter, you’ll be able to:
    • State the advantages of protectionism and free trade.
    • Name types of trade barriers.
    continued
  • 4. Learning Objectives After completing this chapter, you’ll be able to:
    • Identify some of the major trade alliances in the world today.
  • 5. Why It’s Important Global trade doesn’t just influence business, it also affects all the countries and people of the world.
  • 6. Key Words multinational company imports exports exchange rate balance of trade protectionism continued
  • 7. Key Words tariff quota embargo free trade
  • 8. Global Producers and Consumers We are all part of the global marketplace. The global marketplace exists anywhere business crosses national borders.
  • 9. Global Producers and Consumers Countries can satisfy their citizens’ wants and needs by buying them in the global market.
  • 10. The Global Marketplace A multinational corporation is a company that does business in many countries and has facilities and offices in many countries around the world.
  • 11. The Global Marketplace The global marketplace works much like a shopping mall or a supermarket.
  • 12. The Global Marketplace The United States is rich in resources—human, natural, and production — but it still needs things from other countries.
  • 13. Figure 10.1 MAJOR EXPORTS AND IMPORTS OF THE UNITED STATES Look at the graph to see what products the United States imports and exports. Name the product that the United States exports more than it imports. Source: Standard & Poor’s
  • 14. Specialization Countries specialize in producing certain goods and services. By specializing, countries can sell what they produce best so they can buy the products they need from other countries.
  • 15. Specialization The kinds of resources available to a country often influence what it specializes in producing.
  • 16. Specialization A country with little money or advanced technology but a large population might specialize in manual labor.
  • 17. Types of Trade Imports are goods and services that one country buys from another country. Exports are goods and services that one country sells to another country.
  • 18. Types of Trade Other types of trade include:
    • Investment
    • Exchange of human resources
    • Tourism
    • Military aid
    • Loans
  • 19. Currency Countries have to pay for each other’s products with currency. Currency is another name for money. Just as countries use different lan-guages, they use different currencies, such as dollars, pesos, and yen.
  • 20. Currency The foreign exchange market is made up of banks where different currencies are exchanged.
  • 21. Exchange Rates The exchange rate is the price at which one currency can buy another currency. Exchange rates change from day to day and from country to country.
  • 22. Exchange Rates How much the currency of a country is worth depends on how many other countries want to buy its products.
  • 23. Prices A company follows the change in exchange rates to find the best prices for products.
  • 24. Prices When the value of a country’s currency goes up compared to another country’s, it has a favorable exchange rate .
  • 25. Prices When the value of a country’s currency goes down compared to another country’s, it has an unfavorable exchange rate .
  • 26. Prices Some countries choose to lower the value of their currency to bring in more business. When this happens, it costs less to buy products from that country.
  • 27. Balance of Trade Balance of trade is the difference in the value between how much a country imports and how much it exports.
  • 28. Balance of Trade When a country exports more than it imports, it has a trade surplus . When a country imports more than it exports, it has a trade deficit .
  • 29. Balance of Trade A country can have an unfavorable balance of trade with one country and a favorable balance with another.
  • 30. Graphic Organizer How Exchange Rates Affect the Balance of Trade Graphic Organizer Weak Currency FAVORABLE BALANCE OF TRADE More exports than imports Strong Currency More imports than exports NEGATIVE BALANCE OF TRADE Trade surplus (leftover money) Trade deficit (debt)
  • 31.
    • Explain what trade is.
      • Type your answer here by highlighting this text. The paragraph will fill the space as you type.
    • Explain exchange rates.
      • Type your answer here by highlighting this text. The paragraph will fill the space as you type.
    • Why would a country want to devalue its currency?
      • Type your answer here by highlighting this text. The paragraph will fill the space as you type.
    Name
  • 32. Global Competition Global competition often leads to trade disputes between countries. At the heart of most trade disputes is whether there should be limits on trade.
  • 33. Protectionism Protectionism is the practice of putting limits on foreign trade to protect businesses at home.
  • 34. Protectionism Some of the reasons in favor of protectionism are:
    • Foreign competition can lower the demand for products made at home.
    continued
  • 35. Protectionism
    • Companies at home need to be protected from unfair foreign competition.
    • Industries that make products related to national defense need to be protected.
    continued
  • 36. Protectionism
    • The use of cheap labor in other countries can lower wages or threaten jobs at home.
    • A country can become too dependent on another country for important products like oil, steel, or grain.
    continued
  • 37. Protectionism
    • Other countries might not have the same environmental or human rights standards.
  • 38. Trade Barriers To limit competition from other countries, governments put up trade barriers to keep foreign products out.
  • 39. Trade Barriers A tariff is a tax placed on imports to increase their price in the domestic market.
  • 40. Trade Barriers A quota is a limit placed on the quantities of a product that can be imported.
  • 41. Trade Barriers An embargo is when the government decides to stop an import or export of a product.
  • 42. Many Asian markets are friendlier to smaller American companies. Consultant Robert Azar works with U.S. businesses that want to plant roots in Asia. continued The Friendly Asian Markets
  • 43. According to Azar, Asian businesses may perceive a large company as a threat. In contrast, they often see smaller ones as someone they can join up with. continued The Friendly Asian Markets
  • 44. This is good news for what type of business ownership? Analyze
      • Type your answer here by highlighting this text. The paragraph will fill the space as you type.
    Name
  • 45. Free Trade Supporters of free trade believe there should be no limits on trade.
  • 46. Free Trade The benefits of free trade are:
    • It opens up new markets in other countries.
    • It creates new jobs, especially in areas related to global trade.
    continued
  • 47. Free Trade
    • Competition forces businesses to be more efficient and productive.
    • Consumers have more choice in the variety, price, and quality of products.
    continued
  • 48. Free Trade
    • It promotes cultural understanding and cooperation between countries.
    • It helps all countries raise their standard of living.
  • 49. Trade Alliances To reduce limits on trade more countries are forming trade alliances with each other. In a trade alliance, several countries merge their economies into one huge market.
  • 50. Trade Alliances NAFTA (North American Free Trade Agreement) was controversial because some workers would be displaced when trade barriers were lowered.
  • 51. Trade Alliances Some of the major trade alliances in the world today are:
    • NAFTA
    • European Union (EU)
    • Association of Southeast Asian Nations (ASEAN)
  • 52. Figure 10.2 MAP OF TRADE ALLIANCES IN THE WORLD The European Union (EU) is the oldest and best-known economic community formed to promote free trade among the members of the community and to foster common economic policies.
  • 53.
    • What nations make up the European Union?
    Type your answer here. You may want to search online to find the answer. Type your name here
  • 54. International Business and Finance Affects Everyone Understanding international business and finance has become increasingly important for the consumer, wage earner, investor, citizen, and business leader.
  • 55. International Business and Finance Affects Everyone An understanding of international business helps you understand why goods and services are at particular prices.
  • 56. International Business and Finance Affects Everyone The business leader of tomorrow will have a good grasp of international business and finance.
  • 57. Type your name here
    • What is a trade war?
      • Type your answer here
    • What are some of the major trade alliances in the world today?
      • Type your answer here
    Name
  • 58. As a restaurant owner, what kind of things might you import and export? Type your answer here Name
  • 59. In the global marketplace, what is the importance of specialization? continued Name Type your answer here
  • 60. By expanding operations domestically and internationally, how does this affect the economies involved? continued Name Type your answer here
  • 61. How can a small company, like Panda Express, change domestic culture? Name Type your answer here
  • 62.
    • You now need to print out the pages with your answers. Please do not print all of this document as it is 62 pages. To print out the pages you need follow these instructions.
    • Go to Print
    • Choose “Slides” and type in page numbers
      • 31, 44, 53, 57, 58, 59, 60, 61 then press Print
    • Make sure you have your name on each slide
    • Hand in to Ms. Lucas