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Factors and Regulations for the Global Economy


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Factors and Regulations for the Global Economy
BF10 - Principals of Business and Finance

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Factors and Regulations for the Global Economy

  1. 1. UNDERSTANDING BusinessIn a Global Economy
  2. 2. Part3: Factors&Regulations Forbusinessintheglobal marketplace
  3. 3. DomesticBusinessThe making, buying, and selling of goods and service within a country.
  4. 4. InternationalBusinessBusiness activities needed for creating, shipping, and selling goods and services across national borders.
  5. 5. AbsoluteAdvantageA country can produce a good or service at a lower cost than other countries.
  6. 6. ComparativeAdvantageA situation in which a country specializes in the production of a good or service at which it is relatively more efficient.
  7. 7. Exports-ImportsGoods and services sold between countries.
  8. 8. ForeignDebtThe amount of money a country owes to other countries.
  9. 9. BalanceofTradeThe difference between a country’s total exports and total imports.
  10. 10. ForeignExchangeMarketWhere banks buy and sell different currencies.
  11. 11. ExchangeRateThe value of a currency in one country when compared with the value in another.
  12. 12. International Business Environment Factors
  13. 13. Geography Includes a country’s location, climate, terrain, seaports, natural resources
  14. 14. CulturalInfluence Includes language, religion, family, food, values, customs, social relationships
  15. 15. EconomicDevelopment Includes education and literacy level, inflation, technology, exchange rate, agricultural, dependency, infrastructure, transportation
  16. 16. Political&LegalConcerns Includes type of government, stability of government, government policies for businesses relevant to trade barriers
  17. 17. Trade Barrier Factors
  18. 18. Embargo when a government bans the import or export of specified goods.
  19. 19. Quota A limit on the quantity of good that may be imported or exported within a given period to regulate international trade.
  20. 20. Tariffs Taxes on certain imported products which increases prices.
  21. 21. Encouragementof International Trade
  22. 22. Common Market When countries that are members freely invest in one another. Such as: European Union (EU) or Latin American Integration Association (LAIA)
  23. 23. FreeTradeAgreementWhen countries that are members remove duties and trade barriers on products traded among them to increase trade between members. Such as: NAFTA (North American Free Trade Agreement)
  24. 24. FreeTradeZonesInclude selected areas that allow duty-free products to be imported, and then stored, assembled, and/or used in manufacturing. The activities usually occur around a seaport or airport.
  25. 25. EntryModetothe GlobalMarketplace
  26. 26. FranchisingAllowing a business the rights to use another company’s name or process in a specific way.
  27. 27. LicensingSelling the right to a company to use some intangible property (production process, trademark, or brand name) for a fee or royalty.
  28. 28. JointVentureWhen two or more companies agree to share a business project.
  29. 29. Maininternational tradeorganizations
  30. 30. InternationalMonetaryFundHelps promote economic cooperation and maintain an orderly system of world trade and exchange rates.
  31. 31. World BankProvides economic aid to developing countries to fund building communications systems, transportation networks, and energy plans.
  32. 32. World TradeOrganizationSettles trade disputes and enforces free-trade agreements among its members.