2. Global Perspective:
• More of the world’s people, from the richest to the
poorest, continue to participate in the world’s wealth
through global trade.
• The emerging global economy in which we live brings
us into world wide competition, with significant
advantages for both marketers and consumers.
Marketers from new markets opening and smaller
markets growing large enough to become viable
business opportunities. Consumers benefit by being
able to select from the widest range of goods
produced any where in the world at the lowest
prices.
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3. Cont.
• Bound together by satellite communications
and global companies, consumers in every
corner of the world are demanding an ever-
expanding variety of goods.
• World trade becomes an important economic
activity. Because of this importance, the
inclination is for countries to control
international trade to their own advantage. As
competition intensifies, the tendency toward
protectionism gains momentum.
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4. Cont.
• In the benefits of the social, political and
economic changes now taking place are to be
fully realized, free trade must prevail
throughout the global market place.
• The creation of the World Trade Organization,
WTO, is one of the biggest victories for free
trade.
• At no time in modern economic history have
countries been more economically
interdependent, have greater opportunities for
international trade existed, or has the potential
for increased demand existed than now
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5. • A major world wide recession catapulted the
world’s economies in to the Great Depression
when trade all but dried up after tariffs and
other trade barriers were raised to intolerable
heights.
• Determined not to repeat this economic
disaster following World War II, world leaders
created GAAT, a forum for member countries
to negotiate a reduction of tariffs and other
barriers to trade. GAAT became part of WTO,
that moved in to a new era of free trade.
Cont.
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6. • The rapid growth of war-torn economies and
previously underdeveloped countries, coupled
with large scale economic cooperation and
assistance, led to new global marketing
opportunities.
• Countries once classified as less developed
were reclassified as Newly Industrialized
Countries (NICs)
Cont.
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7. • Companies are looking for ways to become
more efficient, improve productivity, and
expand their global reach while maintaining
an ability to respond quickly to deliver a
product that the market demands.
• Global companies are not the only ones
aggressively seeking new market
opportunities. Smaller companies are using
novel approaches to marketing and seeking
ways to apply their technological expertise to
exporting goods and services not previously
sold abroad.
Cont.
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8. • When countries trade, financial transactions
among businesses or consumers of different
nations occur. Products and services are
exported and imported, monetary gifts are
exchanged, investments are made, cash
payments are made and cash receipts
received, and vacation and foreign travel
occurs. There will be a constant flow of money
into and out of a country.
Cont.
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9. • Each of the nation’s financial transactions with
other countries is reflected in its balance of
payments. A deficit results when international
payments are greater than receipts.
• The relationship between merchandise imports
and exports is referred as trade balance. If a
country exports more goods than imports, it has
a favorable balance of trade and if it imports
more than exports, an unfavorable balance of
trade (may lead to negative balance of trade
and balance of payment).
Cont.
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10. • Government restrictions on trade are adopted by
protectionists: protection of an infant industry,
protection of the home market, need to keep
money at home, encouragement of capital
accumulation, maintenance of the standard of
living and real wages, conservation of natural
resources, industrialization of a low-wage nation,
maintenance of employment and reduction of
unemployment, national defense, increase of
business size, and retaliation and bargaining.
Cont.
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11. • To encourage development of domestic industry
and protect existing industry, governments my
establish such barriers to trade as tariffs,
quotas, boycotts, monetary barriers, non-tariff
barriers, and market barriers.
• Barriers are imposed against imports and
against foreign businesses. While the inspiration
for such barriers may be economic or political,
they are encouraged by local industry.
Cont.
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12. • Tariffs: tax imposed by a government on goods
entering at its borders. Used as revenue-
generating taxes or to discourage the importation
of goods, or for both reasons.
– Increase: inflationary pressures
– Weaken: balance of payment position, supply
& demand patterns, international relations
– Restrict: manufacturer’s supply sources,
choices available to consumers, competition.
Cont.
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13. • Quotas: absolute restriction on the quantity of a
specific item that can be imported.
• Boycotts: an absolute prohibition on the purchase
and importation of certain goods from other
countries.
• Standards: to protect health, safety, and product
quality.
• Monetary Barriers: Three barriers to consider:
–Blocked currency
–Differential exchange rate
–Government approval requirements 4 foreign
exchange
Cont.
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14. • Antidumping Penalties: to prevent foreign
producers from using predatory pricing, a
practice whereby a producer intentionally sells
its products for less than the cost of
production in order to undermine the
competition and take control of the market.
• As the global marketplace evolves, trading
countries have focused attention on ways of
eliminating tariffs, quotas, and other barriers
to trade. To support the growth of
international trade: WTO, IMF, World Bank
• Protests: complaint against the WTO, IMF,…
Cont.
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15. • The complaint against is the blend of unintended
consequences of globalization: environmental
concerns, worker exploitation, cultural extinction,
higher oil prices, and diminished sovereignty of
nations.
• The internet is an important innovation in the
dynamic environment of global business and is
rapidly becoming an indispensable tool- it will have a
profound effect on how international business is
conducted in the 21st century……!!!!!!!
Cont.
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16. Assignment I
Write a report on the
development and current
status of GATT (WTO), IMF
and World Bank
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