Exercise Give me stories of different products and marketing approaches in other countries, and compare them in Palestine? What evidence have we seen in the last ten years of growing international business partnership?Trade agreements- global mergers- joint ventures- licensing
“We are in the midst of agreat transition from narrownationalism to internationalpartnership.” ~ Lyndon Baines Johnson
Key Topics The rise of global business Major world marketplaces and Palestine trading partners Influences on international business International business management The impact of differences among nations
The key drivers to globalization Global marketDrivers: Convergence Similar customer needs, Global customers, Transferable marketing Trade policies, Technical Scale economies,GovernmentStandards, host government, Global Sourcing efficiencies Cost Influence policies Strategies Countries costs, Advantages High product development costs Interdependence, Competitors global High exports/imports, Global Competition
Globalization Is Gaining SpeedThe world economy isbecoming asingle, interdependentsystemExport:Domestic product sold abroadImport:Foreign product solddomestically
Globalization Is Gaining Speed Example: Asian financial markets in the late 90s directly affects stock markets worldwide. Discussion: what product from other countries do you useconsume? Why have you chosen it? Why not Palestinian product?
Categorizing Economies High Income Countries: Per capita income greater than $9,386 Middle Income Countries: Per capita income between $765 and $9,386 Low Income Countries: Per capita income of less than $765 Discussion: what countries fall into each category?
Major World Marketplaces North America NAFTA Europe EU Pacific Asia Do we have any economic agreement with other countries. What are they?
Pacific Asia RepresentsEnormous Business Potential Projections for 2010 (in millions) 500 In less than a 450 decade, Asian 400 415 432 language 350 speakers on 300 the web will 250 far exceed 200 English 150 speakers 100 96 50 34 0 English Japanese Chinese KoreanSource: Time Global Business, Nov. 2001 2 - 16
Competitive Advantage Absolute Advantage:when one country can produce a product cheaper andor higher quality than any other country. Ex. OPEC Comparative Advantage:when one country can produce certain goods or services more efficiently and effectively than others. Ex. US software
Competitive advantages When competitive advantage is materialized?When a firm earns persistently higher rate of profit over its rivals. Determinants of profit level1- Value of company products in customers’ eyes.2- Company production cost.
Competitive advantage It can be created in certain industrial field, through the adoption of low-cost- differentiation strategy. M. Porter
National Competitive Advantage Factor conditions Demand conditions Related and supporting industries Strategies, structures, an d rivalries Qui. Evaluate Palestine?
Import/Export Balances Balance of Trade Trade Deficits Trade Surpluses Balance of PaymentsThe total flow of money into or out of an economy
Exchange RatesHeavily Impact Global Trade When an economy’s currency is strong: Domestic companies find it harder to export products Foreign companies find it easier to import products Domestic companies may move production to cheaper sites in foreign countries Implications for balance of trade?
Exchange RatesHeavily Impact Global Trade When an economy’s currency is weak: Domestic companies find it easier to export products Foreign companies find it harder to import products Foreign companies may invest in production facilities Implications for balance of trade?
Barriers to International Trade Legal & Political Social & Cultural Differences Differences Economic Differences
Take Time to Learn the Culture Thoroughly! Este es nuestro nuevo auto: Ha, ha, ha, ha, h el NOVA! a, ha!!!
The Customer’s LanguageA Critical Business Success Factor In the U.S. alone, 18% of the population does not speak English at home. Only 48% of the world’s Web users are native English speakers. Consumers are four times more likely to buy a product on the Internet if the website is in their preferred language.Source: Time Global Business, Nov. 2001
Economic Differences To operate effectively in another country, businesses must know when, and to what extent, the government is involved in a given industry.
Legal & Political Differences Quotas, Tariffs, & Subsidies Protectionism Local Content Laws Business Practice Laws Day to day operations Cartels Dumping
Definitions Quota: restriction on the number of certain type of product that can be imported into a country. Embargo: complete ban on imports and exports, imposed by a government for political reasons. Tariff: tax levied on imported products. Subsidy: government payments to help a domestic business compete with foreign firms. Protectionism: the practice of protecting domestic business against foreign competition.
Chapter Review Discuss the rise of international business, describe the major world marketplaces. Explain how competitive advantage, import-export balances, exchange rates, and foreign competition shape international business strategies.
Chapter Review Discuss what factors influence whether a company should engage in international business. Identify different levels of international involvement and international organizational structure. Describe key barriers to international trade.