Itb Chap 03


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  • CHAPTER 3 06/08/09 ITB
  • Itb Chap 03

    1. 1. Business in the Global Economy 3-1 International Business Basics 3-2 The Global Marketplace 3-3 International Business Organizations 3
    2. 2. LESSON 3-1 International Business Basics <ul><li>Goals </li></ul><ul><li>Describe importing and exporting activities. </li></ul><ul><li>Compare balance of trade and balance of payments. </li></ul><ul><li>List factors that affect the value of global currencies. </li></ul>Chapter 3 Slide
    3. 3. Key Terms <ul><li>balance of payments </li></ul><ul><li>balance of trade </li></ul><ul><li>exchange rate </li></ul><ul><li>exports </li></ul><ul><li>imports </li></ul>Chapter 3 Slide
    4. 4. TRADING AMONG NATIONS <ul><li>Absolute advantage </li></ul><ul><li>Comparative advantage </li></ul><ul><li>Importing </li></ul><ul><li>Exporting </li></ul>Chapter 3 Slide
    5. 5. IMPORTING Chapter 3 Slide
    6. 6. MEASURING TRADE RELATIONS <ul><li>Balance of trade </li></ul><ul><li>Balance of payments </li></ul>Chapter 3 Slide
    7. 7. U.S. TRADE BALANCES Chapter 3 Slide
    8. 8. BALANCE OF TRADE Chapter 3 Slide
    9. 9. >> C H E C K P O I N T <ul><li>How does balance of trade differ from balance of payments? </li></ul>Chapter 3 Slide
    10. 10. INTERNATIONAL CURRENCY <ul><li>Foreign exchange rates </li></ul><ul><li>Factors affecting currency values </li></ul><ul><li>Three main factors affect currency </li></ul><ul><ul><li>Balance of payments </li></ul></ul><ul><ul><li>Economic conditions </li></ul></ul><ul><ul><li>Political disability </li></ul></ul>Chapter 3 Slide
    11. 11. RECENT VALUES OF CURRENCIES Chapter 3 Slide
    12. 12. >> C H E C K P O I N T <ul><li>What factors affect the value of a country’s currency? </li></ul>Chapter 3 Slide
    13. 13. LESSON 3-2 The Global Marketplace <ul><li>Goals </li></ul><ul><li>Describe the components of the international business environment. </li></ul><ul><li>Identify examples of formal trade barriers. </li></ul><ul><li>Explain actions to encourage international trade. </li></ul>Chapter 3 Slide
    14. 14. Key Terms <ul><li>infrastructure </li></ul><ul><li>trade barrier </li></ul><ul><li>quota </li></ul><ul><li>tariff </li></ul><ul><li>embargo </li></ul>Chapter 3 Slide
    15. 15. THE INTERNATIONAL BUSINESS ENVIRONMENT <ul><li>Geography </li></ul><ul><li>Cultural influences </li></ul><ul><li>Economic development </li></ul><ul><ul><li>Literacy level </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Agricultural dependency </li></ul></ul><ul><li>Political and legal concerns </li></ul>Chapter 3 Slide
    16. 16. Chapter 3 Slide <ul><li>GEOGRAPHY </li></ul><ul><li>location </li></ul><ul><li>climate </li></ul><ul><li>terrain </li></ul><ul><li>waterways </li></ul><ul><li>natural resources </li></ul><ul><li>ECONOMICS </li></ul><ul><li>technology </li></ul><ul><li>education </li></ul><ul><li>inflation </li></ul><ul><li>exchange rate </li></ul><ul><li>infrastructure </li></ul><ul><li>CULTURE </li></ul><ul><li>language </li></ul><ul><li>family </li></ul><ul><li>religion </li></ul><ul><li>customs </li></ul><ul><li>traditions </li></ul><ul><li>food </li></ul><ul><li>POLITICAL–LEGAL </li></ul><ul><li>FACTORS </li></ul><ul><li>government system </li></ul><ul><li>political stability </li></ul><ul><li>trade barriers </li></ul>THE INTERNATIONAL BUSINESS ENVIRONMENT
    17. 17. >> C H E C K P O I N T <ul><li>List the four main elements of the international business environment. </li></ul>Chapter 3 Slide
    18. 18. INTERNATIONAL TRADE BARRIERS <ul><li>Quotas </li></ul><ul><li>Tariffs </li></ul><ul><li>Embargoes </li></ul>Chapter 3 Slide
    19. 19. QUOTAS <ul><li>Reasons for quotas </li></ul><ul><li>To keep supply low and prices the same </li></ul><ul><li>To express displeasure at the policies of the importing country </li></ul><ul><li>To protect one of a country’s industries from too much competition form abroad </li></ul>Chapter 3 Slide
    20. 20. TARIFFS <ul><li>Reasons for tariffs </li></ul><ul><li>To set amount per pound, gallon, or other unit </li></ul><ul><li>To set the value of a good </li></ul>Chapter 3 Slide
    21. 21. EMBARGOES <ul><li>Reasons for embargoes </li></ul><ul><li>To protect a country’s industries from international competition more than the quota or tariff will achieve </li></ul><ul><li>To prevent sensitive products from falling into the hands of unfriendly groups or nations </li></ul>Chapter 3 Slide
    22. 22. >> C H E C K P O I N T <ul><li>What are three formal trade barriers? </li></ul>Chapter 3 Slide
    23. 23. ENCOURAGING INTERNATIONAL TRADE <ul><li>Free-trade zones </li></ul><ul><li>Free-trade agreements </li></ul><ul><li>Common markets </li></ul>Chapter 3 Slide
    24. 24. FREE-TRADE ZONES <ul><li>Used to promote international business in a selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing </li></ul><ul><li>Usually located around a seaport of airport </li></ul>Chapter 3 Slide
    25. 25. FREE-TRADE AGREEMENTS <ul><li>Member countries agree to remove duties and trade barriers on products traded among them </li></ul><ul><li>Results in increased trade between members </li></ul>Chapter 3 Slide
    26. 26. COMMON MARKETS <ul><li>Allows companies to invest freely in each member’s country </li></ul><ul><li>Allows workers to move freely across borders </li></ul><ul><li>Examples </li></ul><ul><ul><li>European Union (EU) </li></ul></ul><ul><ul><li>Latin American Integration Association (LAIA) </li></ul></ul>Chapter 3 Slide
    27. 27. >> C H E C K P O I N T <ul><li>What actions could be taken to encourage international trade? </li></ul>Chapter 3 Slide
    28. 28. LESSON 3-3 International Business Organizations <ul><li>Goals </li></ul><ul><li>Discuss activities of multinational organizations. </li></ul><ul><li>Explain common international business entry modes. </li></ul><ul><li>Describe activities of international trade organizations and agencies. </li></ul>Chapter 3 Slide
    29. 29. Key Terms <ul><li>multinational company (MNC) </li></ul><ul><li>joint venture </li></ul>Chapter 3 Slide
    30. 30. MULTINATIONAL COMPANIES (MNC) <ul><li>MNC strategies </li></ul><ul><li>MNC benefits </li></ul><ul><li>Drawbacks of multinational companies </li></ul>Chapter 3 Slide
    31. 31. MNC STRATEGIES <ul><li>Global strategy </li></ul><ul><li>Multinational strategy </li></ul>Chapter 3 Slide
    32. 32. MNC BENEFITS <ul><li>Large amount of goods available </li></ul><ul><li>Lower prices </li></ul><ul><li>Career opportunities </li></ul><ul><li>Foster understanding, communication, and respect </li></ul><ul><li>Friendly international relations </li></ul>Chapter 3 Slide
    33. 33. DRAWBACKS OF MULTINATIONAL COMPANIES <ul><li>Economic power </li></ul><ul><li>Worker dependence on the MNC </li></ul><ul><li>Consumer dependence </li></ul><ul><li>Political power </li></ul>Chapter 3 Slide
    34. 34. >> C H E C K P O I N T <ul><li>What are two strategies commonly used by multinational companies? </li></ul>Chapter 3 Slide
    35. 35. GLOBAL MARKET ENTRY MODES <ul><li>Licensing </li></ul><ul><li>Franchising </li></ul><ul><li>Joint venture </li></ul>Chapter 3 Slide
    36. 36. LICENSING <ul><li>Allows companies to produce items in other countries without being actively involved </li></ul><ul><li>Has a low financial investment, so the potential financial return for the company is often low </li></ul><ul><li>The risk for the company is low </li></ul>Chapter 3 Slide
    37. 37. FRANCHISING <ul><li>Allows organizations to enter into contracts with people in other countries to set up a business that looks and runs like the parent company </li></ul><ul><li>Marketing elements, such as food products, packaging, and advertising must meet both cultural sensitivities and legal requirements </li></ul><ul><li>Commonly involves selling a product or service </li></ul>Chapter 3 Slide
    38. 38. JOINT VENTURE <ul><li>Allows two or more companies to share raw materials, shipping facilities, management activities, or production activities </li></ul><ul><li>Concerns include the sharing of profits and not as much control since several companies are involved </li></ul><ul><li>Very popular for manufacturing, such as Japanese and U.S. automobile manufacturers </li></ul>Chapter 3 Slide
    39. 39. >> C H E C K P O I N T <ul><li>How does licensing differ from a franchise? </li></ul>Chapter 3 Slide
    40. 40. INTERNATIONAL TRADE ORGANIZATIONS <ul><li>World Trade Organization </li></ul><ul><li>International Monetary Fund </li></ul><ul><li>World Bank </li></ul>Chapter 3 Slide
    41. 41. WORLD TRADE ORGANIZATION (WTO) <ul><li>WTO Goals </li></ul><ul><li>Lowering tariffs that discourage free trade </li></ul><ul><li>Eliminating import quotas </li></ul><ul><li>Reducing barriers for banks, insurance companies, and other financial services </li></ul><ul><li>Assisting poor countries with economic growth </li></ul>Chapter 3 Slide
    42. 42. INTERNATIONAL MONETARY FUND (IMF) <ul><li>Helps to promote economic cooperation </li></ul><ul><li>Maintains an orderly system of world trade and exchange rates </li></ul><ul><li>Includes over 150 member nations </li></ul>Chapter 3 Slide
    43. 43. WORLD BANK <ul><li>Created in 1944 to provide loans for rebuilding after World War II </li></ul><ul><li>Today the World Bank has over 180 member countries and two main divisions </li></ul><ul><ul><li>International Development Association (IDA), which makes loans to help developing countries </li></ul></ul><ul><ul><li>International Finance Corporation (IFC), which provides technical capital and technical help to private businesses in nations with limited resources </li></ul></ul>Chapter 3 Slide
    44. 44. >> C H E C K P O I N T <ul><li>How does the International Monetary Fund assist countries? </li></ul>Chapter 3 Slide