This document provides an overview of key concepts in international business and global trade. It discusses why global trade is important, how it is measured, and why nations trade. It also addresses barriers to trade, how governments and institutions foster world trade through organizations like the WTO, IMF, and World Bank. Additionally, it examines international economic communities like NAFTA and the EU, and how companies can enter the global marketplace through exporting, foreign investment, and other methods. Cultural factors, political risks, and economic conditions that affect international trade are also reviewed. The document concludes with trends in the global marketplace like market expansion in developing countries and how multinational corporations are impacting world trade.

1. PowerPoint Image Slideshow
Introduction to Business
Chapter 3 COMPETING IN THE GLOBAL MARKETPLACE

2. Learning Outcomes
1. Why is global trade important to the United States,
and how is it measured?
2. Why do nations trade?
3. What are the barriers to international trade?
4. How do governments and institutions foster world
trade?
5. What are international economic communities?
6. How do companies enter the global marketplace?
7. What threats and opportunities exist in the global
marketplace?
8. What are the advantages of multinational
corporations?
9. What are the trends in the global marketplace?

4. Global Trade in the United States
Global Vision
• Recognizing and reacting to
international business
opportunities
• Aware of threats from foreign
competitors in all markets
• Effectively use international
distribution networks to obtain
raw materials and move
finished products to the
customers.

5. The Big Mac Index
•Can the price of a Big
Mac around the world
help compare and
even predict the
relative purchasing
power of each
currency?

6. The Big Mac Index

7. Exports Imports Balance of
Trade
Trade
Surplus
Trade Deficit Balance of
Payments
Made in one
country and
sold to
others
Bought from
other
countries
Value of a
country’s
exports and
the value of
its imports
Favorable Unfavorable Difference
between
total
payments to
and its total
receipts
from other
countries

9. Exchange Rate
Floating
Exchange Rate
Devaluation

10. 1. Why is global trade important to the United States,
and how is it measured?
• CONCEPT CHECK
1. What is global vision, and why is it
important?
2. What impact does international trade have
on the U.S. economy?
3. Explain the impact of a currency
devaluation.

11. Why Nations Trade
• Produce and
sell products
at a lower
cost
Absolute
• Specialization
ensures
greater
product
availability
and lower
prices
Comparative

12. Globalization
Created jobs & wealth in many
nations.
Global trade encourages
• Competition
• Innovation
• Productivity
• Lower prices.

13. Pros & Cons of Outsourcing
Pros Cons
You don’t have to hire more employees Lack of control
Lower labor cost Communication issues
Outsource the mundane tasks Problems with quality
Tap into global scaling Delivery
Reduce problems Intellectual property/formulas/secret sauce

14. 2. Why do nations trade?
• CONCEPT CHECK
1. Describe the policy of free trade and its
relationship to comparative advantage.
2. Why do people fear globalization?
3. What are the benefits of globalization?

24. 3. What are the barriers to international trade?
• CONCEPT CHECK
1. Discuss the concept of natural trade
barriers.
2. Describe several tariff and nontariff barriers
to trade.

25. Fostering Global Trade

26. World Bank International Monetary Fund (IMF)
Promote trade through financial
cooperation and eliminate trade barriers
• Offers low-interest loans
• Advice and information, to developing
nations
• Countries must pledge to lower trade
barriers and aid private enterprise
• Short-term loans to member nations
that are unable to meet their
budgetary expenses
• Facilitate international trade
• Promote high employment
• Reduce poverty around the world

27. 4. How do governments and institutions foster world
trade?
• CONCEPT CHECK
1. Describe the purpose and role of the WTO.
2. What are the roles of the World Bank and
the IMF in world trade?

28. What is NAFTA (North American Free Trade
Agreement)?

29. What is NAFTA (North American Free Trade
Agreement)?

30. What is EU (European Union)?
• Foster political and economic integration
in Europe.
• Stimulated economic progress by
eliminating trade barriers
• differences in tax laws
• differences in product standards,
• Establishing a common currency.
• The two most powerful countries in the
EU are Germany and France.

31. What is Central American Free Trade
Agreement?
• Passed in 2005.
• United States
• Costa Rica
• Dominican Republic
• El Salvador
• Guatemala
• Honduras
• Nicaragua
• Intent to encourage direct investments and export
diversification
• Facilitate economic growth of the Central American
nations

32. 5. What are international economic communities?
• CONCEPT CHECK
1. Explain the pros and cons of NAFTA.
2. What is the European Union? Will it ever be
a United States of Europe?

33. Participating in the Global Marketplace –
“Go Global”
Exporting
Licensing
Contract manufacturing
Joint ventures
Direct foreign investment
Countertrading – goods & services
are traded for payment

34. Participating in the Global Marketplace
• View the video which reports on a similar
failure of Target to expand from the USA
to Canada. Compared to Walmart, which
has over 6,000 stores outside the U.S.,
Target was new to global expansion since
Canada was the first global location
attempted. Evaluate the challenges
Target faced related to those Walmart
had to overcome in Germany that were
described in Section 3.5.

35. 6. How do companies enter the global
marketplace?
• CONCEPT CHECK
1. Discuss several ways that a company can
enter international trade.
2. Explain the concept of countertrade.

36. What Is A Trade War?

37. Table 3.2 Where the Money Is, continued

38. Threats and Opportunities in the Global Marketplace
Nationalism Language
Customs
Traditions
Infrastructure
• Complex vs Simple

39. Table 3.1 Cultural Dos and Don’ts Guidelines and Examples

40. Could Ukraine war plunge the global economy into a new crisis?

41. 7. How do companies enter the global
marketplace?
• CONCEPT CHECK
1. Explain how political factors can affect
international trade.
2. Describe several cultural factors that a
company involved in international trade
should consider.
3. How can economic conditions affect trade
opportunities?

42. Table 3.3 The World’s Top 11 Largest Multinational Corporations

43. Multinational Corporations
• Corporations that move
resources, goods, services, and
skills across national
boundaries without regard to
the country in which their
headquarters are located are
multinational corporations.

44. 8. What is the impact of multinational
corporations?
• CONCEPT CHECK
1. What is a multinational corporation?
2. What are the advantages of multinationals?

45. Freight Rate Hikes
Inflation
Food Shortages
Civil Unrest
Fuel
Sanctions
Supply Chain
U.S. Tariffs reduced

46. Market
Expansion
Limited Size
Markets
Beyond
Resource
Acquisition
Acquire new
resources
Operate
efficiently
China &
India
Exports
Technical &
Managerial
Skills
Trends in Global Competition

47. 9. What are the trends in the global marketplace?
• CONCEPT CHECK
1. What trends will foster continued growth in
world trade?
2. Describe some of the ways businesses can
take advantage of these trends to “go
global.”