Chapter 4 International Environment for Business 1 Chapter 4 International Environment for Business ©2008 Thomson/South-Western SEE IF YOU CAN FIND AND MAKE OUT THE JUMBLED WORD!

Chapter 4 International Environment for Business 2 Lesson 4.1 The Importance of International Business Goals Describe the nature, growth, and importance of international trade and investment. Explain the reasons for the growth of international business. P

Chapter 4 International Environment for Business 3 Importance of International Business International business — business activities that occur between (2) two or more countries Extent of international trade — most of world’s trade takes place among the developed countries of North America, Western Europe, and the Pacific Rim O

Chapter 4 International Environment for Business 4 Canada China Mexico Japan Germany United Kingdom South Korea Taiwan France Malaysia Top 10 Countries with Which the United States Trades T

Chapter 4 International Environment for Business 5 European Union I

Chapter 4 International Environment for Business 6 EU Countries in English EU Map 2009

Chapter 4 International Environment for Business 7 Growth in International Business European flag. It is the symbol not only of the European Union but also of Europe's unity and identity in a wider sense. The circle of gold stars represents solidarity and harmony between the peoples of Europe. The number of stars has nothing to do with the number of Member States. There are twelve stars because the number twelve is traditionally the symbol of perfection, completeness and unity. The flag therefore remains unchanged regardless of EU enlargements. R

Chapter 4 International Environment for Business 8 The EU and Euro European Union (EU) 27 countries with 16 countries using the Euro

Chapter 4 International Environment for Business 9 The EU and Euro EU countries using the euro: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain EU countries not using the euro: Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, United Kingdom

Chapter 4 International Environment for Business 10 Growth in International Business World Trade Organization ( 150 Countries) (WTO) Rules for Trading, Trade agreement lead to large cuts in Tariffs and boosted exports and imports among member countries. page 86 W T O Website

Chapter 4 International Environment for Business 11 Growth in International Business North American Free Trade Agreement (NAFTA) 1989 Canada, 1992 Mexico joined. International Monetary Fund (IMF) Help countries in difficulties paying for their imports or repaying loans World Bank – Low cost loans to less developed counties for basic needs. F (last letter)

Chapter 4 International Environment for Business 12 Jumbled Word Profit - The reward for producing Goods and Services.

Chapter 4 International Environment for Business 13 Lesson 4.2 Forms of International Business Goals Distinguish between the different forums through which international business is conducted. Describe the policies, rules, and laws that governments use to affect international trade and investment.

Chapter 4 International Environment for Business 14 Forms of International Business Exporting GO OUT ►►►► ►►►► Importing COME IN ◄◄ ◄◄◄◄ ◄◄ International licensing We allow others countries to make our products and sell them, we are paid a royalty.

Chapter 4 International Environment for Business 15 Forms of International Business Joint ventures Share the costs and profit Everyone gets a piece of the pie. Wholly owned subsidiaries NO partners/risky Strategic alliances Work together/experts like TV show Survivor

Chapter 4 International Environment for Business 16 FORMS OF INTERNATIONAL BUSINESS Multinational firms Owns or controls production or service facilities in more than 1 country USA Home country PARENT France Host country SUBSIDIARY Japan Host Country SUBSIDIARY Thailand Host Country SUBSIDIARY Headquarters

Chapter 4 International Environment for Business 17 Government Policies Policies – Tariffs “ Government Tax on product inTO country” – Dumping “Selling for less than cost” – Quotas “Limit” – Nontariff barriers non tax ways = Steering wheel – Embargoes “Government Restriction!!

Chapter 4 International Environment for Business 18 Government Policies Exchange rate – the value of the one country’s currency expressed in the currency of another country. OR how much can your dollar buy in another country. Exchange rate Big Mac Index $1 US Dollar vs. British Pound.726 British Cents. If a Big Mac cost 5 lb in England, it would take $6.88 American money to buy it.

Chapter 4 International Environment for Business 19 Government Policies Currency values –Exchange rate $ Dollar vs. Euro or Lira or Pound. (homework sheet) on Edline Edline homework due on Fridayhomework due on Friday 03/12/10 1 per person, unique with your name.

Chapter 4 International Environment for Business 20 Taste and See – “Economist”

Chapter 4 International Environment for Business 21 Big Mac Index Jan 2010

Chapter 4 International Environment for Business 22

Chapter 4 International Environment for Business 23 Cultural Differences Culture — customs, beliefs, values, and patterns of behavior of the people of a country or group Low-context culture — people communicate directly and explicitly America High-context culture — communication tends to occur through nonverbal signs and indirect suggestions Customs and Religion

Chapter 4 International Environment for Business 24 Cultural Differences Individualism-Collectivism Self Vs. Other Intercultural gestures

Chapter 4 International Environment for Business 25 Lesson 4.3 Theories of International Trade and Investment Goals Explain two theories of international trade. Discuss the concepts of balance of trade and balance of payments. Consider career opportunities in international business and understand the factors related to being sent abroad on assignment.

Chapter 4 International Environment for Business 26 Theories of International Trade Comparative advantage theory — to gain a trade advantage, a country should specialize in products or services that it can provide more efficiently than other countries can. Soft DrinksCoffeeOil

Chapter 4 International Environment for Business 27 Theories of International Trade Product life cycle theory — product or service goes through four stages: introduction, growth, maturity, and decline Black and White TV Color TV Projection TV Flat Screen Digital TV HDTV

Chapter 4 International Environment for Business 28 Balance of Trade Balance of payments — accounting statement in which international transactions are recorded; consists of current account and capital account

Chapter 4 International Environment for Business 29 Balance of Trade Current account — value of goods and services exported and imported, as well as other income and payments Capital account — investment funds coming into and going out of a country (bank loans or deposits, purchase and sale of business and investing in new business)

Chapter 4 International Environment for Business 30 Career Opportunities in International Business Exporting and importing Teaching and translating Administering trade laws Managing foreign offices and operations Banking and insurance International trade organizations Government agencies