Intro to Business Chapter 3 Business in the Global Economy 3-1 International Business Basics 3-2 The Global Marketplace 3-3 International Business Organizations

3-1 International Business Basics Trade Among Nations Domestic Business – International Business – Countries are ____________ and so are their economies.

3-1 International Business Basics Trade Principles Absolute Advantage – Comparative Advantage -

3-1 International Business Basics Trade Principles Imports – Exports – Balance of Trade – the difference between a country’s total exports and imports. Exports > Imports = Imports > Exports =

3-1 International Business Basics Trade Principles Money goes from country to country through __________ and _________. Balance of Payments Favorable – receive more money than is paid out Unfavorable – sending more money out than it brings in

3-1 International Business Basics International Currency Exchange Rate – Factors affecting value Balance of Payments Economic Conditions Political Stability

3-2 The Global Marketplace ___________ Location Climate Terrain Waterways Natural Resources Technology Education Inflation Exchange Rate Infrastructure _________ Language Family Religion Customs Traditions Food __________ ________ Government System Political Stability Trade Barriers Business Regulations International Business Environment

3-2 The Global Marketplace International Trade Barriers Quotas – Tariff – Embargo –

3-2 The Global Marketplace Encouraging International Trade Free-Trade Zones – a selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing; often a seaport or airport Free-Trade Agreement – member countries agree to remove all duties (import taxes) and trade barriers on products traded among them. (Ex: NAFTA) Common Market – members do away with duties and other trade barriers ; also called an economic community (Ex: European Union, Latin America Integration Association)

3-3 International Business Organizations Multinational Company (MNC) – an organization that does business in several countries; parent company in ________ country and separate divisions in _____country MNC Strategies Global Strategy – Multinational Strategy –

3-3 International Business Organizations Entering a Global Market Licensing – Franchising – Joint Venture –

3-3 International Business Organizations International Trade Organizations World Trade Organization (WTO) Settles trade disputes and enforces free-trade agreements International Monetary Fund (IMF) Promotes economic cooperation Monitors exchange rates World Bank Gives economic aid to less developed countries