Forms of International Business Shannon Parsons

Importing and Exporting Goods Exporting- Selling products or services to buyers in another country. Exporting- Selling products or services to buyers in another country. –Example: China making clothing and selling it to the United States. Importing- Defined as buying goods or services to buyers in another country. Importing- Defined as buying goods or services to buyers in another country. –Example: The U.S. buying coffee beans from Brazil.

Importing and Exporting Cont. Simplest forms of international business Simplest forms of international business Risk free Risk free

International Licensing Company allows a company in another country to make and sell products (according to certain specifications). Company allows a company in another country to make and sell products (according to certain specifications). –Example: When a country has a McDonalds fast-food restaurant that was invented and originated in the U.S.

Joint Ventures Set up businesses in foreign countries Set up businesses in foreign countries Two or more firms share the costs of doing business and also share the profits. Two or more firms share the costs of doing business and also share the profits.

Wholly Owned Subsidiary When firms set up businesses abroad on its own without any partners. When firms set up businesses abroad on its own without any partners.

Strategic Alliances Firms agree to cooperate on certain aspects of business while remaining competitors on other aspects. Firms agree to cooperate on certain aspects of business while remaining competitors on other aspects.

Multinational Firms The expansion of international business. The expansion of international business. Firm that owns or controls production or service facilities in more than one country. Firm that owns or controls production or service facilities in more than one country.

Home and Host Country Home- The country where the business has its headquarters. Home- The country where the business has its headquarters. Host- The foreign location where the business has facilities. Host- The foreign location where the business has facilities.

Parent Firm and Subsidiaries Parent Firm- Name given to company headquarters. Parent Firm- Name given to company headquarters. Subsidiaries- The foreign branches registered as independent legal entities. Subsidiaries- The foreign branches registered as independent legal entities.

International Business Policy Policy Rules Rules Laws Laws Tax (tariff) Tax (tariff)

Tariff Every country has some foreign tax on every imported goods. Every country has some foreign tax on every imported goods. Clothing Clothing Food Food Cars Cars Natural Resources Natural Resources

Countries Limits on import Quota- limits the quantity or value of units permitted to enter a country Quota- limits the quantity or value of units permitted to enter a country –Example: the USA only allows ten thousand tons of salmon to enter the country each year.

Why tariffs are so high?? Countries put taxes in place on imports because they are trying to protect domestic producers. Countries put taxes in place on imports because they are trying to protect domestic producers. –example: tax on imported car

Exporting and Importing Restrictions Embargo- Stopping of all imported and exported goods from a country Embargo- Stopping of all imported and exported goods from a country –Example: Cuban Missile Crisis Sanctions- Not as powerful as an embargo Sanctions- Not as powerful as an embargo –Example: Cuban Cigars

Currency Values Exchange rate- is the value of one country's currency expressed in the currency of another country. Exchange rate- is the value of one country's currency expressed in the currency of another country. If the US dollar is worth more than another countries currency that would mean our countries economy is doing better. If the US dollar is worth more than another countries currency that would mean our countries economy is doing better.

Cultural Differences Culture- the shared values, beliefs, and behavior existing in an organization. The customs, beliefs, values, and patterns of behavior of the people of a country or group.

Example. Extra note- I had this picture first, just saying.

Import Export

Example 2 Peeling a banana for a women in Russia means you have a romantic interest in that women. Peeling a banana for a women in Russia means you have a romantic interest in that women.

Currency Values Most countries money is backed by gold, but the United States is only back partially by gold Most countries money is backed by gold, but the United States is only back partially by gold

Different currency 1 U.S Dollar =.741 Euros