Principles of Business, Marketing, and Finance Lesson One Business in a Global Society UNT in partnership with TEA, Copyright ©. All rights reserved

International Business All business activities needed to: –Create –Ship –Sell Goods and services across national borders. UNT in partnership with TEA, Copyright ©. All rights reserved 2

International Business All activities needed to create, ship, and sell goods and services across national borders Also referred to as global business, international trade, and foreign trade Importance of international business –Source of raw materials –Supplier of foreign products –New market and investment opportunities –Improved political relations UNT in partnership with TEA, Copyright ©. All rights reserved 2

Foreign Trade International Trade Global business Other Names for International UNT in partnership with TEA, Copyright ©. All rights reserved 3

Importance of International Business Global Opportunities Exports- goods and services one country sells to another country -meet Consumer Demands Imports- goods and services one country buys from another countr y - Materials and Parts are Needed from Other Countries UNT in partnership with TEA, Copyright ©. All rights reserved 4

Domestic Business Business Within One Country Making, Buying, Selling Goods and Services within One Country UNT in partnership with TEA, Copyright ©. All rights reserved 5

Fundamentals of International Trade Trade Barriers are restrictions that reduce free trade among countries. Protectionism - limiting trade with other countries to protect business at home Tariff - tax placed on imported products to make them more expensive than domestic products Quota - limit placed on the quantities of a product that can be imported Embargo – a ban on the import or export of a product UNT in partnership with TEA, Copyright ©. All rights reserved 7

International Business Environment Geographic Conditions –Climate –Terrain, seaways –Natural resources –Agricultural products Economic Conditions –Type of economic system –Level of education –Types of industries UNT in partnership with TEA, Copyright ©. All rights reserved 8

International Business Environment Cultural and Social Factors –Language –Education –Religion –Values, customs –Social relationships Political and Legal Factors –Type of government –Political stability –Government policies toward business UNT in partnership with TEA, Copyright ©. All rights reserved 8

Resources for a Country UNT in partnership with TEA, Copyright ©. All rights reserved 10 HumanNatural

Global Marketplace Multinational Corporation –conducts business in many countries. –has facilities and offices in many countries.. –works like a shopping mall or a supermarket. UNT in partnership with TEA, Copyright ©. All rights reserved 9

Currency Exchange Rate –Price at which one currency can buy another currency –Exchange rates change daily –Currency rate depends on how many other countries want to buy the country’s products UNT in partnership with TEA, Copyright ©. All rights reserved 12

Different Exchange Rate Scenarios Favorable -when the value of a country’s currency goes up compared to another country’s currency Unfavorable -when the value of a country’s currency goes down compared to another country’s currency Countries lower the value of the currency to increase business UNT in partnership with TEA, Copyright ©. All rights reserved 13

Balance of Trade –Difference in value between how much a country imports and how much it exports. Trade Surplus -more exports than imports Trade Deficit -more imports than exports UNT in partnership with TEA, Copyright ©. All rights reserved 14

Gross Domestic Product (or GDP) The value of all final goods and services produced within a nation in a given year. A nation's GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices in the United States UNT in partnership with TEA, Copyright ©. All rights reserved 14

Advantage of International Business Consumer-has more choices Citizen-has increased awareness of the world UNT in partnership with TEA, Copyright ©. All rights reserved 16

Global Dependency A condition that exists when items consumers want and need are created in other countries.

Quick Quiz 1.Exports are: A.Goods and services one country buys from another country (example: The U.S. _________ a lot of their electronics from China) B.Goods and services one country sells to another country (example: China _____________ a lot of their electronics to the U.S.) 2.International Business is: A.Business within one country B.All activities needed to create, ship and sell goods and services across international borders. 3.Imports are: A.Goods and services one country buys from another country (example: The U.S. _________ a lot of their electronics from China) B.Goods and services one country sells to another country (example: China _____________ a lot of their electronics to the U.S.)

Quick Quiz 4.Trade barriers are: A.A tax placed on imported products to make them more expensive than domestic products. B.Restrictions that reduce free trade among countries. 5.A Quota is: A.A limit placed on the quantities of a product that can be imported. B.A ban on the import or export of a product. 6.A geographic condition in the international business environment is: A.Terrain, seaways B.Religion

Quick Quiz 7.The exchange rate is: A.More imports than exports. B.Price at which one country’s currency can buy another country’s currency. 8.Trade Surplus occurs when: A.A country has more imports than exports. B.A country has more exports than imports. 9.An examples of a global dependency the United States has to another country is: A.Beef B.Oil 10.GDP stands for: A.Gross Domestic Product B.Great Drilling Prospects