When you have completed this chapter, you will be able to: Explain why countries trade. Explain why companies export and import. Explain how and why countries.

Slides:



Advertisements
Similar presentations
Globalization and the World Economy Economics. What is Globalization? Globalization is the integration of economic activities through a market and across.
Advertisements

Global Analysis International Trade.
Why Nations Trade.
Section 6.1 The Global Marketplace
Chapter 4 global analysis Section 4.1 International Trade Section 4.2
Chapter 4 Global Analysis
©2009 The McGraw-Hill Companies, All Rights Reserved ©2009 The McGraw-Hill Companies, All Rights Reserved Chapter 6 International Business McGraw-Hill/Irwin.
Business in a Global Economy
Unit 13 International Marketing
Business in a Global Economy
10 Chapter Business in a Global Economy pp
Global Markets and International Marketing
International Business
Globalization and the World Economy
Copyright © 2006 Pearson Education Canada Inc. 5-1 Chapter 5 Understanding International Business.
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 4-1 Competing in Global Markets Chapter 4 Imports - foreign.
Read to Learn Describe free trade. Indicate who benefits and who does not benefit from free trade.
Business in a Global Economy
The United States and the Global Economy COI1 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the.
In this section: A global economy is an economy in which companies compete actively with businesses from all over the world. This section discusses: The.
Chapter 4 Global Analysis
Part Two The Global Environment and Social and Ethical Responsibilities 5 Global Markets and International Marketing.
Business in a Global Economy
Business in a Global Economy. Read: You may not know it but you’re a part of the global marketplace. You might buy clothes made in Taiwan. Turnover your.
The Global Context of Business
6 - 1 Copyright McGraw-Hill/Irwin, 2005 International Linkages The United States and World Trade Rapid Trade Growth Specialization & Comparative Advantage.
Global Marketing Chapter 5. Global Marketing Why do I need to study this? Why do I need to study this? Why Go Abroad? Why Go Abroad? Increased Revenue.
Chapter 5 Global Management. Learning Outcomes 1.Define global management 2.Compare and contrast importing and exporting 3.Explain the advantages and.
Chapter 7.1 Trade Between Nations.
International Business
The Global Context of Business
Business Fifth Canadian edition, Griffin, Ebert & Starke © 2005 Pearson Education Canada Inc. CHAPTER 4 Understanding International Business.
Global Analysis. International Trade – exchange of goods and services among nations Imports – goods and services purchased from another country Exports.
Business in a Global Economy
International Business 7.1 International Trade 7.2 The Global Economy.
1 Chapter 7 Section 1 Global Economics Objectives Describe how international trade benefits consumers. Explain the significance of currency exchange rates.
Ch 10, 11, 12 - Slide 1 Learning Objectives 1.Explain 1.Explain why nations need to trade with each other. 2.Describe 2.Describe how currency exchange.
Competing in Global Markets
CHAPTER 4 Competing in World Markets. TRADE PRACTICES Imports- foreign goods and services purchased by domestic customers Exports- domestically produced.
Chapter 6: The United States in the Global Economy
The Global Economy is an economy in which companies compete actively with businesses from all over the world.
Copyright 2008 The McGraw-Hill Companies 5-1 International Linkages United States and World Trade Specialization and Comparative Advantage The Foreign.
Business Essentials 9e Ebert/Griffin The Global Context of Business chapter four.
© Prentice Hall, 2005Excellence in Business, Revised Edition Chapter Competing in the Global Economy.
Ch 4.1 International Trade The Global Marketplace.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Part 1 Business in a Global Environment.
International Trade Chapter #4.
When you have completed this chapter, you will be able to: Explain why countries trade. Explain why companies export and import. Explain how and why countries.
International Trade Chapter 4. Nature of International trade International Trade – is the exchange of goods and services among nations. International.
UNIT 3 – BUSINESS IN THE GLOBAL ECONOMY Unit 3.01 International Business Basics.
Intro to Business April 15, 2015 Unit 2 Test Chapter 10 – Business in a Global Economy Political Cartoon.
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Chapter 10: Business in a Global Economy
International Business
Chapter 17 International Trade.
Click here to advance to the next slide.
Doing Business in Global Markets
CHAPTER 4 GLOBAL ANALYSIS
Read to Learn Describe free trade. Indicate who benefits and who does not benefit from free trade.
Chapter 4 Global Analysis
Unit 10: International Marketing
The Global Economy Section 7.2.
THE GLOBAL CONTEXT OF BUSINESS
Opener Describe a trade that you have made.
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
5 The United States and the Global Economy.
Introduction to Trade Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson.
5 The United States and the Global Economy.
The United States in the Global Economy
International Trade Chapter 4.1 (2006 Edition)
Presentation transcript:

When you have completed this chapter, you will be able to: Explain why countries trade. Explain why companies export and import. Explain how and why countries restrict international trade. Describe the strategies organizations use to compete in the global economy. 1 Business Essentials

International Trade What is International Trade? International trade Most of the world depends on international trade to maintain its standard of living. What are some American exports? What are some things Americans love to import? Cigars, chocolate, electronic goods, oil, etc. CHAPTER 7: INTERNATIONAL BUSINESS 2 Business Essentials (Mr. Archambeau)

International Trade Why Do Countries Trade? A country may not be able to produce a good it wants. A country may have an advantage over others in producing particular goods or services. Absolute Advantage: Law of Comparative Advantage: CHAPTER 7: INTERNATIONAL BUSINESS 3

International Trade Business Essentials (Mr. Archambeau) 4 1 People's Republic of China$1,581,000,000,000 2 Germany$1,303,000,000,000 3 United States$1,289,000,000,000 4 Japan$765,200,000,000 5 France$517,300,000,000 6 Netherlands$485,900,000,000 7 South Korea$464,300,000,000 8 Italy$448,400,000,000 9 United Kingdom$410,300,000, Russia$400,100,000,000 Top Ten World Exporters (CIA World Factbook, 2010):

CHAPTER 7: INTERNATIONAL BUSINESS International Trade Business Essentials (Mr. Archambeau) 5 U.S. Trade in Goods: 2011 Totals (U. S. Census Bureau) Canada186, , ,948.3 Canada CountryExportsImportsBalance China66, , ,323.0 Mexico128, , ,801.7 Russia5, , ,337.1 Poland2,034.32, United Kingdom36, ,524.43,241.3 United Arab Emirates9,756.91,608.48,148.5 NOTE: All figures are in millions of U.S. dollars

International Trade Top 10 U.S. Exports to the World C S P Pharmaceutical preparations A O CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 6 Fuel oil Organic chemicals T P

International Trade Top 10 U.S. Imports Crude oil (16.3% of total) Passenger cars Medicinal preparations Automotive accessories Other household goods Computer accessories CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 7 Petroleum products Cotton apparel Telecommunications equipment Video equipment

International Trade Exporting Exports Example: IBM earns about 40 percent of its revenues abroad. Why do companies export? Answer: A Companies identify export markets: analyze demographic figures, economic data, country reports, consumer tastes, and competition in the markets being considered. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 8

International Trade Importing American companies import billions of dollars worth of goods and services every year. They import consumer goods, industrial goods, raw materials, and food products. Why do many companies import materials? They import some or all of the materials they use to reduce production costs, because domestic inputs are not available, because their quality is not as good as imported goods, or because they plan to resell foreign goods in their own country. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 9

International Trade The Trade Balance The Balance of Trade is the difference between the value of the goods a country exports and the value of the goods it imports. A trade deficit e Why is a trade deficit undesirable? A CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 10

International Trade Foreign Exchange Companies that purchase goods or services from foreign countries must pay for them with foreign currency. Companies purchase foreign currency from banks, which convert each currency into dollars. The value of one currency in terms of another is the foreign exchange rate. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 11

International Trade Foreign Exchange On 10/19/11, the foreign exchange rate for the Japanese Yen was Yen for each U.S. Dollar ( Most foreign exchange rates fluctuate daily. If the value of the Yen rises (if it drops to 100 Yen for each U.S. Dollar), how does this affect a company that has to purchase Japanese goods using Yen? CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 12

International Trade Protection A tariff i Quotas a An embargo I Since 1961 The United States has imposed an embargo on Cuba. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 13

The Global Economy The Rise of the Global Economy The global economy is an economy in which companies compete actively with businesses from all over the world. Many factors have led to the rise of the global economy: II PP TT CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 14

The Global Economy The Rise of the Global Economy Improvements in telecommunications technology:  Improvements have facilitated the exchange of information, from weeks to seconds (e.g., fax and ) development of the Internet has led to e- commerce (sales over the World Wide Web); small businesses can now reach customers worldwide. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 15

The Global Economy The Rise of the Global Economy Political Changes:  The rise in democracy in much of the world has been a driving force in dramatically increasing opportunities for businesses.  Other changes include the end of the cold war with Russia and increased relations with China. Holiday Inn runs a hotel in Warsaw, Poland and Colgate Palmolive has a facility in Huangpu, China. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 16

The Global Economy The Rise of the Global Economy The Establishment of Free Trade Areas:  A free trade area is  Countries create free trade areas to promote international trade and limit protectionism. The largest free trade area is in North America, and was created by the North American Free Trade Agreement (NAFTA). CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 17

The Global Economy The Rise of the Global Economy North American Free Trade Agreement (NAFTA):  Established in 1994, NAFTA united the United States, Canada, and Mexico in a trade agreement.  Businesses in these countries can sell their products anywhere in North America without facing major trade restrictions. Pros: lower consumer prices, increased sales, and lower labor costs Cons: some American workers have lost their jobs (e.g., Sara Lee moved operations to Mexico and laid of more than 1,000 workers.) CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 18

Doing Business Globally Forms of International Operations Some companies build factories in foreign countries or set up retail outlets overseas.  Selling can be done through local companies familiar with local markets  Selling can be done through establishment of sales, manufacturing, and distribution facilities in foreign countries. Other companies export their products throughout the world and import materials from other countries. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 19

Doing Business Globally Forms of International Operations Working Through a Foreign Intermediary  A foreign intermediary is a wholesaler or agent who markets products for companies that want to do business abroad..  Companies using a foreign intermediary cannot invest millions in operations abroad. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 20

Doing Business Globally Forms of International Operations Signing a Licensing Agreement with a Foreign Company  A licensing agreement is an agreement that permits one company to sell another company’s products abroad in return for a percentage of the company’s revenues.  Under such agreements, TGI Friday’s opened branches in Singapore, Indonesia, Malaysia, Thailand, Australia, and New Zealand. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 21

Doing Business Globally Forms of International Operations Forming a Strategic Alliance  Some companies can expand into foreign markets by forming strategic alliances with foreign companies.  A strategic alliance involves pooling resources and skills in order to achieve common goals.  This allows access to new markets, shared research, broadening of product lines, learning new skills, and expansion of cross-cultural knowledge of management groups.  An example is Daimler-Benz (Mercedes-Benz and Chrysler). CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 22

Doing Business Globally Forms of International Operations Becoming a Multinational Corporation  A multinational corporation establishes manufacturing and distribution facilities in foreign countries.  One purpose is to sell products or services in other countries.  McDonald’s maintains restaurants in 119 countries; sales represent half of total revenues.  Another reason is to take advantage of inexpensive labor costs abroad.  Another example of a multinational corporation is Daimler-Benz (Mercedes-Benz and Chrysler). CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 23

Doing Business Globally Forms of International Operations Challenges of Working in an International Environment  Managers must learn to deal with customers, producers, suppliers, and employees from different countries.  They must become familiar with local laws.  They must learn to respect local customs.. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 24

Doing Business Globally Forms of International Operations Understanding Foreign Cultures  Business managers from different countries see the world differently.  They must become familiar with local laws.  They must learn to respect local customs.. CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 25

Doing Business Globally CHAPTER 7: INTERNATIONAL BUSINESS Business Essentials (Mr. Archambeau) 26 Why is it important for businesspeople to respect local customs? In Japan, the community elder must be consulted about business decisions.

THE END Business Essentials (Mr. Archambeau) 27