1. Understand business in the global marketplace.
POB 1.03 Part 2
Understand business in the global marketplace.

2. What Factors Impact the International Business Environment?
Geography
Culture
Economy
Political & legal Concerns

3. Geographic Factors
Location
Climate
Terrain
Seaports
Natural Resources

4. Cultural Factors
Culture – accepted behaviors, customs and values of a society
Factors include …
Language
Religion
Values
Customs
Social relationships

5. Economic Factors
What are the differences in the living and work environments?
3 Key Effects:
Literacy Level – better ed = more & better products for citizens
Technology – automated production, distribution and communication = ability to create and deliver products quickly
Agricultural Dependency – usually either heavy ag focus or manufacturing
Infrastructure: nation’s transportation, communication, and utility systems

6. Political and Legal Factors
Regulations on advertising and the enforcement of contracts
Safety inspections
Type of government, stability of government and policies towards businesses

7. What are trade barriers?
Trade barrier – a restriction to free trade
Formal barriers
Embargo
Quota
Tariff
Informal barriers
Culture
Tradition
Religion

8. Embargo
Embargo – an action imposed by a government to stop the export or import of a product completely
Why?
To protect its own industries from international competition
Prevent products from getting to other countries (ex: defense weapons)
Express disapproval of actions/policies

9. Quota
Quota – limit on the quantity of a product that may be imported or exported within a given time period
Why?
To keep prices stable (high)
Express displeasure toward a country
Protect its own country’s industry

10. Tariff
Tariff – tax the government places on certain imported goods and services
Why?
Increase the price of a good
High tariff lowers demand and reduces the amount imported

11. Encouraging International Trade
A few things that encourage international trade
Common Markets
Free-Trade Agreements
Free-Trade Zones

12. Common Markets
In a common market, the member countries do away with the duties and other trade barriers
AKA “economic community”
Examples: European Union (EU), Latin American Integration Association (LAIA)

13. Free-Trade Agreements
In a Free-Trade Agreement, member countries agree to remove the duties and trade barriers on products traded among them
Example: North American Free Trade Agreement (NAFTA) 1993

14. Free Trade Zone
A Free Trade Zone is a selected are where products can be imported duty free and then stored, assembled, and/or used in manufacturing
Usually near a seaport or airport
Importer pays duties when items leave the zone