1. The Global Economy
Section 7.2

2. What You’ll Learn
How NAFTA has increased international trade within North America.
How managers decide how to get involved in the global economy.
How managers deal with the challenges they face when working in a different culture.

3. Discussion Question
Why do some people believe it is important to “Buy American”?
Keep the U.S. less dependent on other countries
Keep U.S. labor employed and working

4. Global Economy
An economy in which companies compete actively with businesses from all over the globe

5. Question
How have telecommunications and political changes affected international business?
Telecommunications has made communication among nations much easier
Political changes have opened countries to foreigners who want to do business

6. The Rise of the Global Economy
Many factors have led to the rise of the global economy.
Improvements in Telecommunications Technology
Information can now be sent in seconds as opposed to weeks
E-commerce
Political Changes
Less exclusion form certain areas of the world
Free Trade Areas = a region where trade restrictions are reduced

7. NAFTA NAFTA stands for North American Free Trade Agreement.
Largest free trade area in the world
Businesses in the United States, Mexico, and Canada can sell their products anywhere in North America without facing major trade restrictions.
Negatives??
Sara Lee laid off more than a thousand American workers after it moved to Mexico.
Other Agreements:

8. Forms of International Operations
Working through a foreign intermediary
Wholesaler that markets products for companies that want to do business abroad for a commission
Signing a licensing agreement with a foreign company
Permits one company to sell another company ‘s products abroad for a percentage of revenues
Forming a strategic alliance
Involves pooling resources and skills to achieve common goals
Becoming a multinational corporation
Establish manufacturing and distribution facilities in foreign countries

9. Multinational Companies
There are many ways for companies to do business globally.
Use imported materials.
Produce goods in other countries.
Sell products in other countries.

10. Challenges of Working in an International Environment
Managers must learn to:
work with customers, producers, suppliers, and employees from different countries
become familiar with and show respect for local laws and customs
be aware of different cultural attitudes

12. P.161 P.171 Section 7.1 & 7.2 Assessment Fact and Idea Review #1-4
Critical Thinking #1-2
P.171
Case Analysis