1. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 1 Wild World: Competing in the Global Economy

2. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 2 Why Nations Trade Scarce resources Limited capabilities Global ambitions Economies of scale

3. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 3 Theories of Production and Trading Absolute advantage Comparative advantage

4. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 4 Measuring International Trade Balance of trade –Surplus –Deficit Balance of payments –Cash inflow –Cash outflow

5. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 5 US Imports and Exports–Goods Foods, feeds, and beverages Industrial supplies and materials Machinery and transport equipment Automotive vehicles, engines, and parts Consumer goods

6. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 6 US Imports and Exports–Services Business, technical, and professional Educational, financial, telecommunications, and insurance Royalties and license fees Travel and passenger fares Freight and port services

7. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 7 Global Trade Issues Free trade Fair trade Trade restrictions

8. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 8 Protectionism and Trade Restrictions Tariffs Quotas Embargoes Sanctions Restricting imports Subsidies Dumping

9. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 9 Promoting Free Trade World Trade Organization (WTO) International Monetary Fund (IMF) The World Bank General Agreement on Tariffs and Trade (GATT) Asia Pacific Economic Cooperation Council (APECC)

10. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 10 Trading Blocs Advantages Help smaller countries Promote competition Widen markets Foster economic growth Disadvantages Economic isolation Trade restrictions Decline in world trade Fewer choices

11. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 11 North American Free Trade Agreement (NAFTA) United States Canada Mexico

12. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 12 The European Union MinimizingEstablishing Local Regulations Variations in Product Standards Trade Protectionism Global Product Standards Consumer Protection EnvironmentalProtection

13. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 13 The Economic and Monetary Union (EMU) The Euro –Economic impact –Currency exchange –Currency unification –Centralized banking

14. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 14 Foreign Exchange Rates and Currency Valuations Floating exchange rate system Government intervention Devaluation Fixed value system

15. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 15 The Global Business Environment OpportunitiesChallenges  Growth Potential  Increased Sales  Operating Efficiencies  New Technologies  More Consumer Choices  Laws and Customs  Consumer Preferences  Ethical Standards  Labor Skills  Politics and Economics

16. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 16 Cultural Differences In Global Business Consider the other person’s customs Deal with the individual Clarify your intent and meaning Adapt your style to the other person’s Show respect

17. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 17 Legal Differences In Global Business Common law Civil law Theocratic law

18. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 18 International Business Activity Importing and Exporting Licensing and Franchising Strategic Alliances and Joint Ventures Direct Foreign Investment OwnershipFinancialRisk LowLowLow LowLowLow ModerateModerateModerate HighHighHigh Common Forms Levels of Commitment

19. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 19 Strategic Approaches to International Business Products Support Promotion Pricing Staffing

20. © Prentice Hall, 2007Excellence in Business, 3eChapter 3 - 20 The Impact of Terrorism on Global Business Government expenditures Business expenditures Transportation Banking