1. INTERNATIONAL BUSINESS GOALS: State the basic reason for nations doing business with each other. Understand the concepts of currency exchange rates, balance of trade, and balance of payments. Explain what is meant by a multinational corporation. Unit 5

2. INTERNATIONAL BUSINESS  Business activities necessary for creating, shipping and selling goods and services across national borders  Also called foreign or world trade.

3. TRADING AMONG NATIONS  Importing – things we buy from other countries  Exporting – things we sell to other countries

4. WHY IMPORT?  Lower cost  Perception of better quality  Personal enjoyment in owning foreign made goods

5. IMPORTED RAW MATERIALS USED IN PRODUCTION IN THE U.S. Bauxite Aluminum Ore 97% Mica 100% Manganese 100% Industrial Diamonds 100% Silver 64% Nickel 68% Tin 72% Chromium 73% Cobalt 95% Import U.S. Production

6. U.S. TRADE, 2011 All Countries All Countries$1,480$2,207- $727 Selected Nations and Regions Canada280315 -34 Mexico198262- 64 Japan66129- 63 Netherlands4223+ 19 Australia2810+ 17 Brazil4332+ 11 Taiwan2641- 16 China104400- 295 European Union268368- 99 Goods ExportedGoods ImportedU.S. (in Billions) (in Billions)Balance

7. Predict: What do you think are some of the main US Exports?

8. MAIN US EXPORTS  Machinery  Industrial Supplies  Motor vehicles and parts  Aircrafts

9. Challenges of International Business INTERNATIONAL CURRENCY Exchange rate - The value of a currency in one country compared with the value of a currency in another. Each country uses its own form of currency - with its own unique value. The value of the currency is effected by supply and demand.

10. Currency Exchange Rates When goods/services are quoted in one currency (i.e. Euros), but paid for in another (i.e. US Dollar), the amount must be converted from dollars to euros using the current currency exchange rate.

11. BARRIERS TO INTERNATIONAL TRADE  Quotas – limit on quantity of certain goods by the government  Tariffs – tax placed on certain goods by the government  Embargoes – stopping export/import all together of a product or from a country

12. WHY BARRIERS?  Increase demand for US products  Express disapproval for actions of another country

13. MEASURING TRADE BETWEEN NATIONS  Balance of trade – difference between countries total exports and total imports  Balance of payments – difference between the amount of money that comes into a country and the amount of money that goes out of a country

14. BALANCE OF TRADE FavorableUnfavorable Exports ImportsExports Imports Trade Surplus Trade Deficit

15. GLOBAL BUSINESS ORGANIZATIONS multinational companycorporation (MNC) A multinational company or corporation (MNC) is an organization that conducts business in several countries and has management capable of doing business worldwide.

16. GLOBAL STRATEGY  Using a standardized product and marketing strategy worldwide

17. MULTINATIONAL STRATEGY  Treating each national market differently, developing products and marketing strategies that appeal to the customs, tastes and buying habits of a particular national market

18. Advantages of International Business  Lower prices  More choices  Career opportunities  Increased sales and profits  Promotes mutual understanding and respect between nations  Increased competition so US products are better quality and companies are more productive

19. Predict: Try to identify one potential advantage and on potential disadvantage of International Trade.

20. Disadvantages of International Business  Lowers the demand for US made products  Decreased demand for some US products causes lost jobs