Download presentation
Presentation is loading. Please wait.
2
The World Marketplace: Business Without Borders
3-1 Discuss business opportunities in the world economy Explain the key reasons for international trade Describe the tools for measuring international trade Analyze strategies for reaching global markets Discuss barriers to international trade and strategies to surmount them Describe the free-trade movement and discuss key benefits and criticisms 3-2 3-3 3-4 3-5 3-6
3
Global Trade: Key Reasons and Business Opportunities
Access to technology and decrease in barriers to trade has increased global business opportunities Growing usage of cell phones is an important indicator of economic growth Leads to increase in GDP
4
Global Trade: Key Reasons and Business Opportunities
Opportunity to penetrate huge and growing markets Access to factors of production Reduced risk Inflow of innovation
5
Competitive Advantage
Opportunity cost: Opportunity of giving up the second-best choice when making a decision Absolute advantage: When a country can produce more of a product than other nations using the same amount of resources
6
Competitive Advantage
Comparative advantage: Benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries Seldom remains static due to upgrade of technology and workforce
7
Evaluating International Trade
Balance of trade: Difference between a nation’s exports and imports Trade surplus: Total value of exports is higher than the total value of imports Trade deficit: Total value of imports is higher than the total value of exports Balance of payments: Total flow of money into or out of a country
8
Evaluating International Trade
Balance of payments surplus: More money flows in than out Balance of payments deficit: More money flows out than in Exchange rates: Measure the value of one nation’s currency relative to the currency of other nations Countertrade: Barter of products for products rather than for currency
9
Web-link: WTO Seminar on Exchange Rates and Trade
Director-General Pascal Lamy’s opinion on improving understanding of the economic interface between exchange rates and trade
10
Exhibit 3.2 - Market Development Options
11
Strategies for Reaching Global Markets
Foreign outsourcing: Contracting with foreign suppliers to produce products at a fraction of the cost of domestic production Importing: Buying products domestically that have been produced or grown in foreign nations
12
Strategies for Reaching Global Markets
Exporting: Selling products in foreign nations that have been produced or grown domestically Foreign licensing: Organization (licensor) granting a foreign firm (licensee) the rights to produce and market products or to use its trademark in a defined geographical area
13
Strategies for Reaching Global Markets
Foreign franchising: Firms (franchisor) expand by offering businesses (franchisees) in other countries the right to produce and market their products according to specific operating requirements
14
Strategies for Reaching Global Markets
Direct investment: Acquiring foreign firms or developing new facilities from the ground up in foreign countries Joint ventures: Two or more companies join force to pursue specific opportunities Partnership: Long-term agreement Strategic alliance: Less encompassing and informal agreement
15
Reality TV Video Slide 15 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Why does Earth Class Mail have an unprecedented opportunity for impact on conventional postal mail delivery? Which reasons for engaging in international trade seem to be relevant to Earth Class Mail’s demonstration at the International Trade Show for Postal Executives? Explain your answer. Which strategy for reaching global markets does Earth Class Mail seem to be employing?
17
Barriers to Trade Sociocultural differences Economic differences
Legal/political differences
18
Global Trade: Problems and Solutions
Sociocultural differences: Among cultures in language, attitudes, and values Vital to understand and respond Requires cultivating firsthand knowledge, and practicing extreme sensitivity
19
Global Trade: Problems and Solutions
Economic differences Critical to understand and evaluate Infrastructure: Country’s physical facilities that support economic activity
20
Global Trade: Problems and Solutions
Political and legal differences International businesses must comply with: International legal standards Laws of their own and host countries Ease of doing business increases the chances of a country to grow
21
Global Trade: Problems and Solutions
Political climate Influences whether that nation is attractive to foreign business Protectionism: National policies designed to restrict international trade, usually with the goal of protecting domestic businesses
22
Common Trade Restrictions
Tariffs: Taxes levied against imports Quotas: Limitations on the amount of specific products that may be imported from certain countries during a given time period Voluntary export restraints (VERs): Limitations on the amount of specific products that one nation will export to another nation
23
Common Trade Restrictions
Embargo: Complete ban on international trade of a certain item, or a total halt in trade with a particular nation
24
Free Trade Unrestricted movement of goods and services across international borders General Agreement on Tariffs and Trade (GATT): International trade treaty designed to encourage worldwide trade among its members
25
Free Trade Movement World Trade Organization (WTO): Permanent global institution to: Promote international trade Settle international trade disputes World Bank: International cooperative to reduce poverty in the developing world
26
Web-link: World Bank World bank endeavors to end extreme poverty within a generation and boost shared prosperity.
27
Free Trade Movement International Monetary Fund (IMF): Promotes international economic cooperation and stable growth
28
Free Trade Movement Key actions
Supports stable exchange rates and facilitates a smooth system of international payments Encourages member nations to adopt sound economic policies Promotes international trade and lends money to member nations to address economic problems
29
Trade Restrictions Reasons to Create Reasons to Eliminate
Protect domestic industry Reduce prices and increase choices for consumers by encouraging competition from around the world Protect domestic jobs in key industries Increase domestic jobs in industries with a comparative advantage versus other countries Protect national security interests Increase jobs—both at home and abroad—from foreign companies Retaliate against countries who have engaged in unfair trade practices Build exporting opportunities through better relationships with other countries Pressure other countries to change their policies and practices Use resources more efficiently on a worldwide basis
30
Trading Blocs and Common Markets
Trading blocs: Groups of countries that have reduced or eliminated all tariffs Allow free flow of goods among the member nations Common market: Group of countries that have eliminated tariffs and harmonized trading rules to allow the free flow of goods among member nations
31
Trading Blocs and Common Markets
North American Free Trade Agreement (NAFTA): Treaty among the United States, Mexico, and Canada that eliminated trade barriers and investment restrictions Drawback - Increase in the U.S trade deficit that adversely affects the economy
32
Trading Blocs and Common Markets
European Union: Aid Europe’s trade position and to increase its international political and economic power Drawback - Economically weaker member countries could drag the EU into a damaging recession
33
3-1 Discuss business opportunities in the world economy Explain the key reasons for international trade Describe the tools for measuring international trade Analyze strategies for reaching global markets Discuss barriers to international trade and strategies to surmount them Describe the free-trade movement and discuss key benefits and criticisms 3-2 3-3 3-4 3-5 3-6
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.