1. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 1 Competing in the Global Economy

2. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 2 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

3. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 3 Barriers to Going Global Accounting and taxes Labor laws Remote headquarters Business differences Cultural differences Changing behavior

4. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 4 Cultural Differences in International Business Study the culture Observe local customs Deal with the individual Clarify your intent and meaning Adapt your style Show respect

5. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 5 Legal Differences In Global Business US Laws International laws Country-specific laws

6. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 6 International Market-Entry Strategies Importing and exporting Licensing Franchising Strategic alliances and joint ventures Foreign direct investment

7. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 7 Why Do Nations Trade? Greater total output Wider variety of goods Expanded markets Lower prices Increased local competition Economies of scale

8. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 8 Theories of Production and Trading Absolute advantage Comparative advantage

9. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 9 Measuring International Trade Balance of trade –Surplus –Deficit Balance of payments –Cash inflow –Cash outflow

10. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 10 U.S. Trade Deficit Imports Exports

11. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 11 Protectionism and Trade Restrictions Tariffs Quotas Embargoes Sanctions Restricting imports Subsidies Dumping

12. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 12 Agreements and Organizations Promoting Free Trade General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) Asia Pacific Economic Cooperation Council (APEC) International Monetary Fund (IMF) The World Bank

13. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 13 Trading Blocs Advantages Help smaller countries Promote competition Widen markets Foster economic growth Disadvantages Economic isolation Trade restrictions Decline in world trade Fewer choices

14. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 14 Global Trading Blocs European Union (EU) North American Free Trade Agreement (NAFTA) Association of Southeast Asian Nations (ASEAN) South America’s Mercosur Argentina Brazil Paraguay Uruguay Brunei Indonesia Philippines Singapore Thailand Canada Mexico United States Austria Belgium Finland France Germany Ireland Italy Luxembourg Netherlands Portugal Spain

15. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 15 North American Free Trade Agreement (NAFTA) United States Canada Mexico

16. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 16 The European Union MinimizingEstablishing Local Regulations Variations in Product Standards Trade Protectionism Global Product Standards Consumer Protection EnvironmentalProtection

17. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 17 Impact of the Euro Centralized banking Unified currency Economic impact Currency exchange costs

18. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 18 Foreign Exchange Rates and Currency Valuations Floating exchange rate system Government intervention Currency devaluation Fixed value system

19. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 19 The Impact of Terrorism on Global Business Tighter security Longer delays at borders Cargo restrictions Higher transport costs