Business
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This document discusses international business and trade. It provides information on: - The role of international business is to buy, sell, and trade goods and services across national boundaries. Nations trade to obtain unavailable or lower cost materials and goods. - Countries have absolute advantage when they are the only or most efficient producer of an item. Comparative advantage exists when a country can supply products at a lower cost than other items. - Barriers to international trade include economic, political/legal, social/cultural, and technological factors. Trade agreements like the WTO, NAFTA, and EU help reduce trade barriers.
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Business
- 1. McGraw-Hill/Irwin 息 2008 The McGraw-Hill Companies, Inc. All rights reserved. Business in a Borderless WorldBusiness in a Borderless World 3
- 2. 3-2 The Role of International Business To buy, sell and trade goods and services across national boundaries Did You Know? McDonalds serves 50 million customers a day at 30,000 restaurants in 120 countries.
- 3. 3-3 Why Nations Trade To obtain raw materials and goods that are: Otherwise unavailable Available elsewhere at a lower price Santro Karachi Big Pak Inds moving twards Bangladesh
- 4. 3-4 Absolute Advantage A monopoly that exists when a country is the: Only source of an item Only producer of an item Most efficient producer of an item Example: DeBeers Consolidated Mines, Ltd. Virtually controls the worlds diamond trade
- 5. 3-5 Comparative Advantage A country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items Example: U.S. agricultural commodities, such as corn and wheat
- 6. 3-6 Trade Between Countries Importing The purchase of goods and services from foreign sources Exporting The sale of goods and services to foreign markets
- 7. 3-7 Trade Between Countries Balance of trade: Difference of value b/t nations exports and imports Trade deficit: More import of products than exports and trade surplus is vice versa Balance of payment: Difference between into and out of money into a country.
- 8. 3-8 The U. S. Trade Deficit 1980-2005 (in billions of dollars)
- 9. 3-9 International Trade Barriers Economic Legal/political Social/cultural Technological
- 10. 3-10 Economic Barriers The level of a countrys economic development Industrialized nations U.S., Japan, Great Britain, Canada Less-developed countries Africa, Asia, and South America The level of existing infrastructure Currency exchange rates
- 11. 3-11 Political & Legal Barriers Laws and regulations Tariffs and trade restrictions Import tariffs, exchange controls, quotas, embargos, anti-dumping regulations Political barriers Political instability, cartels
- 12. 3-12 Social & Cultural Barriers Understanding the differences among the cultures of countries can be important to a firm Spoken and written language Body language and personal space Family roles Perception of time Religious holidays and local customs
- 14. 3-14 Technological Barriers Varying levels of technological development and infrastructure
- 15. 3-15 Trade Agreements, Alliances & Organizations GATT WTO NAFTA EU MERCOSUR APEC World Bank IMF
- 16. 3-16 GATT and NAFTA General Agreement on Tariffs and Trade (GATT): Provides a forum for tariff negotiations and discussion The World Trade Organization (WTO) Deals with the rules of trade between nations North American Free Trade Agreement (NAFTA): Eliminates most tariffs and trade restrictions on agricultural and manufactured products between Canada, Mexico, and U.S. (1994-2009).
- 17. 3-17 Levels of Involvement in International Trade Import/Export Trading Companies Licensing & Franchising Contract Manufacturing Joint Ventures & Alliances Mergers and aquisitions The MNC
- 18. 3-18 Outsourcing U.S. companies are increasingly transferring manufacturing and other tasks to countries where labor and supplies are less expensive
- 19. 3-19 Developing International Business Strategies Multinational Strategy: Customizing and adapting products, promotion and distribution to the local market condition Global Strategy (Globalization): Standardizing products, promotion, and distribution to one world market
- 20. 3-20 Managing the Challenges of Global Business Adapting to different cultures Carefully studying those markets Preparing and implementing appropriate strategies
- 21. 3-21 Chapter 3 Quiz 1. A negative balance of trade occurs when a. a country imports more than it exports b. a company has a monopoly on the production of a specific resource c. a country exports more than it imports d. a countrys currency can be exchanged for anothers currency or gold 2. A partnership between a foreign company and a local partner is called: a. a trading company b. an export agency company c. a direct investment d. a joint venture
- 22. 3-22 Chapter 3 Quiz 3. When the United States established a policy forbidding trade with Cuba, this was an example of what type of trade restriction? a. a quota b. an embargo c. a countertrade agreement d. an import tariff 3. A comparative advantage exists when a. a firm supplies a product at lower costs. b. a firm is the only supplier of a product. c. a country supplies a product at lower costs. d. a country is the most efficient supplier of an item.