Objectives-Chapter Learning 3
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Highlight the opportunities and challenges of conducting business in other countries. List five ways to improve communication in an international business relationship. Identify five forms of international business activity. Discuss why nations trade. Explain why nations restrict international trade and list four forms of trade restrictions. Highlight three protectionist tactics nations use to give their domestic industries a competitive edge. Outline the causes of the global economic crisis at the end of the twentieth century and summarize the lesson learned by this example. Summarize the challenges European and Asian countries are facing as they attempt to narrow the U.S. lead in global e-commerce.
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Global Environment
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Can generate additional sales. Produce operational efficiency. Expose businesses to new technology. Increased consumer selection.
Global Business and Cultural Differences
Recognize and respect differences in:
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Values Ideas of Status Decision Making Habits Attitudes Toward Time Use of Space Manners Ethical Standards
Doing Business in Another Culture
Learn about culture's:
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History Religion Politics Customs
Improving Intercultural Communication
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Be alert to customs. Deal with the individual. Clarify your intent and meaning. Adapt your style to the other person's. Show respect.
Foreign Corrupt Practices Act of 1978
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The law that deals with bribing government officials in other nations. Critics argue payoffs are a routine part of world trade.
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Five Forms of International Business
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Importing and Exporting Importing: purchasing goods or services form another country and bringing them into one's own country. Exporting: Selling and shipping goods or services to another country. Licensing: Agreement to produce and market another company's product in exchange for a royalty or fee. Franchising Strategic Alliances: Long-term relationship in which two or more companies share ideas, resources, and technologies in order to establish competitive advantages Joint Ventures: Cooperative partnership in which organizations share investment, and profits in the development, production, or selling of products
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Absolute vs. Comparative Advantage
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Absolute Advantage: The production of an item more efficiently than all other nations or virtually the only country that can or is producing the product. Comparative Advantage: The efficient production of products and trading for those products it not can produce efficiently.
Web site on Absolute and Comparative Advantage.
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Click on graph.
Measuring International Trade
Key Economic Indicators:
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Imports Exports Balance of Trade Balance of Payments
Measuring International Trade
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Balance of Trade: Total of a country's exports minus the total value of its imports over time. Balance of Payments: The broadest indicator, is the total flow of money into the country minus the total flow of money out of the country over time.
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Forms of Trade Restriction
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Tariffs: Taxes, surcharges, or duties levied against imported good. Quotas: Limits the amount of a certain product that countries can import. Embargoes: A complete ban on imports or exports. Sanctions: Are politically motivated embargoes that revoke normal trade relations status.
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Three Competitive Edge Projectionist Tactics
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Restrictive Import Standards Subsidies Dumping: Charging less than the actual cost or less than the homecountry price for goods sold in other countries
Trade Organizations Web Sites
World Trade Organization
Click for web site
International Monetary Fund
Click for web site
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Asia Pacific Economic Council
Four Trading Blocks
ASEAN MERCOSUR NAFTA EU
As the economies of the world become increasingly linked, many countries have formed powerful regional trading blocs that trade freely with one another and limit foreign competition.
Trading Block Advantages
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Improved world trade. Protection for smaller countries that may not be able to compete. Sharing of knowledge and technology. A way to shield emerging nations from global economic instability.
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Trading Block Disadvantages
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Potential for exclusion. Decline of world trade. Fewer consumer choices if markets are closed to them.
The Euro Officially Launched in 1999
Click for web site
Could reduce annual exchange costs by $65 billion. Allow consumers to compare cost no matter what the location.
Foreign Exchange Rates
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Foreign Exchange: The conversion of one currency for another.
Currenc y Rates
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Exchange Rate: The amount required for exchange of one Click for web site currency for another. Floating Exchange Rate System: Currency's value or price fluctuates depending on the forces of global supply and demand.
Global Economic Crisis Conditions
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Excessive amounts of foreign-denominated debt Bad loans Plunging real estate prices
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Southeast Asia's Recovery Road
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Increased Exports Aid from Japan Rise in Oil Prices Bank and Corporate Reforms