GEB 6365-01 An Overview of International Business.ppt - GEB...

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GEB 6365-01INTRODUCTIONAn Overview of International BusinessDefinitionThe term "International Business" encompassesbusiness transactions across multiple countries.Multinational Corporation(MNC) or MultinationalEnterprise(MNE) are commonly used terms for acompany that takes a global approach to markets,production, and financing.Another term sometimes used interchangeably is“Transnational Company” which, among others, meansa company owned and managed by nationals ofdifferent countries.
MNCs can be classified intoglobal companies,i.e.globally integratedcompanies, or they can bemulti-domestic companiesi.e. the ones that allowcertain foreign country operations to be fairlyindependent and able to respond unique localdemandsThe majorgoal of publicly held business is to maximizeshareholders’ wealth – i.e. to maximize the price of itsstocks.Identify other goals (profit, employees, customers,suppliers, banks, community..) Explain Differences.Under what conditions would profitmaximization be inconsistent with shareholder wealthmaximization?
The U.S. Economy and Global BusinessExportscreate jobs and boost economic growth.Trade makes companies more efficient. Research shows thatexporters are more productive than companies that focussolely on domestic trade.Importspromote domestic competition, reduce prices forconsumers, and offer shoppers a wider variety of goods andservices.In 2016 U.Sexportswere $2.2 trillion. Added 13 percent tothe GDP and created about 12 million jobs.In 2016 U.S.importswere $2.9 trillion, resulting in a deficit(as usual).U.S. exports about one fifthof its industrial production andone thirdof its farm products.More than 1 in 5 U.S. jobs depends upon international trade.More than 41 million American jobs depend on trade i.e.more than 1 in 5.
According to U.S. Department of commerce, 98% of about304,223 U.S. companies that export are small and medium-sized businesses and they account for one-thirdof U.S.merchandise exports.With more than 80% of the world’s purchasing power andmore than 95% of its population outside the U.S. futureeconomic growth and jobs for the U.S. depend oninternational trade and investment.Booming U.S. export of services reached $750 billion in2016 achieving a surplus of $248 billion.The U.S. is by far the world’s largest exporter of serviceswith globally competitive service industries-includingbanking, information technology, insurance, audiovisuals,energy services, and express delivery.Companies’ import of intermediate goods, raw materials,and capital goodsaccount for more than 60% of all U.S.goods imports.
U.S. benefits from Free Trade Agreements (FTAs) whichcurrently cover over 20 countries.

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