Business 1000 Chapter 3

Business 1000 chapter 3

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Unformatted text preview: Why Trade With Other Nations? No nation can produce all its needs Mutually beneficial exchange Natural Resources or Technology- Produce or Buy? Professor Hirokazu Takada 3-1 Theories of Advantage Comparative U. S. China Output per Output Unit of Input Unit China U. S. Software Professor Hirokazu Takada Clothing 3-2 Strategies for Reaching Global Markets Reaching h Licensing h Exporting h Franchising h Contract Manufacturing h Joint Ventures h Strategic Alliances h Subsidiaries-MNCs h Foreign Direct Foreign Investment Investment 3-3 Professor Hirokazu Takada Five Modes of Entry into Foreign Markets Indirect exporting Direct exporting Licensing Joint ventures Direct investment Commitment, Risk, Control, Profit Potential Professor Hirokazu Takada 3-4 Forces Affecting Trading in Global Markets in hSocio-cultural - Economic & Financial - Legal & Regulatory - Physical & Environmental - Trade Protectionism - Global E-Commerce-Future Professor Hirokazu Takada 3-5 Cultural Differences Cultural in Global Markets in • • • • Language Language Religion Religion Values & Attitudes Values Personal Personal Communication Communication • • Social Structure Aesthetics Professor Hirokazu Takada 3-6 Economic & Economic Financial Forces Financial No Worldwide Currency Currency Fluctuations Floating Exchange Rates Bartering/Countertrading Professor Hirokazu Takada 3-7 Protectionism Mercantilism Tariffs Protective Revenue Import Quota Embargo Nontariff Barriers Professor Hirokazu Takada 3-8 Trade Agreements • • • • • • General Agreement on Tariffs & Trade (1948) Uruguay Round of GATT (1986) • • • • Lower Tariffs Extend Rules World Trade Organization (1995) Common Markets European Union (EU) Mercosur North American Free Trade Agreement (1994) Central America Free Trade Agreement (2005) Professor Hirokazu Takada 3-9...
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