Chap1outline - IntrotoInternationalBusiness 04:42...

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Intro to International Business 04:42 Economic Interdependence No business is purely domestic—even the smallest local firms are affected by global  competition  Disruption anywhere in the supply chain of today's globally connected manufacturing  plants brings distant assembly lines to a halt Terrorist attacks, spread of infectious disease, civil war, etc. affect all economies around  the world Economic interdependence is a result of: Natural resources Technological advances in travel, shipping and communications, and the Internet Political change—more free, democratic countries  Need to establish widely accepted legal norms  Greatest challenge: international terrorism, poverty and ignorance, declining natural  resources, environmental degradation, risk of widespread infectious disease America in International Markets Historically American companies involved in international trading are large Prior to WWII, the policies around the world were isolationist WWI—US briefly traded with other countries 1920s—US reverted back to isolationist policies "made in America" WWII—most of Europe was destroyed, in order to prevent communism the US tried to  when the hearts of the destroyed companies over by rebuilding Europe's economy—aka  free trade Appeal of trade:  Cheap natural resources elsewhere in the world International communication was built up after WWII Belief for the need of free trade to build up infrastructure
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Represents freedom  Was not until the 1980s when the effect of mounting trade deficits began to be felt, when  foreign firms gained a greater share of US domestic markets and when American jobs  were lost to foreign workers, did Americans realize that oceans could no longer insulate  them from foreign competition Lack of Commitment—small- and medium-sized companies have lacked the  commitment to international business The Education of American Managers—more recently these companies have began to  understand the importance of international markets and have began learning how to be  profitable abroad (language, currency, advertising, etc.) Forms of International Business—(1) Trade (2) International Licensing (3) Foreign Direct  Investment Trade—importing and exporting of goods and services Comparative advantage exists if the costs of production and price received for the  goods allow the goods to be sold for a higher price in a foreign country than at home *when all countries specialize in producing goods over which they have a comparative  advantage, all countries will produce more and consume more, and wealth and  employment will increase World trade has developed and become the major commercial activity that it is today 
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This note was uploaded on 01/19/2012 for the course BLS 464 taught by Professor Humbauch during the Fall '11 term at Miami University.

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Chap1outline - IntrotoInternationalBusiness 04:42...

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