bus508_w2_c4 - BUS 508, Week 2, Chapter 4: Economic...

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BUS 508, Week 2, Chapter 4: Economic Challenges Facing Contemporary Business Slide # Topic Narration 1 Introduction Welcome to The Business Enterprise. In this lesson, we will discuss the Economic Challenges Facing Contemporary Business. Please go to the next slide. 2 Objectives Upon completion of this lesson, you will be able to: Analyze the factors that drive supply and demand, different types of market structures in a free enterprise system, and factor of stability in a nation’s economy. And formulate competitive market entry strategies based on analysis of global markets. In order to achieve these objectives, the following supporting topics will be covered: Factors of production; International marketplace; Balance of trade; Exports and imports; Exchange rates; Barriers to international trade; Reducing barriers to international trade; NAFTA; and Multinational versus global business. Please go to the next slide. 3 Why Nations Trade As domestic markets mature and sales growth slows, companies in every industry recognize the increasing importance of efforts to develop business in other countries. International trade is vital to a nation and its business because it boosts economic growth by providing a market for its products and access to needed resources. Companies can expand their markets, seek growth opportunities in other nations, and make their production and distribution systems more efficient. They also reduce their dependence on the economies of their home nations. Please go to the next slide.
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4 Factors of Production Business decisions to operate abroad depend on the availability, price, and quality of labor, natural resources, capital, and entrepreneurship, the basic factors of production, in the foreign country. Trading with other countries allows a company to spread risk because different nations may be at different stages of the business cycle or in different phases of development. If demand falls off in one country, the company may still enjoy strong demand in other nations. Please go to the next slide. 5 Size of the International Marketplace In addition to human and natural resources, entrepreneurship, and capital, companies are attracted to international business by the sheer size of the global marketplace. Only one in five of the world’s nearly seven billion people live in a relatively well-developed country. The share of the world’s population in the less developed countries will increase over the coming years because more developed nations have lower birthrates. As developing nations expand their involvement in global business, the potential for reaching new groups of customers dramatically increases. Firms looking for new revenue are inevitably attracted to giant markets such as China and India. However, people alone are not enough to create a market. Consumer demand also requires purchasing power. Although people in the developing nations have lower per-capita
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This note was uploaded on 01/24/2012 for the course BUS 508 508 taught by Professor Drfrederick during the Spring '11 term at Strayer.

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bus508_w2_c4 - BUS 508, Week 2, Chapter 4: Economic...

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