Chapter 3

Chapter 3 - Chapter 3 Doing Business in a Global Market...

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Chapter 3 Doing Business in a Global Market
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Overview ± Know the importance of the global market ± Be familiar with key terms in doing business in the global market (importing, exporting, etc) ± Illustrate strategies used in reaching global markets ± Evaluate the forces that affect trading in global markets ± Be able to discuss the changing landscape of the global market
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Name that company? What company was started by Howard Schultz due to his travels in Italy and exploring the local coffee shops?
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Importing, Exporting, and Free Trade ± Importing- Buying products from another country ± Exporting- Selling products to another country ± Free Trade- Movement of goods and services among nations without political or economic barriers **90% of companies doing business globally believe it is important for their employees to have experience working in other countries**
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Pros and Cons of Free Trade ± Global market contains over 6.7 billion potential customers for goods and services ± Productivity grows when countries produce goods and services in which they have a comparative advantage ± Global competition and less-costly imports keep prices down, so inflation does not curtail ± Domestic workers (esp. manufacturing based) can lose their jobs due to increased imports or production shifts to low- wage global markets ± Workers may be forced to accept pay cuts from employers, who can threaten to move their jobs to lower-cost global markets ± Moving operations
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Comparative Advantage vs. Absolute Advantage ± Comparative Advantage- States that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently ± Absolute Advantage- Advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries *** No absolute advantage in natural resources does not last forever*** (oil)
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This note was uploaded on 01/30/2012 for the course IT 104 taught by Professor Staff during the Spring '08 term at Purdue.

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Chapter 3 - Chapter 3 Doing Business in a Global Market...

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