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Transcript of © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 3 - 1 Competing in the Global...
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 1
Competing in the Competing in the Global EconomyGlobal Economy
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 2
The GlobalThe GlobalBusiness EnvironmentBusiness EnvironmentOpportunities Challenges
Growth Potential
Increased Sales
Operating Efficiencies
New Technologies
More Consumer Choices
Laws and Customs
Consumer Preferences
Ethical Standards
Labor Skills
Politics and Economics
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 3
Barriers to Going Barriers to Going GlobalGlobal
• Accounting and taxes
• Labor laws
• Remote headquarters
• Business differences
• Cultural differences
• Changing behavior
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 4
Cultural Differences in Cultural Differences in International BusinessInternational Business
• Study the culture
• Observe local customs
• Deal with the individual
• Clarify your intent and meaning
• Adapt your style
• Show respect
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 5
Legal Differences In Legal Differences In Global BusinessGlobal Business
• US Laws
• International laws
• Country-specific laws
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 6
International Market-International Market-Entry StrategiesEntry Strategies
• Importing and exporting
• Licensing
• Franchising
• Strategic alliances and joint ventures
• Foreign direct investment
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 7
Why Do Nations Trade?Why Do Nations Trade?
• Greater total output
• Wider variety of goods
• Expanded markets
• Lower prices
• Increased local competition
• Economies of scale
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 8
Theories of Production Theories of Production and Tradingand Trading
• Absolute advantage
• Comparative advantage
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 9
Measuring Measuring International TradeInternational Trade
• Balance of trade
– Surplus
– Deficit
• Balance of payments
– Cash inflow
– Cash outflow
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 10
U.S. Trade DeficitU.S. Trade Deficit
• Imports
• Exports
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 11
Protectionism and Protectionism and Trade RestrictionsTrade Restrictions
• Tariffs
• Quotas
• Embargoes
• Sanctions
• Restricting imports
• Subsidies
• Dumping
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 12
Agreements and Agreements and Organizations Promoting Organizations Promoting
Free TradeFree Trade• General Agreement on Tariffs and Trade (GATT)
• World Trade Organization (WTO)
• Asia Pacific Economic Cooperation Council (APEC)
• International Monetary Fund (IMF)
• The World Bank
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 13
Trading BlocsTrading Blocs
AdvantagesAdvantages
Help smaller countries
Promote competition
Widen markets
Foster economic growth
DisadvantagesDisadvantages
Economic isolation
Trade restrictions
Decline in world trade
Fewer choices
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 14
Global Trading BlocsGlobal Trading BlocsEuropean Union (EU)
North AmericanFree Trade
Agreement (NAFTA)
Association ofSoutheast AsianNations (ASEAN)
SouthAmerica’sMercosur
Argentina
Brazil
Paraguay
Uruguay
Brunei
Indonesia
Philippines
Singapore
Thailand
Canada
Mexico
United States
Austria
Belgium
Finland
France
Germany
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 15
North American Free North American Free Trade Agreement Trade Agreement
(NAFTA)(NAFTA)• United States
• Canada
• Mexico
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 16
The European UnionThe European Union
MinimizingMinimizing EstablishingEstablishing
Local RegulationsLocal Regulations
Variations in Variations in Product StandardsProduct Standards
Trade ProtectionismTrade Protectionism
GlobalGlobalProduct StandardsProduct Standards
Consumer ProtectionConsumer Protection
Environmental Environmental ProtectionProtection
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 17
Impact of the EuroImpact of the Euro
• Centralized banking
• Unified currency
• Economic impact
• Currency exchange costs
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 18
Foreign Exchange Rates Foreign Exchange Rates and Currency Valuationsand Currency Valuations
• Floating exchange rate system
• Government intervention
• Currency devaluation
• Fixed value system
© Prentice Hall, 2005 Excellence in Business, Revised Edition
Chapter 3 - 19
The Impact of Terrorism The Impact of Terrorism on Global Businesson Global Business
• Tighter security
• Longer delays at borders
• Cargo restrictions
• Higher transport costs