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Mohammad Arief 1. GLOBAL ECONOMY The reduction of trade barriers The opening of markets to foreign imports Increased the competitive pressure ENTRY TO.

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Presentation on theme: "Mohammad Arief 1. GLOBAL ECONOMY The reduction of trade barriers The opening of markets to foreign imports Increased the competitive pressure ENTRY TO."— Presentation transcript:

1 Mohammad Arief 1

2 GLOBAL ECONOMY The reduction of trade barriers The opening of markets to foreign imports Increased the competitive pressure ENTRY TO THE FOREIGN COUNTRIES 2

3 1. Carlos Slim (Mexico) milyar dolar AS, telekomunikasi 2. Bill Gates (USA) - 53 milyar dolar AS, Microsoft 3. Warren Buffett (USA) - 47 milyar dolar AS, Berkshire Hathaway 4. Mukesh Ambani (India) - 29 milyar dolar AS, Petro kimia, minyak dan gas. 5. Lakshmi Mittal (India) milyar dolar AS, Baja. 6. Larry Ellison (USA) - 28 billion, Oracle 7. Bernard Arnault (France) milyar dolar AS, LVMH 8. Eike Batista (Brazil) - 27 milyar dolar AS, penambangan, minyak. 9. Amancio Ortega (Spain) - 25 milyar dolar AS, pengusaha. 10. Karl Albrecht (Germany) milyar dolar AS, supermarkets 3

4 Richest Company (Fortune) 4 1. Royal Dutch Shell - (Total revenue USD 247,613 miliar, Profit 27,909 miliar) 2. Wal-Mart Stores - (Total revenue USD 469,162 miliar, Profit 16,999 miliar) 3. Exxon Mobil - (Total revenue USD 449,886 miliar, Profit 44,880 miliar) 4. Sinopec Group - (Total revenue USD 428,167 miliar, Profit 8,221 miliar) 5. China National Petroleum - (Total revenue USD 408,630 miliar, Profit 18,196 miliar) 6. BP - (Total revenue USD 388,285 miliar, Profit 11,582 miliar) 7. State Grid - (Total revenue USD 298,449 miliar, Profit 12,318 miliar) 8. Toyota Motor - (Total revenue USD 265,702 miliar, Profit 11,587 miliar) 9. Volkswagen - (Total revenue USD 247,613 miliar, Profit 27,909 miliar) 10. Total - (Total revenue USD 234,278 miliar, Profit 13,743 miliar)

5 Market Driven Cost Driven Competitive Driven Government Driven Why The Firm Entry To The Foreign Countreis Regional Trading Agreements Supported with 5

6  The European Union (EU)  A unified economic and trade entity  Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden  Economic and monetary union (Euro)  North American Free Trade Agreement (NAFTA)  Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees)  United States, Canada, and Mexico 6

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8  U.S.-Central America Free Trade Agreement (CAFTA)  Free Trade Area of the Americas  Southern Cone Common Market (Mercosur)  Association of Southeast Asian Nations (ASEAN)  Trading alliance of 10 Southeast Asian nations  African Union  South Asian Association for Regional Cooperation (SARRC) 8

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11 Import/export sales and profit margins are very sensitive to changes in exchange rates Transaction risk exposure Translation risk exposure Operating risk exposure Occurs when a purchase agreement or sales contract (a specific “transaction”) commits the company to make future payables or accept future receivables in a foreign currency. Occurs when a company’s foreign assets (or liabilities) are affected by persistent exchange rate trends. Operating risk exposures are more difficult to hedge than transaction risk exposures and more difficult to forecast than translation risk exposures Risk 11

12 Outsourcing to foreign contract manufacturers is, however, as much about importing competitiveness as it is about exporting jobs ● Technology ● Less complex assembly ● Raw materials handling tasks to places Time-to-market and the capacity to innovate quickly Determine 12

13 Determinants of Foreign Exchange rates in countries (Short Run) :  Import/Export Flows and Transaction Demand for a Currency  The Equilibrium Price  Speculative Demand, Government Transfers, and Coordinated Intervention  Short-Term Exchange Rate Fluctuations 13

14  The Role of Real Growth Rates  The Role of Real Interest Rates The higher the real rate of interest in an economy, the greater the demand for the financial assets offered by that economy  The Role of Expected Inflation Inflationary expectations provide an important third determinant of long-term trends in exchange rates. 14

15  Shares of World Trade and Regional Trading Blocs  Comparative Advantage and Free Trade  Import Controls and Protective Tariffs  Strategic Trade Policy  Increasing Returns  Network Externalities 15


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