1. © Prentice Hall, 2005Business In Action 3eChapter 3 - 1 Competing in the Global Economy

2. © Prentice Hall, 2005Business In Action 3eChapter 3 - 2 Why Nations Trade Greater total output Wider variety of goods Expanded markets Lower prices Increased local competition Economies of scale

3. © Prentice Hall, 2005Business In Action 3eChapter 3 - 3 Theories of Production and Trading Absolute advantage Comparative advantage

4. © Prentice Hall, 2005Business In Action 3eChapter 3 - 4 Measuring International Trade Balance of trade –Surplus –Deficit Balance of payments –Cash inflow –Cash outflow

5. © Prentice Hall, 2005Business In Action 3eChapter 3 - 5 US Imports and Exports–Goods Foods, feeds, and beverages Industrial supplies and materials Machinery and transport equipment Automotive vehicles, engines, and parts Consumer goods

6. © Prentice Hall, 2005Business In Action 3eChapter 3 - 6 US Imports and Exports–Services Business, technical, and professional Educational, financial, telecommunications, and insurance Royalties and license fees Travel and passenger fares Freight and port services

7. © Prentice Hall, 2005Business In Action 3eChapter 3 - 7 Protectionism and Trade Restrictions Tariffs Quotas Embargoes Sanctions Restricting imports Subsidies Dumping

8. © Prentice Hall, 2005Business In Action 3eChapter 3 - 8 Promoting Free Trade World Trade Organization (WTO) International Monetary Fund (IMF) The World Bank General Agreement on Tariffs and Trade (GATT) Asia Pacific Economic Cooperation Council (APECC)

9. © Prentice Hall, 2005Business In Action 3eChapter 3 - 9 Trading Blocs Advantages Help smaller countries Promote competition Widen markets Foster economic growth Disadvantages Economic isolation Trade restrictions Decline in world trade Fewer choices

10. © Prentice Hall, 2005Business In Action 3eChapter 3 - 10 North American Free Trade Agreement (NAFTA) United States Canada Mexico

11. © Prentice Hall, 2005Business In Action 3eChapter 3 - 11 The European Union MinimizingEstablishing Local Regulations Variations in Product Standards Trade Protectionism Global Product Standards Consumer Protection EnvironmentalProtection

12. © Prentice Hall, 2005Business In Action 3eChapter 3 - 12 The Economic and Monetary Union (EMU) The Euro –Economic impact –Currency exchange –Currency unification –Centralized banking

13. © Prentice Hall, 2005Business In Action 3eChapter 3 - 13 Foreign Exchange Rates and Currency Valuations Floating exchange rate system Government intervention Devaluation Fixed value system

14. © Prentice Hall, 2005Business In Action 3eChapter 3 - 14 The Global Business Environment OpportunitiesChallenges  Growth Potential  Increased Sales  Operating Efficiencies  New Technologies  More Consumer Choices  Laws and Customs  Consumer Preferences  Ethical Standards  Labor Skills  Politics and Economics

15. © Prentice Hall, 2005Business In Action 3eChapter 3 - 15 Barriers to Going Global Accounting and taxes Labor laws Remote headquarters Business differences Cultural differences Personal behavior

16. © Prentice Hall, 2005Business In Action 3eChapter 3 - 16 Cultural Differences In Global Business Consider the other person’s customs Deal with the individual Clarify your intent and meaning Adapt your style to the other person’s Show respect

17. © Prentice Hall, 2005Business In Action 3eChapter 3 - 17 Legal Differences In Global Business US Laws International laws Country-specific laws

18. © Prentice Hall, 2005Business In Action 3eChapter 3 - 18 International Business Activity Importing and Exporting Licensing and Franchising Strategic Alliances and Joint Ventures Direct Foreign Investment OwnershipFinancialRisk LowLowLow LowLowLow ModerateModerateModerate HighHighHigh Common Forms Levels of Commitment

19. © Prentice Hall, 2005Business In Action 3eChapter 3 - 19 Strategic Approaches to International Business Products Promotion Pricing Staffing

20. © Prentice Hall, 2005Business In Action 3eChapter 3 - 20 The Impact of Terrorism on Global Business Tighter security Longer delays at borders Cargo restrictions Higher transport costs