All activities necessary to create, ship, and Sell goods/services throughout the world.
Taking Advantage… 2 types Absolute Advantage Comparative Advantage Absolute: means that country can produce cheaper than anybody else. happens when lots of natural resources are available. Comparative: means that country has advantage in more than one area (ie. clothing AND computers). happens when country chooses more efficient advantage.
Import VS. Export comes IN to the country (we bought it). happens when another country has an advantage. also happens when perception of quality is higher (ex. BMW, Swiss chocolate). goes OUT to another country (we sold it). happens when we have the advantage. also happens when perception of the quality of American items is higher (ex. U.S. movies, medicines).
It’s all a balance Trade can be favorable for a country (it sold more than it bought, exports>imports)… …or unfavorable (it bought more than it sold, imports>exports) Favorable = trade surplus Unfavorable = trade deficit
Show me the money! (not all countries are created equal) …. Exchange rates influence purchasing decisions Companies want to avoid risky choices (political issues in a country can weigh heavily when it comes to money matters)
Foreign Exchange Rates and Currency Values Three things affect these rates: Balance of payments (favorable means value of currency is going up, usually from an increase in demand) Economic conditions (high inflation and interest rates) Political stability (when new laws are put in place or there is uncertainty with current government)
The NAFTA debate favorable alternative or disaster in the making??
YOUR ASSIGNMENT… Prepare a 2-5 page report (12 point font, double- spaced)on doing business in a foreign country. Go to www.businessxtra.swlearning.com for the link to commercial guides for doing business in specific countries. Include in your report information from all 10 sections of the report.