1. Analyze Career Opportunities in… INTERNATIONAL BUSINESS Use the internet to learn more about careers in international business. Choose one of the job titles listed and answer the following questions. 1. How would you describe the earnings potential for this field? 2. Is this a career that interests you? Describe a few things you could do to learn more about this career. Customs Inspector Interpreter or Translator Global Purchasing Manger Freight Inspector Cross-Cultural Trainer International Sales Representative International Marketing Manager Import-Export Coordinator Bell Ringer 1

2. Business in the Global Economy Chapter 3

3. INTERNATIONAL BUSINESS BASICS 3-1

4. Today’s Goals Describe importing and exporting activities

5. Fun Facts – Hong Kong In business dealing with Westerners, the Chinese often chose a nickname. Don’t be surprised if during your business dealing with the Chinese they ask to consult with a feng shui man. A feng shui man may be brought in to determine good luck dates or the proper special arrangement for a building or office. This individual's opinion should be observed.

6. Domestic Business Making, buying, and selling of goods and services within a country

7. International Business International Business aka World Trade or Foreign Trade International Business Business activities needed for creating, shipping, and selling goods and services across national borders with multiple countries

8. Why use International Trade? Without foreign trade, all of the items you buy would cost more

9. International Trade Advantages ◦ Wider variety of products ◦ Lower costs Disadvantages ◦ Competition for domestic companies ◦ American jobs lost to lower-paid workers in other countries

10. Absolute Advantage when a country can produce a product at a lower cost than other countries due to an abundance of natural resources or raw materials

11. Comparative Advantage a country specializes in the production and exporting of a good or service at which it is more efficient (lower cost)

12. Imports Items bought from other countries Some consumers prefer expensive foreign goods over cheaper domestic products

13. US Imports 100%

14. Imports Without foreign trade, many things we buy would cost more or not be available Other countries can produce some goods at a lower cost because they have the needed raw materials or have lower labor costs

15. Exports Goods and services sold to other countries

16. Exports

17. Goal 1- Imports & Exports Class Mixer!!! ◦ Clock side of the room is imports. ◦ Printer side of the room is exports. ◦ Get up and describe yourself to someone from the other side of the room. ◦ 30 seconds!!! ◦ GO!

19. Imports are all around us. List 3 imported products you own. What country were they made in? Bell Ringer 2

20. Today’s Goals Compare balance of trade and balance of payments

21. Measuring Trade Relations Foreign Debt – amount a country owes to other countries Measured By: 1. Balance of Trade 2. Balance of Payments

22. Balance of Trade Difference between a countries total exports and total imports Exports > Imports = Trade Surplus Exports < Imports = Trade Deficit Favorable vs. Unfavorable

23. Possible Trade Positions Favorable Balance of TradeUnfavorable Balance of Trade ExportsImportsExportsImports Why is it important for a country to export more than it imports?

24. Balance of Payments difference between the amount of money that comes into a country and amount that goes out of it Credits > Debits = Positive or Favorable Credits < Debits = Negative or Unfavorable

25. Other Forms of Exchange Money goes from one country to another through: ◦ Investments ◦ Tourism ◦ Government aid  Financial  Military ◦ Deposits in foreign banks

26. Goal 2 – Trade vs. Payments balance of trade balance of payments How does balance of trade differ from balance of payments?

27. Fair Trade What is Fair Trade?

28. Create an informational flyer that promotes purchasing Fair Trade products to other high school students. Research www.fairtradeusa.org to find the content of your ad. Communicate the benefits of Fair Trade Certified purchases to businesses and consumers. Include pictures of Fair Trade Certified products and where they can be purchased. You may work with a partner. The advertisement must be designed using Microsoft Publisher or Microsoft Word. www.fairtradeusa.org

29. Today’s Goals List factors that affect the value of global currencies

30. International Currency Various currencies around the world European Union Euro India Rupee Saudi Arabia Riyal

31. Why do many countries use a variety of colors in their currency? Color is used to distinguish different denominations and discourage counterfeiting.

32. banks that buy and sell different currencies

33. Exchange Rate value of a currency in one country compared with the value in another Affected by supply and demand

35. Recent Values of Currencies CountryCurrencyUnits per USDValue in USD BritainPound0.66 pounds1.52 BrazilReal1.73 reals0.577 CanadaDollar0.98 dollars1.01 European UnionEuro0.76 euro1.32 JapanYen94.6 yen0.0106 Saudi ArabiaRiyal3.75 riyal0.27 South AfricaRand7.43 rand0.135 South KoreaWon1117.67 won0.0009 VenezuelaBolivar4,300.00 bolivars0.000232558 Which currency is worth the most in terms of U.S. dollars?

36. Current Exchange Rates www.x-rates.com values change on a daily basis

37. 3 Factors Affecting Currency Values 1. Balance of Payments 2. Economic Conditions 3. Political Stability

38. Balance of Payments Favorable = constant or rising value Increased demand for nation’s products and currency Unfavorable = decline in value

39. Economic Conditions Inflation reduces value High interest rates = decrease in value and demand

40. Political Stability Political Instability ◦ Risk ◦ New laws Businesses could lose buildings, equipment or money on deposit in banks

42. Goal 3 Factors that affect the value of money: ◦ Balance of Payments ◦ Economic Conditions ◦ Political Stability

43. Using the internet, research what Illinois is doing to encourage international trade. Most states have an exporting program in their state department of commerce. Include Illinois’s main export as well. Write a paragraph summary of your findings.

45. THE GLOBAL MARKETPLACE 3-2

46. Today’s Goals Describe the components of the international business environment

47. International Business Environment Geography location climate Culture language customs Economics technology education Political-Legal Concerns political stability business regulations

48. Geography Location Climate Terrain Seaports Natural Resources

49. Culture accepted behaviors, customs, and values of a society Language Family Religion Customs Traditions Food

50. Economics Factors that affect a country’s level of economic development are: ◦ Literacy Level ◦ Technology ◦ Agricultural Dependency

51. Infrastructure A nation’s transportation, communication, and utility systems

52. Political & Legal Concerns Type of Government Stability of Government Trade Barriers Business Regulations

53. Goal 1 The four elements of the international business environment are: ◦ G eography ◦ C ulture ◦ E conomics ◦ P olitical-Legal Factors

54. Get into groups of three or four and develop a game that your classmates could play to help them remember and understand the elements of the international business environment. You may adapt a familiar board game or game show.

55. Use the internet to locate information about laws in foreign countries that are different from those in the United States. Write down 5 laws in your notes and be prepared to share them with the class. www.listverse.com www.dumblaws.com

56. 1. List 3 laws that relate to international business 2. Explain how they would impact doing business with that country

57. What is the Arms Export Control Act? What year was it established? Bell Ringer 3

58. Today’s Goals Identify examples of formal trade barriers

59. International Trade Barriers restrictions to free trade Government actions are formal trade barriers. ◦ Ex: Quotas, tariffs, and embargoes Informal trade barriers ◦ Ex: culture, tradition, religion

60. Quotas limit on the quantity of a product that may be imported or exported within a given period May be set to: ◦ Keep supply low and prices high ◦ Express displeasure at a countries' policies ◦ Protect an industry from too much foreign competition

61. Tariff a tax that a government places on certain imported products Increases prices of imported goods High tariffs lower demand and import quantity

62. Japan’s Tariffs 38.5% Beef 32% Oranges 40% Processed Cheese 10.5% Sweet Corn 20.4% Cookies

63. Do tariffs on imported goods help consumers or hurt them? Hurt them because they lead to higher prices, lower quantity and variety of products, and less competition among manufacturers

64. Embargoes stopping the export or import of a product completely Reasons to impose an embargo: ◦ Protect own industries more than a quota or tariff will ◦ Prevent products from falling into the hands of unfriendly groups or nations ◦ To express disapproval of policies of another country

65. Trade Sanctions http://www.treasury.gov/resource- center/sanctions/Programs/Pages/Program s.aspx http://www.treasury.gov/resource- center/sanctions/Programs/Pages/Program s.aspx http://www.pmddtc.state.gov/embargoed_ countries/index.html http://www.pmddtc.state.gov/embargoed_ countries/index.html

66. Goal 2 What are three formal trade barriers? ◦ Quotas ◦ Tariffs ◦ Embargoes

67. http://hts.usitc.gov/ http://hts.usitc.gov/ Go to http://hts.usitc.gov/ and look up the general US tariff amounts and unit of quantity (pound, gallon, item) for five different products. Explain the benefits and drawbacks of tariffs for countries, companies, and consumers.http://hts.usitc.gov/

68. What is a Port of Entry? List 3 locations in Illinois? Bell Ringer 4

69. Today’s Goals Explain actions to encourage international trade

70. Encouraging International Trade Free-Trade Zones Free-Trade Agreements Common Markets

71. Free-Trade Zones area where products can be imported duty-free (tax free) then stored, assembled, and used in manufacturing Usually in seaports and airports

72. Free-Trade Agreements member countries agree to remove duties (import taxes) and trade barriers on products traded among them Increases trade between members NAFTA (1994)- no tariffs between members

73. Common Markets aka Economic Community members do away with duties and trade barriers Allows money and people to move freely across borders Members have a common external duty on products being imported from nonmember countries

74. European Union (EU) est. 1993

75. Latin American Integration Association (LAIA) est. 1960

76. Goal 3 What actions could be taken to encourage international trade? ◦ Free-Trade Zones ◦ Free-Trade Agreements ◦ Common Markets

77. Using the internet, print a map of a country. Label the geographic benefits of the country (seaports, waterways, terrain, climate, natural resources, ports of entry). After that, research informal trade barriers for that country (customs, traditions, religion, language). Record your research on the same page as your map.

78. In how many countries is McDonalds located? Where is their headquarters? Bell Ringer 5

79. INTERNATIONAL BUSINESS ORGANIZATIONS 3-3

80. Today’s Goals Discuss activities of multinational organizations Explain common international business entry

81. Multinational Companies (MNC) an organization that does business in several countries Parent company in home country Divisions or branches in host country

82. multinational company, home country, and host country How does this picture illustrate the following concepts: multinational company, home country, and host country? home country parent company host country Korean company, KIA, is doing business in the US as well as Korea. Korea is the home country because that is where the parent company is located. KIA has placed business activities in the US, making it the host country.

83. Global Strategies aka Standardized uses the same product and marketing strategy worldwide Offering the same product the same way everywhere

84. Multinational Strategy aka Adapted treats each country market differently, adapt to customs, tastes, and buying habits of a distinct national market

85. Chinese McDonalds Menu

86. Interesting McDonalds Items Interesting McDonalds Items

87. Advantages of Multinational Companies Larger markets and more available to consumers More products at lower prices More career opportunities

88. Drawbacks of MNC Can become a major economic power in host country Workers may depend on the MNC for jobs Consumers can become dependent for goods and services May influence or control the political power of a country

89. Global Market Entry Modes Licensing Franchising Joint Venture

90. Licensing selling the right to use some intangible property (production process, trademark, or brand name) for a fee or royalty Involves manufacturing Low financial investment and risk

91. Franchising the right to use a company name or business process in a specific way Contracted to have same business elements but local marketing elements Involves selling a product or service

92. Joint Venture Joint Venture an agreement between two or more companies to share a business project Benefit by sharing raw materials, shipping facilities, management activities, or production facilities Concerns are sharing of profits and control

93. Joint Venture Most popular in manufacturing Example: Japanese and U.S. auto manufacturers

94. Today’s Goals Describe activities of international trade organizations and agencies

95. International Trade Organizations Created to help companies with global trade activities

96. International Trade Organizations worksheet

97. World Trade Organization (WTO) www.wto.org www.wto.org Created in 1995 to promote trade around the world Settles trade disputes Enforces Free-Trade agreements between members

98. World Trade Organization Goals: ◦ Lower tariffs that discourage free trade ◦ Eliminate import quotas ◦ Reduce barriers for banks, insurance companies, and other financial services ◦ Assist poor countries with economic growth

99. International Monetary Fund (IMF) www.imf.org www.imf.org Formed in 1946 to promote economic cooperation Maintains world trade and exchange rates Eliminates trade wars

100. International Monetary Fund Promotes exchange rate stability Provides resources to help members in balance of payments difficulties Assists with poverty reduction

101. World Bank www.worldbank.org www.worldbank.org International Bank for Reconstruction and Development (IBRD) Created in 1944 to provide loans for rebuilding after WWII Key function is to give economic aid to less developed countries

102. World Bank Divisions International Development Association (IDA)  Makes loans to help developing/poor countries International Finance Corporation (IFC)  Provides capital and technical help to private businesses in nations with limited resources  Promotes joint ventures between foreign companies and local companies to further capital investment in developing nations

103. www.export.gov www.export.gov OpportunitiesBy Country Go to www.export.gov and review the various information sources available to exporters. Click on Opportunities then By Country. Select a country and write a summary of the services available to exporters to that location. Describe how companies that are starting or expanding their exporting activities could use the services. After that, give your opinion on doing international business with that country.www.export.gov