After reading this chapter, you should be able to: 1. Discuss the rise of international business and describe the major world marketplaces and trade agreements and alliances. 2. Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 3. Discuss the factors involved in deciding to do business internationally and in selecting the appropriate levels of international involvement and international organizational structure.

After reading this chapter, you should be able to: 4. Describe some of the ways in which social, cultural, economic, legal, and political differences among nations affect international business.

Globalization

Distinctions Based on Wealth Geographic Clusters

Significant Agreements and Treaties – North American Free Trade Agreement (NAFTA) – European Union (EU) – Association of Southeast Asian Nations (ASEAN)

Significant Agreements and Treaties – General Agreement on Tariffs and Trade (GATT): – World Trade Organization (WTO)

Balance of Trade Trade Surplus Trade Deficit.

Balance of Payments Exchange Rate

When an economy’s currency is strong: Implications for the balance of trade?

When an economy’s currency is weak: Implications for the balance of trade?

Absolute Advantage Comparative Advantage

National Competitive Advantage – Conditions favoring heavy involvement in international business:

Going International – Gauging International Demand – Adapting to Customer Needs – Outsourcing – Offshoring

Exporters Importers International firms Multinational firms

Independent Agent Licensing Arrangements (or Agreements) Branch Offices

Strategic Alliance (or Joint Venture) Foreign Direct Investment (FDI)

Quotas, Embargoes, Tariffs, and Subsidies Protectionism

Local Content Laws Business Practice Laws Cartels Dumping