NETA PowerPoint Presentations to accompany The Future of Business Fourth Edition Adapted by Norm Althouse, University of Calgary Copyright © 2014 by Nelson Education Ltd.

International: The Global Marketplace Chapter 5 Copyright © 2014 by Nelson Education Ltd.Chapter 5

Copyright © 2014 by Nelson Education Ltd. Making the Connection

Learning Outcomes 1. Show why global trade is important to Canada and how it is measured. 2. Explain why nations trade. 3. List some of the international economic communities. 4. Explain how companies can enter the global marketplace. 5. Discuss how governments and institutions foster world trade Copyright © 2014 by Nelson Education Ltd.4

Learning Outcomes (cont’d) 6. Explain some of the threats in the global marketplace. 7. List some of the trends in the global marketplace. Copyright © 2014 by Nelson Education Ltd.5

Basic Term Copyright © 2014 by Nelson Education Ltd.6 Global Vision  Recognizing international opportunities.  Awareness of threats from foreign competitors.  Effectively using international distribution networks.

Show why global trade is important to Canada and how it is measured. Copyright © 2014 by Nelson Education Ltd.7

Canada Goes Global Copyright © 2014 by Nelson Education Ltd.8 Offers expanded markets for our products.  Economies of scale in production and marketing.  Ease of transfer of experience, technology.  Global recognition of products and brand names.  Possibility of uniform global image for the companies.

Measuring Trade Between Nations Copyright © 2014 by Nelson Education Ltd.9 Exports Imports Balance of Trade (Imports - Exports) Balance of Payments

Challenges Copyright © 2014 by Nelson Education Ltd.10  Economic crises of 2008 and onward.  Fluctuating value of currencies. © 2009 JUPITERIMAGES CORPORATION

Explain why nations trade. Copyright © 2014 by Nelson Education Ltd.11

Why Nations Trade Copyright © 2014 by Nelson Education Ltd.12 Absolute Advantage A country can produce and sell a product at a lower cost. Or, the country is the only provider of the product. Principle of Comparative Advantage The concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.

Fear of Trade and Globalization Copyright © 2014 by Nelson Education Ltd.13  Canadians have lost jobs.  Others fear losing their jobs.  Employers may threaten to export jobs if there are labour disputes.  Service and white-collar workers are increasingly seeing their operations moving offshore.

Benefits of Globalization Copyright © 2014 by Nelson Education Ltd.14  Productivity increases.  Global competition.  Open economy spurs innovation.  Export jobs often pay more than other available jobs.

List some of the international economic communities. Copyright © 2014 by Nelson Education Ltd.15

International Economic Communities Copyright © 2014 by Nelson Education Ltd.16 NAFTA Mercosur European Union ASEAN

Exhibit 5.2: The European Union Gets Bigger Copyright © 2014 by Nelson Education Ltd.17

Explain how companies can enter the global marketplace. Copyright © 2014 by Nelson Education Ltd.18

Entering the Global Marketplace Copyright © 2014 by Nelson Education Ltd.19 high risk/high return low risk/low return Risk Return Exporting Licensing Contract Manufacturing Joint Venture Direct Foreign Invest- ment

Countertrade Copyright © 2014 by Nelson Education Ltd.20 A form of international trade in which part or all of the payment for goods and services is in the form of other products.

Basic Terms Copyright © 2014 by Nelson Education Ltd.21 exporting – sell domestically produced products to buyers in other countries licensing – allowing use of manufacturing, patents, or knowledge contract manufacturing – private label manufacturing by a foreign company joint venture – domestic company buys part of a foreign company or joins foreign company to form new company direct investment – active ownership of a foreign company

Discuss how governments and institutions foster world trade. Copyright © 2014 by Nelson Education Ltd.22

Fostering Global Trade Copyright © 2014 by Nelson Education Ltd.23 Antidumping Laws World Trade Organization (WTO) World Bank International Monetary Fund (IMF)

Explain some of the threats in the global marketplace. Copyright © 2014 by Nelson Education Ltd.24

Treats in the Global Marketplace Copyright © 2014 by Nelson Education Ltd.25 Political Considerations Cultural Differences Economic Environment Natural Barriers Tariff Barriers Non-Tariff Barriers

List some of the trends in the global marketplace. Copyright © 2014 by Nelson Education Ltd.26

The Future of the Global Marketplace Copyright © 2014 by Nelson Education Ltd.27  Canada – Increasing its prominence in the world.  Canada – Seeking new markets.  The emergence of BRIC economic power.