© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Three Business in a Global Setting 3 | 1 PRIDE HUGHES KAPOOR INTRODUCTION TO BUSINESS ELEVENTH EDITION

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives 1.Explain the economic basis for international business 2.Discuss the restrictions nations place on international trade, the objectives of these restrictions, and their results 3.Outline the extent of international trade and identify the organizations working to foster it 4.Define the methods by which a firm can organize for and enter into international markets 5.Describe the various sources of export assistance 6.Identify the institutions that help firms and nations finance international business 3 | 2

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Basis for International Business  Define International Business Absolute Advantage Comparative Advantage  Why are some countries better equipped than others to produce particular goods or services?  How does specialization help improve efficiency? What does this have to do with comparative advantage? 3 | 3

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Basis for International Business (cont’d)  Why do countries trade?  Define Exporting Importing Balance of Trade Trade Deficit Balance of Payments 3 | 4

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Business  What are the reasons for restricting international trade? Why are more restrictions placed on imports than on exports?  What are the common arguments for and against international trade?  What is a Favorable Balance of Trade? 3 | 5

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Trade Restrictions  Define Import Duty (Tariff) Dumping Nontariff Barriers -Import Quota -Embargo -Foreign Exchange Control -Currency Devaluation -Bureaucratic Red Tape -Cultural Attitudes 3 | 6

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Extent of International Business  How do recessions affect international business?  Why is globalization the new reality for business?  How does globalization create new job opportunities and greater choice for consumers?  How has the Internet increased the spread of globalization? 3 | 7

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The World Economic Outlook for Trade  Be able to discuss the global economic outlook for international trade Canada and Western Europe Mexico and Latin America Japan Other Asian Countries Emerging Europe Commonwealth of Independent States The United States  What are the differences in economic performance between developed and developing nations? 3 | 8

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Trade Agreements  Be able to define and discuss the major international trade agreements General Agreement of Tariffs and Trade (GATT) World Trade Organization (WTO) European Union (EU) North American Free Trade Agreement (NAFTA) Central American Free Trade Agreement – Dominican Republic (CAFTA-DR) Association of Southeast Asian Nations (ASEAN)  What is an Economic Community? 3 | 9

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Economic Organizations Working to Foster Trade  Be able to list and discuss the major economic organizations European Economic Area (EEA) Commonwealth of Independent States (CIS) Caribbean Basin Initiative (CBI) Common Market of the Southern Cone (MERCOSUR) Organization of Petroleum Exporting Countries (OPEC) Organization for Economic Cooperation and Development (OECD) 3 | 10

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Methods of Entering International Business  Define and discuss the advantages and disadvantages of Licensing Exporting -What are a Letter of Credit, a Bill of Lading, and a Draft? Joint Venture Totally Owned Facility -What are the two forms? Strategic Alliances Trading Companies Countertrade Multinational Enterprise 3 | 11

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Largest Foreign and U.S. Multinational Corporations  Be able to list some of the largest multinational corporations In the United States Globally  How large are these organizations? How do they compare to national GDPs? 3 | 12

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  What are the steps required to enter international markets? Hint: There are nine steps  What are the marketing tasks associated with each step? Steps in Entering International Markets 3 | 13

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Sources of Export Assistance  What are some sources of export assistance? National Export Strategy (NES) Trade Promotion Coordinating Committee (TPCC)  How do these organizations provide assistance? 3 | 14

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Financing International Business  How do organizations find financing for international operations?  What are some of the principal organizations that exist to assist businesses in obtaining necessary financing? The Export-Import Bank of the United States (Eximbank) Multilateral Development Banks (MDB) The International Monetary Fund (IMF) 3 | 15