© Prentice Hall, 2005Business In Action 3eChapter Competing in the Global Economy

© Prentice Hall, 2005Business In Action 3eChapter Why Nations Trade Greater total output Wider variety of goods Expanded markets Lower prices Increased local competition Economies of scale

© Prentice Hall, 2005Business In Action 3eChapter Theories of Production and Trading Absolute advantage Comparative advantage

© Prentice Hall, 2005Business In Action 3eChapter Measuring International Trade Balance of trade –Surplus –Deficit Balance of payments –Cash inflow –Cash outflow

© Prentice Hall, 2005Business In Action 3eChapter US Imports and Exports–Goods Foods, feeds, and beverages Industrial supplies and materials Machinery and transport equipment Automotive vehicles, engines, and parts Consumer goods

© Prentice Hall, 2005Business In Action 3eChapter US Imports and Exports–Services Business, technical, and professional Educational, financial, telecommunications, and insurance Royalties and license fees Travel and passenger fares Freight and port services

© Prentice Hall, 2005Business In Action 3eChapter Protectionism and Trade Restrictions Tariffs Quotas Embargoes Sanctions Restricting imports Subsidies Dumping

© Prentice Hall, 2005Business In Action 3eChapter Promoting Free Trade World Trade Organization (WTO) International Monetary Fund (IMF) The World Bank General Agreement on Tariffs and Trade (GATT) Asia Pacific Economic Cooperation Council (APECC)

© Prentice Hall, 2005Business In Action 3eChapter Trading Blocs Advantages Help smaller countries Promote competition Widen markets Foster economic growth Disadvantages Economic isolation Trade restrictions Decline in world trade Fewer choices

© Prentice Hall, 2005Business In Action 3eChapter North American Free Trade Agreement (NAFTA) United States Canada Mexico

© Prentice Hall, 2005Business In Action 3eChapter The European Union MinimizingEstablishing Local Regulations Variations in Product Standards Trade Protectionism Global Product Standards Consumer Protection EnvironmentalProtection

© Prentice Hall, 2005Business In Action 3eChapter The Economic and Monetary Union (EMU) The Euro –Economic impact –Currency exchange –Currency unification –Centralized banking

© Prentice Hall, 2005Business In Action 3eChapter Foreign Exchange Rates and Currency Valuations Floating exchange rate system Government intervention Devaluation Fixed value system

© Prentice Hall, 2005Business In Action 3eChapter The Global Business Environment OpportunitiesChallenges  Growth Potential  Increased Sales  Operating Efficiencies  New Technologies  More Consumer Choices  Laws and Customs  Consumer Preferences  Ethical Standards  Labor Skills  Politics and Economics

© Prentice Hall, 2005Business In Action 3eChapter Barriers to Going Global Accounting and taxes Labor laws Remote headquarters Business differences Cultural differences Personal behavior

© Prentice Hall, 2005Business In Action 3eChapter Cultural Differences In Global Business Consider the other person’s customs Deal with the individual Clarify your intent and meaning Adapt your style to the other person’s Show respect

© Prentice Hall, 2005Business In Action 3eChapter Legal Differences In Global Business US Laws International laws Country-specific laws

© Prentice Hall, 2005Business In Action 3eChapter International Business Activity Importing and Exporting Licensing and Franchising Strategic Alliances and Joint Ventures Direct Foreign Investment OwnershipFinancialRisk LowLowLow LowLowLow ModerateModerateModerate HighHighHigh Common Forms Levels of Commitment

© Prentice Hall, 2005Business In Action 3eChapter Strategic Approaches to International Business Products Promotion Pricing Staffing

© Prentice Hall, 2005Business In Action 3eChapter The Impact of Terrorism on Global Business Tighter security Longer delays at borders Cargo restrictions Higher transport costs