International Business. What is International Business? Dealing with all commercial transactions (private and governmental, sales, investments, logistics,

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Presentation transcript:

International Business

What is International Business? Dealing with all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more regions, countries and nations beyond their political boundaries. Example: Buying/selling from China

Why is it important? More and more companies are moving their headquarters to an international destination. Why? Cheaper labor, avoid taxes, cheaper products, eliminate the middle man…. Where would you want to move your company?

Risk Factors Political Risk Social Risk Economic Risk

Political Risk Country leaders (government) New/different taxes Currency exchange rates Trade tariffs or barriers Terrorism, riots, civil wars, even political elections New regulations Example: Move all operations to India then Prime Minister is killed. Country is in mourning and riots begin

Social Risk Working conditions/labor laws Environmental quality Health Economic opportunity Religious differences/traditions Wages of workers Example: Coca-Cola opened a bottling plant in India. That area had a sever drought at the time and Coca-Cola continued to deplete the water supply for it’s bottling effort.

Economic Risk Employment rates drop Value of currency is reduced Import/export increases/decreases Changes in buying power Debt/surplus China(where you moved your business) lends the U.S. money, then the U.S. defaults on that loan. China’s buying power has been reduced.

Foreign Exchange Rates The price of a nation’s currency in terms of another currency. Two components… Domestic currency: accepted form of money but not necessarily exclusive currency Foreign currency: foreign money not accepted Investopedia.com Video

**Change the direction.

How would a country’s currency be affected?? A nation imports more than it exports INCREASE DECREASE ?? NOT SURE ??

How would a country’s currency be affected?? Interest rates in a country rise. INCREASE DECREASE ?? NOT SURE ??

How would a country’s currency be affected?? A new president is elected in a country. INCREASE DECREASE ?? NOT SURE ??

How would a country’s currency be affected?? A nation’s inflation rate drops. INCREASE DECREASE ?? NOT SURE ??

How would a country’s currency be affected?? The exports for a country increase as a result of technology. INCREASE DECREASE ?? NOT SURE ??

How would a country’s currency be affected?? The military seizes control of the government and takes over major industries. INCREASE DECREASE ?? NOT SURE ??

How would a country’s currency be affected?? New tourist attractions and international publicity increase international tourism by over one million people. INCREASE DECREASE ?? NOT SURE ??