1. International Business Chapter 1 We Live in a Global Economy

2. 1.1 Business Basics
People within a country are dependent on each other to produce goods and services
Countries are also dependent on each other
Countries cannot produce everything their population needs and wants
Domestic business – making, buying, and selling goods and services within a country

3. International business – all business activities needed to create, ship, and sell goods and services across national borders

4. Why is International Business important?
It provides a source of raw materials and parts and demand for foreign products
Global dependency – a condition that exists when items consumers need and want are created in other countries
Allows for new markets and investment opportunities
Global opportunities - Businesses increase sales and profits with foreign trade
It can even help improve political relations
Can help to improve mutual understanding, communications, and the level of respect among people in different nations

5. When Did International Business Start?
Countries such as China, India, and Japan were trading products throughout the world 15,000 years ago.
General Agreement on Tariffs and Trade in 1947

6. International Business Basics - The Fundamentals of International Trade
When a country has too much of a good or service they look for trade opportunities
They do not exchange goods and services, they sell them
Imports – products bought from businesses in other countries
Exports – products sold in other countries
Trade Barriers – restrictions that
reduce free trade among countries

7. 1.2 The International Business Environment
International business is different from local business
Global business is influenced by four factors:
Political and legal Factors
Economic Conditions
Geographic Conditions
Cultural and Social Factors

8. 1. Political and Legal Factors
Common political and legal factors that affect international business activities include:
Type of government
Stability of the government
Government policies toward business
US Government influences include:
Regulation of fair advertising
Enforcement of contracts,
Safety inspections of foods and medications, etc.

9. 2. Economic Conditions Factors that influence economic situations
Type of economic system
Availability of natural resources
General education level of country’s population
Types of industries/jobs
Stability of country’s money supply
Available technology

10. 3. Geographic Conditions
Climate
Example: Hot weather will limit the type of crops that can be grown
Terrain
Example: Rivers, mountains, seaports
Natural Resources

11. 4. Cultural and Social Factors
Culture has a strong influence on business activities
In some societies hugging is an appropriate business greeting, others a handshake
Culture – accepted behaviors, customs, and values of a society
Main cultural and social factors that affect international business are:
Language, education, religion, values, customs, and social relationships
Suggestion: Learn a second language and continue using it

12. The Global Business World
What skills do you think are needed to work in the international environment?
History
Geography
Language
Cultural awareness
Study Skills