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POB 1.03 Part 2 Understand business in the global marketplace.

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Presentation on theme: "POB 1.03 Part 2 Understand business in the global marketplace."— Presentation transcript:

1 POB 1.03 Part 2 Understand business in the global marketplace.

2 What Factors Impact the International Business Environment? Geography Culture Economy Political & legal Concerns

3 Geographic Factors Location Climate Terrain Seaports Natural Resources

4 Cultural Factors Culture – accepted behaviors, customs and values of a society Factors include … ◦ Language ◦ Religion ◦ Values ◦ Customs ◦ Social relationships

5 Economic Factors What are the differences in the living and work environments? 3 Key Effects: ◦ Literacy Level – better ed = more & better products for citizens ◦ Technology – automated production, distribution and communication = ability to create and deliver products quickly ◦ Agricultural Dependency – usually either heavy ag focus or manufacturing Infrastructure: nation’s transportation, communication, and utility systems

6 Political and Legal Factors Regulations on advertising and the enforcement of contracts Safety inspections Type of government, stability of government and policies towards businesses

7 What are trade barriers? Trade barrier – a restriction to free trade Formal barriers ◦ Embargo ◦ Quota ◦ Tariff Informal barriers ◦ Culture ◦ Tradition ◦ Religion

8 Embargo Embargo – an action imposed by a government to stop the export or import of a product completely Why? ◦ To protect its own industries from international competition ◦ Prevent products from getting to other countries (ex: defense weapons) ◦ Express disapproval of actions/policies

9 Quota Quota – limit on the quantity of a product that may be imported or exported within a given time period Why? ◦ To keep prices stable (high) ◦ Express displeasure toward a country ◦ Protect its own country’s industry

10 Tariff Tariff – tax the government places on certain imported goods and services Why? ◦ Increase the price of a good ◦ High tariff lowers demand and reduces the amount imported

11 Encouraging International Trade A few things that encourage international trade ◦ Common Markets ◦ Free-Trade Agreements ◦ Free-Trade Zones

12 Common Markets In a common market, the member countries do away with the duties and other trade barriers AKA “economic community” Examples: European Union (EU), Latin American Integration Association (LAIA)

13 Free-Trade Agreements In a Free-Trade Agreement, member countries agree to remove the duties and trade barriers on products traded among them Example: North American Free Trade Agreement (NAFTA) 1993

14 Free Trade Zone A Free Trade Zone is a selected area where products can be imported duty free and then stored, assembled, and/or used in manufacturing Usually near a seaport or airport Importer pays duties when items leave the zone

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