Presentation is loading. Please wait.

Presentation is loading. Please wait.

Business in a Changing World

Similar presentations

Presentation on theme: "Business in a Changing World"— Presentation transcript:

1 Business in a Changing World
Part 1 Business in a Changing World © 2015 McGraw-Hill Education.

The Dynamics of Business and Economics CHAPTER 2 Business Ethics and Social Responsibility CHAPTER 2 APPENDIX The Legal and Regulatory Environment CHAPTER 3 Business in a Borderless World

3 Learning Objectives LO 3-1 Explore some of the factors within the international trade environment that influence business. LO Investigate some of the economic, legal-political, social, cultural and technological barriers to international business. LO Specify some of the agreements, alliances and organizations that may encourage trade across international boundaries. LO Summarize the different levels of organizational involvement in international trade. LO Contrast two basic strategies used in international business.

4 Role of International Business
The buying, selling and trading of goods and services across national boundaries Absolute Advantage A monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item Comparative Advantage The basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items Outsourcing The transferring of manufacturing or other tasks – such as data processing – to countries where labor and supplies are less expensive

5 Role of International Business
Balance of Trade The difference in value between what a nation exports and its imports Trade Deficit A nation’s negative balance of trade, which exists when that country imports more products than it exports Balance of Payments The difference between the flow of money into and out of a country Exporting – the sale of goods and services to foreign markets 2011 U.S. exports = $2.1 trillion+ Importing – the purchase of goods and services from foreign markets 2011 U.S. imports = $2.6 trillion+

6 Level of development is determined in part by a country’s
Economic Barriers Level of development is determined in part by a country’s Infrastructure The physical facilities supporting a country’s economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems and commercial distribution systems Exchange Rate The ratio at which one nation’s currency can be exchanged for another nation’s currency

7 Tariffs and Trade Restrictions
Import Tariff A tax levied by a nation on goods imported into the country Fixed tariff is a specific amount of money levied on each unit of product brought into the country Ad valorem tariff is based on the value of the item Exchange Controls Regulations that restrict the amount of currency that can be bought or sold

8 Tariffs and Trade Restrictions
Quota Restriction on the number of units of a particular product that can be imported into a country Embargo A prohibition on trade for a particular product Dumping The act of a country or business selling products at less than what it costs to produce them

9 Political & Technological Barriers
Cartel A group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets Are creating global marketing opportunities The lack of phone lines opens the market for cellular communications Technological Advances Create new challenges and competition Out of the top five PC companies, three are from countries in Asia Changing Technologies

10 Trade Agreements and Organizations
General Agreement on Tariffs and Trade (GATT) Trade agreement signed by 23 nations in 1947, provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved World Trade Organization (WTO) International organization dealing with the rules of trade between nations, evolved from GATT North American Free Trade Agreement (NAFTA) Agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among Canada, the U.S. and Mexico

11 Getting Involved Franchising Trading Company Licensing
A firm that buys goods in one country and sells them to buyers of another country Handles all trade activities; similar to export agents but their role is broader Licensing A trade agreement in which one company – the licensor – allows another company – the licensee – to use its company name, products, patents, brand, trademarks, raw materials and/or production processes in exchange for a fee or royalty An attractive alternative to direct investment when political stability is in doubt Franchising A form of licensing in which a company – the franchiser – agrees to provide a franchisee a name, logo, methods of operation, advertising, products and other elements associated with a franchiser’s business, in return for a financial commitment and the agreement to conduct business in accord with the franchiser’s standard of operation

12 Contract Manufacturing
Getting Involved The hiring of a foreign company to produce a specified volume of the initiating company’s product to specification; the final product carries the domestic firm’s name For example, Reebok uses contract manufacturers to produce many of its shoes Contract Manufacturing As defined earlier is transferring tasks to other countries where costs are lower Insourcing, where foreign companies transfer tasks to U.S. companies, happens more often Outsourcing

13 Getting Involved Offshoring Joint Venture
The relocation of business processes by a company or subsidiary to another country Different from outsourcing; the company retains control by not subcontracting to another company Joint Venture The sharing of the costs and operation of a business between a foreign company and a local partner Used in countries forbidding direct investment from foreign companies or when the company lacks resources or expertise

14 Getting Involved Strategic Alliance Direct Investment
A partnership formed to create competitive advantage on a worldwide basis Used when competition is fierce and costs are high Becoming predominant in the automobile and computer industries Direct Investment The ownership of overseas facilities For companies who want more control and are willing to invest considerable resources May involve new facilities or the purchase of an existing operation

15 Getting Involved Multinational Corporation (MNC) A corporation that operates on a worldwide scale, without significant ties to any one nation or region Global Strategy (Globalization) Multinational Strategy A strategy that involves standardizing products (promotion and distribution) for the whole world as if it were a single entity A plan used by international companies that involves customizing products, promotion and distribution according to cultural technological, regional and national differences

Download ppt "Business in a Changing World"

Similar presentations

Ads by Google