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Intro to Business, Ethics Business 40 Week 2 Carole K. Meagher 26 January, 2005.

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Presentation on theme: "Intro to Business, Ethics Business 40 Week 2 Carole K. Meagher 26 January, 2005."— Presentation transcript:

1 Intro to Business, Ethics Business 40 Week 2 Carole K. Meagher 26 January, 2005

2 Agenda Roll call, introductions, project ideas Article analysis Before you leave tonight… I need a roster with your group and project idea Week 4 Lead-in

3 WSJ – Socialism in Football Count off by 4s… 1.Is the NFL better off overall if the teams work together? Why or why not? 2.What types of revenue that are shared? Not shared? Why do some teams make more money than do others? 3.What arguments do the larger-market team owners offer to defend their demands for greater shares of the NFL revenues? 4.What arguments do the smaller-market team owners offer to defend their demands to keep their shares of the NFL revenues?

4 Economics: Create Wealth Use Scarce Resources to Produce Goods & Services To Distribute Among Competing Groups/Individuals Micro v. Macro Resource Development

5 $What is produced? $What amount is produced? $What is the method of output distribution? $What is the rate of economic growth? Adapted from: Adapted from: Edwin Mansfield Economics (New York: W.W. Norton, 1976), p.8 Four Whats of an Economic System

6 Primary Economic Systems Communism Socialism Capitalism (Highly Controlled ) (Little Control ) Mixed

7 Economic Theories: Capitalism Adam Smith (1776) Early industrial revolution, studied a pin factory Core tenets: Freedom is vital Invisible Hand If everyone maximizes their own good, the overall good will be maximized Base of microeconomic theory Flaw: Micro + Micro + Micro Macro

8 Quantity(S) High High Low Price(P) S Supply Curve

9 Price(P) Quantity(D) High Low D Demand Curve

10 Quantity High Low Price Market Equilibrium SD Surplus Shortage Equilibrium Point

11 Sellers OneMany Monopoly Oligopoly MonopolisticCompetition Perfect Competition Free-Market Competition

12 Limits of Free-Markets Inequality of Wealth- Causes National & World Tension Greed Compromises Ethics Potential Environmental Damage Limitations Push Country towards Socialism = Government Regulation

13 Economic Theories: Communism Karl Marx (1867) Observed extreme, harsh conditions in Europe mid- Industrial Revolution Core tenets: Control of capital invites abuse, thus revolution From each according to his ability, to each according to his needs Centralize control in order to avoid problems Base of macroeconomic theory Flaw: Power still corrupts Government is not as efficient as market

14 Economic Theories: Socialism Frederick Engels (1880) Mellower version of Communism Core tenets: Sees capitalist system as fundamentally a good way to produce goods and manage an economy Encourages democratic, widespread distribution of wealth, profits Base of most of world economies Flaw: Will people take advantage of a system that protects them from poverty, no matter what?

15 Economic Theories: Keynesian John Maynard Keynes (1936) Observed Great Depression Core tenets: Maximize aggregate output Described market failures Role of government is to prevent boom/bust, thus stabilize economy Base of current US policy Flaw: Very theoretical… rarely tested in real life circumstances.

16 Source: Parade Magazine, Apr. 12, 1998. Industrialized Nations Tax Rate

17 Why is the U.S. an Economic Success? Major ReasonPercent* Major ReasonPercent* Constitution85 Free Elections84 Free Enterprise System81 Abundant Resources78 Cultural Diversity71 * Respondents could choose more than one. Source: Investors Business Daily Survey

18 U.S. Economy Key Economic Indicators Productivity Business Cycles Recession Depression Recovery Stabilization Fiscal Policy Monetary Policy National Debt

19 Key Economic Indicators Gross Domestic Product (GDP) Unemployment Rate Price Indexes Consumer Price Index(CPI) Producer Price Index(PPI)

20 U.S. Gross Domestic Product In Billions of U.S. $ Source: U.S. Dept. of Commerce, Bureau of Economic Analysis

21 U.S. Unemployment (%) Source: U.S. Bureau of Labor Statistics

22 SOURCE: SOURCE: U.S. Bureau of Labor Statistics What Makes Up The Consumer Price Index?

23 Consumer Price Index 1982-84 = 100 Source: U.S. Dept. of Labor, Bureau of Labor Statistics

24 % Change in Labor Productivity- U.S. Source: U.S. Dept. of Commerce, Bureau of Labor Statistics

25 Chapter 3: Break… Video… Discussion Count off by 3s… 1.Why did Coca-Cola decide to expand into Russia? 2.How did Coca-Cola expand? What steps did they take? 3.Why do Russians buy Coca-Cola instead of local brands?

26 Growing World Population Source: Population Research Bureau

27 By Region/Country - % of World Source: Population Research Bureau

28 Company % of Earnings From Outside U.S. Source: Investment Advisor, August 2000

29 Leading Goods Exporters/Importers (2001) CountryExportsImports United States 731 1,180 Germany 571 493 Japan 404 350 France 322 326 United Kingdom 273 332 World Total6,155 6,441 In Billion $ Source: World Trade Organization

30 Leading Services Exporters/Importers (2001) CountryExports Imports United States 263 188 Germany 80 133 Japan 64 107 France 80 62 United Kingdom 108 92 World Total1,460 1,445 In Billion $ Source: World Trade Organization

31 Why Trade With Other Nations? Allows specialization to maximize production Different natural resources makes trading beneficial

32 U.S. Trading Partners RegionExportsImports Asia 26.5% 36.3% West. Europe 24.0 20.8 North America 22.5 18.7 Latin America 21.8 17.3 Middle East 2.7 3.3 Africa 1.7 2.3 C./E. Europe/ Baltic States/CIS 0.9 1.3 Total 100% 100% Source: World Trade Organization, 2001

33 CountryStrengths United States Technology, R & D Spending Finland Univ. Enrollment, Efficient Legal System, Business Ethics Taiwan Cell-phone Ownership, Tech. Innovation, Local Firms Competitiveness Singapore Savings Rate, Math/Science Education, Political Trust Sweden H.S. Enrollment, Press Freedom, Phone Access Global Competitiveness

34 Global Trade Goods & Services Importing Exporting Measuring Trade Balance of Trade/Payments Trade Deficit

35 U. S. Trade in Goods & Services ($ Billions) Source: St. Louis Business Monthly, Oct. 1999 & World Trade Organization Balance of Trade

36 Sources of U.S. Oil Imports In Millions of Barrels Source: USA Today

37 U.S. Trade Experience Balance of Payments Debtor Nation Foreign Direct Investment Dumping

38 Sources of Foreign Direct Investments In the U.S. Source: U.S. Commerce Dept.

39 Strategies for Reaching Global Markets Licensing Exporting Franchising Contract Manufacturing Joint Ventures Strategic Alliances Subsidiaries-MNCs Foreign Direct Investment

40 Worlds Largest MNCs- 2002 Revenue ($Billions) 1)Wal-Mart Stores 217 2)Exxon Mobil 213 3)General Motors 175 4)BP 174 5)Ford Motor 162 6)Daimler Chrysler 136 7)Royal Dutch/Shell Group 135 8)General Electric 125 9)Toyota Motor 121 10)Mitsubishi112

41 Forces Affecting Trading in Global Markets Socio-cultural Economic & Financial Legal & Regulatory Physical & Environmental Trade Protectionism Global E-Commerce-Future

42 Cultural Differences in Global Markets Language Religion Values & Attitudes Aesthetics Materialism

43 Did You Know? In Turkey its rude to cross your arms while you are facing someone. In the Arab world the left hand is considered unclean; dont eat with it! In India never pat someones head, its the seat of the soul. The Chinese associate gifts such as straw sandals, clocks and handkerchiefs with funerals.

44 Whats the 2 nd Most Valuable Global Business Language? Source: Accountemps Poll

45 Nations That Have Not Converted to the Metric System United States Liberia Yemen Myanmar (Burma) Brunei

46 Economic & Financial Forces No Worldwide Currency Currency Fluctuations Floating Exchange Rates Bartering/Countertrading

47 Developing Countries Need Infrastructure 1.2 billion people lack clean drinking water 3 billion people lack adequate sanitation 2 billion people lack electricity 2 billion people lack electricity

48 Legal & Regulatory Forces Inconsistent Laws & Regulations Foreign Corrupt Practices Act of 1978 Local Business Contact Required

49 Protectionism Tariffs Protective Revenue Import Quota Nontariff Barriers Long-standing relationships Regulations inside countries

50 Trade Agreements General Agreement on Tariffs & Trade (1948) Uruguay Round of GATT (1986) Lower Tariffs Extend Rules World Trade Organization (1995) Common Markets European Union (EU) Mercosur North American Free Trade Agreement (1994)

51 Future Global Trade Peoples Republic of China Russia & Others Internet Bypassing laws Greymarkets Items for sale that are otherwise illegal

52 Week 4 Lead-in Chapters 5 and 6 – Starting your own business Find an article talking about something related to starting your own business, and tie it back to the text. Or, whatever you want, just be thoughtful and buzzword compliant Group rosters!

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