1. The Global Economy is an economy in which companies compete actively with businesses from all over the world.

2. Factors that contribute to the Global Economy  Improvements in communications technology  The rise in democracy in much of the world  The elimination of trade restrictions, especially in the European Common Market where now 25 countries are using a common currency, the Euro

3. Free Trade Area  A Free Trade area is a region within which trade restrictions are reduced or eliminated.  The largest free trade area in the world is in North America under the North American Free Trade Agreement—NAFTA—which was put into place in 1994 between the United States, Canada, and Mexico.

4. Effects of Free Trade  Lower prices on consumer goods; for example, goods made in Mexico are available to Canadians at prices cheaper than if the same goods were made here in Canada  Free Trade means that the countries involved have eliminated tariffs on imported goods between countries.

5. Multinational Corporation  A multinational corporation is a business that has made a significant commitment to establish manufacturing and distribution facilities in foreign countries. For example; Disney Land has now built a Disney theme park in Paris, France, in Tokyo, Japan, and in China.

6. Challenges  Working for a multinational corporation can present many challenges: For example, –Managers must learn to deal with customers, producers, suppliers, and employees from different countries. –Managers must become familiar with local laws –Managers must learn to respect local customs and cultural attitudes –Managers have to educate themselves into what customers want –Managers need to understand business customs to avoid inappropriate or embarrassing situations.