BA 101 Introduction to Business

3.Competing in the Global Economy

Why Nations TradeWhy Nations Trade

Scarce Scarce RecoursesRecoursesScarce Scarce

RecoursesRecourses

GlobalGlobalAmbitionsAmbitions

GlobalGlobalAmbitionsAmbitions

Limited Limited CapabilitiesCapabilities

Limited Limited CapabilitiesCapabilities

Economies Economies of Scaleof Scale

Economies Economies of Scaleof Scale

Theories of Production and Trading

AbsoluteAbsoluteAdvantageAdvantageAbsoluteAbsolute

AdvantageAdvantageComparativeComparativeAdvantageAdvantage

ComparativeComparativeAdvantageAdvantage

MeasuringInternational Trade

Balance Balance of Tradeof TradeBalance Balance of Tradeof Trade

SurplusSurplusSurplusSurplus

DeficitDeficitDeficitDeficit

BalanceBalanceof Paymentsof Payments

BalanceBalanceof Paymentsof Payments

Cash InflowCash InflowCash InflowCash Inflow

Cash OutflowCash OutflowCash OutflowCash Outflow

Global Trade Issues

Free TradeFree TradeFree TradeFree Trade

Fair TradeFair TradeFair TradeFair Trade

Trade RestrictionsTrade RestrictionsTrade RestrictionsTrade Restrictions

Protectionism and Trade Restrictions

SanctionsSanctionsSanctionsSanctions RestrictiveRestrictiveImportsImports

RestrictiveRestrictiveImportsImports SubsidiesSubsidiesSubsidiesSubsidies DumpingDumpingDumpingDumping

TariffsTariffsTariffsTariffs QuotasQuotasQuotasQuotas EmbargoesEmbargoesEmbargoesEmbargoes

Promoting Free Trade

World Trade Organization

(WTO)

World Trade Organization

(WTO)

InternationalMonetary Fund

(IMF)

InternationalMonetary Fund

(IMF)The World BankThe World Bank

General Agreementon Tariffs and Trade

(GATT)

General Agreementon Tariffs and Trade

(GATT)

Asia Pacific Econ CooperationCouncil (APECC)

Asia Pacific Econ CooperationCouncil (APECC)

Trading Blocs

AdvantagesAdvantages

Help smaller countries

Promote competition

Widen markets

Foster economic growth

DisadvantagesDisadvantages

Economic isolation

Trade restrictions

Decline in world trade

Fewer choices

North American Free Trade Agreement (NAFTA)

United StatesUnited States

CanadaCanada

MexicoMexico

The European Union

MinimizingMinimizing EstablishingEstablishing

Local RegulationsLocal Regulations

Variations in Variations in Product StandardsProduct Standards

Trade ProtectionismTrade Protectionism

GlobalGlobalProduct StandardsProduct Standards

Consumer ProtectionConsumer Protection

Environmental Environmental ProtectionProtection

The Economic and Monetary Union (EMU)

EconomicEconomicImpactImpact

EconomicEconomicImpactImpact

CurrencyCurrencyExchangeExchange

CurrencyCurrencyExchangeExchange

CentralizedCentralizedBankingBanking

CentralizedCentralizedBankingBanking

CurrencyCurrencyUnificationUnification

CurrencyCurrencyUnificationUnificationThe EURO

Foreign Exchange Rates and Currency Valuations

Floating Rates

Government Action

Currency Devaluation

Fixed Value System

The GlobalBusiness Environment

Opportunities

Growth Potential

Increased Sales

Operating Efficiencies

New Technologies

More Consumer Choices

Challenges

Laws and Customs

Consumer Preferences

Ethical Standards

Labor Skills

Politics and Economics

Cultural Differences In Global Business

Consider the other person’s customsConsider the other person’s customs

Deal with the individualDeal with the individual

Clarify your intent and meaningClarify your intent and meaning

Adapt your style to the other personAdapt your style to the other person

Show respectShow respect

International Business Activity

Importing and ExportingImporting and Exporting

Licensing and FranchisingLicensing and Franchising

Strategic Alliances Strategic Alliances and Joint Venturesand Joint Ventures

Direct Foreign InvestmentDirect Foreign Investment

OwnershipOwnership FinancialFinancial RiskRisk

LowLow LowLow LowLow

LowLow LowLow LowLow

ModerateModerate ModerateModerate ModerateModerate

HighHigh HighHigh HighHigh

Common FormsCommon FormsLevels of CommitmentLevels of Commitment

Impact of Terrorism on Global Business

GovernmentGovernmentExpendituresExpenditures

Business Business ExpendituresExpenditures

BankingBankingTransportationTransportation