chapter 4 international environment for business 1 chapter 4 international environment for business...
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Chapter 4 International
Environment for Business1
Chapter 4 International Environment for Business
©2008 Thomson/South-Western
SEE IF YOU CAN FIND AND MAKE OUT THE JUMBLED WORD!
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Environment for Business2
Lesson 4.1 The Importance of International Business
Goals Describe the nature, growth, and importance
of international trade and investment. Explain the reasons for the growth of
international business.
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Importance of International Business
International business — business activities that occur between (2) two or more countries
Extent of international trade — most of world’s trade takes place among the developed countries of North America, Western Europe, and the Pacific Rim
O
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CanadaCanada
ChinaChina
MexicoMexico
JapanJapan
GermanyGermany
United KingdomUnited Kingdom
South KoreaSouth Korea
TaiwanTaiwan
FranceFrance
MalaysiaMalaysia
Top 10 Countries with Which the United States Trades
T
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European Union
I
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EU Countries in English
EU Map 2009
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Growth in International Business
European flag. It is the symbol not only of the European Union but also of Europe's unity and identity in a wider sense. The circle of gold stars represents solidarity and harmony between the peoples of Europe.The number of stars has nothing to do with the number of Member States. There are twelve stars because the number twelve is traditionally the symbol of perfection, completeness and unity. The flag therefore remains unchanged regardless of EU enlargements.
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The EU and Euro
European Union (EU) 27 countries with 16 countries using the Euro
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Environment for Business9
The EU and Euro
EU countries using the euro: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain EU countries not using the euro: Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, United Kingdom
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Growth in International Business
World Trade Organization ( 150 Countries) (WTO) Rules for Trading, Trade agreement lead to large cuts in Tariffs and boosted exports and imports among member countries. page 86
W T O Website
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Growth in International Business
North American Free Trade Agreement (NAFTA) 1989 Canada, 1992 Mexico joined.
International Monetary Fund (IMF) Help countries in difficulties paying for their imports or repaying loans
World Bank – Low cost loans to less developed counties for basic needs.
F (last letter)
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Jumbled Word
Profit - The reward for producing Goods and Services.
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Environment for Business13
Lesson 4.2 Forms of International Business
Goals Distinguish between the different forums
through which international business is conducted.
Describe the policies, rules, and laws that governments use to affect international trade and investment.
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Forms of International Business
Exporting GO OUT ►►►► ►►►►
Importing COME IN ◄◄ ◄◄◄◄ ◄◄ International licensing We allow others countries
to make our products and sell them, we are paid a royalty.
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Environment for Business15
Forms of International Business
Joint ventures Share the costs and profit Everyone gets a piece of the pie.
Wholly owned subsidiaries NO partners/risky
Strategic alliances Work together/experts like TV show Survivor
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FORMS OF INTERNATIONAL BUSINESS
Multinational firms
Owns or controls production or service facilities in more than 1 country
USAHome country
PARENT
FranceHost countrySUBSIDIARY
JapanHost CountrySUBSIDIARY
ThailandHost CountrySUBSIDIARY
Headquarters
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Government Policies
Policies– Tariffs “Government Tax
on product inTO country” – Dumping “Selling for less than cost”– Quotas “Limit”– Nontariff barriers non tax ways = Steering wheel– Embargoes “Government Restriction!!
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Government Policies
Exchange rate – the value of the one country’s currency expressed in the currency of another country. OR how much can your dollar buy in another country. http://www.xe.com
Exchange rate Big Mac Index $1 US Dollar vs. British Pound .726
British Cents. If a Big Mac cost 5 lb in England, it would take $6.88
American money to buy it.
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Environment for Business19
Government Policies
Currency values –Exchange rate $ Dollar vs. Euro or Lira or Pound.
(homework sheet) on Edline
homework due on Friday 03/12/101 per person, unique with your
name.
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Environment for Business20
Taste and See – “Economist”
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Environment for Business21
Big Mac Index Jan 2010
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Environment for Business22
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Environment for Business23
Cultural Differences
Culture — customs, beliefs, values, and patterns of behavior of the people of a country or group http://www.youtube.com/watch?v=8tIUilYX56E
Low-context culture — people communicate directly and explicitly America
High-context culture — communication tends to occur through nonverbal signs and indirect suggestions
Customs and Religion
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Cultural Differences
Individualism-Collectivism
Self Vs. Other
Intercultural gestures
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Lesson 4.3 Theories of International Trade and Investment
Goals Explain two theories of international trade. Discuss the concepts of balance of trade and
balance of payments. Consider career opportunities in international
business and understand the factors related to being sent abroad on assignment.
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Theories of International Trade
Comparative advantage theory — to gain a trade advantage, a country should specialize in products or services that it can provide more efficiently than other countries can.
Soft Drinks Coffee Oil
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Theories of International Trade
Product life cycle theory — product or service goes through four stages: introduction, growth, maturity, and decline
Black and White TV 1940-1950
Color TV
Projection TV
Flat Screen
Digital TV
HDTV
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Balance of Trade
Balance of payments — accounting statement in which international transactions are recorded; consists of current account and capital account
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Balance of Trade
Current account — value of goods and services exported and imported, as well as other income and payments
Capital account — investment funds coming into and going out of a country(bank loans or deposits, purchase and sale of business and investing in new business)
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Career Opportunities in International Business
Exporting and importing Teaching and translating Administering trade laws Managing foreign offices and operations Banking and insurance International trade organizations Government agencies