powerpoint presentation by charlie cook copyright © 2005 prentice hall, inc. all rights reserved....

PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookCopyright © 2005 Prentice Hall, Inc.Copyright © 2005 Prentice Hall, Inc.

All rights reserved. All rights reserved.

Chapter 4Chapter 4The Global The Global Context of Context of BusinessBusiness

Copyright © 2005 Prentice Hall, Inc. All rights reserved. 4–2

“We are in the midst of a great transition from narrow nationalism to international partnership.”

— Lyndon Baines Johnson


Key Topics

• The rise of global business• Major world marketplaces and U.S. trading

partners• Influences on international business• International business management• The impact of differences among nations


Globalization Is Gaining Speed

• The world economy is becoming a single, interdependent system

• Export:Domestic product sold

abroad• Import:

Foreign product sold domestically


Major World Marketplaces

North AmericaNorth America

EuropeEurope

Pacific AsiaPacific Asia


Pacific Asia Represents Enormous Business Potential

Source: Time Global Business, Nov. 2001.

English Japanese Chinese Korean0

50100150200250300350400450500

415

9696

432

34

Projections for 2010 (in millions)In less than a decade,

Asian language speakers on the web

will far exceed English speakers.


Competitive Advantage

• Absolute Advantage• Comparative Advantage


National Competitive Advantage

• Factor conditions• Demand conditions• Related and

supporting industries• Strategies, structures,

and rivalries


Import/Export Balances

• Balance of TradeTrade DeficitsTrade Surpluses

• Balance of Payments


Exchange Rates Heavily Impact Global Trade• When an economy’s currency is strong:

Domestic companies find it harder to export productsForeign companies find it easier to import productsDomestic companies may move production to

cheaper sites in foreign countries• Implications for balance of trade?


Exchange Rates Heavily Impact Global Trade (cont’d)• When an economy’s currency is weak:

Domestic companies find it easier to export productsForeign companies find it harder to import productsForeign companies may invest in production facilities

• Implications for balance of trade?


Levels of International Involvement

• Importer and Exporter • International Firms• Multinational Firms


International Organizational Structures

• Foreign Investment

• Strategic Alliances

• Branch Offices

• Licensing Arrangements

• Independent Agents

INVO

LVEM

ENT

HIGH

LOW


Barriers to International Trade

Social and Cultural Differences Economic

Differences

Legal and Political Differences


Take Time to Learn the Culture Thoroughly!

Este es nuestro Este es nuestro nuevo auto: nuevo auto:

el NOVA!el NOVA!


The Customer’s Language: A Critical Business Success Factor• In the U.S. alone, 18% of the population does

not speak English at home.

• Only 48% of the world’s Web users are native English speakers.

• Consumers are four times more likely to buy a product on the Internet if the website is in their preferred language.

Source: Time Global Business, Nov. 2001


Global Differences• To operate effectively

in another country, businesses must know when, and to what extent, the government is involved in a given industry.

• Legal and Political Differences Quotas, tariffs, and

subsidies Protectionism Local content laws Business practice laws Day to day operations Cartels Dumping


Chapter Review• Discuss the rise of international business, describe

the major world marketplaces.• Explain how competitive advantage, import-export

balances, exchange rates, and foreign competition shape international business strategies.

• Discuss what factors influence whether a company should engage in international business.

• Identify different levels of international involvement and international organizational structure.

• Describe key barriers to international trade.

powerpoint presentation by charlie cook copyright © 2005 prentice hall, inc. all rights reserved....

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