Business Essentials 5e. - Ebert and Griffin

Chapter 4 Understanding the Global Context of Business 1 Overview Rise of international business Major world marketplaces International business strategies

Competitive advantage Import-export balances Exchange rates Foreign competition shape Factors influencing the decision to engage in international business Rise of International Business The world economy is

becoming a single, interdependent system Export: Domestic (i.e., U.S.) product sold abroad Import: Foreign product sold domestically (i.e., in the U.S.) Growth Competitiveness Index The Major Trading Partners of the United States

2004 Data: http://ita.doc.gov/td/industry/otea/usft h/aggregate/H04T10.html http://www.ita.doc.gov/td/industry/ote a/usfth/aggregate/H04T11.html Table 41 Major World Marketplaces Europe North America Pacific Asia http://www.forbes.com/ The North American Marketplace and the Nations of NAFTA 1994

Figure 42 http://en.wikipedia.org/wiki/NAFTA http://utopia.utexas.edu/articles/tbr/nafta.html?sec=business&sub=economics Europe and the Nations of the European Union Austria Belgium Belgium* New in 2004: Cyprus Denmark Finland the Czech Republic Estonia 1992 France*

Hungary France Germany (West)* Latvia Greece Lithuania Ireland Malta Italy* Italy Ireland Poland Slovakia Italy Luxembourg Luxembourg* Slovenia Netherlands* Netherlands

Portugal Spain Sweden United Kingdom http://europa.eu.int/abc/history/index_en.htm# Figure 43 The Nations of ASEAN 1967 Plus 3: Japan, China, South Korea Brunei Darussalam Cambodia Indonesia* Laos PDR Malaysia* Myanmar Philippines*

Singapore* Thailand* Vietnam Figure 44 http://www.aseansec.org/ Pacific Asia Represents Enormous Business Potential 500 Projections for 2010 (in millions) 450 400 350 432 415 In less than a decade, Asian

language speakers on the web will far exceed English speakers. 300 250 200 150 100 96 50 34 0 English Source: Time Global Business, Nov. 2001. Japanese

Chinese Korean Competitive Advantage Absolute Advantage: controls the market Saudi oil French wine Columbian coffee Comparative Advantage: influences the market

U.S. computers and agricultural products Indian technological expertise National Competitive Advantage Factor conditions Demand conditions Related and supporting industries Strategies, structures, and rivalries Import/Export Balances

Balance of Trade Trade Deficits Trade Surpluses Balance of Payments http://www.iie.com/research/topics/hottopic.cfm?HotTopicID=9 Exchange Rates and Global Trade When an economys currency is strong: Domestic companies find it harder to export products

Foreign companies find it easier to import products Domestic companies may move production to cheaper sites in foreign countries When an economys currency is weak: Domestic companies find it easier to export products Foreign companies find it harder to import products Foreign companies may invest in production facilities http://www.x-rates.com/ Going International Figure 48 http://www.ipfrontline.com/depts/article.asp?id=4411&deptid=2 Review

Rise of international business Major world marketplaces International business strategies Factors influencing the decision to engage in international business On Wednesdaycourtesy of Lisa and Andrew: Levels of international involvement and international organizational structure

Key barriers to international trade 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.