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Chapter Three. Exploring Global Business. 3 | 1. Learning Objectives. Explain the economic basis for international business Discuss the restrictions nations place on international trade, the objectives of these restrictions, and their results

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Chapter Three

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Chapter three

Chapter Three

Exploring Global Business

3 | 1


Learning objectives

Learning Objectives

  • Explain the economic basis for international business

  • Discuss the restrictions nations place on international trade, the objectives of these restrictions, and their results

  • Outline the extent of international trade and identify the organizations working to foster it

  • Define the methods by which a firm can organize for and enter into international markets

  • Describe the various sources of export assistance

  • Identify the institutions that help firms and nations finance international business

3 | 2


The basis for international business

The Basis for International Business

  • Define

    • International Business

    • Absolute Advantage

    • Comparative Advantage

  • Why are some countries better equipped than others to produce particular goods or services?

  • How does specialization help improve efficiency? What does this have to do with comparative advantage?

3 | 3


The basis for international business cont d

The Basis for International Business (cont’d)

  • Why do countries trade?

  • Define

    • Exporting

    • Importing

    • Balance of Trade

    • Trade Deficit

    • Balance of Payments

3 | 4


International business

International Business

  • What are the reasons for restricting international trade?

    • Why are more restrictions placed on imports than on exports?

  • What are the common arguments for and against international trade?

  • What is a Favorable Balance of Trade?

3 | 5


Types of trade restrictions

Types of Trade Restrictions

  • Define

    • Import Duty (Tariff)

    • Dumping

    • Nontariff Barriers

      • Import Quota

      • Embargo

      • Foreign Exchange Control

      • Currency Devaluation

      • Bureaucratic Red Tape

      • Cultural Attitudes

3 | 6


The extent of international business

The Extent of International Business

  • How do recessions affect international business?

  • Why is globalization the new reality for business?

  • How does globalization create new job opportunities and greater choice for consumers?

  • How has the Internet increased the spread of globalization?

3 | 7


The world economic outlook for trade

The World Economic Outlook for Trade

  • Be able to discuss the global economic outlook for international trade

    • Canada and Western Europe

    • Mexico and Latin America

    • Japan

    • Other Asian Countries

    • Emerging Europe

    • Commonwealth of Independent States

    • The United States

  • What are the differences in economic performance between developed and developing nations?

3 | 8


International trade agreements

International Trade Agreements

  • Be able to define and discuss the major international trade agreements

    • General Agreement of Tariffs and Trade (GATT)

    • World Trade Organization (WTO)

    • European Union (EU)

    • North American Free Trade Agreement (NAFTA)

    • Central American Free Trade Agreement – Dominican Republic(CAFTA-DR)

    • Association of Southeast Asian Nations (ASEAN)

  • What is an Economic Community?

3 | 9


International economic organizations working to foster trade

International Economic Organizations Working to Foster Trade

  • Be able to list and discuss the major economic organizations

    • European Economic Area (EEA)

    • Commonwealth of Independent States (CIS)

    • Caribbean Basin Initiative (CBI)

    • Common Market of the Southern Cone (MERCOSUR)

    • Organization of Petroleum Exporting Countries (OPEC)

    • Organization for Economic Cooperation and Development (OECD)

3 | 10


Methods of entering international business

Methods of Entering International Business

  • Define and discuss the advantages and disadvantages of

    • Licensing

    • Exporting

      • What are a Letterof Credit, aBillofLading, and a Draft?

    • Joint Venture

    • Totally Owned Facility

      • What are the two forms?

    • Strategic Alliances

    • Trading Companies

    • Countertrade

    • Multinational Enterprise

3 | 11


Largest foreign and u s multinational corporations

Largest Foreign and U.S. Multinational Corporations

  • Be able to list some of the largest multinational corporations

    • In the United States

    • Globally

  • How large are these organizations?

    • How do they compare to national GDPs?

3 | 12


Chapter three

Steps in Entering International Markets

  • What are the steps required to enter international markets?

    • Hint: There are nine steps

  • What are the marketing tasks associated with each step?

3 | 13


Sources of export assistance

Sources of Export Assistance

  • What are some sources of export assistance?

    • National Export Strategy (NES)

    • Trade Promotion Coordinating Committee (TPCC)

  • How do these organizations provide assistance?

3 | 14


Financing international business

Financing International Business

  • How do organizations find financing for international operations?

  • What are some of the principal organizations that exist to assist businesses in obtaining necessary financing?

    • The Export-Import Bank of the United States (Eximbank)

    • Multilateral Development Banks (MDB)

    • The International Monetary Fund (IMF)

3 | 15


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