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Chapter 4. Understanding the Global Context of Business. Overview. Rise of international business Major world marketplaces International business strategies Competitive advantage Import-export balances Exchange rates Foreign competition shape

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Chapter 4

Chapter 4

Understanding the Global Context of Business


Overview
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
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
The Major Trading Partners of theUnited States

2004 Data:

http://ita.doc.gov/td/industry/otea/usfth/aggregate/H04T10.html

http://www.ita.doc.gov/td/industry/otea/usfth/aggregate/H04T11.html

Table 4–1


Major world marketplaces
Major World Marketplaces

Europe

North America

Pacific Asia

http://www.forbes.com/


The north american marketplace and the nations of nafta
The North American Marketplace and the Nations of NAFTA

1994

Figure 4–2

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
Europe and the Nations of the European Union

1992

  • Austria

  • Belgium*

  • Denmark

  • Finland

  • France*

  • Germany (West)*

  • Greece

  • Ireland

  • Italy*

  • Ireland

  • Italy

  • Luxembourg*

  • Netherlands*

  • Portugal

  • Spain

  • Sweden

  • United Kingdom

  • Austria

  • Belgium

  • Denmark

  • Finland

  • France

  • Germany

  • Greece

  • Ireland

  • Italy

  • Ireland

  • Italy

  • Luxembourg

  • Netherlands

  • Portugal

  • Spain

  • Sweden

  • United Kingdom

  • New in 2004:

  • Cyprus

  • the Czech Republic

  • Estonia

  • Hungary

  • Latvia

  • Lithuania

  • Malta

  • Poland

  • Slovakia

  • Slovenia

Figure 4–3

http://europa.eu.int/abc/history/index_en.htm#


The nations of asean 1967
The Nations of ASEAN1967

Plus 3:

Japan, China, South Korea

  • Brunei Darussalam

  • Cambodia

  • Indonesia*

  • Laos

  • PDR

  • Malaysia*

  • Myanmar

  • Philippines*

  • Singapore*

  • Thailand*

  • Vietnam

Figure 4–4

http://www.aseansec.org/


Pacific asia represents enormous business potential

500

450

400

350

300

432

415

250

200

150

100

50

96

0

34

English

Japanese

Chinese

Korean

Pacific Asia Represents Enormous Business Potential

Projections for 2010 (in millions)

In less than a decade, Asian language speakers on the web will far exceed English speakers.

Source: Time Global Business, Nov. 2001.


Competitive advantage
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
NationalCompetitive Advantage

  • Factor conditions

  • Demand conditions

  • Related and supporting industries

  • Strategies, structures, and rivalries


Import export balances
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
Exchange Rates and Global Trade

  • When an economy’s 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 economy’s 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
Going International

Figure 4–8

http://www.ipfrontline.com/depts/article.asp?id=4411&deptid=2


Review
Review

  • Rise of international business

  • Major world marketplaces

  • International business strategies

  • Factors influencing the decision to engage in international business

    On Wednesday—courtesy of Lisa and Andrew:

  • Levels of international involvement and international organizational structure

  • Key barriers to international trade


Chapter review
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.


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