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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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