Warm Up. Look around the room and even in your book bags and on you. Can you identify things that were made in other countries? Why do you think they were? What are some advantages and disadvantages of getting those items from that country?. Essential Standard1.00.
Understand the role of business in the global economy.
Understand business in the global marketplace.
Factors and regulations companies have to consider when doing business in the global market place
Balance of trade is the difference between a country’s total exports and total imports.
Balance of payments is the difference between the amount of money that comes into a country and the amount that goes out of it.
Main factors affecting currency exchange rates are:
Four main factors:
Political and Legal Concerns
A country’s geography includes:
The geography of a country could impact its natural resources and export and import of resources.
Cultural factors that may Influence how business is conducted in the global marketplace:
The accepted behavior, customs and values of a society could impact business activities.
Key effects of a country’s economics that may influence conducting business in a global marketplace:
Education and Literacy level
A country’s economic development impacts its citizens standard of living and business activities.
Political and legal concerns that may influence business activities in a global marketplace:
Type of Government
Stability of government
Government policies for businesses relevant to trade barriers
Political and legal concerns influence business activities in the global marketplace.
Government bans the import or export of specified goods.
Why would a government place an embargo?
To protect a good or service from too much competition in a global market place more that what a quota or tariff could.
To protect sensitive goods.
A limit on the quantity of good that may be imported or exported within a given period to regulate international trade.
Why would a company or country set a quota?
To regulate the supply and prices.
To protect a good or service from too much competition in a global market place.
Taxes on certain imported products which increases prices.
Why would a government use a tariff?
To protect the supply of goods.
Main factors are:
Common Market: Countries that are members freely invest in one another.
European Union (EU)
Latin American Integration Association (LAIA)
Free-Trade Agreement: Countries that are members remove duties and trade barriers on products traded among them to increase trade between members.
NAFTA (the North American Free Trade Agreement) between the United States, Canada, and Mexico.
Free-trade zones: Include selected areas that allow duty-free products to be imported, and then stored, assembled, and/or used in manufacturing. The activities usually occur around a seaport or airport.
Main entry modes for companies to enter the global marketplace
Franchising is allowing a business the rights to use another company’s name or process in a specific way.
H & R Block
Licensing is selling the right to a company to use some intangible property (production process, trademark, or brand name) for a fee or royalty.
Beyond Juice Cafés
Main international trade organizations
International Monetary Fund (IMF)
Helps promote economic cooperation and maintain an orderly system of world trade and exchange rates.
Provides economic aid to developing countries to fund building communications systems, transportation networks, and energy plans.
World Trade Organization (WTO)
Settles trade disputes and enforces free-trade agreements among its members.