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INTERNATIONAL COMMERCE ____________________________________________________________

INTERNATIONAL COMMERCE ____________________________________________________________. Issues with Cross-Border Commercial Transactions Currency Legal and Transactional Practices Social and Cultural Transactional Infrastructure Technology Resource Availability.

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INTERNATIONAL COMMERCE ____________________________________________________________

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  1. INTERNATIONAL COMMERCE____________________________________________________________ Issues with Cross-Border Commercial Transactions • Currency • Legal and Transactional Practices • Social and Cultural • Transactional Infrastructure • Technology • Resource Availability

  2. INTERNATIONAL COMMERCE____________________________________________________________ Forms of International Business • Direct Import/Export • Direct Foreign Investment • Sole Venture • Partnership • Portfolio Investments • Licensing, Franchising or Management Contracts: Strategic Alliance

  3. INTERNATIONAL COMMERCE____________________________________________________________ Globalization • Transition to Integrated and Interdependent World Economy Occurring at Three Levels • Markets • Production • Institutions

  4. INTERNATIONAL COMMERCE____________________________________________________________ Globalized Markets • Merger of National Markets into Global Market: Worldwide Products Produced for Worldwide Market Globalized Production • Integrateable International Labor, Land and Capital Factors: Reliably and Efficiently Transportable

  5. INTERNATIONAL COMMERCE____________________________________________________________ Globalized Institutions Laws, Customs and Institutions that Manage, Expedite and Regulate Global Trade • World Trade Organization (WTO) • World Bank • United Nations United Parcel Service (UPS)

  6. 1907: Delivering documents by Bicycle in Seattle Today: 11th Largest Airline in the World Processes Daily 2% of the World’s GDP Ships more than 13.5 Million Packages/Day Largest User of Wireless Technology: the Clipboard Since 1996, spent $1 Billion on Supply Chain Management Services, including Financing, that are available to any Business or Person wanting to be Globalized

  7. UPS Trade Management Services In today's marketplace, companies considering sourcing or selling their products overseas must evaluate many more options than in the past and process greater amounts of information in order to make decisions. And cultural barriers and complex compliance initiatives make global trade even more of a challenge. To adapt to this new business arena, companies need more than just additional information. In order to make effective business decisions, they need clear and customized advice from experienced professionals. UPS Trade Management Services provides clients with customized assessments regarding complex compliance and administrative issues facing global companies.

  8. INTERNATIONAL COMMERCE____________________________________________________________ • Organized in 1995 as Successor to General Agreement on Trades and Tariffs (GATT) • Headquartered in Geneva. 144 Member Countries • Goal is to help producers of goods and services, exporters and importers conduct business: •  Administers WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitor national trade policies• Technical assistance and training for developing countries

  9. INTERNATIONAL COMMERCE____________________________________________________________ • World Bank’s mission is to fight poverty and improve living standards of people in developing world • It is a Development Bank that provides loans, policy advice, technical assistance and knowledge-sharing services to low and middle income countries to reduce poverty • Conceived during World War II at Bretton Woods, New Hampshire, World Bank initially helped rebuild Europe • In 2004 provided $20.1 billion for 245 projects in developing countries worldwide • Reconstruction is important focus: natural disasters, humanitarian emergencies and post­conflict rehabilitation needs

  10. INTERNATIONAL COMMERCE____________________________________________________________ Motivating Forces of Globalization • Political: Reduced Tariffs • Technological: Faster, More Reliable Transportations and Communications

  11. INTERNATIONAL COMMERCE____________________________________________________________ Motivating Forces of Globalization • Positive Economic Benefits: Lower Prices, Job Creation and Economic Growth • Negative Impacts: Higher-Paying Jobs Move to Low-Wage Countries, Diminished Sovereign Authority and No Tax or Regulatory Standards

  12. INTERNATIONAL COMMERCE____________________________________________________________ Exchange Rates • Expresses Relationship between Currencies of Transacting Countries • 2001 (“Strong Dollar”): $1 USD = 1.18€ $0.85 USD = 1€ • 2005 (“Weak Dollar”): $1 USD = 0.79€ $1.27 USD = 1€

  13. INTERNATIONAL COMMERCE____________________________________________________________ Political, Legal and Cultural Issues • Political Systems and Approach • Democratic: All Institutions Accountable to Elected, Representative Government • Socialistic: Collective State Interest controls all Property and Factors of Production • Theocratic: Single Person or Institution is Controlling Authority

  14. INTERNATIONAL COMMERCE____________________________________________________________ Political, Legal and Cultural Issues • Legal System: Reflects Political System’s Attitude about Right of Redress for Inequitable Treatment • Contract Enforcement: Reliable Belief that Lawful Contracts will be Enforced • Property Rights, especially Intellectual Property • Product Safety and Liability

  15. INTERNATIONAL COMMERCE____________________________________________________________ Political, Legal and Cultural Issues • Culture: Shared and Learned Values and Norms. Prescribe a Society’s Design of How it Lives • Inseparable Elements of Ethics and Religion may underlie Society’s Culture and Political Approach • Male/Female Roles in Authority-based Relations • Subtleties of Language, Tone and Manner

  16. INTERNATIONAL COMMERCE____________________________________________________________ Comparative Statistics

  17. INTERNATIONAL COMMERCE____________________________________________________________ The China Factor During 2003, China purchased: • Nearly ¼ of World’s Aluminum and Steel • Almost One-Third of Iron Ore • 40% of Cement During last 20 years: • City of Shenzhen grew from 70,000 to 7 Million • 300 Million Chinese have migrated from Rural Areas to Industrialized Cities

  18. INTERNATIONAL COMMERCE____________________________________________________________ European Union (EU) • Total Population Rate Increase – 4.1%

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