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Wild World: Competing in the Global Economy

Wild World: Competing in the Global Economy. Why Nations Trade. Scarce resources Limited capabilities Global ambitions Economies of scale. Theories of Production and Trading. Absolute advantage Comparative advantage. Measuring International Trade. Balance of trade Surplus Deficit

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Wild World: Competing in the Global Economy

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  1. Wild World: Competing in the Global Economy Excellence in Business, 3e

  2. Why Nations Trade • Scarce resources • Limited capabilities • Global ambitions • Economies of scale Excellence in Business, 3e

  3. Theories of Productionand Trading • Absolute advantage • Comparative advantage Excellence in Business, 3e

  4. Measuring International Trade • Balance of trade • Surplus • Deficit • Balance of payments • Cash inflow • Cash outflow Excellence in Business, 3e

  5. US Imports and Exports–Goods • Foods, feeds, and beverages • Industrial supplies and materials • Machinery and transport equipment • Automotive vehicles, engines, and parts • Consumer goods Excellence in Business, 3e

  6. US Imports and Exports–Services • Business, technical, and professional • Educational, financial, telecommunications, and insurance • Royalties and license fees • Travel and passenger fares • Freight and port services Excellence in Business, 3e

  7. Global Trade Issues • Free trade • Fair trade • Trade restrictions Excellence in Business, 3e

  8. Protectionism and Trade Restrictions • Tariffs • Quotas • Embargoes • Sanctions • Restricting imports • Subsidies • Dumping Excellence in Business, 3e

  9. Promoting Free Trade • World Trade Organization (WTO) • International Monetary Fund (IMF) • The World Bank • General Agreement on Tariffs and Trade (GATT) • Asia Pacific Economic Cooperation Council (APECC) Excellence in Business, 3e

  10. Trading Blocs Advantages Disadvantages • Help smaller countries • Promote competition • Widen markets • Foster economic growth • Economic isolation • Trade restrictions • Decline in world trade • Fewer choices Excellence in Business, 3e

  11. North American Free Trade Agreement (NAFTA) • United States • Canada • Mexico Excellence in Business, 3e

  12. Local Regulations Global Product Standards Variations in Product Standards Consumer Protection Trade Protectionism Environmental Protection The European Union Minimizing Establishing Excellence in Business, 3e

  13. The Economic and Monetary Union (EMU) • The Euro • Economic impact • Currency exchange • Currency unification • Centralized banking Excellence in Business, 3e

  14. Foreign Exchange Rates and Currency Valuations • Floating exchange rate system • Government intervention • Devaluation • Fixed value system Excellence in Business, 3e

  15. The GlobalBusiness Environment Opportunities Challenges • Growth Potential • Increased Sales • Operating Efficiencies • New Technologies • More Consumer Choices • Laws and Customs • Consumer Preferences • Ethical Standards • Labor Skills • Politics and Economics Excellence in Business, 3e

  16. Cultural Differences In Global Business • Consider the other person’s customs • Deal with the individual • Clarify your intent and meaning • Adapt your style to the other person’s • Show respect Excellence in Business, 3e

  17. Legal Differences In Global Business • Common law • Civil law • Theocratic law Excellence in Business, 3e

  18. Common Forms Levels of Commitment Ownership Financial Risk Importing and Exporting Low Low Low Licensing and Franchising Low Low Low Strategic Alliances and Joint Ventures Moderate Moderate Moderate Direct Foreign Investment High High High International Business Activity Excellence in Business, 3e

  19. Strategic Approaches to International Business • Products • Support • Promotion • Pricing • Staffing Excellence in Business, 3e

  20. The Impact of Terrorism on Global Business • Government expenditures • Business expenditures • Transportation • Banking Excellence in Business, 3e

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