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Competing in the Global Economy

Competing in the Global Economy. Why Nations Trade. Greater total output Wider variety of goods Expanded markets Lower prices Increased local competition Economies of scale. Theories of Production and Trading. Absolute advantage Comparative advantage. Measuring International Trade.

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Competing in the Global Economy

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  1. Competing in the Global Economy Business In Action 3e

  2. Why Nations Trade • Greater total output • Wider variety of goods • Expanded markets • Lower prices • Increased local competition • Economies of scale Business In Action 3e

  3. Theories of Productionand Trading • Absolute advantage • Comparative advantage Business In Action 3e

  4. Measuring International Trade • Balance of trade • Surplus • Deficit • Balance of payments • Cash inflow • Cash outflow Business In Action 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 Business In Action 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 Business In Action 3e

  7. Protectionism and Trade Restrictions • Tariffs • Quotas • Embargoes • Sanctions • Restricting imports • Subsidies • Dumping Business In Action 3e

  8. 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) Business In Action 3e

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

  10. North American Free Trade Agreement (NAFTA) • United States • Canada • Mexico Business In Action 3e

  11. Local Regulations Global Product Standards Variations in Product Standards Consumer Protection Trade Protectionism Environmental Protection The European Union Minimizing Establishing Business In Action 3e

  12. The Economic and Monetary Union (EMU) • The Euro • Economic impact • Currency exchange • Currency unification • Centralized banking Business In Action 3e

  13. Foreign Exchange Rates and Currency Valuations • Floating exchange rate system • Government intervention • Devaluation • Fixed value system Business In Action 3e

  14. 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 Business In Action 3e

  15. Barriers to Going Global • Accounting and taxes • Labor laws • Remote headquarters • Business differences • Cultural differences • Personal behavior Business In Action 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 Business In Action 3e

  17. Legal Differences In Global Business • US Laws • International laws • Country-specific laws Business In Action 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 Business In Action 3e

  19. Strategic Approaches to International Business • Products • Promotion • Pricing • Staffing Business In Action 3e

  20. The Impact of Terrorism on Global Business • Tighter security • Longer delays at borders • Cargo restrictions • Higher transport costs Business In Action 3e

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