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McGraw-Hill/Irwin Understanding Business, 8e. © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh. *. *. Competing in Global Markets. *. CHAPTER. 3. *. *. 1- 1. The Dynamic Global Market. World Population by continent:.

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  1. McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh * * Competing in Global Markets * CHAPTER 3 * * 1-1

  2. The Dynamic Global Market World Population by continent: ** The U.S. is the largest importing nation in the World!

  3. Growing World Population In Billions Source: Population Reference Bureau

  4. Why Trade WithOther Nations? • No nation can produce all its needs • Mutually beneficial exchange • Natural Resources or Technology- Produce or Buy?

  5. Theories of Advantage Comparative U. S. China China U. S. Output per Unit of Input Software Clothing

  6. Theories of Advantage Absolute =VirtualMonopoly South Africa Output per Unit of Input The Rest of the World Diamond Production

  7. Global Competitiveness

  8. Global Trade • Goods & Services • Importing • Exporting • Measuring Trade • Balance of Trade/Payments • Trade Deficit • Dumping

  9. U. S. Trade inGoods & Services (Billions) Balance of Trade Source: St. Louis Business Monthly, Oct. 1999 & World Trade Organization & Wikipedia

  10. Leading Goods Exporters/Importers CountryExportsImports United States 928 1,476 Germany 1016 717 Japan 539 402 France 443 420 United Kingdom 374 439 World Total 9,099 8,823 In Billions $ Source: Wikipedia, 2005

  11. Licensing Exporting Franchising Contract Manufacturing Joint Ventures Joint Ventures & Strategic Alliances Foreign Direct Investment Strategies forReaching Global Markets

  12. Country Presenceof Well-Known Companies Source: World Features Syndicate

  13. Starbucks’ Expansion World Locations Source: Starbucks.com May 2006

  14. Most Spoken Languages Most Spoken Languages in the U.S. Most Spoken Languages in the World Source: 2005 CIA World Factbook

  15. Foreign DirectInvestments in the U.S. Source: Bureau of Economic Analysis, 2004

  16. World’s Largest MNCs Revenue ($Billions) • Wal-Mart Stores  217 • Exxon Mobil  213 • General Motors  175 • BP  174 • Ford Motor  162 • Daimler Chrysler  136 • Royal Dutch/Shell 135 • General Electric  125 • Toyota Motor  121 • Mitsubishi 112 Source: Business Week; Morgan Stanley Capital International; and S&P Compustat

  17. What’s On Your Pizza • Costa Rica - Coconut • France - Bacon, onion and fresh cream • India - Pickled ginger, minced mutton and tofu • Australia - Shrimp and pineapple • Pakistan - Curry • Brazil - Green peas • Japan - Squid and mayo jaga Source: World Features Syndicate

  18. Forces Affecting Tradingin Global Markets • Socio-cultural • Economic & Financial • Legal & Regulatory • Physical & Environmental

  19. Language Religion Values & Attitudes Personal Communication Cultural Differences in Global Markets • Social Structure • Aesthetics

  20. Did You Know? • In Turkey it’s rude to cross your arms while you are facing someone. • In the Arab world the left hand is considered unclean; don’t eat with it! • In India never pat someone’s head, it’s the seat of the soul. • The Chinese associate gifts such as straw sandals, clocks and handkerchiefs with funerals.

  21. Economic & Financial Forces • No Worldwide Currency • Currency Fluctuations • Floating Exchange Rates • Bartering/Countertrading

  22. U.S. Oil Imports Source: Gibson Consulting 2005

  23. Nations That Have Not Converted to the Metric System UnitedStates Myanmar (Burma) Liberia Source: 2005 Yourunits.com

  24. Legal & Regulatory Forces • Inconsistent Laws & Regulations • Foreign Corrupt Practices Act of 1978 • Local Business Contact Required

  25. Developing CountriesNeed Infrastructure • 1.2 billion people lack clean drinking water • 3 billion people lack adequate sanitation • 2 billion people lack electricity

  26. Protectionism • Mercantilism • Tariffs • Protective • Revenue • Import Quota • Embargo • Nontariff Barriers-Keiretsu

  27. Trade Agreements • General Agreement on Tariffs & Trade (1948) • Uruguay Round of GATT (1986) • World Trade Organization (1995) • Common Markets • European Union (EU) • Mercosur • North American Free Trade Agreement (1994) • Central America Free Trade Agreement (2005)

  28. Future Global Trade • People’s Republic of China- Permanent Normal Trade Relations/Rights • Russia & Others • Internet • Technology- Obstacles/Problems

  29. Pro’s More focus on areas where they can excel and grow Outsourced work creates efficiencies, resulting in hiring more workers Fuels global market growth Con’s Jobs lost/wages fall Reduces product quality Communication becomes much more difficult Pro’s & Con’s of Offshore Outsourcing

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