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Navigating Global Markets: Strategies and Challenges in International Trade

Explore the complexities of global trade, from theories of comparative advantage to the impact of cultural differences and legal regulations. Discover key strategies for reaching global markets and the forces shaping international trade landscape.

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Navigating Global Markets: Strategies and Challenges in International Trade

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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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