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Business Policy & Strategy Chapter 13

Business Policy & Strategy Chapter 13. Analyzing Global Business Murdick, Moor, Babson & Tomlinson Sixth Edition, 2000. Global Opportunities. Benefits of Global Investments. Leaping over trade barriers Transportation Efficiencies Global Integration. Theories of International Business.

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Business Policy & Strategy Chapter 13

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  1. Business Policy & StrategyChapter 13 Analyzing Global Business Murdick, Moor, Babson & Tomlinson Sixth Edition, 2000

  2. Global Opportunities • Benefits of Global Investments • Leaping over trade barriers • Transportation Efficiencies • Global Integration

  3. Theories of International Business • The Theory of Comparative Advantage • The Imperfect Markets Theory • The Product Life Cycle

  4. Approaches to Global Business • Exporting and Importing goods & services • Licensing and Franchising • Piggybacking/ Strategic Alliances • Joint Ventures (IJVs) • Foreign Direct Investments and Acquisitions • Mergers

  5. Barriers To Globalization • Tariffs • Quotas • Export, Import, and Investment Laws • Local Content Laws

  6. Barriers To Globalization • Dumping and Price Control Laws • Bribery Laws • Labor Usage Laws • Foreign Exchange Restrictions

  7. Barriers To Globalization • Government Monopolies • Enforcement of Laws • Government Purchasing Policies • Threat of Nationalization and Expropriation

  8. Currency Issues • Changes in the value of the dollar affect: • Exports • Imports • International Investment

  9. Currency Issues • Factors that influence exchange rates • Inflation Rates • Interest Rates • Income Levels • Government Controls • Expectations

  10. Period A German Product Euros 4,000 Exchange Rate $1=EU 4 Effect: U.S. buyer pays $1000 Period B German Product Euros 4,000 Exchange Rate $1=EU 2 Effect: U.S. buyer pays $2000 Transaction Effect

  11. Methods to Avoid Currency Risk • International Loans • Forward Market • Currency Options • Natural Hedging “Firms, Funds Pay to Hedge Vs. Argentina Devaluation”, www.reuters.com , October 4, 2001.

  12. Global Strategy • Global product or multi-domestic product? • Global products are basically the same product produced and sold all over the world. Examples include petrochemical refining, pharmaceutical drugs, and airplanes. • Multidomestic products are tailored for each country market.

  13. Going to Market • Define the concept, then do research, as international arena varies. • Marketing Mix • Product/service • Promotion • Price • Distribution

  14. Examples • Nova - car in South America • Gerber’s baby food in Africa • Coca Cola in China • Got milk?

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