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Introduction to Business 1 BUS-101 Instructor: Erlan Bakiev, Ph.D.

Introduction to Business 1 BUS-101 Instructor: Erlan Bakiev, Ph.D. Competing in the Global Economy. Scarce Recourses. Limited Capabilities. Global Ambitions. Economies of Scale. Why Nations Trade. Theories of Production and Trading. Absolute Advantage. Comparative Advantage.

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Introduction to Business 1 BUS-101 Instructor: Erlan Bakiev, Ph.D.

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  1. Introduction to Business 1BUS-101Instructor: Erlan Bakiev, Ph.D.

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

  3. Scarce Recourses Limited Capabilities Global Ambitions Economies of Scale Why Nations Trade Business In Action 3e

  4. Theories of Production and Trading Absolute Advantage Comparative Advantage Business In Action 3e

  5. Balance of Trade Balance of Payments Surplus Cash Inflow Deficit Cash Outflow MeasuringInternational Trade Business In Action 3e

  6. Foods, Feeds and Beverages Industrial Supplies & Materials (including Petroleum) Machinery & Transport Equipment (not autos) Automotive Vehicles, Engines & Parts Consumer Goods (non-food) Other Goods Exports 49,616 156,837 290,496 78,942 84,359 32,854 Imports 49,687 267,681 283,323 203,743 307,854 49,078 US Exports and Imports – Goods(in $ billions, 2002 data) Business In Action 3e

  7. Travel and Passenger Fares Other Transport Royalties and License Fees Other Private Services Military, Defense Services Misc. Government Services Exports 83,593 29,166 44,142 122,594 11,943 795 Imports 78,013 38,527 19,258 69,436 19,245 2,920 US Exports and Imports – Services(in $ billions, 2002 data) Business In Action 3e

  8. Trade Deficit on the Rise Trade deficit (in $ billions) Business In Action 3e

  9. Free Trade Fair Trade Trade Restrictions Global Trade Issues Business In Action 3e

  10. Protectionism and Trade Restrictions Tariffs Quotas Embargoes Sanctions Restrictive Imports Subsidies Dumping Business In Action 3e

  11. General Agreement on Tariffs and Trade (GATT) Asia Pacific Econ Cooperation Council (APECC) International Monetary Fund (IMF) The World Bank Promoting Free Trade World Trade Organization (WTO) Business In Action 3e

  12. 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

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

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

  15. The EURO The Economic and Monetary Union (EMU) Economic Impact Currency Unification Centralized Banking Currency Exchange Business In Action 3e

  16. Foreign Exchange Rates and Currency Valuations Floating Rates Government Action Currency Devaluation Fixed Value System Business In Action 3e

  17. 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

  18. 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 • Show respect Business In Action 3e

  19. Legal Differences In Global Business • Common Law (US, UK) • Civil Law (France, Italy, Turkey etc.) • Theocratic Law (Iran, Saudi Arabia) • IMF and WTO (found restrictive laws in TR and RUS) • Issues (Bribery different Acts against it.. Foreign Corrupt Practices Act ) Business In Action 3e

  20. Business In Action 3e

  21. 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

  22. Strategic Approaches to International Markets • Products • Support • Promotion • Pricing • Staffing Business In Action 3e

  23. Impact of Terrorism on Global Business Government Expenditures Business Expenditures Transportation Banking Business In Action 3e

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