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Anyone believe It’s not a Globalized Economy?

Anyone believe It’s not a Globalized Economy?. Fisher-Price recall Chinese-made Toys contaminated with Lead-based Paint. “Insanity is doing the same thing over and over again and expecting different results.” (Albert Einstein).

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Anyone believe It’s not a Globalized Economy?

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  1. Anyone believe It’s not a Globalized Economy? Fisher-Price recall Chinese-made Toys contaminated with Lead-based Paint “Insanity is doing the same thing over and over again and expecting different results.” (Albert Einstein)

  2. INTERNATIONAL COMMERCE____________________________________________________________ Why are Nike's shoes made in Vietnam but Toyota's Tundra trucks are built in San Antonio? _____________________________________________________ • What is this situation's “net on-shoring/off-shoring" result?  • Why isn’t everyone in Ohio happy with this? • Would a law taxing foreign-earned Net Income of US-based companies fix problem? 

  3. INTERNATIONAL COMMERCE____________________________________________________________ A Global Balance Sheet might show the US as the World's largest Debtor (Borrower) and China as the World's largest Creditor (Lender) ______________________________ • How did this happen? • Has this always been the case? • Is it something to worry about? • What should (could) be done about it?

  4. INTERNATIONAL COMMERCE

  5. INTERNATIONAL COMMERCE____________________________________________________________ Where does our oil come from? What happens if US becomes “energy-independent?” • Import 269% more from Canada than Saudi Arabia Source: Energy Information Administration, US Dept. of Energy

  6. ENERGY TRIVIA US is World’s Third largest Oil Producer (about 10%) but Consumes about 24% About one-half of Imported Oil comes from Western Hemisphere Nations Nearly 50% of Energy is Produced from Coal and Natural Gas Nuclear Capacity same as 1996 but Applications for 26 New Plants pending Source: Energy Information Administration, US Dept. of Energy

  7. Where are Global Markets: Demographics Population Growth Rates

  8. Where are Global Markets: Demographics Fertility Rates Number of children born to women aged 15 to 49

  9. INTERNATIONAL COMMERCE____________________________________________________________ How do you Compete Internationally? 2008 Chevrolet’s “Trax” 1968 Ford’s “World Car” • Or does Global Competition offer Unique Market Segments and Countless Opportunities for Product Differentiation? • Approaches. (1) Direct (2) Alliances (3) Licensing

  10. INTERNATIONAL COMMERCE____________________________________________________________ EXCHANGE RATES Express Relationship between Currencies of Transacting Countries • 2001 (“Strong Dollar”) $ 1 USD = 1.18€ $ 0.85 USD = 1€ _________________________________________________ • 2005 (“Weak Dollar”) $1 USD = 0.86€ $1.17 USD = 1€ _________________________________________________ • 2008 (“Very Weak Dollar”) $1 USD = 0.67€ $1.48 USD = 1€ _________________________________________________ • Nov 2009 (No Change?) $1 USD = 0.66€ $1.50 USD = 1€

  11. Historical Exchange Rates Monthly Average Exchange Rates: US Dollars per Euro Concerns about Inflation and US Economy’s Recovery have weakened Dollar • Cf. Textbook, pp. 118-127

  12. INTERNATIONAL COMMERCE____________________________________________________________

  13. INTERNATIONAL COMMERCE____________________________________________________________ “Germany’s new finance minister has echoed Chinese warnings about the growing threat of fresh global asset price bubbles, fueled by low US interest rates and a weak dollar.”Financial Times, Nov. 20, 2009

  14. THE CHINA FACTOR Did you know China has only one time zone?

  15. Another Perspective on Balance of TradeHow does US/China Relationship look now? Current Account Balance of Payments As a Percentage of GDP

  16. Which Countries are Growing? Which are not?Where are Opportunities? Growth in GDP per capita Percentage change, annual rate

  17. INTERNATIONAL COMMERCE____________________________________________________________ LEGAL SYSTEM How does Society redress Inequitable Treatment? • Contract Enforcement: Will Contracts be consistently Enforced? • Property Rights:Do they include Intellectual Property? • Product Safety and Liability:Are there standards? What kind of liability?

  18. INTERNATIONAL COMMERCE____________________________________________________________ CULTURE What are a Society’s Shared and Learned Values? How does it “Live?” • Ethics and Religion:How do you reconcile conflicting ethics? Can religion influence business decisions? • Male/Female Roles and Authority:What about Cultures where Women don’t (can’t) exercise authority? • Subtleties of Language, Tone and Manner: Does it matter how things are said?

  19. INTERNATIONAL COMMERCE____________________________________________________________ GLOBALIZED INSTITUTIONS Laws, Customs and Institutions (Public/Private) that Manage, Expedite and Regulate Global Trade • World Trade Organization (WTO) • World Bank • Global-Scale Businesses United Parcel Service (UPS)

  20. 1907: Delivering documents by Bicycle in Seattle Today: 11th Largest Airline in the World Processes Daily 2% of the World’s GDP Ships more than 13.5 Million Packages/Day Largest User of Wireless Technology: The Clipboard Since 1996, spent $1 Billion on Supply Chain Management Services, including Financing, that are available to any Business or Person wanting to be Globalized

  21. INTERNATIONAL COMMERCE____________________________________________________________ Motivating Forces of Globalization • Political: Reduced Tariffs • Technological: Faster, More Reliable Transportation and Communication

  22. INTERNATIONAL COMMERCE____________________________________________________________

  23. INTERNATIONAL COMMERCE____________________________________________________________ EUROPEAN UNION (EU) • Total Population Rate Increase: 4.1% (Natural: 0.4%; Net Migration: 3.7%)

  24. THE CHINA FACTOR • World’s Leading Producer of Steel, Copper, Coal, Aluminum and Cement • 2005: Second Largest Oil Importer • 2006: Second Largest Auto Market Richmond, VA: $3.42 Guangzhou, China: $1.41

  25. Is it worth it? Do Benefits outweigh Costs? • Positive Economic Benefits Lower Prices, Job Creation and Economic Growth • Negative Impacts Shifting Job Distribution; Diminished Sovereign Authority; Multiple Tax and Regulatory Standards

  26. INTERNATIONAL COMMERCE____________________________________________________________ "Problem in Australia, chief. Everyone seems to be asleep."Cartoon by Leo Cullum

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