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Chapter 2 Competing in the Global Economy

Chapter 2 Competing in the Global Economy. The Global Business Environment. Opportunities. Challenges. Growth Potential Increased Sales Operating Efficiencies New Technologies More Consumer Choices. Laws and Customs Consumer Preferences Ethical Standards Labour Skills

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Chapter 2 Competing in the Global Economy

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  1. Chapter 2 Competing in the Global Economy

  2. The GlobalBusiness Environment Opportunities Challenges • Growth Potential • Increased Sales • Operating Efficiencies • New Technologies • More Consumer Choices • Laws and Customs • Consumer Preferences • Ethical Standards • Labour Skills • Politics and Economics

  3. Accounting and 36% Taxes Labour Laws 41% Remote 44% Headquarters Business Styles 52% Cultural Differences 65% Personal Behaviour 69% 0% 20% 40% 60% 80% 100% Barriers to Going Global

  4. 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

  5. Canadian Laws International Laws Country-Specific Laws Legal Differences In Global Business

  6. 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

  7. International Product Strategies Standardization Customization

  8. Why Do Nations Trade? Greater Total Output Lower Prices Wider Variety of Goods Increased Local Competition Expanded Markets Economies of Scale

  9. Theories of Production and Trading Absolute Advantage Comparative Advantage

  10. MeasuringInternational Trade Balance of Trade Balance of Payments Surplus Cash Inflow Deficit Cash Outflow

  11. Canadian Balance of Trade

  12. Protectionism and Trade Restrictions Tariffs Quotas Embargoes Sanctions Restricting Imports Subsidies Dumping

  13. Agreements and Organizations Promoting Free Trade • General Agreement on Tariffs and Trade (GATT) • World Trade Organization (WTO) • International Monetary Fund (IMF) • The World Bank • Asia Pacific Economic Cooperation Council (APEC)

  14. Trading Blocs Advantages Disadvantages • Help smaller countries • Promote competition • Widen markets • Foster economic growth • Economic isolation • Trade restrictions • Decline in world trade • Fewer choices

  15. Global Trading Blocs European Union (EU) North American Free Trade Agreement (NAFTA) Association of Southeast Asian Nations (ASEAN) South America’s Mercosur Austria Belgium Cyprus* Czech Republic Denmark Estonia Germany Greece Finland France Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Poland Portugal Slovakia Slovenia Spain Sweden The Netherlands United Kingdom *Only the Southern part of Cyprus is part of the EU. Canada Mexico United States Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam Argentina  Bolivia*  Brazil  Chile*  Paraguay  Uruguay  *Chile and Bolivia are associate members

  16. Canada United States Mexico North American Free Trade Agreement (NAFTA)

  17. Local Regulations Global Product Standards Variations in Product Standards Consumer Protection Trade Protectionism Environmental Protection The European Union Minimizing Establishing

  18. Centralized Banking Unified Currency Economic Impact Foreign Exchange Costs Impact of the Euro

  19. Foreign Exchange Rates and Currency Valuations Floating Exchange Rates Government Intervention Currency Devaluation Fixed Value System

  20. Dealing With Global Shocks Tighter Security More Delays Cargo Restrictions Increased Costs

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