View
218
Download
3
Category
Preview:
Citation preview
Copyright © 2009 Pearson Education Canada 2-1
Chapter 2Chapter 2 COMPETING COMPETING
IN THEIN THE
GLOBAL GLOBAL
ECONOMYECONOMY
Copyright © 2009 Pearson Education Canada 2-2
WHY NATIONS TRADEWHY NATIONS TRADE
• Greater total output
• Wider variety of goods
• Expanded markets
• Lower Prices
• Increased local competition
• Economies of scale
Copyright © 2009 Pearson Education Canada 2-3
Theories of Theories of Production and TradingProduction and Trading
AbsoluteAbsolute
AdvantageAdvantage
AbsoluteAbsolute
AdvantageAdvantageComparativeComparative
AdvantageAdvantage
ComparativeComparative
AdvantageAdvantage
Copyright © 2009 Pearson Education Canada 2-4
HOW INTERNATIONAL HOW INTERNATIONAL TRADE IS MEASUREDTRADE IS MEASURED
• Balance of
trade
- Trade surplus
- Trade deficit
• Balance of payments
-Cash inflow
-Cash outflow
Copyright © 2009 Pearson Education Canada 2-5
• (New chart to be added)
Copyright © 2009 Pearson Education Canada 2-6
TRADE RESTRICTIONSTRADE RESTRICTIONSProtectionismProtectionism
• Restrictive import standards
• Subsidies
• Dumping
• Tariffs
• Quotas
• Embargos
Copyright © 2009 Pearson Education Canada 2-7
AGREEMENTS AND AGREEMENTS AND ORGANIZATIONS PROMOTING ORGANIZATIONS PROMOTING
FREE TRADEFREE 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)
Copyright © 2009 Pearson Education Canada 2-8
TRADING BLOCSTRADING BLOCS
Advantages• Wider markets
• Fosters economic growth
• Helps smaller countries
• Promotes competition
Disadvantages• Trade restrictions
• Economic isolation
• Decline in overall world trade
• Fewer choices
Copyright © 2009 Pearson Education Canada 2-9
EXCHANGE RATES AND EXCHANGE RATES AND CURRENCY FLUCTUATIONSCURRENCY FLUCTUATIONS
• Floating exchange rates
• Fixed value systems
• Currency devaluation
• Government intervention
Copyright © 2009 Pearson Education Canada 2-10
Opportunities
Growth potential
Increased sales
Operating efficiencies
New technologies
More consumer choice
Challenges
Laws and customs
Consumer preferences
Ethical standards
Labour skills
Politics and economics
THE GLOBAL BUSINESS THE GLOBAL BUSINESS ENVIRONMENTENVIRONMENT
Copyright © 2009 Pearson Education Canada 2-11
Copyright © 2009 Pearson Education Canada 2-12
• Consider the other person’s customsConsider the other person’s customs
• Deal with the individualDeal with the individual
• Clarify your intent and meaningClarify your intent and meaning
• Adapt your style to the other personAdapt your style to the other person
• Show respectShow respect
CULTURAL DIFFERENCES IN CULTURAL DIFFERENCES IN GLOBAL BUSINESSGLOBAL BUSINESS
Copyright © 2009 Pearson Education Canada 2-13
LEGAL DIFFERENCES IN LEGAL DIFFERENCES IN GLOBAL BUSINESSGLOBAL BUSINESS
• Canadian law
• International law
• Local laws (country specific)
Copyright © 2009 Pearson Education Canada 2-14
Importing and ExportingImporting and Exporting
Licensing and FranchisingLicensing and Franchising
Strategic Alliances Strategic Alliances and Joint Venturesand Joint Ventures
Direct Foreign InvestmentDirect Foreign Investment
OwnershipOwnership FinancialFinancial RiskRisk
LowLow LowLow LowLow
LowLow LowLow LowLow
ModerateModerate ModerateModerate ModerateModerate
HighHigh HighHigh HighHigh
Common FormsCommon FormsLevels of CommitmentLevels of Commitment
FORMS OF INTERNATIONAL FORMS OF INTERNATIONAL BUSINESS ACTIVITYBUSINESS ACTIVITY
Copyright © 2009 Pearson Education Canada 2-15
PRODUCT STRATEGIES FOR PRODUCT STRATEGIES FOR INTERNATIONAL MARKETSINTERNATIONAL MARKETS
• Standardize-selling the same product worldwide
• Customize-accommodating the lifestyles and habits of the local markets
Copyright © 2009 Pearson Education Canada 2-16
HOW TO AVOID BUSINESS HOW TO AVOID BUSINESS BLUNDERS ABROADBLUNDERS ABROAD
• The importance of packaging
• The language barrier
• The problems with promotion
• Local customs• Translation
problems • The need for
research
Copyright © 2009 Pearson Education Canada 2-17
DEALING WITH ECONOMIC DEALING WITH ECONOMIC SHOCKS IN A GLOBAL BUSINESS SHOCKS IN A GLOBAL BUSINESS
ENVIRONMENTENVIRONMENT
• Health issues
• Natural disasters
• Economic fluctuations
• Energy
• Terrorism
• Security
Recommended