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**SLIDE KH1**
INTERNATIONAL BUSINESS (IB)[Read: Head, Chapter 1, pp. 1!"#
Chara$ter%&ed ' %r+ a$t%-%t%e+
% %terat%/a0 trade
ad/r %-e+tet
IB d%er+ r/ d/e+t%$ '2+%e++ (DB)
% 3hat4
(1)5ARKETS (6ORLD 7S DO5ESTIC), (!)8RODUCTION,
(")ACCOUNTIN9CONTROL ( -----details below)
6HAT ELSE4
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Broadly speaking, there are at least six factors that separate
IB from DB (Head).
hey are!(")#olitical separation, ($)physical separation,
(%)relational separation (e.g. b&s.
networks), (')enironmental separation (e.g. climate, nat&ral
reso&rces ),
()deelopmental separation, and (*)c<&ral
separation.
In IB, one or more of these separations significantly affect
company b&siness
(e.g. possible so&rces of IB risks). In DB, these are all
negligible factors (in most
circ&mstances).
S8ECIIC ISSUES
(") +ho&ld yo& sell in global markets (here, whywhy
not)
/01B20 32456+ B4I7/!
growth, scale economy, technology, competitieness, .......
hy
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/rowth in ol&me of world merchandise trade and /D#,
$88-"% (2nn&al 9 change). +o&rce! 1
4atio of world exports of goods and commercial serices to
/D#, ":;8-$8"8. Index, $888
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hanks to the /2 1(), world trade has grown massiely.
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9LOBAL 5ARKETS BRIN99RO6TH (I9URE 1.1), SCALE ECONO5;,
TECHNOLO9;, CO58ETITI7ENESS, ...
6H; 44
Be$a2+e / added ar
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6HICH CAR IS THE 5OST A5ERICAN4 (A00 +/0d % the U.S. ar
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% Let&, 8re+%det / T//ta 5/t/r Sa0e+ USA, +h/3%= !?1! T//ta
Car (/-er ? /
part+ 2+ed are U.S. ade). 8r%$e: M!1,@>>US ('a+%$
/de0).
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THE REASON: 3here $ar+ (ad $ar part+) are pr/d2$ed
6h pr/d2$e /-er+ea+4
5ar
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DIERENCE BET6EEN DB AND IB
COUNTR;S8ECIIC ACTORS: $heap 0a'/2r, 3hat e0+e4
CULTURE, INSTITUTIONS, LAN9UA9E, .. NOT A SERIOUS ACTOR IN
DB
I58LICATIONS
% %terat%/a0 ar
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NOT ALL DI 9OES TO LO6 6A9E COUNTRIES.
Cheap 0a'/2r %+ /t a03a+ the rea+/ /r DI
C/petet %r+ are a'0e t/ ta
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=DI inflows and o&tflows, ":::-$88>, and $88; forecast.
+o&rce! 16?D
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#ortfolio inestment and foreign direct inestment.
e@ll disc&ss =DI in depth later in the co&rse.
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Tra+a$t%/: Caada(!??J)
5/e % (BM) 5/e /2t (BM)
/oods (exportsA) '": ''*
+erices (exportsA) * (2009) :" (2009)
Income (receiptsA) %; *%
#ortfolio (salesA) ;$ '"
=DI (salesA) *" *;
+ome stats! ?anada $8"".
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(") INTERNATIONAL ACCOUNTIN9TAATION %+ pr/'0eat%$.
A IR5 5UST HA7E A HO5E COUNTR; de+p%te %t+ '2+%e++
a$t%-%t%e+
% /ther $/2tr%e+.
The %r+ h/e $/2tr taFe+ the %r, '2t /ther $/2tr%e+ a0+/ 3at
t/
taF %t.
(N/te: TaF treat%e+ 'et3ee $/2tr%e+ a /r a /t eF%+t. E-e %
the
eF%+t, the /te d/ /t $/p0ete0 $a$e0 /2t d/2'0e taFat%/.)
TRANSER 8RICIN9 IS ANOTHER ISSUE.
Ca %r+ a%ta% a +et+ / '//
