SLIDE 1

3-1 International Business Basics

3-2 The Global Marketplace

3-3 International Business Organizations

3C H A P T E R

Business in the Global Economy

SLIDE 2

International Business Basics Goal 1 Describe importing and

exporting activities.

Goal 2 Compare balance of trade and balance of payments.

Goal 3 List factors that affect the value of global currencies.

Trading among nations• A domestic company only does business in their

own country while an international company will do business in multiple countries.

• Absolute Advantage- when a country can produce a good or service at a lower cost than other countries. (Example: Columbia= Coffee)

• Comparative Advantage- a more efficient production method for a product/service. (Example: US= Technology advances)

SLIDE 4

IMPORTS vs EXPORTS• How does importing differ from exporting? – Importing is bringing items from other

countries into a country. Example: Oil from Middle East

– Exporting is selling goods and services to other countries.Example: US selling food and medicine to other countries.

SLIDE 5

Balance of Trade/Payments• How does balance of trade differ from balance

of payments?–Balance of trade is the difference between a

country’s total exports and total imports. –Balance of payments is the difference

between the amount of money that comes into a country and the amount that goes out of it.

SLIDE 6

BALANCE OF TRADE

INTERNATIONAL CURRENCY(Foreign Exchange Market)

Exchange Rate- the value of a currency in one country compared with the value in another country.Interest Rates- the cost of using someone else’s money

SLIDE 8

RECENT VALUES OF CURRENCIES

SLIDE 9

INTERNATIONAL BUSINESS ENVIRONMENT (Factors that can affect the currency of a country)• Geography• Cultural influences• Economic development (3 factors)–Literacy level–Technology–Agricultural dependency

• Political and legal concerns• Infrastructure- Country’s transportation,

communication, and utility systems.

SLIDE 10

ELEMENTS OF INTERNATIONAL BUSINESS ENVIRONMENT

SLIDE 11

TRADE BARRIERS-(RESTRICTIONS TO FREE TRADE)

• What are three formal (government enforced) trade barriers?

–Quota- a LIMIT set on imports • Example: A US company can only purchase so much of a

product from a country.

–Tariff- a TAX set on imports• Example: A US company purchases cheese from Scotland.

–Embargo- to STOP the import or export to or from a country • Example: US placed an embargo on Cuba (except for food and medicine)

SLIDE 12

MULTINATIONAL COMPANIES (MNC)

• Organizations that do business in several countries (Home country & Host country)

• Licensing- to sell the right to use a trademark or brand for royalties.

• Franchising- the right to use a company name or business

• Joint Venture- an agreement between 2 or more companies to share a business project

World Trade Organization (WTO)-was created in 1995 to promote

trade around the world.

ON PAGE 2A/2B of this packet do online research on the following topics discussed in this chapter. Use the book (ch. 3) to answer any questions not covered on this PPT.