- 1. 3The WorldMarketplace:Business WithoutBorders 2 0 1 3 C e n
g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y
n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o
rp o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t
e , i n w h o l e o r i n p a r t . 2 0 1 3 C e n g a g e L e a r n
i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n
n e d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t o a
p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o
r i n p a r t .1LO1 What opportunities exist in theworld economy
for businesses?LO2 Why do nations trade?LO3 How do we measure
trade?LO4 How do companies reach globalmarkets?LO5 What are the
barriers tointernational trade?LO6 What are the benefits
andcriticisms of the free trademovement?
2. Growing World Population 2 0 1 3 C e n g a g e L e a r n i n
g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e
d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t o a p u
b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i
n p a r t .2 3. Global Trade Recovery The long-term global
potential for U.S. business isenormous The global economy
contracted in 2009 But, world GDP turned back around in 2010 U.S.
consumers have money but China and Indiarepresent a bigger
opportunity 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t
s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r
d u p l i c a t e d , o rp o s t e d t o a p u b l i c l y a c c e
s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .3 4. Key
Reasons for International Trade 2 0 1 3 C e n g a g e L e a r n i n
g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e
d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t o a p u
b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i
n p a r t .4Access to Factors of ProductionReduced Economic
RiskInflow of Innovation 5. Key Reasons for International
Trade:Competitive AdvantageOpportunity cost The cost of giving up
the second-best choice when 2 0 1 3 C e n g a g e L e a r n i n g .
A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d ,
c o p i e d o r d u p l i c a t e d , o rp o s t e d t o a p u b l
i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p
a r t .5A country has anabsolute advantage whenit can produce more
of agood than other nations,using the same amountof
resources.Comparativeadvantage is thebenefit a countryhas in a
given industry ifit can make products at alower
opportunitycost.making a decision 6. Cell Phone SubscriptionsAround
the World In the U.S., Europe, and Japan, cell phonesfollowed
landlines, but many developing nationscan leapfrog technology.
China currently boasts the worlds largest base ofcell phone
users766 million Indias current subscriber base ismore than
584million; it has grown explosively in 5 years In Africa, cell
phone penetration rates in 2009were approximately 21% versus 9% for
land lines In Zimbabwe, cell phone penetration grew from4% in 2008
to about 30% in 2009.Source: Zimbabwe: Mobile phone penetration
linked to GDP growth, October 28, 2010, AllAfrica Global Media
website, http://allafrica.com/stories/201011011088.html, accessed
February 7, 2010; Mobile Phone Adoption in Developing Countries,
WikiInvest
website,http://www.wikinvest.com/concept/Mobile_Phone_Adoption_in_Developing_Countries,
accessed February 8, 2011; Cell phones vital in developing world by
Malcolm Foster, January 27, 2007, Washington Post website,
http://www .washingtonpost.com/wp-dyn/ 2 0 1 3 C e n g a g e L e a
r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c
a n n e d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t
o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l
e o r i n p a r t
.6content/article/2007/01/27/AR2007012700662.html, accessed January
28, 2009; Chinas mobile users top 600 million: govt, July 24, 2008
vario images GmbH & Co.KG / Alamy 7. Global Trade: Taking
Measure 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R
e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u
p l i c a t e d , o rp o s t e d t o a p u b l i c l y a c c e s s
i b l e w e b s i t e , i n w h o l e o r i n p a r t .7 Balance of
TradeTrade DeficitTrade Surplus Balance of PaymentsBalance of
Payments DeficitBalance of Payments Surplus Exchange Rates
Countertrade 8. Global Trade: Exchange Rates 2 0 1 3 C e n g a g e
L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b
e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp o s t
e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w
h o l e o r i n p a r t .8STRONG DOLLAR VS EURO:(Example: $1.00 =
1.20 euros)WEAK DOLLAR VS. EURO:(Example: $1.00 = .60 euros)U.S.
travelers to Europe European travelers to U.S.American firms
withEuropean operationsEuropean firms withAmerican
operationsEuropean exporters American exporters Source: What is
countertrade? By Neha Gupta, Barter News Weekly website, March 11,
2010,
http://www.barternewsweekly.com/2010/03/11/what-is-counter-trade-1851/,
accessed February 10, 2010 9. Foreigners Flocking to America
forBargains The weak dollar is enticing global shoppers The down
dollar is a discount to tourists Foreign travelers are lured to the
U.S. where theyget a bigger bang for their euro, franc, yen. Demand
for U.S. hotels is up Tourism has been an economic boost
representing10% of jobs added in the first part of
2011http://www.alaskadispatch.com/article/foreigners-flocking-america-bargains
9 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e
r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i
c a t e d , o rp o s t e d t o a p u b l i c l y a c c e s s i b l
e w e b s i t e , i n w h o l e o r i n p a r t . 10. The Many
Names of MoneyName That Currency 2 0 1 3 C e n g a g e L e a r n i
n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n
e d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t o a p
u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r
i n p a r t .10ChinaEnglandEuropean
UnionIndiaIranIsraelJapanMexicoSouth AfricaSouth
KoreaYuanPoundEuroRupeeRialShekelYenPesoRandWon 11. Market
Development Options 2 0 1 3 C e n g a g e L e a r n i n g . A l l R
i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i
e d o r d u p l i c a t e d , o rp o s t e d t o a p u b l i c l y
a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t
.11 12. Strategies for Reaching Global Markets 2 0 1 3 C e n g a g
e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t
b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp o s
t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n
w h o l e o r i n p a r t .12Foreign
Outsourcing/ContractManufacturingContracting with foreign suppliers
toproduce productsImportingBuying products that have beenproduced
in foreign nations 13. Seizing the Opportunity: Strategiesfor
Reaching Global Markets 2 0 1 3 C e n g a g e L e a r n i n g . A l
l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o
p i e d o r d u p l i c a t e d , o rp o s t e d t o a p u b l i c
l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r
t .13 ExportingSelling domestic products abroad LicensingAuthority
given for rights to produce/marketproduct and use
trademarks/patents FranchisingProviding the right to produce and
marketproducts under its operating requirements Direct
InvestmentFirms acquire businesses or develop newfacilities in
foreign countries Joint VenturesTwo or more companies joining
forces The Studio Dog/Photodisc/Getty Images Mystic Arabia / Alamy
14. Chrysler and Fiat 2 0 1 3 C e n g a g e L e a r n i n g . A l l
R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p
i e d o r d u p l i c a t e d , o rp o s t e d t o a p u b l i c l
y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t
.14Foreignacquisitionallows companiesto gain quickaccess into
newmarketsIn the wake of theGreat RecessionItalian carmaker
Fiatacquired struggling U.S.auto giant, Chrysler toleverage the
Americanmarket 15. Barriers to International Trade 2 0 1 3 C e n g
a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n
o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp
o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e ,
i n w h o l e o r i n p a r t .15 Sociocultural Differences
Economic Differences Political & Legal Differences MAO SIQIAN/
XINHUA/XINHUA PRESS/ CORBIS 16. Veggie Surprise, Anyone?McDonalds
India: PaneerSalsa Wrap: Cottage cheese withMexican-Cajun coating
Australia: Bacon and Egg Roll: rashers of qualitybacon and fried
egg Kumati: Veggie Surprise Burger United Kingdom: Five Toasted
Deli sandwichoptionsPizza Hut Japan: Crust stuffed with shrimp
nuggets andmayonnaise South Korea: Crust filled with sweet potato
mousse 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R
e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u
p l i c a t e d , o rp o s t e d t o a p u b l i c l y a c c e s s
i b l e w e b s i t e , i n w h o l e o r i n p a r t .16Joe
Raedle/Getty ImagesSource: McDonalds country/market sites,
http://www.mcdonalds .com./countries.html, accessed February 10,
2011 . 17. Barriers to International Trade:Economic Differences 2 0
1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e
d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t
e d , o rp o s t e d t o a p u b l i c l y a c c e s s i b l e w e
b s i t e , i n w h o l e o r i n p a r t .17 Exchange Rates
Population Per Capita Income Infrastructure Transportation
Communication Energy FinanceCan you profitably provideyour product
or service tomeet the needs of themarket? 18. Barriers to
International Trade:Sociocultural DifferencesSocial/cultural
differences canrapidly undermine businessrelationships 2 0 1 3 C e
n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a
y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o
rp o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t
e , i n w h o l e o r i n p a r t .18 Nonverbal Communication Forms
of Address Attitudes toward punctuality Religious Celebrations
Business Practice/Gifts 19. Barriers to International
Trade:Political and Legal Differences Political regimes differ
around the world Legal Differences Lack of Enforcement Bribery
Political Climate Stability Violence Piracy and intellectual
property is a problem inseveral foreign nations. 2 0 1 3 C e n g a
g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o
t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp o
s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i
n w h o l e o r i n p a r t .19 The Studio Dog/Photodisc/Getty
Images 20. Global Greening?The world community must take dramatic
steps to combat global warming. Change wont be easy and
coordination is vital The United Nations is sponsoring an
international Climate ChangeConference in Copenhagen.Consider these
questions about the conference:1. Did a treaty emerge? How many
nations signed? Did any of theparticipants surprise you? How?2. Do
you think the conferences and treaties will yield results? Why
orwhy not?3. What role did the United States play? Do you believe
that the role wasappropriate? Why or why not? 2 0 1 3 C e n g a g e
L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b
e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp o s t
e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w
h o l e o r i n p a r t .20 21. Protectionism 2 0 1 3 C e n g a g e
L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b
e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp o s t
e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w
h o l e o r i n p a r t .21Reasons to Create
TradeRestrictionsReasons to Eliminate TradeRestrictionsProtect
domestic industry Reduce prices and increasechoices for
consumersProtect domestic jobs in keyindustriesIncrease domestic
jobsRetaliate against countries whohave engaged in unfair
tradepracticesBuild exporting opportunitiesPressure other countries
Use world resources moreefficiently 22. International Trade
Restrictions 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h
t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o
r d u p l i c a t e d , o rp o s t e d t o a p u b l i c l y a c c
e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .22
Tariffs Quotas Voluntary Export Restrictions Embargo 23. Free
Trade: The Movement GainsMomentum 2 0 1 3 C e n g a g e L e a r n i
n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n
e d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t o a p
u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r
i n p a r t .23There has been a global move towardfree trade the
unrestrictedmovement of good and services acrossborders. 24. GATT
and the World Trade Organization(WTO) 2 0 1 3 C e n g a g e L e a r
n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a
n n e d , c o p i e d o r d u p l i c a t e d , o rp o s t e d t o
a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e
o r i n p a r t .24 General Agreement on Tariffs &Trade (GATT)
Established in 1948 125 Nations Slashed tariffs by about 30% World
Trade Organization (WTO) Promote International Trade Settle Trade
Disputes 25. GATT and the World Trade Organization(WTO) 2 0 1 3 C e
n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a
y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o
rp o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t
e , i n w h o l e o r i n p a r t .25 The World Bank 187 Member
Countries Reduce World Poverty in Developing World Influence Global
Economy Provide Financial Assistance The International MonetaryFund
Support Stable Exchange Rates Facilitate International Payments
Adopt Economic Policies Promote Trade Lends money to member
nationsAP Images/J. Scott Applewhite 26. Trading Blocs and Common
MarketsGroups of countries promoting the free flow of goods and
services 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s
R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d
u p l i c a t e d , o rp o s t e d t o a p u b l i c l y a c c e s
s i b l e w e b s i t e , i n w h o l e o r i n p a r t .26 The
North American Free Trade Agreement(NAFTA) The largest trading bloc
United States, Canada and Mexico Critics for job loss European
Union (EU) The largest common market 27 nations; combined GDP of
$15 Trillion Goal is to bolster Europes trade position 27. 3Looking
Back What opportunities exist in the world economy for businesses?
Why do nations trade? How do we measure trade? How do companies
reach global markets? What are the barriers to international trade?
What are the benefits and criticisms of the free trade movement? 2
0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v
e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a
t e d , o rp o s t e d t o a p u b l i c l y a c c e s s i b l e w
e b s i t e , i n w h o l e o r i n p a r t . 2 0 1 3 C e n g a g e
L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b
e s c a n n e d , c o p i e d o r d u p l i c a t e d , o rp o s t
e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w
h o l e o r i n p a r t .27
