CHAPTER 10

INTERNATIONAL BUSINESS

TRADING AMONG NATIONS

• INTERNATIONAL BUSINESS--INCLUDES ALL BUSINESS ACTIVITIES NECESSARY FOR CREATING, SHIPPING, AND SELLING GOODS AND SERVICES ACROSS BORDERS

• COMPARATIVE ADVANTAGES--SOME COUNTRIES CAN PRODUCE BETTER THAN OTHER COUNTRIES

IMPORTS

• THE THINGS WE BUY FROM OTHER COUNTRIES

• HOW WOULD WE BE ABLE TO EAT BANANAS?

• REDUCE COSTS OF SOME GOODS OR SIMPLY MAKE THEM AVAILABLE

• PERCEIVED QUALITY OF IMPORTED GOODS (MERCEDES BENZ)

EXPORTS• GOODS AND SERVICES WE SELL

TO OTHER COUNTRIES• OUR EXPORTS BENEFIT OTHER

COUNTRIES• 1 OUT OF 6 JOBS IN U.S. DEPENDS

ON INTERNATIONAL BUSINESS

INTERNATIONAL CURRENCY

• FOREIGN EXCHANGE MARKET--CONSISTS OF BANKS BUYNG AND SELLING DIFFERENT CURRENCIES

• EXHANGE RATE--VALUE OF CURRENCY IN ONE COUNTRY COMPARED TO A VALUE OF ANOTHER; AFFECTED BY SUPPLY AND DEMAND

BARRIERS TO INTERNATIONAL TRADE

• QUOTAS--SETS A LIMIT ON THE QUANTITY OF A PRODUCT THAT MAY BE IMPORTED OR EXPORTED (OPEC)

• TARIFFS--TAX THAT A GOVERNMENT PLACES ON CERTAIN IMPORTS, MAKES PRODUCT MORE EXPENSIVE

• EMBARGOES--STOP EXPORT OR IMPORT OF PRODUCT(S) COMPLETELY

MEASURING TRADE BETWEEN NATIONS

• BALANCE OF TRADE--DIFFERENCE BETWEEN TOTAL EXPORTS AND TOTAL IMPORTS– TRADE SURPLUS--FAVORABLE,

EXPORTS MORE THAN IMPORTS– TRADE DEFICIT--UNFAVORABLE,

IMPORTS GREATER THAN EXPORTS• BALANCE OF PAYMENTS--DIFF.

BETWEEN MONEY COMING IN AND MONEY COMING OUT

GLOBAL BUSINESS ORGANIZATIONS

• MULTINATIONAL COMPANY--ORG. THAT DOES BUSINESS WORLDWIDE

• GLOBAL STRATEGY--USES STANDARDIZED PRODUCT AND MARKETING STRATEGY WORLDWIDE

• MULTINATIONAL STRATEGY--EACH NATIONAL MARKET IS TREATED DIFFERENTLY

ADVANTAGES AND DISADVANTAGES OF

INTERNATIONAL BUSINESS• ADVANTAGES

– ABUNDANCE OF GOODS

– LOWER PRICES– INCREASE CHOICE– EXPAND CAREER

OPPORTUNITIES– PROMOTES

MUTUAL UNDERSTANDING

•DISADVANTAGES-COMPETITION COULD LOWER DEMAND FOR OUR GOODS-SOME WORKERS COULD LOSE JOBS-FOREIGN COMPETITION BETTER THAN US COMPANIES

WEBSITES

• www.ita.doc.gov/TD/Industry/OTEA/state

• www.census.gov/ftp/pub/foreign-trade/www

• www.census.gov/foreign-trade/balance/index.html#I

• http://globaledge.msu.edu/ibrd/• www.sbaonline.sba.gov/OIT/info/

Guide-To-Exporting