Essential Standard1.00
Understand the role of business in
the global economy.
1
Objective 1.03
Understand business in the global
marketplace.
2
Topics
• Factors and regulations companies have to
consider when doing business in the global
market place
• Main entry modes for companies to enter
the global marketplace
• Main international trade organizations
3
Factors and regulations companies have to
consider when doing business in the
global market place
4
Domestic vs. International
Businesses
• What activities are included in domestic
business transactions? Where do they take
place?
• What activities are included international
business transactions? Where do they take
place?
5
Business Advantage Factors
• Absolute advantage exists when a country can
produce a good or service at a lower cost than
other countries.
• Comparative advantage is a situation in which a
country specializes in the production of a good or
service at which it is relatively more efficient.
• What are some examples of absolute and
comparative advantages?
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International Trade
•
•
•
•
From where do imports come?.
From where do exports come?
What are some examples of imports?
What are some examples of exports?
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Importing
Advantages and Disadvantages
• Advantages
–
–
–
–
Goods available for purchase.
Goods could have cost less since they were imported.
Goods may be a better quality since imported.
Goods imported and owned may provide satisfaction.
• Disadvantages
– Some goods would cost more without competition of
imported goods.
– Possibly goods may be unavailable.
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Exporting
Advantages and Disadvantage(s)
• Advantages
– Exporting creates jobs.
– Exporting provides access to goods usually
unavailable.
• Disadvantage(s)
– Jobs may depend on global business.
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Measuring of Trade Relations
• What is a way to measure trade relations?
• Why are measures of trade relations
completed?
• Foreign debt is the amount of money a
country owes to other countries.
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Measuring of Trade Relations
continued
Balance of trade is the difference between a
country’s total exports and total imports.
– If a country exports more than it imports, it has a
trade surplus. This is favorable.
– If a country imports more than it exports, it has a
trade deficit. This is unfavorable.
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Measuring of Trade Relations
continued
Balance of payments is the difference between
the amount of money that comes into a country
and the amount that goes out of it.
– If a country receives more money in a year than it
pays out, it has favorable balance.
– If a country sends more money out than it brings
in, it has an unfavorable balance.
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International Currency Exchange Rate
Main Factors
• The foreign exchange market is where banks
buy and sell different currencies.
• The exchange rate is the value of a currency
in one country when compared with the value
in another.
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International Currency Exchange Rate
Main Factors Continued
Main factors affecting currency exchange rates
are:
– Balance of payments
– Economic conditions
– Political stability
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International Business Environment
Factors
• What are the main
environmental issues that
could make a difference
when conducting business in
the global marketplace?
• How could these issues
impact businesses?
15
International Business Environment
Factors continued
Four main factors:
– Geography
– Cultural Influences
– Economic Development
– Political and Legal
Concerns
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International Business Environment
Factors continued
• What is included in a
country’s geography?
-----------------------------------• The geography of a
country could impact its
natural resources and
export and import of
resources.
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International Business Environment
Factors continued
• What main cultural factors
may Influence how business
is conducted in the global
marketplace?
------------------------------------• The accepted behavior,
customs and values of a
society could impact
business activities.
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International Business Environment
Factors Continued
• What key effects of a
country’s economics that
may influence conducting
business in a global
marketplace?
------------------------------------• A country’s economic
development impacts its
citizens standard of living
and business activities.
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International Business Environment
Factors continued
• What political and legal
concerns may influence
business activities in a
global marketplace?
-------------------------------• Political and legal
concerns influence
business activities in the
global marketplace.
20