Chapter 7.2 notes

The Main Idea – Chapter 7
This chapter discusses how business is conducted
7.1 discusses the trading of goods and services
between countries and how governments protect
their producers
7.2 describes the growing economic
interdependence among countries
- Explain how NAFTA has increased international trade
within North America
- Describe how managers decide how to get involved in
the global economy.
- Discuss how managers deal with the challenges they
face when working in a different culture.
Why do some people believe it is important
to “buy American”?
Rise of the Global Economy
Nike operates factories in Vietnam and
The Gap owns stores in Canada, France,
Germany, UK, and Japan
LG is headquarters are in S. Korea
Name some companies and where they are
Rise of the Global Economy
What main factors have
made the globe smaller?
-Communications tech.
-Political changes
-Trade restrictions being
Global economy
An economy in which
companies compete
actively with businesses
all over the world.
1. Improvements in Telecommunications
-Internet. Ever buy anything on the net?
-e-commerce- sales made over the WWW
-conference calls
-More airlines/flights
2. Political changes
-Hatin’ has lessened
-The rise in democracy in the world has made
it more easier to do business with other nations
3. Free Trade Areas
-Created to promote international trade and
limit protectionism
-Free trade area- a region which trade
restrictions are reduced or eliminated.
-Largest free trade area in the world is the
North American Free Trade Agreement
-Lame student video
pg. 165 – Doing Business Globally
Forms of International Operations
– Foreign Intermediary
– Licensing Agreement
– Strategic Alliance
– Multinational Corporation
Forms of International Operations
Foreign Intermediary- wholesaler or agent
who markets products for companies that
want to do business abroad
Forms of International Operations
Licensing agreement- permits one
company to sell another company’s products
abroad in return for a % of revenue.
Forms of International Operations
Strategic Alliance- pooling resources and
skills in order to achieve a common goal
with another company. In 1998:
Forms of International Operations
Multinational Corporations- companies
that do business in countries other than its