exports domestically produced goods and services sold in markets in other countries imports...
TRANSCRIPT
• Exports
• Domestically produced goods and services sold in markets in other countries
• Imports
• Foreign-made products and services purchased by domestic consumers
WHY NATIONS TRADE• Boosts economic growth by providing access to new markets and needed resources
• More efficient production systems
• Less reliance on economies of home nations
International Sources of Factors of Production
• Decisions to operate abroad depend on a variety of factors.
• Allows a company to spread risk throughout nations in different stages of the business cycle or development
Size of the International Marketplace
• World population = 7 billion
• One in five people live in relatively well-developed countries.
• Huge populations of developing nations can be lucrative markets.
Absolute and Comparative Advantage
• Absolute advantage
• Comparative advantage
MEASURING TRADE BETWEEN NATIONS
• Balance of trade
• Difference between a nation’s imports and exports
• Balance of payments
• Overall flow of money into or out of a country
Major U.S. Exports and Imports
• U.S. leads world, exports and imports annually total $3 trillion
• U.S. imports more goods than exports; exports more services than imports.
Exchange Rates
• Exchange rate
• Value of one nation’s currency relative to the currencies of other nations
• Rates can quickly create or wipe out competitive advantage.
• Foreign currency market
BARRIERS TO INTERNATIONAL TRADE
Social and Cultural Differences• Language, values, and religious attitudes
Economic Differences• Infrastructure, currency conversion, and shifts
Political and Legal Differences• Political climate, legal environment, international regulations
Types of Trade Restrictions• Tariffs
• Nontariff barriers
REDUCING BARRIERS TO INTERNATIONAL TRADE
Organizations Promoting International Trade• General Agreement on Tariffs and Trade (GATT)
• Sponsored negotiations to reduce worldwide barriers to trade
• World Trade Organization
• Monitors GATT agreements
• World Bank
• Lends money to less-developed and developing countries
• International Monetary Fund
• Promotes trade through financial cooperation
International Economic Communities
• Reduce trade barriers and promote regional economic cooperation
NAFTA (1994)
• United States, Canada, Mexico
CAFTA (2005)
• United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua
European Union
• Best-known example of a common market
GOING GLOBAL
Levels of Involvement
• Importers and exporters
• Countertrade
• Contractual agreements
• Franchising
• Offshoring
• International direct investment
• Multinational corporation
DEVELOPING A STRATEGY FOR INTERNATIONAL BUSINESS
Global Business Strategies• Sell same product in essentially the same manner throughout the world
Multidomestic Business Strategies• Develops products and marketing strategies for particular national markets