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Understanding the International Business Environment and Trade Barriers

This article explores the components of the international business environment, highlighting the significance of geography, cultural influences, economic development, and political-legal concerns. It identifies formal trade barriers such as quotas, tariffs, and embargoes while discussing measures to encourage international trade, including free-trade zones, free-trade agreements, and common markets. These elements are crucial for fostering global trade relations and enhancing economic cooperation among countries.

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Understanding the International Business Environment and Trade Barriers

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  1. 3-2 The Global Marketplace Goals Describe the components of the international business environment. Identify examples of formal trade barriers. Explain actions to encourage international trade.

  2. Chapter 3 Key Terms • infrastructure • trade barrier • quota • tariff • embargo

  3. Chapter 3 INTERNATIONAL BUSINESS ENVIRONMENT • Geography • Cultural influences • Economic development • Literacy level • Technology • Agricultural dependency • Political and legal concerns

  4. Chapter 3 • location • climate • terrain • waterways • natural resources • technology • education • inflation • exchange rate • infrastructure GEOGRAPHY ECONOMICS INTERNATIONAL BUSINESS ENVIRONMENT • language • family • religion • customs • traditions • food CULTURE • government system • political stability • trade barriers • business regulations POLITICAL–LEGAL FACTORS Elements of International Business Environment

  5. Checkpoint >> List the four main elements of the international business environment. Chapter 3 Answer • geography • cultural influences • economic development • political and legal concerns

  6. Chapter 3 INTERNATIONAL TRADE BARRIERS • Quotas • Tariffs • Embargoes

  7. Chapter 3 QUOTAS Reasons for quotas • To keep supply low and prices the same • To express displeasure at the policies of the importing country • To protect one of a country’s industries from too much competition form abroad

  8. Chapter 3 TARIFFS Reasons for tariffs • To set amount per pound, gallon, or other unit • To set the value of a good

  9. Chapter 3 EMBARGOES Reasons for embargoes • To protect a country’s industries from international competition more than the quota or tariff will achieve • To prevent sensitive products from falling into the hands of unfriendly groups or nations

  10. Checkpoint >> What are three formal trade barriers? Chapter 3 Answer • quotas • tariff s • embargoes

  11. Chapter 3 ENCOURAGING INTERNATIONAL TRADE • Free-trade zones • Free-trade agreements • Common markets

  12. Chapter 3 FREE-TRADE ZONES • Used to promote international business in a selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing • Usually located around a seaport of airport

  13. Chapter 3 FREE-TRADE AGREEMENTS • Member countries agree to remove duties and trade barriers on products traded among them • Results in increased trade between members

  14. Chapter 3 COMMON MARKETS • Allows companies to invest freely in each member’s country • Allows workers to move freely across borders • Examples • European Union (EU) • Latin American Integration Association (LAIA)

  15. Checkpoint >> What actions could be taken to encourage international trade? Chapter 3 Answer • Actions that could be taken to encourage international trade include free-trade zones, free-trade agreements, and common markets.

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