International Environment of Business

1. International Environment of Business By: Christina Harrison

2. Tutorial Objectives Define international business Distinguish between the different forms through which international business in conducted. Identity common barriers to international business Source: E., L., and Burrow, 84

3. What is International Business? Why is it Important? • Allows countries to obtain goods and services it cannot provide itself • Keeps costs down • Creates more competition • Allows business to expand Source: E., L., and Burrow, 89 Business activities that happen between 2 or more countries.

4. Forms of International Business Exporting When a country sells its goods or services to another country Importing When a country buys goods or services from another country International Licensing When one company allows a company in another country to make and sell products according to certain specifications. Source: E., L., and Burrow, 85

5. Forms of International Trade Cont. Joint Ventures When two or more firms share the cost of doing business and also share the profits. Wholly-owned Subsidiary When a firm sets up a business abroad without any partners. Strategic Alliance Firms agree to cooperate on certain aspects of business while remaining competitors on other aspects. Source: E., L., and Burrow, 86

6. The Top Ten Countries the US trade with in March 2011: Source: Us Census Bureau • http://www.census.gov/foreign-trade/top/dst/current/balance.html

7. Review Time New Mexico Michigan Mexico Alaska Which of the four places would a Texas based company have to trade with another company in order for it to be considered international business?

8. Correct! Click here for the next question Mexico is not part of the United States; therefore, 2 countries are doing business with one another.

9. No. Try Again! Try Again! Michigan is a state in the United States. International business requires 2 countries trading.

10. Sorry! Try Again Try Again New Mexico is located in the United States. International business requires at least 2 countries to trade.

11. Try Again Try Again! Alaska is located in the United States. International business requires at least 2 countries

12. Review Time! International Licensing Exporting Importing Wholly-owned subsidiary If an American pharmaceutical company allows a German firm to make and sell a medicine the American company has invented and the American company receives loyalties from the German company, what form of trade is being conducted?

13. Correct! Click here to learn about barriers to international trade. International licensing allows companies to sell products to certain specifications and receive loyalties in return.

14. Try Again! Try Again Exporting is selling a good or service to another country.

15. Sorry! Try Again Try Again Importing is buying goods or services from another country.

16. Sorry! Try Again A wholly-owned subsidiary is when a firm sets up abroad without any partners.

17. Barriers to International Trade Government Policies Currency Values Cultural Differences Next

18. Government Policies Tariffs Taxes on foreign goods to protect domestic industries and to earn revenue. Dumping The practice of selling goods in a foreign market at a price that is below cost or below what it charges in its home country. Quota A limit on the quantity or value of units permitted to enter a country. Source: E., L., and Burrow, 91

19. Government Policies Cont. Embargo Government bars companies from doing business with particular countries. Sanctions A milder form of embargo where specific business ties with a foreign country are banned Source: E., L., and Burrow, 92

20. Currency Values Exchange Rate The value of one country’s currency expressed in the currency of another country. IF: 1American dollar = 125 Japanese yen Camera in Japan sells for 12,500 yen = $100 (12,500/125) BUT: If the exchange rate falls to 1 American dollar = 100 Japanese yen THEN: Camera would cost $125 (12,500/100) Source: E., L., and Burrow, 92-93

21. Review Time! Dumping Embargo Tariff Sanction The United States places a 5% tax on all textiles entering the country from Thailand. What type of barrier is this called?

22. Sorry. Try Again Try Again! Dumping is the practice of selling goods in a foreign market at a price that is below cost or below what it charges in its home country.

23. Oops. Try Again Try Again! An embargo is when a country bars companies from doing business with another country.

24. Correct! Click here to learn about cultural differences A tariff is placing a tax on incoming goods and services.

25. No. Try Again Try Again! Sanctions are restrictions against specific products.

26. Cultural Differences Culture Customs, beliefs, values and patters of behavior of the people of a country or group. Language, religion, attitudes toward work, authority, and family. Courtship, etiquette, gestures, and joking Source: E., L., and Burrow, 93

27. Cultural Differences Low Context Culture A person is expected to come to the point directly and not beat around the bush High Context Culture Communication tends to occur through non-verbal signs and indirect suggestions Source:E., L., and Burrow, 94 Photos: Rumsey, D

28. Business in China Click video to learn about business in China. Source: InBusinessTV

29. Business in India Click video to learn about business in India. Source: Arjay

30. Business in Germany Click video to learn about business in Germany. Source:Howcast

31. Business in the Middle East Click video to learn about business in the Middle East. Source: Nettresults

32. Review Time! YES NO The United States is considered a low context culture because we use direct and straight forward communication.

33. Try Again. Try Again! In high context cultures communication tends to occur through non-verbal signs and indirect suggestions and in the United Stated communication tends to be very direct.

34. Correct! Next Question A person is expected to come to the point directly and not beat around the bush in a low context culture.

35. Review Time! Germany China Middle East India In which country can you expect to alter contacts throughout negotiations?

36. Try Again Try Again! When conducting business in Germany, they prefer to write out all of the specifications.

37. Correct Sources When doing business in China, they look at the contract as a start of a partnership. You can expect to make many alterations to the contract as you conduct business in China.

38. Try Again Try Again Written agreements are extremely important in the Middle East and it will not be signed until all aspects have been reviewed and the business partners are satisfied.

39. Try Again Try Again Written agreements in India are expected.

40. Sources Start Over Photos Photo Attribution: Original image: “The American Continent” http://www.davidrumsey.com/maps1133.html by: David Rumsey Released under an Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0 Photo Attribution: Original Image: Map of Asia By: David Rumsey http://www.davidrumsey.com/maps5990.html Released under and Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0 Videos “Indian social etiquette: Business and dining”. YouTube.com. 1 Feb 2010. Arjay11201988. 9 Jun 2011. <http://www.youtube.com/watch?v=xQjTc6-oLuU&feature=related> “Chinese business culture: Business in China required patience”. YouTube.com. 20 Mar 2008. InBusinessTV. 9 June 2011. < http://www.youtube.com/watch?v=3743zVOjkME? “10 tips on Arab culture for successful business in the middle east”. YouTube.com. 20 Aug 2010. Nettresults. 9 Jun 2011. <http://www.youtube.com/watch?v=U9XoD9V9Bvg&feature=related> “How to follow proper business etiquette in Germany”. YouTube.com. 20 Mar 2011. Howcast. 9 Jun 2011. <http://www.youtube.com/watch?v=2WS-Ke0hOX8 > Text Citation E., Kenneth, James L., and Jim Burrow. Business Principles and Management. 11. South-Western Pub, 2003. 84-103. Print. "U.S. Census Bureau." Top Ten Countries with which the U.S. Trades: For the month of March 2011. N.p., 08 Jun 2011. Web. 8 Jun 2011. <http://www.census.gov/foreign-trade/top/dst/current/balance.html >.