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4. Global Markets

4. Global Markets. The Basis For International Business. Encompasses all exchanges across international boundaries Steady increase in trade since WWII For U.S., international business means: New markets New sources of inexpensive labor, raw materials, etc.

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4. Global Markets

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  1. 4. Global Markets

  2. The BasisFor International Business • Encompasses all exchanges across international boundaries • Steady increase in trade since WWII • For U.S., international business means: • New markets • New sources of inexpensive labor, raw materials, etc. • For foreign firms, means piece of large, lucrative U.S. market

  3. Forms of Trade Advantage • Absolute advantage • Ability to produce specific product more efficiently than any other nation • Comparative advantage • The ability to produce specific product more efficiently than any other product

  4. Exporting & Importing • Exporting • Importing • Balance of trade • Trade deficit • Balance of payments

  5. RestrictionsOn International Business • Trade restrictions • Tariffs • Dumping • Nontariff barriers • Import quotas • Embargoes • Foreign-exchange controls • Societal, economic & regulatory differences • Language, values, infrastructure, currency shifts, political/legal

  6. Reasons for Trade Restrictions • Equalization of balance of payments • Protection of: • New/weak industries • National security • Public health • Jobs • Retaliation

  7. The Extent of International Business • Trend toward elimination of trade barriers • General Agreement on Tariffs & Trade (Monitored by World Trade Organization) • The Kennedy Round (1964-1967) • The Tokyo Round (1973-1979) • The Uruguay Round (1986-1993) • The Doha Round (2001-Ongoing)

  8. The Extent of International Business (Cont.) • International Economic Communities • European Union (EU) • European Economic Area (EEA) • European Monetary Union (EMU) • North American Free Trade Agreement (NAFTA) • Association of Southeast Asian Nations (ASEAN) • Pacific Rim • Commonwealth of Independent States (CIS) • Caribbean Basin Initiative (CBI) • Organization of Petroleum Exporting Countries (OPEC) • Organization for Economic Cooperation & Development (OECD)

  9. Methods of EnteringInternational Business • Contractual agreements • Licensing, franchising, subcontracting • Exporting (indirect & direct) & importing • Through an export-import merchant or agent • Through export trading or management companies • Through offset agreements • Through establishment of sales offices or branches • Joint ventures & strategic alliances • Totally owned facilities (direct investment) • Countertrade • Multinational corporations

  10. Strategies forInternational Business • Global business strategy • Standardization strategy • Multidomestic business strategy • Adaptation strategy

  11. Sources of Export Assistance • Some export assistance programs include: • U.S. Export Assistance Centers • International Trade Administration • U.S. and Foreign Commercial Services • Export Legal Assistance Network • Advocacy Center • American Business Center • The Business Service for the Newly Independent States • Eastern Europe Business Information Center • National Trade Data bank

  12. Financing International Business • Export-Import Bank of the United States (Eximbank) • Multilateral Development Banks (MDB) • World Bank • Inter-American Development Bank (IDB) • African Development Bank (AFDB) • European Bank for Reconstruction and Development (EBRD) • International Monetary Fund (IMF)

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