Transcript International Business

Principles of Business, Marketing, and
Finance
Lesson One
Business in a Global Society
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International Business
• All business activities needed to:
– Create
– Ship
– Sell
• Goods and services across national
borders.
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2
International Business
• All activities needed to create, ship, and sell
goods and services across national borders
• Also referred to as global business, international
trade, and foreign trade
• Importance of international business
–
–
–
–
Source of raw materials
Supplier of foreign products
New market and investment opportunities
Improved political relations
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2
Other Names for International
Global business
International Trade
Foreign Trade
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3
Importance of International
Business
• Global Opportunities
• Exports- goods and services one country sells to
another country
-meet Consumer Demands
• Imports- goods and services one country buys from
another country
-Materials and Parts are Needed from Other
Countries
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4
Domestic Business
• Business Within One
Country
• Making, Buying, Selling
Goods and Services within
One Country
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5
Fundamentals of International
Trade
• Trade Barriers are restrictions that reduce free
trade among countries.
• Protectionism - limiting trade with other countries to
protect business at home
• Tariff - tax placed on imported products to make
them more expensive than domestic products
• Quota - limit placed on the quantities of a product
that can be imported
• Embargo – a ban on the import or export of a
product
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7
International Business
Environment
• Geographic Conditions
–
–
–
–
Climate
Terrain, seaways
Natural resources
Agricultural products
• Economic Conditions
– Type of economic system
– Level of education
– Types of industries
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8
International Business
Environment
• Cultural and Social Factors
–
–
–
–
–
Language
Education
Religion
Values, customs
Social relationships
• Political and Legal Factors
– Type of government
– Political stability
– Government policies toward business
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8
Resources for a Country
Human
Natural
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10
Global Marketplace
• Multinational Corporation
– conducts business in many countries.
– has facilities and offices in many countries.
– works like a shopping mall or a supermarket.
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9
Currency
• Exchange Rate
– Price at which one currency can buy
another currency
– Exchange rates change daily
– Currency rate depends on how many
other countries want to buy the
country’s products
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12
Different Exchange Rate Scenarios
• Favorable
-when the value of a country’s currency goes up
compared to another country’s currency
• Unfavorable
-when the value of a country’s currency goes down
compared to another country’s currency
• Countries lower the value of the currency to
increase business
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13
Balance of Trade
• Balance of Trade
– Difference in value between how
much a country imports and how
much it exports.
• Trade Surplus
-more exports than imports
• Trade Deficit
-more imports than exports
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14
Gross Domestic Product
(or GDP)
• The value of all final goods and services
produced within a nation in a given year. A
nation's GDP at purchasing power parity (PPP)
exchange rates is the sum value of all goods
and services produced in the country valued at
prices in the United States
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14
Advantage of International
Business
• Consumer-has more
choices
• Citizen-has increased
awareness of the
world
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16
Global Dependency
• A condition that exists when items
consumers want and need are created in
other countries.
Quick Quiz
1. Exports are:
A. Goods and services one country buys from another country
(example: The U.S. _________ a lot of their electronics from China)
B. Goods and services one country sells to another country (example:
China _____________ a lot of their electronics to the U.S.)
2. International Business is:
A. Business within one country
B. All activities needed to create, ship and sell goods and services
across international borders.
3. Imports are:
A. Goods and services one country buys from another country
(example: The U.S. _________ a lot of their electronics from China)
B. Goods and services one country sells to another country (example:
China _____________ a lot of their electronics to the U.S.)
Quick Quiz
4. Trade barriers are:
A. A tax placed on imported products to make them more expensive
than domestic products.
B. Restrictions that reduce free trade among countries.
5. A Quota is:
A. A limit placed on the quantities of a product that can be imported.
B. A ban on the import or export of a product.
6. A geographic condition in the international business environment is:
A. Terrain, seaways
B. Religion
Quick Quiz
7. The exchange rate is:
A. More imports than exports.
B. Price at which one country’s currency can buy another country’s
currency.
8. Trade Surplus occurs when:
A. A country has more imports than exports.
B. A country has more exports than imports.
9. An examples of a global dependency the United States has to another
country is:
A. Beef
B. Oil
10. GDP stands for:
A. Gross Domestic Product
B. Great Drilling Prospects