International Business

Ch 1 International Business ➲ International Transactions - export-import trade, direct foreign investment - wholly owned subsidiaries, joint ventures; licensing, franchising, outsourcing, and management contracts. ➲ More than one set of environmental variables. ➲ Interactions between countries - Trade and foreign policies, Tariffs and other barriers, and Exchange rates. ➲ Variables which are Especially Important- Infrastructure, Market structure, and Socio/cultural variables.

The Global Business Environment ➲ Collapse of communist economies. ➲ Economic power of western nations. ➲ Rise of newly industrialized nations. ➲ Free market economies. ➲ Belief in open markets, trade and foreign investments as the road to economic development.

The Global Business Environment ➲ Trade Agreements and stabilization of trade policies*. ➲ Regional trade blocks. ➲ Free Market Economies*. ➲ Measures to facilitate trade. ➲ Globalization of Markets* ➲ Big Emerging Markets* ➲ The internet* * (see slides)

The Global Bus. Env. - Free Market Economies ➲ Privatization and deregulation. ➲ Especially in financial services, transportation and communications. ➲ Lower barriers to trade.

The Global Bus. Env. Trade Agreements ➲ World Trade Organization (W.T.O) ➲ North American free Trade Area (N.A.F.T.A) ➲ European Union (E.U) ➲ A.S.E.A.N. Free Trade Area (A.F.T.A.) ➲ Southern Common Market (Mercosur)

➲ Asia-Pacific Economic Cooperation (A.P.E.C)

World Trade Organization ➲ Created at the conclusion of the last G.A.T.T. agreement. ➲ 149 countries (as of December 2005)

➲ Functions: • Administering WTO trade agreements (e.g.,GATT, GATS, TRIPS) • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations 

➲ WTO | About the organization

North American Free Trade Agreement – NAFTA GNP: $10.8 trillion; 406 million people

03/09/98

Copyright  1997 by Houghton Mifflin Company. All rights reserved.

European Union GNP $9 trillion; 386 million people ➲ ➲ ➲ ➲ ➲ ➲ ➲ ➲

Belgium Denmark France Germany Greece Ireland Italy Luxembour g

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Netherlands Portugal Spain U.K. Austria Finland Sweden

2004 – Czech Republic Cyprus, Estonia, Hungary, Poland, Slovenia, Bulgaria, Latvia, Lithuania, Malta, Romania, Slovakia.

ASEAN/ A.F.T.A. ASEAN ❚

Brunei

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Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

ASEAN Free Trade Area GNP: 546 Billion: 512 million People

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Brunei Laos Myanmar Malaysia Indonesia The Philippines Singapore Thailand

A.F.T.A. M-6 CHINA BHU.

INDIA BNGL.

MYANMAR Rangoon

Hamol Halphong

LAOS

Vietlane

THAILAND Bangkok

VIETNAM

TAIWAN Hong Kong Manila

CAMBODIA

Phnom Peih

PHILIPPINES

Ho Chi Minh city

BRUNEI MALAYSIA

Kuala Lumpur Medan Palembang

SINGAPORE INDONESIA PAPU NEW GUINEA

Jakarta Sematany Bandung Surabaya

AUSTRALIA

Southern Cone Common Market (Mercosur) GNP: $1.3 trillion; 220 million people ●

Argentina

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Bolivia

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Brazil

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Chile

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Paraguay

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Uruguay

Mercosur

APEC - Asia Pacific Economic Cooperation ➲ Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, The Philippines, Papua New Guinea, Singapore, Taiwan, Thailand and the U.S. ➲ Forum for promoting trade liberalization and economic cooperation

The Global Bus. Env. Globalization of Markets ➲ Global linkages - trade, financial markets, tech., comm. & transportation, etc. ➲ Global Competition. ➲ Global market segments. ➲ Mass Marketing and Global Strategies. ➲ Restructuring of Organizations ➲ Mergers, consolidations, centralization, global production strategies, global supply & R&D arrangements, etc.

The Global Bus. Env. - Big Emerging Markets. ➲Asia - ASEAN, CEA, India, South Korea. ➲Latin America - Mexico, Argentina, Brazil. ➲Africa - South Africa. ➲Europe - Poland, Turkey

The Global Bus. Env. Internet ➲Emerging as a major international business tool for - Sales (both business-to-business and consumer), research, advertising, and communications. ➲Problems with govt. regulations, tariffs, and taxation.

Reasons for Expanding into International Markets Domestic Market Saturated Increase market size and extend product life cycle Enhance your return on invested capital Enhance location advantages for suppliers or customers  Higher Sales, Economies of Scale, Risk Diversification, transfer of knowhow, global brands etc.    

 Growth Opportunities  Globalization of Market