Notesale: Turn your study into money

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International Business – The buying, selling, trading of goods and services across
national boundaries
 Most of the world’s population and two-thirds of its total purchasing power
are outside the U
...

 Global Marketing requires balancing global brands with the needs of local
consumers
Roles of International Business
 Absolute Advantage – A monopoly that exists when a country is the only
source of an item, the only producer of an item, or the most efficient
producer of an item
 Comparative Advantage – The basis of most international trade, when a
country specializes in products that it can supply more efficiently or at a
lower cost than it can produce other items
 Outsourcing – The transferring of manufacturing or other tasks – such as
data processing - to countries where labor and supplies are less expensive
...
1 trillion+
Importing – the purchase of goods and services from foreign markets
US imports = $2
...

Level of development is determined in part by a country’s
Infrastructure
 The physical facilities supporting a country’s economic activities, such as
railroads, highways, ports, airfields, utilities and power plants, schools,
hospitals, communication systems and commercial distribution systems

Another economic trade barrier is the
Exchange Rate – The ratio at which one nation’s currency can be exchanged for
another nation’s currency
 Exchange rates vary daily and affect the cost of imports an exports
 A government may intentionally alter the value of its currency through fiscal
policy
Import Tariff – A tax levied by a nation on goods imported into the country
 A fixed tariff is a specific amount of money levied on each unit of product
brought into the country
 Ad valorem tariff is based on the value of the item
Exchange controls – Regulations that restrict the amount of currency that can be
bought or sold
Quota – restriction on the number of units of a particular product that can be
imported into a country
Embargo – a prohibition on trade for a particular product
Dumping – the act of a country or business selling products at less than what it costs
to produce them
Dumping can spark trade wars
The Obama administration imposed stiff tariffs on Chinese-made tires,
allegedly dumped on the US market
China retaliated by slapping tariffs on US chicken
Political considerations affect international business daily
 Seldom in writing and change rapidly
 Political unrest may create a hostile or even dangerous environment
for foreign business
Cartel – A group of firms or nations that agrees to act as a monopoly and not
compete with each other, in order to generate a competitive advantage in world
markets
- OPEC is an example of a cartel
Trade agreements and Organizations
General Agreement on Tariffs and Trade (GATT)
- Trade agreement signed by 23 nations in 1947, provided a forum for
tariff negotiations and a place where international trade problems cou ld
be discussed and resolved
- World Trade Organization - International organization dealing with the
rules of trade between nations, evolved with GATT

North American Free Trade Agreement (NAFTA)
 Agreement that eliminates most tariffs and trade restrictions on
agricultural and manufactured products to encourage trade among
Canada, the U
...
and Mexico
Effective January 1, 1994 – Easier to invest in Mexico and Canada – Protects
intellectual property – Expands trade by requiring equal treatment – Simplifies
country-of-origin rules

World Bank
 An organization established in 1946 by the industrialized nations to
loan money to underdeveloped and developing countries
International Monetary Fund
 Organization established in 1947 to promote trade among member
nations by eliminating trade barriers and fostering financial
cooperation

*Franchising
 A form of licensing in which a company – the franchiser – agrees to
provide a franchisee a name, logo, methods of operation, advertising,
products and other elements associated with a franchiser’s business,
in return for a financial commitment and the agreement to conduct
business in accord with the franchiser’s standard of operation
Strategic Alliance
 A partnership formed to create competitive advantage on a
worldwide basis
 Used when competition is fierce and costs are high
 Becoming predominant in the automobile and computer industries
Direct investment
 The ownership of overseas facilities
 For companies who want more control and are willing to invest considerable
resources
 May involve new facilities or the purchase of an existing operation



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