business

1. CHAPTER 3 Business in a
Borderless World
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2. Role of International Business
• Most of the world’s population and
two-thirds of its total purchasing
power are outside the U.S.
• Global marketing requires
balancing global brands with the
needs of local consumers
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3. Role of International Business
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4. Role of International Business
Exporting – the sale of goods
and services to foreign markets
2011 U.S. exports = $2.1 trillion+
Importing – the purchase of goods
and services from foreign markets
2011 U.S. imports = $2.6 trillion+
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5. Role of International Business
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6. International Trade Barriers
Completely free trade seldom exists, due to:
• Economic barriers
• Ethical, legal and political barriers
• Social and cultural barriers
• Technological barriers
AT&T has made inroads with
consumers who don’t want their
cell phones to stop working
when they go abroad
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7. Economic Barriers
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8. Economic Barriers
Level of development is determined in part by a country’s
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9. Economic Barriers
Another economic trade barrier is the
• Exchange rates vary daily and affect
the cost of imports and exports
• A government may intentionally alter
the value of its currency through fiscal
policy
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10. International Trade Barriers
When entering the international marketplace, companies
must contend with potentially complex relationships
Different laws of its own nation, international laws and
the laws of the nation with which its trading
Various trade restrictions
Changing political climates
Different ethical values
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11. Legal Barriers
A firm doing business abroad must understand and obey
the laws of the host country
Some countries have restrictions on how much local
currency can be taken out of its borders
Other countries may forbid foreigners from owning property
Some countries fail to honor U.S. laws and/or fail to enforce
their own laws
In some parts of the world, copyright and patent laws are
less strict than in the U.S.
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12. Tariffs and Trade Restrictions
• 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
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13. Tariff and Trade Restrictions
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14. Tariff and Trade Restrictions
Dumping can spark trade wars
The Obama administration imposed stiff
tariffs on Chinese-made tires, allegedly
dumped on the U.S. market
China retaliated by slapping
tariffs on U.S. chicken
products exported to China
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15. Political Barriers
Political considerations affect international business daily
 Seldom in writing & change rapidly
 Political unrest may create a hostile or even
dangerous environment for foreign business
 OPEC is an example of a cartel
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16. Social and Cultural Barriers
Research can help minimize the problems associated
with social and cultural differences
Differences in the spoken and written language
Appropriate body language, posture, facial expressions
and personal space may vary by nation
Family roles may differ in different societies
Other nations often have a different perception of time
National customs and holidays must be respected
Most nations use the metric system
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17. Technological Barriers
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18. Trade Agreements and Organizations
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19. Trade Agreements and Organizations
CA
NA
DA
ME
XICO
USA
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20. Trade Agreements and Organizations
While controversial, NAFTA has become a positive
factor for U.S. firms
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21. Trade Agreements and Alliances
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22. Trade Alliances and Organizations
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23. Getting Involved
Exporting and Importing
 Countertrade agreement is a foreign trade agreement that
involves bartering products for other products instead of
currency
 Export agents are middlemen that help companies by handling
their international transactions
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24. Getting Involved
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25. Getting Involved
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26. Getting Involved
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27. Getting Involved
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28. Getting Involved
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29. International Business Strategies
A plan used by international
companies that involves
customizing products,
promotion and distribution
according to cultural
technological, regional and
national differences
A strategy that involves
standardizing products
(promotion and distribution)
for the whole world as if it
were a single entity
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