The document outlines a lesson plan that discusses the global context of business, including the major world marketplaces, drivers of globalization, competitive advantages, trade balances, exchange rates, barriers to international trade, and factors to consider when deciding whether to engage in international business. Students are provided exercises to analyze different countries' economies and trade relationships.

1. Memoona Qadeer
Copyright ©2003 Prentice Hall, Inc.

2. Today’s Plan
 Let’s improve- quiz
 The company
 Lesson part 1
 Break
 Lesson part 1
 Let’s improve- exercise
 The company
 Foresee: Next class

4. Chapter 2
The Global Context of Business

5. Exercise
 Give me stories of different products and
marketing approaches in other countries, and
compare them in Palestine?
 What evidence have we seen in the last ten years
of growing international business partnership?
Trade agreements- global mergers- joint ventures-
licensing

6. “We are in the midst of a
great transition from narrow
nationalism to international
partnership.”
~ Lyndon Baines Johnson

7. Key Topics
 The rise of global business
 Major world marketplaces and Palestine trading
partners
 Influences on international business
 International business management
 The impact of differences among nations

8. The key drivers to globalization
Global
market
Drivers: Convergence
Similar customer needs,
Global customers, Transferable marketing
Trade policies, Technical Scale economies,
GovernmentStandards, host government, Global Sourcing efficiencies Cost
Influence policies Strategies Countries costs,
Advantages
High product development costs
Interdependence, Competitors global
High exports/imports,
Global
Competition

9. Globalization Is Gaining Speed
The world economy is
becoming a
single, interdependent
system
Export:
Domestic product sold abroad
Import:
Foreign product sold
domestically

10. Globalization Is Gaining Speed
 Example: Asian financial markets in the late 90s
directly affects stock markets worldwide.
 Discussion: what product from other countries do
you useconsume? Why have you chosen it?
Why not Palestinian product?

11. Categorizing Economies
High Income Countries:
Per capita income greater than $9,386
Middle Income Countries:
Per capita income between $765 and $9,386
Low Income Countries:
Per capita income of less than $765
Discussion: what countries fall into each category?

12. Major World Marketplaces
 North America NAFTA
 Europe EU
 Pacific Asia
 Do we have any economic
agreement with other
countries. What are they?

13. The North American Marketplace (NAFTA)
Canada
United States
Mexico
Copyright ©2003 Prentice Hall, Inc. 2 - 13

14. Europe and the Nations of the European Union
• Austria • Luxembourg • Portugal • Sweden
• Belgium • Netherlands • Spain • United Kingdom
• Denmark
• Finland
• France
• Germany
• Greece
• Ireland
• Italy
• Ireland
• Italy
Copyright ©2003 Prentice Hall, Inc. 2 - 14

15. The Nations of ASEAN
• Brunei
• Indonesia
• Malaysia
• Philippines
• Singapore
• Thailand
• Vietnam
Copyright ©2003 Prentice Hall, Inc. 2 - 15

16. Pacific Asia Represents
Enormous Business Potential
Projections for 2010 (in millions)
500
In less than a 450
decade, Asian 400 415 432
language 350
speakers on 300
the web will 250
far exceed 200
English 150
speakers 100
96
50
34
0
English Japanese Chinese Korean
Source: Time Global Business, Nov. 2001
2 - 16

17. Competitive Advantage
 Absolute Advantage:
when one country can produce a product cheaper andor higher quality than
any other country. Ex. OPEC
 Comparative Advantage:
when one country can produce certain goods or services more efficiently and
effectively than others. Ex. US software

18. Competitive advantages
 When competitive advantage is materialized?
When a firm earns persistently higher rate of profit
over its rivals.
 Determinants of profit level
1- Value of company products in customers’ eyes.
2- Company production cost.

19. Competitive advantage
 It can be created in certain industrial
field, through the adoption of low-cost-
differentiation strategy. M. Porter

20. National Competitive Advantage
 Factor conditions
 Demand conditions
 Related and supporting
industries
 Strategies, structures, an
d rivalries
 Qui. Evaluate Palestine?

21. Import/Export Balances
 Balance of Trade
 Trade Deficits
 Trade Surpluses
 Balance of Payments
The total flow of money into or out of an economy

22. Exchange Rates
Heavily Impact Global Trade
 When an economy’s currency is strong:
 Domestic companies find it harder to export
products
 Foreign companies find it easier to import products
 Domestic companies may move production to
cheaper sites in foreign countries
 Implications for balance of trade?

23. Exchange Rates
Heavily Impact Global Trade
 When an economy’s currency is weak:
 Domestic companies find it easier to export
products
 Foreign companies find it harder to import products
 Foreign companies may invest in production
facilities
 Implications for balance of trade?

24. The U.S. Economy Has a Growing Trade Deficit
U.S. Imports & Exports U.S. Trade Deficit
(in billions) (in billions)
1600 $400,000
1400 350,000
344,716
1200 300,000
1000 250,000
255,971
800
200,000
600
150,000
166,898
400
100,000
35,666
105,932
102,113
200
28,266
97,039
95,947
78,857
50,000
68,949
0
0
1990
1991
1992
1993
1994
1995
1996
1997
1999
2000
1998
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Imports Exports
Copyright ©2003 Prentice Hall, Inc. 2 - 24

25. Does It Make Sense to Go International?
Is there Can the
Is the foreign Does the
international product be
business firm have or
demand for YES modified to fit YES YES
climate suited can it get the
the firm’s a foreign
to imports? necessary
product? market?
skills and
NO NO NO knowledge
to do
business
NO abroad?
YES
Stay Domestic Go International
Copyright ©2003 Prentice Hall, Inc. 2 - 25

26. Levels of International Involvement
 Importer & Exporter
 International Firms
 Multinational Firms

27. International Organizational Structures
HIGH
INVOLVEMENT  Foreign Investment
 Strategic Alliances
 Branch Offices
 Licensing Arrangements
 Independent Agents
LOW

28. Barriers to International Trade
Legal & Political
Social & Cultural Differences
Differences Economic
Differences

29. Take Time to Learn the Culture Thoroughly!
Este es nuestro
nuevo auto: Ha, ha, ha, ha, h
el NOVA! a, ha!!!

30. The Customer’s Language
A Critical Business Success Factor
 In the U.S. alone, 18% of the population does not
speak English at home.
 Only 48% of the world’s Web users are native
English speakers.
 Consumers are four times more likely to buy a
product on the Internet if the website is in their
preferred language.
Source: Time Global Business, Nov. 2001

31. Economic Differences
To operate effectively in another
country, businesses must know when, and to
what extent, the government is involved in a
given industry.

32. Legal & Political Differences
 Quotas, Tariffs, & Subsidies
 Protectionism
 Local Content Laws
 Business Practice Laws
 Day to day operations
 Cartels
 Dumping

33. Definitions
 Quota: restriction on the number of certain type of
product that can be imported into a country.
 Embargo: complete ban on imports and
exports, imposed by a government for political
reasons.
 Tariff: tax levied on imported products.
 Subsidy: government payments to help a
domestic business compete with foreign firms.
 Protectionism: the practice of protecting domestic
business against foreign competition.

34. Chapter Review
 Discuss the rise of international business, describe
the major world marketplaces.
 Explain how competitive advantage, import-export
balances, exchange rates, and foreign competition
shape international business strategies.

35. Chapter Review
 Discuss what factors influence whether a
company should engage in international
business.
 Identify different levels of international
involvement and international organizational
structure.
 Describe key barriers to international trade.