Chapter 2 - Global Business.powerpointttt
AnhPhng503120
37 views
72 slides
Oct 08, 2024
Slide 1 of 72
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
About This Presentation
Chapter 2 - Global Business.powerpointttt
Slide Content
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 4
GLOBAL BUSINESS
CHAPTER 4
GLOBAL BUSINESS
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LEARNING OBJECTIVES
4-1Explain the economic basis for international business.
4-2Explore the methods by which a firm can organize for and enter
into international markets.
4-3Discuss the restrictions nations place on international trade, the
objectives of these restrictions, and their results.
4-4Outline the extent of international business and the economic
outlook for trade.
4-5Discuss international trade agreements and international
economic organizations working to foster trade.
4-6Describe the various sources of export assistance.
4-7Identify the institutions that help firms and nations finance
international business.
LEARNING OBJECTIVES
4-1Explain the economic basis for international business.
4-2Explore the methods by which a firm can organize for and enter
into international markets.
4-3Discuss the restrictions nations place on international trade, the
objectives of these restrictions, and their results.
4-4Outline the extent of international business and the economic
outlook for trade.
4-5Discuss international trade agreements and international
economic organizations working to foster trade.
4-6Describe the various sources of export assistance.
4-7Identify the institutions that help firms and nations finance
international business.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Basis for International Business
▪International business – all business activities
that involve exchanges across national
boundaries
▪A firm is engaged in international business when:
✔buys some portion of its input from an
organization located in a foreign country
✔or sells some portion of its output to an
organization located in a foreign country
The Basis for International Business
▪International business – all business activities
that involve exchanges across national
boundaries
▪A firm is engaged in international business when:
✔buys some portion of its input from an
organization located in a foreign country
✔or sells some portion of its output to an
organization located in a foreign country
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Absolute and
Comparative Advantage
▪Absolute advantage – the ability to produce a
specific product more efficiently than any other
nation
▪Comparative advantage – the ability to produce
a specific product more efficiently than any other
product
Absolute and
Comparative Advantage
▪Absolute advantage – the ability to produce a
specific product more efficiently than any other
nation
▪Comparative advantage – the ability to produce
a specific product more efficiently than any other
product
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Absolute and
Comparative Advantage
▪For example: imagine that you are the president
of a successful manufacturing firm and that you
can accurately type 90 words per minute. Your
assistant can type 80 words per minute but
would run the business poorly.
⇒Who are the person that has an absolute
advantage?
⇒Who are the person that has a comparative
advantage in managing and typing?
Absolute and
Comparative Advantage
▪For example: imagine that you are the president
of a successful manufacturing firm and that you
can accurately type 90 words per minute. Your
assistant can type 80 words per minute but
would run the business poorly.
⇒Who are the person that has an absolute
advantage?
⇒Who are the person that has a comparative
advantage in managing and typing?
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Absolute and
Comparative Advantage
▪You have an absolute advantage over your
assistant in both typing and managing. However,
you cannot afford to type your own letters
because your time is better spent in managing
the business. That is, you have a comparative
advantage in managing.
▪Your assistant has a comparative advantage in
typing because he or she can do that better than
managing the business. Thus, you spend your
time managing, and you leave the typing to your
assistant.
Absolute and
Comparative Advantage
▪You have an absolute advantage over your
assistant in both typing and managing. However,
you cannot afford to type your own letters
because your time is better spent in managing
the business. That is, you have a comparative
advantage in managing.
▪Your assistant has a comparative advantage in
typing because he or she can do that better than
managing the business. Thus, you spend your
time managing, and you leave the typing to your
assistant.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Absolute and
Comparative Advantage
▪Goods and services are produced more
efficiently when each country specializes in the
products for which it has a comparative
advantage.
▪Every country has a comparative advantage in
some product.
Absolute and
Comparative Advantage
▪Goods and services are produced more
efficiently when each country specializes in the
products for which it has a comparative
advantage.
▪Every country has a comparative advantage in
some product.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting and Importing
▪Suppose that the United States specializes in
producing corn. It then will produce a surplus of
corn, but perhaps it will have a shortage of wine.
France, on the other hand, specializes in
producing wine but experiences a shortage of
corn.
=> What should two countries (U.S and France) do
to satisfy both needs for corn and wine?
Exporting and Importing
▪Suppose that the United States specializes in
producing corn. It then will produce a surplus of
corn, but perhaps it will have a shortage of wine.
France, on the other hand, specializes in
producing wine but experiences a shortage of
corn.
=> What should two countries (U.S and France) do
to satisfy both needs for corn and wine?
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting and Importing (slide 1 of 3)
Importing and exporting are the principal activities
in international trade
▪Exporting – selling and shipping raw materials
or products to other nations
•Example: The Boeing Company exports its airplanes
to a number of countries for use by their airlines.
▪Importing – purchasing raw materials or
products in other nations and bringing them into
one’s own country
•Example: Buyers for Macy’s department stores
purchase rugs in India and have them shipped back
to the United States for resale.
Exporting and Importing (slide 1 of 3)
Importing and exporting are the principal activities
in international trade
▪Exporting – selling and shipping raw materials
or products to other nations
•Example: The Boeing Company exports its airplanes
to a number of countries for use by their airlines.
▪Importing – purchasing raw materials or
products in other nations and bringing them into
one’s own country
•Example: Buyers for Macy’s department stores
purchase rugs in India and have them shipped back
to the United States for resale.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting and Importing (slide 2 of 3)
▪Balance of trade – the total value of a nation’s
exports minus the total value of its imports over
some period of time
•If a country imports more than it exports, its balance
of trade is negative and is said to be unfavorable.
▪Trade deficit – a negative balance of trade
▪In 2016, the United States imported $2,713 billion worth of
goods and services and exported $2,208 billion worth. It thus
had a trade deficit of $505 billion
Exporting and Importing (slide 2 of 3)
▪Balance of trade – the total value of a nation’s
exports minus the total value of its imports over
some period of time
•If a country imports more than it exports, its balance
of trade is negative and is said to be unfavorable.
▪Trade deficit – a negative balance of trade
▪In 2016, the United States imported $2,713 billion worth of
goods and services and exported $2,208 billion worth. It thus
had a trade deficit of $505 billion
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FIGURE 4-1U.S. International Trade in Goods and Services
FIGURE 4-1U.S. International Trade in Goods and Services
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting and Importing (slide 3 of 3)
▪Balance of payments – the total flow of money
into a country minus the total flow of money out
of that country over some period of time
•Includes:
▪Imports and exports
▪Investments
▪Money spent by foreign tourists
▪Payments by foreign governments
▪Aid to foreign governments
▪All other receipts and payments
Exporting and Importing (slide 3 of 3)
▪Balance of payments – the total flow of money
into a country minus the total flow of money out
of that country over some period of time
•Includes:
▪Imports and exports
▪Investments
▪Money spent by foreign tourists
▪Payments by foreign governments
▪Aid to foreign governments
▪All other receipts and payments
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Licensing
▪Licensing – a contractual agreement in which one firm
permits another to produce and market its product and use its
brand name in return for a royalty or other compensation
•Example: Yoplait yogurt is a French yogurt licensed for
production in the United States. The U.S. producer pays
Yoplait a percentage of its income from sales of the
product.
▪Advantage:
•It provides a simple method for expanding into a foreign
market with virtually no investment.
▪Disadvantages:
•If the licensee does not maintain the licensor’s product
standards, the product’s image may be damaged.
•A licensing arrangement may not provide the original
producer with any foreign marketing experience.
Licensing
▪Licensing – a contractual agreement in which one firm
permits another to produce and market its product and use its
brand name in return for a royalty or other compensation
•Example: Yoplait yogurt is a French yogurt licensed for
production in the United States. The U.S. producer pays
Yoplait a percentage of its income from sales of the
product.
▪Advantage:
•It provides a simple method for expanding into a foreign
market with virtually no investment.
▪Disadvantages:
•If the licensee does not maintain the licensor’s product
standards, the product’s image may be damaged.
•A licensing arrangement may not provide the original
producer with any foreign marketing experience.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting (slide 1 of 3)
▪A firm may manufacture its products in its home
country and export them for sale in foreign
markets.
▪Advantage:
•It can be a relatively low-risk method of
entering foreign markets.
▪Disadvantage:
•It is not a simple method; it opens up some
levels of involvement to the exporting firm
Exporting (slide 1 of 3)
▪A firm may manufacture its products in its home
country and export them for sale in foreign
markets.
▪Advantage:
•It can be a relatively low-risk method of
entering foreign markets.
▪Disadvantage:
•It is not a simple method; it opens up some
levels of involvement to the exporting firm
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting (slide 2 of 3)
▪At the most basic level, the exporting firm may
sell its products outright to an export-import
merchant, which is essentially a merchant
wholesaler.
▪Alternatively, the exporting firm may ship its
products to an export-import agent, which
arranges the sale of the products to foreign
intermediaries for a commission or fee.
▪An exporting firm may also establish its own
sales offices, or branches, in foreign countries.
Exporting (slide 2 of 3)
▪At the most basic level, the exporting firm may
sell its products outright to an export-import
merchant, which is essentially a merchant
wholesaler.
▪Alternatively, the exporting firm may ship its
products to an export-import agent, which
arranges the sale of the products to foreign
intermediaries for a commission or fee.
▪An exporting firm may also establish its own
sales offices, or branches, in foreign countries.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting (slide 3 of 3)
Exporting to International Markets
▪Letter of credit – issued by a bank on request of an
importer stating that the bank will pay an amount of
money to a stated beneficiary
▪Bill of lading – document issued by a transport carrier to
an exporter to prove that merchandise has been shipped
▪Draft – issued by the exporter’s bank, ordering the
importer’s bank to pay for the merchandise, thus
guaranteeing payment once accepted by the importer’s
bank
Exporting (slide 3 of 3)
Exporting to International Markets
▪Letter of credit – issued by a bank on request of an
importer stating that the bank will pay an amount of
money to a stated beneficiary
▪Bill of lading – document issued by a transport carrier to
an exporter to prove that merchandise has been shipped
▪Draft – issued by the exporter’s bank, ordering the
importer’s bank to pay for the merchandise, thus
guaranteeing payment once accepted by the importer’s
bank
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting (slide 3 of 3)
Letter of credit – issued by a bank on request of an importer
stating that the bank will pay an amount of money to a stated
beneficiary
▪The letter of credit is issued “in favor of the exporter,” meaning that
the funds are tied specifically to the trade contract involved.
▪The importer’s bank forwards the letter of credit to the exporter’s
bank, which also normally deals in international transactions.
▪The exporter’s bank then notifies the exporter that a letter of credit
has been received in its name, and the exporter can go ahead with
the shipment.
▪The carrier transporting the merchandise provides the exporter
with evidence of the shipment in a document called a bill of lading
Exporting (slide 3 of 3)
Letter of credit – issued by a bank on request of an importer
stating that the bank will pay an amount of money to a stated
beneficiary
▪The letter of credit is issued “in favor of the exporter,” meaning that
the funds are tied specifically to the trade contract involved.
▪The importer’s bank forwards the letter of credit to the exporter’s
bank, which also normally deals in international transactions.
▪The exporter’s bank then notifies the exporter that a letter of credit
has been received in its name, and the exporter can go ahead with
the shipment.
▪The carrier transporting the merchandise provides the exporter
with evidence of the shipment in a document called a bill of lading
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting (slide 3 of 3)
Bill of lading – document issued by a transport
carrier to an exporter to prove that merchandise
has been shipped
▪The exporter signs over title to the merchandise
(now in transit) to its bank by delivering signed
copies of the bill of lading and the letter of credit.
▪In exchange, the exporter issues a draft from the
bank, which orders the importer’s bank to pay for
the merchandise.
Exporting (slide 3 of 3)
Bill of lading – document issued by a transport
carrier to an exporter to prove that merchandise
has been shipped
▪The exporter signs over title to the merchandise
(now in transit) to its bank by delivering signed
copies of the bill of lading and the letter of credit.
▪In exchange, the exporter issues a draft from the
bank, which orders the importer’s bank to pay for
the merchandise.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exporting (slide 3 of 3)
▪The draft, bill of lading, and letter of credit are
sent from the exporter’s bank to the importer’s
bank.
▪Acceptance by the importer’s bank leads to return
of the draft and its sale by the exporter to its
bank, meaning that the exporter receives cash
and the bank assumes the risk of collecting the
funds from the foreign bank.
▪The importer is obliged to pay its bank on delivery
of the merchandise, and the deal is complete
Exporting (slide 3 of 3)
▪The draft, bill of lading, and letter of credit are
sent from the exporter’s bank to the importer’s
bank.
▪Acceptance by the importer’s bank leads to return
of the draft and its sale by the exporter to its
bank, meaning that the exporter receives cash
and the bank assumes the risk of collecting the
funds from the foreign bank.
▪The importer is obliged to pay its bank on delivery
of the merchandise, and the deal is complete
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Joint Ventures
▪Joint venture – a partnership formed to achieve a specific goal or to
operate for a specific period of time
▪A joint venture may be used to produce and market an existing
product in a foreign nation or to develop an entirely new product.
▪Advantage:
•A joint venture with an established firm in a foreign country provides
immediate market knowledge and access, reduced risk, and control
over product attributes.
▪Disadvantages:
•Joint-venture agreements established across national borders can
become extremely risky.
•Joint-venture agreements generally require a very high level of
commitment from all the parties involved.
Joint Ventures
▪Joint venture – a partnership formed to achieve a specific goal or to
operate for a specific period of time
▪A joint venture may be used to produce and market an existing
product in a foreign nation or to develop an entirely new product.
▪Advantage:
•A joint venture with an established firm in a foreign country provides
immediate market knowledge and access, reduced risk, and control
over product attributes.
▪Disadvantages:
•Joint-venture agreements established across national borders can
become extremely risky.
•Joint-venture agreements generally require a very high level of
commitment from all the parties involved.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Totally Owned Facilities (slide 1 of 2)
▪Totally owned facilities – a firm’s own production
and marketing facilities in one or more foreign
nations
▪Advantage:
•The direct investment provides complete
control over operations.
▪Disadvantage:
•It carries a greater risk than a joint venture.
Totally Owned Facilities (slide 1 of 2)
▪Totally owned facilities – a firm’s own production
and marketing facilities in one or more foreign
nations
▪Advantage:
•The direct investment provides complete
control over operations.
▪Disadvantage:
•It carries a greater risk than a joint venture.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Totally Owned Facilities (slide 2 of 2)
▪Direct investment may take either one of two forms:
1.The firm builds or purchases manufacturing and other facilities
in the foreign country and uses these facilities to produce its
own established products and market them in that country.
▪Example: General Motors and Colgate-Palmolive have worldwide
manufacturing facilities.
2.A firm purchases an existing firm in a foreign country under an
arrangement that allows it to operate independently of the
parent company.
▪Example: When Sony Corporation (a Japanese firm) decided to
enter the motion picture business in the United States, it chose to
purchase Columbia Pictures Entertainment, Inc., rather than start a
new motion picture studio from scratch.
Totally Owned Facilities (slide 2 of 2)
▪Direct investment may take either one of two forms:
1.The firm builds or purchases manufacturing and other facilities
in the foreign country and uses these facilities to produce its
own established products and market them in that country.
▪Example: General Motors and Colgate-Palmolive have worldwide
manufacturing facilities.
2.A firm purchases an existing firm in a foreign country under an
arrangement that allows it to operate independently of the
parent company.
▪Example: When Sony Corporation (a Japanese firm) decided to
enter the motion picture business in the United States, it chose to
purchase Columbia Pictures Entertainment, Inc., rather than start a
new motion picture studio from scratch.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic Alliances
▪Strategic alliance – a partnership formed to
create competitive advantage on a worldwide
basis
▪Individual firms that lack the internal resources
essential for international success may seek to
collaborate with other companies
•Example: New United Motor Manufacturing, Inc.
(NUMMI), formed by Toyota and General Motors,
combines the quality of engineering of Toyota with the
marketing expertise and market access of General
Motors.
Strategic Alliances
▪Strategic alliance – a partnership formed to
create competitive advantage on a worldwide
basis
▪Individual firms that lack the internal resources
essential for international success may seek to
collaborate with other companies
•Example: New United Motor Manufacturing, Inc.
(NUMMI), formed by Toyota and General Motors,
combines the quality of engineering of Toyota with the
marketing expertise and market access of General
Motors.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Trading Companies
▪Trading company – provides a link between
buyers and sellers in different countries
▪A trading company is not involved in
manufacturing or owning assets related to
manufacturing; it buys products in one country at
the lowest price consistent with quality and sells
to buyers in another country.
▪It takes title to products and performs all the
activities necessary to move the products from
the domestic country to a foreign country.
Trading Companies
▪Trading company – provides a link between
buyers and sellers in different countries
▪A trading company is not involved in
manufacturing or owning assets related to
manufacturing; it buys products in one country at
the lowest price consistent with quality and sells
to buyers in another country.
▪It takes title to products and performs all the
activities necessary to move the products from
the domestic country to a foreign country.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Countertrade
▪Countertrade – an international barter
transaction
•Example: Philip Morris’s sale of cigarettes to Russia in
return for chemicals used to make fertilizers
Countertrade
▪Countertrade – an international barter
transaction
•Example: Philip Morris’s sale of cigarettes to Russia in
return for chemicals used to make fertilizers
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Multinational Firms
▪Multinational enterprise – a firm that operates
on a worldwide scale without ties to any specific
nation or region
▪The operations of the multinational enterprise
are concerned, national boundaries exist only on
maps. It is organized under the laws of its home
country
▪The multinational firm represents the highest
level of involvement in international business.
Multinational Firms
▪Multinational enterprise – a firm that operates
on a worldwide scale without ties to any specific
nation or region
▪The operations of the multinational enterprise
are concerned, national boundaries exist only on
maps. It is organized under the laws of its home
country
▪The multinational firm represents the highest
level of involvement in international business.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-1The Ten Largest Foreign and U.S. Multinational Corporations
2016
Rank
Company Business Country
Revenue
($ millions)
1Walmart Stores
General
Merchandise
United States 482,130
2State Grid Power Grids China 329,601
3
China National
Petroleum
Energy China 299,271
4Sinopec Energy China 294,344
5Royal Dutch ShellEnergy Netherlands 272,156
6ExxonMobil Energy United States 246,204
7Volkswagen Automobiles Germany 236,600
8Toyota Automobiles Japan 236,592
9Apple
Computers/
Office Equipment
United States 233,715
10BP Energy United Kingdom225,982
TABLE 4-1The Ten Largest Foreign and U.S. Multinational Corporations
2016
Rank
Company Business Country
Revenue
($ millions)
1Walmart Stores
General
Merchandise
United States 482,130
2State Grid Power Grids China 329,601
3
China National
Petroleum
Energy China 299,271
4Sinopec Energy China 294,344
5Royal Dutch ShellEnergy Netherlands 272,156
6ExxonMobil Energy United States 246,204
7Volkswagen Automobiles Germany 236,600
8Toyota Automobiles Japan 236,592
9Apple
Computers/
Office Equipment
United States 233,715
10BP Energy United Kingdom225,982
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-2Steps in Entering International Markets (slide 1 of 3)
StepActivity Marketing Tasks
1
Identify exportable
products
Identify key selling features
Identify needs that they satisfy
Identify the selling constraints that are
imposed
2
Identify key foreign
markets for the products
Determine who the customers are
Pinpoint what and when they will buy
Do market research
Establish priority, or “target,” countries
3
Analyze how to sell in
each priority market
(methods will be affected
by product
characteristics and
unique features of
country/market)
Located available government and
private-sector resources
Determine service and backup sales
requirements
TABLE 4-2Steps in Entering International Markets (slide 1 of 3)
StepActivity Marketing Tasks
1
Identify exportable
products
Identify key selling features
Identify needs that they satisfy
Identify the selling constraints that are
imposed
2
Identify key foreign
markets for the products
Determine who the customers are
Pinpoint what and when they will buy
Do market research
Establish priority, or “target,” countries
3
Analyze how to sell in
each priority market
(methods will be affected
by product
characteristics and
unique features of
country/market)
Located available government and
private-sector resources
Determine service and backup sales
requirements
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-2Steps in Entering International Markets (slide 2 of 3)
StepActivity Marketing Tasks
4
Set export prices and
payment terms,
methods, and
techniques
Establish methods of export pricing
Establish sales terms, quotations, invoices,
and conditions of sale
Determine methods of international payments,
secured and unsecured
5
Estimate resources
requirements and
returns
Establish financial requirements
Establish human resources requirements (full-
or part-time export department or operation)
Estimate plant production capacity
Determine necessary product adaptations
6
Establish overseas
distribution network
Determine distribution agreement and other
key marketing decisions (price, repair policies,
returns, territory, performance, and
termination)
Know your customer (use U.S. Department of
Commerce international marketing services)
TABLE 4-2Steps in Entering International Markets (slide 2 of 3)
StepActivity Marketing Tasks
4
Set export prices and
payment terms,
methods, and
techniques
Establish methods of export pricing
Establish sales terms, quotations, invoices,
and conditions of sale
Determine methods of international payments,
secured and unsecured
5
Estimate resources
requirements and
returns
Establish financial requirements
Establish human resources requirements (full-
or part-time export department or operation)
Estimate plant production capacity
Determine necessary product adaptations
6
Establish overseas
distribution network
Determine distribution agreement and other
key marketing decisions (price, repair policies,
returns, territory, performance, and
termination)
Know your customer (use U.S. Department of
Commerce international marketing services)
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-2Steps in Entering International Markets (slide 3 of 3)
StepActivity Marketing Tasks
7
Determine shipping,
traffic, and
documentation
procedures and
requirements
Determine methods of shipment (air or ocean
freight, truck, rail)
Finalize containerization
Obtain validated export license
Follow export-administration documentation
procedures
8
Promote, sell, and be
paid
Use international media, communications,
advertising, trade shows, and exhibitions
Determine the need for overseas travel (when,
where, and how often?)
Initiate customer follow-up procedures
9
Continuously analyze
current marketing,
economic, and political
situations
Recognize changing factors influencing
marketing strategies
Constantly re-evaluate
TABLE 4-2Steps in Entering International Markets (slide 3 of 3)
StepActivity Marketing Tasks
7
Determine shipping,
traffic, and
documentation
procedures and
requirements
Determine methods of shipment (air or ocean
freight, truck, rail)
Finalize containerization
Obtain validated export license
Follow export-administration documentation
procedures
8
Promote, sell, and be
paid
Use international media, communications,
advertising, trade shows, and exhibitions
Determine the need for overseas travel (when,
where, and how often?)
Initiate customer follow-up procedures
9
Continuously analyze
current marketing,
economic, and political
situations
Recognize changing factors influencing
marketing strategies
Constantly re-evaluate
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Types of Trade Restrictions (slide 1 of 3)
Tariffs
▪Import duty (tariff) – a tax levied on a particular foreign
product entering a country
▪Two types of tariffs:
1.Revenue tariffs – imposed solely to generate income for the
government
2.Protective tariffs – imposed to protect a domestic industry from
competition by keeping the price of competing imports level with
or higher than the price of similar domestic products
▪Dumping – exportation of large quantities of a product at
a price lower than that of the same product in the home
market
Types of Trade Restrictions (slide 1 of 3)
Tariffs
▪Import duty (tariff) – a tax levied on a particular foreign
product entering a country
▪Two types of tariffs:
1.Revenue tariffs – imposed solely to generate income for the
government
2.Protective tariffs – imposed to protect a domestic industry from
competition by keeping the price of competing imports level with
or higher than the price of similar domestic products
▪Dumping – exportation of large quantities of a product at
a price lower than that of the same product in the home
market
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Types of Trade Restrictions (slide 2 of 3)
Nontariff Barriers
▪Nontariff barrier – a nontax measure imposed by a
government to favor domestic over foreign suppliers
▪Nontariff barriers include:
•Import quota – a limit on the amount of a particular good that
may be imported into a country during a given period of time
•Embargo – a complete halt to trading with a particular nation or
in a particular product
•Foreign-exchange control – a restriction on the amount of a
particular foreign currency that can be purchased or sold
•Currency devaluation – the reduction of the value of a nation’s
currency relative to the currencies of other countries
Types of Trade Restrictions (slide 2 of 3)
Nontariff Barriers
▪Nontariff barrier – a nontax measure imposed by a
government to favor domestic over foreign suppliers
▪Nontariff barriers include:
•Import quota – a limit on the amount of a particular good that
may be imported into a country during a given period of time
•Embargo – a complete halt to trading with a particular nation or
in a particular product
•Foreign-exchange control – a restriction on the amount of a
particular foreign currency that can be purchased or sold
•Currency devaluation – the reduction of the value of a nation’s
currency relative to the currencies of other countries
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Types of Trade Restrictions
▪Currency devaluation
▪Devaluation increases the cost of foreign goods,
whereas it decreases the cost of domestic goods
to foreign firms.
▪For example, the British pound is worth $2. In
this case, an American-made $2,000 computer
can be purchased for £1,000. However, if the
United Kingdom devalues the pound so that it is
worth only $1, that same computer will cost
£2,000. The increased cost, in pounds, will
reduce the import of American computers—and
all foreign goods—into England.
▪Before devaluation, a £500 set of English bone
china will cost an American $1,000. After the
devaluation, the set of china will cost only $500.
The decreased cost will make the china—and all
English goods—much more attractive to U.S.
purchasers.
Types of Trade Restrictions
▪Currency devaluation
▪Devaluation increases the cost of foreign goods,
whereas it decreases the cost of domestic goods
to foreign firms.
▪For example, the British pound is worth $2. In
this case, an American-made $2,000 computer
can be purchased for £1,000. However, if the
United Kingdom devalues the pound so that it is
worth only $1, that same computer will cost
£2,000. The increased cost, in pounds, will
reduce the import of American computers—and
all foreign goods—into England.
▪Before devaluation, a £500 set of English bone
china will cost an American $1,000. After the
devaluation, the set of china will cost only $500.
The decreased cost will make the china—and all
English goods—much more attractive to U.S.
purchasers.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Types of Trade Restrictions (slide 3 of 3)
Cultural Barriers
▪Cultural barriers can impede acceptance of products in
foreign countries.
•Examples: illustrations of feet are regarded as despicable in
Thailand; black and white are the colors of mourning in Japan
and, thus, should not be used in packaging
Types of Trade Restrictions (slide 3 of 3)
Cultural Barriers
▪Cultural barriers can impede acceptance of products in
foreign countries.
•Examples: illustrations of feet are regarded as despicable in
Thailand; black and white are the colors of mourning in Japan
and, thus, should not be used in packaging
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Reasons for and Against
Trade Restrictions
▪Reasons for Trade
Restrictions:
•To equalize a nation’s
balance of payments
•To protect new or weak
industries
•To protect national
security
•To protect the health of
citizens
•To retaliate for another
nation’s trade restrictions
•To protect domestic jobs
▪Reasons Against Trade
Restrictions:
•Higher prices for
consumers
•Restriction of consumers’
choices
•Misallocation of
international resources
•Loss of jobs
Reasons for and Against
Trade Restrictions
▪Reasons for Trade
Restrictions:
•To equalize a nation’s
balance of payments
•To protect new or weak
industries
•To protect national
security
•To protect the health of
citizens
•To retaliate for another
nation’s trade restrictions
•To protect domestic jobs
▪Reasons Against Trade
Restrictions:
•Higher prices for
consumers
•Restriction of consumers’
choices
•Misallocation of
international resources
•Loss of jobs
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Extent of International Business
▪Restrictions or not, international business is
growing.
•In the United States, international trade now accounts
for over one-fourth of gross domestic product (GDP).
•As trade barriers decrease, new competitors enter the
global marketplace, creating more choices for
consumers and new opportunities for job seekers.
•International business will grow along with the
expansion of commercial use of the Internet.
The Extent of International Business
▪Restrictions or not, international business is
growing.
•In the United States, international trade now accounts
for over one-fourth of gross domestic product (GDP).
•As trade barriers decrease, new competitors enter the
global marketplace, creating more choices for
consumers and new opportunities for job seekers.
•International business will grow along with the
expansion of commercial use of the Internet.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Economic Outlook for Trade
(slide 1 of 2)
Canada and Western Europe
▪The U.S.–Canada economic relationship is the most efficient, most
integrated, and most dynamic in the world.
•The two nations generated $669.4 billion in bilateral trade in 2015.
•More than 96,000 American companies currently export to Canada, and
70 percent of Canada’s exports come to the United States.
▪The U.S. trade with the European Union (EU) is one of the largest
and most complex in the world; generating an estimated goods flow
of over $687 billion in 2016, and representing an estimated 30
percent of global trade.
Mexico and Latin America
▪Latin American exports are growing annually.
The Economic Outlook for Trade
(slide 1 of 2)
Canada and Western Europe
▪The U.S.–Canada economic relationship is the most efficient, most
integrated, and most dynamic in the world.
•The two nations generated $669.4 billion in bilateral trade in 2015.
•More than 96,000 American companies currently export to Canada, and
70 percent of Canada’s exports come to the United States.
▪The U.S. trade with the European Union (EU) is one of the largest
and most complex in the world; generating an estimated goods flow
of over $687 billion in 2016, and representing an estimated 30
percent of global trade.
Mexico and Latin America
▪Latin American exports are growing annually.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Economic Outlook for Trade
(slide 2 of 2)
Japan
▪Japan is the world’s third largest economy and the United States’
fourth largest trading partner.
Other Asian Countries
▪China has grown to be the world’s second largest economy, and the
United States shares more than half a trillion dollars in annual
bilateral trade—the largest trading relationship.
▪India’s vast market promises U.S. companies’ continued strong
demand for goods and services.
Africa
▪U.S. trade to and from Africa has tripled over the past decade, and
U.S. exports to this region exceed $22.3 billion.
The Economic Outlook for Trade
(slide 2 of 2)
Japan
▪Japan is the world’s third largest economy and the United States’
fourth largest trading partner.
Other Asian Countries
▪China has grown to be the world’s second largest economy, and the
United States shares more than half a trillion dollars in annual
bilateral trade—the largest trading relationship.
▪India’s vast market promises U.S. companies’ continued strong
demand for goods and services.
Africa
▪U.S. trade to and from Africa has tripled over the past decade, and
U.S. exports to this region exceed $22.3 billion.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-3U.S. Exports and Imports for Selected World Areas in 2016
in Billions of Dollars
Selected World Area Exports Imports
North America $498 $572
Europe $318 $483
Euro Area $200 $326
European Union $270 $417
Pacific Rim $362 $809
South/Central America $137 $108
Africa $22 $27
OPEC $71 $78
Other Countries $67 $159
TABLE 4-3U.S. Exports and Imports for Selected World Areas in 2016
in Billions of Dollars
Selected World Area Exports Imports
North America $498 $572
Europe $318 $483
Euro Area $200 $326
European Union $270 $417
Pacific Rim $362 $809
South/Central America $137 $108
Africa $22 $27
OPEC $71 $78
Other Countries $67 $159
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-4Top Trading Partners: Value of U.S. Merchandise Exports
and Imports, December 2016
RankCountry
Exports
($ billions)
Imports
($ billions)
Total Trade
($ billions)
Percent of
Total Trade
1China 115.8 462.8 578.6 15.9
2Canada 266.8 278.1 544.9 15.0
3Mexico 231.0 294.1 525.1 14.4
4Japan 63.3 132.2 195.5 5.4
5Germany 49.4 114.2 163.6 4.5
6Korea, South 42.3 69.9 112.2 3.1
7
United
Kingdom
55.4 54.3 109.7 3.0
8France 30.9 46.8 77.7 2.1
9India 21.7 46.0 67.7 1.9
1
0
Taiwan 26.1 39.3 65.4 1.8
TABLE 4-4Top Trading Partners: Value of U.S. Merchandise Exports
and Imports, December 2016
RankCountry
Exports
($ billions)
Imports
($ billions)
Total Trade
($ billions)
Percent of
Total Trade
1China 115.8 462.8 578.6 15.9
2Canada 266.8 278.1 544.9 15.0
3Mexico 231.0 294.1 525.1 14.4
4Japan 63.3 132.2 195.5 5.4
5Germany 49.4 114.2 163.6 4.5
6Korea, South 42.3 69.9 112.2 3.1
7
United
Kingdom
55.4 54.3 109.7 3.0
8France 30.9 46.8 77.7 2.1
9India 21.7 46.0 67.7 1.9
1
0
Taiwan 26.1 39.3 65.4 1.8
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The General Agreement on Tariffs and Trade
and the World Trade Organization (slide 1 of 2)
▪General Agreement on Tariffs and Trade (GATT) – an
international organization of nations dedicated to
reducing or eliminating tariffs and other barriers to world
trade
•Most-favored-nation status (MFN) was the famous principle of
GATT.
▪It meant that each GATT member nation was to be treated equally
by all contracting nations.
•From 1947, the body sponsored eight rounds of negotiations to
reduce trade restrictions, including:
▪The Kennedy Round (1964–1967)
▪The Tokyo Round (1973–1979)
▪The Uruguay Round (1986–1993)
The General Agreement on Tariffs and Trade
and the World Trade Organization (slide 1 of 2)
▪General Agreement on Tariffs and Trade (GATT) – an
international organization of nations dedicated to
reducing or eliminating tariffs and other barriers to world
trade
•Most-favored-nation status (MFN) was the famous principle of
GATT.
▪It meant that each GATT member nation was to be treated equally
by all contracting nations.
•From 1947, the body sponsored eight rounds of negotiations to
reduce trade restrictions, including:
▪The Kennedy Round (1964–1967)
▪The Tokyo Round (1973–1979)
▪The Uruguay Round (1986–1993)
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The General Agreement on Tariffs and Trade
and the World Trade Organization (slide 2 of 2)
▪World Trade Organization (WTO) – powerful
successor to GATT that incorporates trade in
goods, services, and ideas
•Created by the Uruguay Round
The General Agreement on Tariffs and Trade
and the World Trade Organization (slide 2 of 2)
▪World Trade Organization (WTO) – powerful
successor to GATT that incorporates trade in
goods, services, and ideas
•Created by the Uruguay Round
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
International Economic Organizations
Working to Foster Trade
▪Economic community – an organization of nations
formed to promote the free movement of resources and
products among its members and to create common
economic policies
•A number of economic communities now exist, including:
▪The European Union
▪The North American Free Trade Agreement
▪The Central Free Trade Agreement
▪The Association of Southeast Asian Nations
▪The Commonwealth of Independent States
▪Trans-Pacific Partnership (TPP)
▪The Common Market of the Southern Cone (Mercosur)
▪The Organization of Petroleum Exporting Countries
International Economic Organizations
Working to Foster Trade
▪Economic community – an organization of nations
formed to promote the free movement of resources and
products among its members and to create common
economic policies
•A number of economic communities now exist, including:
▪The European Union
▪The North American Free Trade Agreement
▪The Central Free Trade Agreement
▪The Association of Southeast Asian Nations
▪The Commonwealth of Independent States
▪Trans-Pacific Partnership (TPP)
▪The Common Market of the Southern Cone (Mercosur)
▪The Organization of Petroleum Exporting Countries
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
International Economic Organizations
Working to Foster Trade
▪The North American Free Trade Agreement.
▪January 1, 1994, created a market of over 491
million people.
▪Built on the Canadian Free Trade Agreement
signed by the U.S and Canada in 1989, and on
the trade reforms undertaken by Mexico since
the mid-1980s.
▪Eliminated all tariffs on goods and provided a
totally free-trade area by 2008.
International Economic Organizations
Working to Foster Trade
▪The North American Free Trade Agreement.
▪January 1, 1994, created a market of over 491
million people.
▪Built on the Canadian Free Trade Agreement
signed by the U.S and Canada in 1989, and on
the trade reforms undertaken by Mexico since
the mid-1980s.
▪Eliminated all tariffs on goods and provided a
totally free-trade area by 2008.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
International Economic Organizations
Working to Foster Trade
▪The North American Free Trade Agreement.
▪Not achieved its goals, has resulted in job
losses, hurts workers by eroding labor standards
and lowering wages, undermines national
sovereignty and independence, does nothing to
help the environment, and hurts the agricultural
sector.
▪In 2017, President Trump was committed to
renegotiate NAFTA.
▪contributed to significant increases in trade and
investment, resulted in increased sales, new
partnerships, and new opportunities, created
high-paying export-related jobs, and resulted in
better prices and selection in consumer goods.
International Economic Organizations
Working to Foster Trade
▪The North American Free Trade Agreement.
▪Not achieved its goals, has resulted in job
losses, hurts workers by eroding labor standards
and lowering wages, undermines national
sovereignty and independence, does nothing to
help the environment, and hurts the agricultural
sector.
▪In 2017, President Trump was committed to
renegotiate NAFTA.
▪contributed to significant increases in trade and
investment, resulted in increased sales, new
partnerships, and new opportunities, created
high-paying export-related jobs, and resulted in
better prices and selection in consumer goods.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
FIGURE 4-2The Evolving European Union
FIGURE 4-2The Evolving European Union
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-5U.S. Government Export Assistance Programs (slide 1 of 2)
1
U.S. Export Assistance Centers,
https://www.sba.gov/managing-bu
siness/exporting/us-export-assista
nce-centers
Provides assistance in export
marketing and trade finance
2
International Trade Administration,
www.ita.doc.gov/
Offers assistance and information to
exporters through its domestic and
overseas commercial officers
3
U.S. and Foreign Commercial
Services, www.export.
gov/
Helps U.S. firms compete more
effectively in the global marketplace
and provides information on foreign
markets
4
Advocacy Center,
http://2016.export.gov/advocacy/
Facilitates advocacy to assist U.S.
firms competing for major projects
and procurements worldwide
TABLE 4-5U.S. Government Export Assistance Programs (slide 1 of 2)
1
U.S. Export Assistance Centers,
https://www.sba.gov/managing-bu
siness/exporting/us-export-assista
nce-centers
Provides assistance in export
marketing and trade finance
2
International Trade Administration,
www.ita.doc.gov/
Offers assistance and information to
exporters through its domestic and
overseas commercial officers
3
U.S. and Foreign Commercial
Services, www.export.
gov/
Helps U.S. firms compete more
effectively in the global marketplace
and provides information on foreign
markets
4
Advocacy Center,
http://2016.export.gov/advocacy/
Facilitates advocacy to assist U.S.
firms competing for major projects
and procurements worldwide
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
TABLE 4-5U.S. Government Export Assistance Programs (slide 2 of 2)
5
Trade Information Center,
http://selectusa.commerce.
gov/investment-incentives/trade-in
formation-center-tic.html
Provides U.S. companies
information on federal programs
and activities that support U.S.
exports
6
STAT-USA/Internet,
https://www.usa.gov/statistics
Offers a comprehensive collection of
business, economic, and trade
information on the Web
7
Small Business Administration,
www.sba.gov/oit/
Publishes many helpful guides to
assist small- and medium-sized
companies
8
National Trade Data Bank,
http://grow.exim.gov/finance-guide?g
clid=CK3H0p2KndlCFUi5wAodTiQH
3g
Provides international economic and
export-protection information
supplied by more than 20 U.S.
agencies
TABLE 4-5U.S. Government Export Assistance Programs (slide 2 of 2)
5
Trade Information Center,
http://selectusa.commerce.
gov/investment-incentives/trade-in
formation-center-tic.html
Provides U.S. companies
information on federal programs
and activities that support U.S.
exports
6
STAT-USA/Internet,
https://www.usa.gov/statistics
Offers a comprehensive collection of
business, economic, and trade
information on the Web
7
Small Business Administration,
www.sba.gov/oit/
Publishes many helpful guides to
assist small- and medium-sized
companies
8
National Trade Data Bank,
http://grow.exim.gov/finance-guide?g
clid=CK3H0p2KndlCFUi5wAodTiQH
3g
Provides international economic and
export-protection information
supplied by more than 20 U.S.
agencies
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Financing International Business
▪Financial assistance is available from U.S. government
and international sources.
•One source is the U.S. Small Business Administration.
▪The U.S. Small Business Administration provides up to $5 million in
short-term loans to U.S. small business exporters.
▪The agency also provides small businesses that have exporting
potential, but need funds to cover the initial costs of entering an
export market, with up to $500,000 in export development financing
to buy, produce goods, or provide services for exports.
•Other sources include multilateral development banks, the
Export-Import Bank, and the International Monetary Fund.
Financing International Business
▪Financial assistance is available from U.S. government
and international sources.
•One source is the U.S. Small Business Administration.
▪The U.S. Small Business Administration provides up to $5 million in
short-term loans to U.S. small business exporters.
▪The agency also provides small businesses that have exporting
potential, but need funds to cover the initial costs of entering an
export market, with up to $500,000 in export development financing
to buy, produce goods, or provide services for exports.
•Other sources include multilateral development banks, the
Export-Import Bank, and the International Monetary Fund.
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Export-Import Bank
of the United States
▪Export-Import Bank of the United States – an
independent agency of the U.S. government
whose function is to assist in financing the
exports of American firms
The Export-Import Bank
of the United States
▪Export-Import Bank of the United States – an
independent agency of the U.S. government
whose function is to assist in financing the
exports of American firms
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Multilateral Development Banks
▪Multilateral development bank (MDB) – an
internationally supported bank that provides
loans to developing countries to help them grow
▪Include:
•The World Bank
•The Inter-American Development Bank
•The Asian Development Bank
•The African Development Bank
•European Bank for Reconstruction and Development
Multilateral Development Banks
▪Multilateral development bank (MDB) – an
internationally supported bank that provides
loans to developing countries to help them grow
▪Include:
•The World Bank
•The Inter-American Development Bank
•The Asian Development Bank
•The African Development Bank
•European Bank for Reconstruction and Development
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The International Monetary Fund
▪International Monetary Fund (IMF) – an international
bank that makes short-term loans to developing
countries experiencing balance-of-payment deficits
▪Main goals:
•Promote international monetary cooperation
•Facilitate the expansion and balanced growth of international
trade
•Promote exchange rate stability
•Assist in establishing a multilateral system of payments
•Make resources available to members experiencing
balance-of-payment difficulties
The International Monetary Fund
▪International Monetary Fund (IMF) – an international
bank that makes short-term loans to developing
countries experiencing balance-of-payment deficits
▪Main goals:
•Promote international monetary cooperation
•Facilitate the expansion and balanced growth of international
trade
•Promote exchange rate stability
•Assist in establishing a multilateral system of payments
•Make resources available to members experiencing
balance-of-payment difficulties
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1.If Japan were regarded as the best electronics
manufacturer in the world, what would be
true?
a.Japan would have a comparative advantage in
electronics manufacturing
b.Japan would have a positive balance of trade
c.The United States would have a comparative
advantage in electronics
d.Japan would have an absolute advantage in
electronics production
e.Japan would have a trade deficit with the United
States
1.If Japan were regarded as the best electronics
manufacturer in the world, what would be
true?
a.Japan would have a comparative advantage in
electronics manufacturing
b.Japan would have a positive balance of trade
c.The United States would have a comparative
advantage in electronics
d.Japan would have an absolute advantage in
electronics production
e.Japan would have a trade deficit with the United
States
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2. ……. is the ability to produce a specific
product more efficiently than any other
product.
a.Absolute advantage
b.Specialization
c.Relative advantage
d.Dominant advantage
e.Comparative advantage
2. ……. is the ability to produce a specific
product more efficiently than any other
product.
a.Absolute advantage
b.Specialization
c.Relative advantage
d.Dominant advantage
e.Comparative advantage
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. Purchasing products or materials in other
nations and bringing them into one’s own
country is ……
a.Trading
b.Balancing
c.Exporting
d.Importing
e.Dumping
3. Purchasing products or materials in other
nations and bringing them into one’s own
country is ……
a.Trading
b.Balancing
c.Exporting
d.Importing
e.Dumping
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4. Buyers that purchase dresses in Europe or
calculators in Taiwan and have them shipped
back to the United States for resales are
engaging in
a.Exporting
b.B. Shipping
c.Importing
d.Expelling
e.Dumping
4. Buyers that purchase dresses in Europe or
calculators in Taiwan and have them shipped
back to the United States for resales are
engaging in
a.Exporting
b.B. Shipping
c.Importing
d.Expelling
e.Dumping
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5. If the Land of Mercury had total exports of
$150 billion and total imports of $234 billion, it
had a…..
a.Comparative advantage
b.Trade deficit
c.Balance of payments
d.Negative output
e.Positive balance of trade
5. If the Land of Mercury had total exports of
$150 billion and total imports of $234 billion, it
had a…..
a.Comparative advantage
b.Trade deficit
c.Balance of payments
d.Negative output
e.Positive balance of trade
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. Which of the following best defines balance of
trade?
a.Purchasing products in other countries and bringing them
into one’s own country
b.The total value of a nation’s exports minus the total value
of its imports over some period of time
c.The total flow of money into the country minus the total
flow of money out of the country over some period of time
d.The ability to specialize in the production of a specific
product and trade it for other needed products
e.The ability to produce a certain product more efficiently
than any other nation
6. Which of the following best defines balance of
trade?
a.Purchasing products in other countries and bringing them
into one’s own country
b.The total value of a nation’s exports minus the total value
of its imports over some period of time
c.The total flow of money into the country minus the total
flow of money out of the country over some period of time
d.The ability to specialize in the production of a specific
product and trade it for other needed products
e.The ability to produce a certain product more efficiently
than any other nation
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. When a country exports more than it
imports, it has a(n)….
a.Trade deficit
b.Favorable balance of trade
c.Unfavorable exchange rate
d.Unfavorable balance of trade
e.Unfavorable balance of payments
7. When a country exports more than it
imports, it has a(n)….
a.Trade deficit
b.Favorable balance of trade
c.Unfavorable exchange rate
d.Unfavorable balance of trade
e.Unfavorable balance of payments
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. A favorable balance of payments means that
a.Exports exceed imports
b.Imports exceed exports
c.Payments exceed trade
d.Exports and other payments exceed imports
and other receipts
e.Total receipts exceed total payments
8. A favorable balance of payments means that
a.Exports exceed imports
b.Imports exceed exports
c.Payments exceed trade
d.Exports and other payments exceed imports
and other receipts
e.Total receipts exceed total payments
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9. When the United States levies a tax on
textiles from India, this tax is a type of….
a.Export duty
b.Barter
c.Import
d.Tariff
e.responsibility
9. When the United States levies a tax on
textiles from India, this tax is a type of….
a.Export duty
b.Barter
c.Import
d.Tariff
e.responsibility
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10. The United States wishes to import no more
than 100 million tons of sugar from India in any
given year. The type of import restriction it
should impose is a(n)
a.Import duty
b.Foreign exchange control
c.Import quota
d.Embargo
e.Export duty
10. The United States wishes to import no more
than 100 million tons of sugar from India in any
given year. The type of import restriction it
should impose is a(n)
a.Import duty
b.Foreign exchange control
c.Import quota
d.Embargo
e.Export duty
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11. The U.S government imposes a tax on
imported automobiles from Japan, Korea,
Germany and other foreign nations to increase
government funds. This is best described as
a(n)
a.Protective tariff
b.Revenue tariff
c.Dumping duty
d.Import quota
e.Excise tax
11. The U.S government imposes a tax on
imported automobiles from Japan, Korea,
Germany and other foreign nations to increase
government funds. This is best described as
a(n)
a.Protective tariff
b.Revenue tariff
c.Dumping duty
d.Import quota
e.Excise tax
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12. Suppose France imposes a tax on
agricultural products from the United States to
help it own farmers. This describes a(n)
A.Revenue tariff
B.Preservation tariff
C.Embargo
D.Nontariff barrier
E.Protective tariff
12. Suppose France imposes a tax on
agricultural products from the United States to
help it own farmers. This describes a(n)
A.Revenue tariff
B.Preservation tariff
C.Embargo
D.Nontariff barrier
E.Protective tariff
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13. Taiwanese manufacturers are dumping toys in
Germany. What will happen to German toy
manufacturers if the German government allows this
dumping to continue?
A.They will be faced with the highest demand ever
B.They will become more competitive
C.They will be put out of business because they cannot
compete with the prices
D.They will try to dump their toys in other countries
E.Their revenues will decrease, but their long-term
success will not be affected
13. Taiwanese manufacturers are dumping toys in
Germany. What will happen to German toy
manufacturers if the German government allows this
dumping to continue?
A.They will be faced with the highest demand ever
B.They will become more competitive
C.They will be put out of business because they cannot
compete with the prices
D.They will try to dump their toys in other countries
E.Their revenues will decrease, but their long-term
success will not be affected
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14. An import duty has the effect of all of the
following except
a.Reducing the number of units exported
b.Raising the price of the product in the importing
nation
c.Reducing the number of units imported
d.Creating a trade restriction
e.Protecting a domestic industry from competition
14. An import duty has the effect of all of the
following except
a.Reducing the number of units exported
b.Raising the price of the product in the importing
nation
c.Reducing the number of units imported
d.Creating a trade restriction
e.Protecting a domestic industry from competition
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15. A limit on the amount of a particular good
that may be brought into a country during a
given period of time is called a(n)
a.Import duty
b.Import deficit
c.Trade embargo
d.Import tariff
e.Import quota
15. A limit on the amount of a particular good
that may be brought into a country during a
given period of time is called a(n)
a.Import duty
b.Import deficit
c.Trade embargo
d.Import tariff
e.Import quota
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16. When an Indian importing firm wants to
import U.S-made products, it must first secure
permission and dollars from the Reserve Bank
of India. This type of restriction is known as a
A. currency devaluation
B. foreign-exchange control
C. Negative foreign exchange
D. Trade embargo
E. quota
16. When an Indian importing firm wants to
import U.S-made products, it must first secure
permission and dollars from the Reserve Bank
of India. This type of restriction is known as a
A. currency devaluation
B. foreign-exchange control
C. Negative foreign exchange
D. Trade embargo
E. quota
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17. A reduction of the value of a nation’s
currency relative to the currencies of other
countries is called
a.A currency devaluation
b.A reduced exchange rate
c.A deficit money market
d.A compressed economy
e.None of these answer choices
17. A reduction of the value of a nation’s
currency relative to the currencies of other
countries is called
a.A currency devaluation
b.A reduced exchange rate
c.A deficit money market
d.A compressed economy
e.None of these answer choices
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18. When a country’s currency is devalued, this
…. the cost of foreign goods and …… the cost
of domestic goods to foreign firms.
a.increases; decreases
b.Reduces; reduces
c.Decreases; increases
d.Neutralizes; raises
e.Neutralizes, decreases
18. When a country’s currency is devalued, this
…. the cost of foreign goods and …… the cost
of domestic goods to foreign firms.
a.increases; decreases
b.Reduces; reduces
c.Decreases; increases
d.Neutralizes; raises
e.Neutralizes, decreases
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19. Suppose a set of English bone china costing £1,000
costs $3,000 in the United States. After devaluation, the
set of china costs $1,000. This change
a.Shows that to foreigner purchasers, the price of the
china is the same before and after the devaluation
b.Makes the china less attractive to foreigner purchasers
c.Makes the china more attractive to foreign purchasers
d.Is irrelevant to foreign purchasers
e.Proves that foreign purchasers would prefer
devaluation of the English pound so that it would be
worth $2. That way, they could get even more for their
dollars
19. Suppose a set of English bone china costing £1,000
costs $3,000 in the United States. After devaluation, the
set of china costs $1,000. This change
a.Shows that to foreigner purchasers, the price of the
china is the same before and after the devaluation
b.Makes the china less attractive to foreigner purchasers
c.Makes the china more attractive to foreign purchasers
d.Is irrelevant to foreign purchasers
e.Proves that foreign purchasers would prefer
devaluation of the English pound so that it would be
worth $2. That way, they could get even more for their
dollars
© 2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
20. In addition to political considerations, all of
the following are reasons for trade restrictions
except
a.Equalizing a nation’s balance of payments
b.Protecting new and weak industries
c.Protecting the health of citizens
d.Protecting national security
e.All of the answer choices are reasons for trade
restrictions
20. In addition to political considerations, all of
the following are reasons for trade restrictions
except
a.Equalizing a nation’s balance of payments
b.Protecting new and weak industries
c.Protecting the health of citizens
d.Protecting national security
e.All of the answer choices are reasons for trade
restrictions
Tags
Categories
BusinessDownload
Download Slideshow Get the original presentation fileQuick Actions
Statistics
- Views 37
- Slides 72
- Age 422 days
Related Slideshows
1
DTI BPI Pivot Small Business - BUSINESS START UP PLAN
MeljunCortes
31 views
1
CATHOLIC EDUCATIONAL Corporate Responsibilities
MeljunCortes
31 views
11
Karin Schaupp – Evocation; lançamento: 2000
alfeuRIO
31 views
10
Pillars of Biblical Oneness in the Book of Acts
JanParon
27 views
31
7-10. STP + Branding and Product & Services Strategies.pptx
itsyash298
29 views
44
Business Legislation PPT - UNIT 1 jimllpkggg
slogeshk98
33 views