*
*
*
**
CHAPTER
Competing*
in Global
Markets
Nickels
McHugh
McGraw-Hill/Irwin
Understanding Business, 8e
McHugh
1-1
3-1
2008 The McGraw-Hill Companies, Inc., All Rights
*
*
*
The Dynamic Global
Market
World Population by continent:
** The U.S. is the largest importing nation in the World!
3-2
*
*
*
Growing World Population
In
Billions
Source: Population Reference Bureau
3-3
*
*
*
Why Trade With
Other Nations?
No nation can produce all
its needs
Mutually beneficial
exchange
Natural Resources or
Technology- Produce or
Buy?
3-4
*
*
*
Theories of Advantage
Comparativ
e
U. S.
China
China
U. S.
Output per
Unit of
Input
Softwar
e
Clothin
g
3-5
*
*
*
Theories of Advantage
Absolut = Virtual
e SouthMonopoly
Africa
Output
per Unit of
Input
The Rest of
the World
Diamond
Production
3-6
*
*
*
Global Competitiveness
Country
Strengths
United States
Technology,
R & D Spending
Finland
Univ. Enrollment, Efficient Legal
System, Business Ethics
Taiwan
Cell-phone Ownership,
Tech. Innovation,
Local Firms Competitiveness
Singapore
Savings Rate, Math/Science
Education, Political Trust
Sweden
H.S. Enrollment, Press Freedom,
Phone Access
3-7
*
*
*
Global Trade
Goods & Services
Importing
Exporting
Measuring Trade
Balance of Trade/Payments
Trade Deficit
Dumping
3-8
*
*
*
U. S. Trade in
Goods & Services (Billions)
Balance of
Trade
Source: St. Louis Business Monthly, Oct. 1999 & World Trade Organization & Wikipedia
3-9
*
*
*
Leading Goods
Exporters/Importers
In Billions $
Country
United States
Germany
Japan
France
United Kingdom
World Total
Source: Wikipedia, 2005
Exports
928
1016
539
443
374
9,099
Imports
1,476
717
402
420
439
8,823
3-10
*
*
*
Strategies for
Reaching Global Markets
Licensing
Joint Ventures &
Strategic Alliances
Exporting
Franchising
Contract
Manufacturing
Joint Ventures
Foreign Direct
Investment
3-11
*
*
*
Country Presence
of Well-Known Companies
Source: World Features Syndicate
3-12
*
*
*
Starbucks Expansion
World Locations
Source: [Link] May 2006
3-13
*
*
*
Most Spoken Languages
Most Spoken
Languages
in the U.S.
Most Spoken
Languages
in the World
Source: 2005 CIA World Factbook
3-14
*
*
*
Foreign Direct
Investments in the U.S.
Source: Bureau of Economic Analysis, 2004
3-15
*
*
*
Worlds Largest MNCs
1) Wal-Mart Stores
2) Exxon Mobil
3) General Motors
4) BP
5) Ford Motor
6) Daimler Chrysler
7) Royal Dutch/Shell
8) General Electric
9) Toyota Motor
10)Mitsubishi
Revenue ($Billions)
217
213
175
174
162
136
135
125
121
112
Source: Business Week; Morgan Stanley Capital International; and S&P Compustat
3-16
*
*
*
Whats On Your Pizza
Costa Rica - Coconut
France - Bacon, onion and fresh cream
India - Pickled ginger, minced mutton and tofu
Australia - Shrimp and pineapple
Pakistan - Curry
Brazil - Green peas
Japan - Squid and mayo jaga
Source: World Features Syndicate
3-17
*
*
*
Forces Affecting Trading
in Global Markets
Socio-cultural
Economic & Financial
Legal & Regulatory
Physical & Environmental
3-18
*
*
*
Cultural Differences
in Global Markets
Language
Religion
Values &
Attitudes
Social
Structure
Aesthetics
Personal
Communication
3-19
*
*
*
Did You Know?
In Turkey its rude to cross your arms
while you are facing someone.
In the Arab world the left hand is
considered unclean; dont eat with it!
In India never pat someones head,
its the seat of the soul.
The Chinese associate gifts such as
straw sandals, clocks and
handkerchiefs with funerals.
3-20
*
*
*
Economic & Financial
Forces
No Worldwide Currency
Currency Fluctuations
Floating Exchange Rates
Bartering/Countertrading
3-21
*
*
*
U.S. Oil Imports
Source: Gibson Consulting 2005
3-22
*
Nations That Have Not
*
* Converted to the Metric System
United
States
Liberi
a
Source: 2005 [Link]
Myanma
r
(Burma)
3-23
*
*
*
Legal & Regulatory
Forces
1. Inconsistent Laws &
Regulations
2. Foreign Corrupt
Practices Act of 1978
3. Local Business Contact
Required
3-24
*
*
*
Developing Countries
Need Infrastructure
1.2 billion people lack clean drinking
water
2 billion people
lack electricity
3 billion people lack adequate
sanitation
3-25
*
*
*
Protectionism
Mercantilism
Tariffs
Protective
Revenue
Import Quota
Embargo
Nontariff Barriers-Keiretsu
3-26
*
*
*
Trade Agreements
General Agreement on Tariffs & Trade (1948)
Uruguay Round of GATT (1986)
World Trade Organization (1995)
Common Markets
European Union (EU)
Mercosur
North American Free Trade Agreement (1994)
Central America Free Trade Agreement (2005)
3-27
*
*
*
Future Global Trade
Peoples Republic of ChinaPermanent Normal Trade
Relations/Rights
Russia & Others
Internet
Technology- Obstacles/Problems
3-28
*
*
*
Pros & Cons of
Offshore Outsourcing
Pros
Cons
More focus on areas
where they can excel and
grow
Jobs lost/wages fall
Reduces product quality
Outsourced work creates
efficiencies, resulting in
hiring more workers
Communication
becomes much more
difficult
Fuels global market
growth
3-29
