The Global Marketplace and International Business Organizations

1. The GlobalThe Global
MarketplaceMarketplace
Chapter 3.2 and 3.3Chapter 3.2 and 3.3

2. The InternationalThe International
Business EnvironmentBusiness Environment
• Geography
– Location, climate, terrain, seaports, and
natural resources
• Culture
– Hugging vs. handshake
– Accepted behaviors and values

3. • Economic Development
– Literacy level
– Technology
– Agricultural Dependency
• Political and Legal Concerns
– Government regulations/restrictions
– Political stability
– Trade barriers

4. Trade BarriersTrade Barriers
• Quotas – Governments set a limit
on the quantity of a product that
may be imported or exported.
• Tariffs – A tax that a government
places on certain imported products.
• Embargoes – Stop the export or
import of a product completely.

5. Encouraging TradeEncouraging Trade
http://www.youtube.com/watch?v=65UcSx_LrZI

6. Encouraging TradeEncouraging Trade
• Free-Trade Zones
– A selected area where products can be
imported duty-free. The importer pays duty
only when the product leaves the zone.
• Free-Trade Agreements
– NAFTA (1993) – no taxes on trade within the 3
countries.
• Common markets
– EU – expand trade among the member
nations.

7. International BusinessInternational Business
OrganizationsOrganizations
• Multinational Company (MNC) –
an organization that does business in
several countries.
Parent Co divisions or separate
companies in other countries

8. MNC StrategiesMNC Strategies
• Global strategy – uses the same
product and marketing strategy
worldwide. (Coca-Cola)
• Multinational strategy – treats each
country differently. (McDonald’s)

9. MNC Benefits & DrawbacksMNC Benefits & Drawbacks
• Provides jobs and money to the
country.
• Can foster understanding, respect
between nations
• Can influence political power.
• Can have labor/factory issues. (Nike)

10. Global Market Entry ModesGlobal Market Entry Modes
• Licensing – Selling the rights to use
some intangible property (trademark or
brand name) for a fee or royalty. (Sports
products)
• Franchising – Set up a business that
looks and runs like the parent company.
Must pay a royalty and use certain
elements of the parent company.
• Joint Venture – An agreement between 2
or more companies to share a business
project. (popular for manufacturing
companies)

11. Intl Trade OrganizationsIntl Trade Organizations
• World Trade Organization (WTO) 1995
– Over 150 member countries
– Settles trade disputes
– Enforces free trade agreements
– Goals are to lower trade restrictions
• International Monetary Fund (IMF) 1946
– Over 150 member nations
– Promote economic cooperation
• World Bank (1944)
– Provided loans to rebuild after WWII.
– Gives aid to less developed countries