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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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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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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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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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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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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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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