Business In Action: Thriving In The Digital Enterprise PDF

Business in Action: Thriving in the Digital Enterprise Tenth Edition Chapter 3 The Global Marketplace Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Why N...

Business in Action: Thriving in the Digital Enterprise Tenth Edition Chapter 3 The Global Marketplace Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Why Nations Trade Economic globalization – The increasing integration and interdependence of national economies around the world Economies of scale ölçek ekonomileri – Savings from buying parts and materials, manufacturing, or marketing in large quantities Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Why Nations Trade Focusing on relative strengths güçlü yönler Expanding markets Pursuing economies of scale Acquiring materials, goods, and services Keeping up with customers Keeping up with competitors Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved How International Trade Is Measured Balance of trade – Total value of the products a nation exports minus the total value of the products it imports, over some period of time. Trade deficit – An unfavorable trade balance is created when a country imports more than it exports Balance of payments – The sum of all payments a country receives from other countries minus the sum of all payments it makes to the other countries, over some specified period of time Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Foreign Exchange Rates and Currency Valuations Exchange rate – The rate at which the money of one country is traded for the money of another Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Strong Currency: Who Gains, Who Loses? Gains Loses Turkish buyers pay less for Turkish companies must imports. compete with lower-priced imports in the Turkish market. Lower-cost imports help keep inflation in check. International tourists are discouraged from visiting Travel to other countries is Turkey. cheaper. International investors are less International expansion and likely to invest in Turkish investment are cheaper. capital markets. Turkish exports are more expensive to buyers in other countries. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Weak Currency: Who Gains, Who Loses? Gains Loses Turkish firms are under less Turkish buyers pay more for price pressure from imports in imports. the domestic market. Higher-priced imports International tourists are contribute to inflation. encouraged to visit Turkey. Travel to other countries is International investors are more expensive. more likely to invest in Turkish capital markets. International expansion and investment are more Turkish exports are more price- expensive. competitive in foreign markets. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Free Trade Free trade: International trade unencumbered by restrictive measures – Like free-market capitalism, no trade is completely free (i.e., there are always a certain amount of regulations). Instead, international trade should be viewed along a continuum from “more free” to “less free.” Supporters of free trade generally acknowledge that it produces winners and losers but argue that the winners gain more than the losers lose, so the net effect is positive. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Free Trade Conflicts between nations Conflicts within nations Asymmetrical wins and losses Short vs long-term effects Broader business enviornment Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Conflicts in International Trade (1 of 4) Protectionism – Government policies aimed at shielding a country’s industries from foreign competition – Governments may choose to protect one or more industries if free trade is not in the best interest of the country’s national security, domestic industries, workforce, or consumers. Tariffs – Taxes levied on imports – Generates revenue, restricts trade, punishes other countries from disobeying international (trade) laws. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Conflicts in International Trade (2 of 4) Import quotas ithalat kotaları – Limits placed on the quantity of imports a nation will allow for a specific product Embargo – A total ban on trade with a particular nation (a sanction) or of a particular product Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Conflicts in International Trade (3 of 4) Export subsidies – A form of financial assistance in which producers receive enough money from the government to allow them to lower their prices in order to compete more effectively in the global market Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Conflicts in International Trade (4 of 4) Dumping – Charging less than the actual cost or less than the home-country price for goods sold in other countries Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved International Trade Organizations (1 of 3) World Trade Organization: Permanent forum for negotiating, implementing, and monitoring international trade procedures, and for mediating trade disputes among 160+ member countries – Guiding principles: Preventing discriminatory policies that favor some trading partners or a country’s own products over those of others, Reducing trade barriers between countries, Making trade policies more predictable and less arbitrary, Discouraging unfair practices, and Helping less-developed countries benefit from international trade. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved International Trade Organizations (2 of 3) International Monetary Fund (IMF) – Formed in 1944 – Aims to monitor global financial developments, provide technical advice and training, provide short- term loans to countries that are unable to meet their financial obligations, and work to alleviate poverty in developing economies – 190 members Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved International Trade Organizations (3 of 3) World Bank – Founded to finance reconstruction after WWII – Involved in projects around the world aimed at addressing poverty, health, education, and other concerns in developing countries – UN agency owned by its 189 member nations Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved International Trade Organizations (3 of 3) World Bank – Group of 5 financial institutions ▪ IFC: Mobilizing private sector investment & advisory ▪ MIGA: Political risk insurance ▪ IBRD: financial products, policy ▪ IDA: Zero or low interest loans and grants ▪ ICSID: Settlement of investment disputes Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Trading Blocs (1 of 4) Trading blocs – Organizations of nations that remove trade barriers among their member countries and establish uniform barriers to trade with nonmember nations Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Trading Blocs (2 of 4) North American Free Trade Agreement (NAFTA) – Formed by the United States, Canada, and Mexico European Union (The EU) – Formed by over 2 dozen European countries Asia-Pacific Economic Cooperation (APEC) – An organization of 21 countries along the Pacific Rim Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved The Global Business Environment (1 of 3) Culture – A shared system of symbols, beliefs, attitudes, values, expectations, and norms for behavior Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Legal Differences in the Global Business Environment Tax haven – A country whose favorable banking laws and low tax rates give companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Legal Differences in the Global Business Environment Bribery – The practice of making payments to government officials to secure contracts, gain priority services and access, or other business advantage. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Forms of International Business Activity Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Forms of International Business Activity Importing – Purchasing goods or services from another country and bringing them into one’s own country Exporting – Selling and shipping goods or services to another country – Least risky form of expanding abroad. Importing and exporting does not involve establishing a physical or legal business presence in other countries. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Forms of International Business Activity Licensing – Licensing intellectual property such as a design patent to a company in another country, which then produces the product and sells it locally. Franchising – Selling the rights to use an entire business system, such as a fast-food restaurant, including the brand name and internal processes. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Forms of International Business Activity Strategic alliances and joint ventures: – Forming a long-term business partnership with a local company in a new market or creating a new company with a local partner. Foreign Direct Investment (FDI) – Investment of money by foreign companies in domestic business enterprises (buying an existing company or establishing a new one) – Multinational Corporations (MNCs): Companies with operations in more than one country Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Strategic Approaches to International Markets (1 of 2) Multidomestic strategy – A decentralized approach to international expansion in which a company creates highly independent operating units in each new country – Local managers have a lot of freedom to run their operations. – Allows flexibility and efficiency in reacting to local market needs but doesn’t deliver economies-of-scale. – Lack of centralized control may allow local managers to act contrary to corporate strategy. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Strategic Approaches to International Markets (2 of 2) Global strategy – A highly centralized approach to international expansion, with headquarters in the home country making all major decisions Transnational strategy – Hybrid approach; “Think globally, act locally” – Major strategic decisions and business systems (e.g., accounting, purchasing) centralized but local units given freedom to make decisions for local markets. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Multidomestic vs Global Multidomestic: Decentralized control, with individual divisions or subsidiaries in various countries free to pursue strategies that align with local markets Global: Centralized control and single approach, applied as uniformly as possible around the world Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved Transnational Transnational: Pursues economies of scale through uniform globalized activities that are adapted as needed to local conditions Source: Based on Stephen P. Robbins and Mary Coulter, Management, 14th ed. (New York: Pearson, 2018), 118. Copyright © 2024, 2020, 2017 Pearson Education, Inc. All Rights Reserved