Week 2 International Business and Trade PDF

INTRODUCTION TO INTERNATIONAL BUSINESS JOEMAR KEVIN AND TRADE ROBLO,MBA What comes to your mind when you hear the word 'INTERNATIONAL BUSINESS and TRADE'? - Global exchange of goods, services, and capital between countries - International markets - Cross-border investments - Trade agreements - Sup...

INTRODUCTION TO INTERNATIONAL BUSINESS JOEMAR KEVIN AND TRADE ROBLO,MBA What comes to your mind when you hear the word 'INTERNATIONAL BUSINESS and TRADE'? - Global exchange of goods, services, and capital between countries - International markets - Cross-border investments - Trade agreements - Supply chains - Import/export regulations - Economic interdependence between nations - Legal systems - Currencies - Market conditions when operating internationally OBJECTIV ES: 01 To know more about International Business & Trade 02 Identify between the International Business & International Trade 03 To know more about Globalization INTERNATIONAL BUSINESS Operations of companies conducting economic activities across national borders, involving the production, purchase, and sale of goods and services in multiple countries. Commercial transactions between private and government entities across two or more countries. TAKE NOTE: Companies need to adjust to the different cultures, laws, and regulations that exist in the countries they enter Companies need to adjust to the different cultures When doing business in Muslim countries, it's essential to adapt to local cultural and religious practices. For example, in predominantly Muslim regions, pork is generally not consumed due to religious dietary restrictions. If your business involves selling chicken and pork products, you should: 1.Respect Local Dietary Restrictions: Emphasize your chicken products and ensure that any pork products are not marketed or sold in areas where it's not acceptable. 2.Label Products Clearly: Make sure your packaging and marketing materials clearly indicate which products are chicken and which are pork, and provide information about halal certification if applicable. 3.Adapt Your Offerings: Consider offering more halal-certified products or alternatives that align with local dietary practices. 4. Understand and Respect Local Customs: Familiarize yourself with other cultural norms and practices to ensure your business operations are respectful and considerate of the local culture. Not only in food but also in laws and regulations What happens if companies do not conduct in- depth research about the country where they are entering the business? INTERNATIONAL TRADE The exchange of goods and services between countries, typically through imports and exports, is known as international trade. This process allows countries to obtain products and services that they cannot produce as efficiently or cheaply domestically, and it helps businesses reach new markets. INTERNATIONAL Exports: These are goods and services produced in one country and sold to TRADE another. When a country exports products, it sends them out to foreign markets. For example, if a country makes high-quality cars and sells them to other countries, those cars are considered exports. Imports: These are goods and services purchased by one country from another. When a country imports products, it buys them from foreign markets. For instance, if a country needs to buy oil from another country, that oil is considered an import. WHY DO WE NEED TO IMPORT? Countries are most likely to import goods or services that their domestic industries cannot produce as efficiently or cheaply as the exporting country INTERNATIONAL TRADE TOP EXPORTERS AND IMPORTERS In 2022, the top exporters of Beauty Products were France ($10.8B), South Korea ($7.09B), United States ($6.02B), Japan ($4.57B), and Germany ($4.13B). In 2022, the top importers of Beauty Products were China ($11.1B), United States ($5.77B), Hong Kong ($3.78B), Germany ($2.85B), and Singapore ($2.58B) Some of the popular food products for exports from the Philippines include mangoes, bananas, pineapple, tuna, cocoa, coconut and the coconut oil  01 GLOBALIZATION GLOBALIZATION Globalization is a term used to describe how trade and technology have made the world into a more connected and interdependent place. Globalization also captures in its scope the economic and social changes that have come about as a result. The wide-ranging effects of globalization are complex and controversial. As with major technological advances, globalization has delivered benefits to the world’s societies but has been the target of criticism for allegedly harming certain groups and aggravating inflation, supply chain disruptions, trade disputes, and national security concerns. Understanding the relative costs and benefits can pave the way for alleviating problems while sustaining GLOBALIZATION TWO COMPONENTS The globalization of Markets The globalization of Productions GLOBALIZATION OF MARKETS This involves the merging and integration of markets across different countries, leading to a more unified global marketplace. Companies can now sell their products and services in multiple countries, and consumers have access to a wider variety of goods from around the world. This integration can lead to increased competition, more choices for consumers, and opportunities for businesses to expand their reach. EXAMPLE: DALI STORE – Even some of their product proudly pinoy made, they also GLOBALIZATION OF MARKETS Example: A brand like McDonald's operates in many countries, adapting its menu to local tastes while maintaining a consistent global brand identity. Coconut coffee in Asian countries GLOBALIZATION OF PRODUCTIONS An easy flow of capital, movement of labor, trade, and other components of economic production across the globe. It defines the production of goods in more than one location or they outsource. Benefits of globalization of production. Companies often set up production facilities or source materials in different parts of the world to take advantage of lower costs, specialized skills, or resources. This can lead to more efficient production processes and cost savings, but it also requires managing complex supply chains. GLOBALIZATION OF PRODUCTIONS Example: An electronic device might be designed in the United States, have components manufactured in South Korea and China, and then be assembled in Vietnam.  ADVANTAGES OF SOURCING LABOR LAND CAPITAL Manufacturing jobs might be outsourced to The physical cost of land, including buying or Countries with better infrastructure and countries where labor costs are lower, such as leasing property for factories, offices, or retail technology may have more efficient India, Bangladesh and Philippines, because it spaces, also varies. Some countries or regions production processes. For example, allows companies to produce goods at a lower may offer cheaper land for development, which Germany’s advanced manufacturing cost. However, the quality of the labor might can significantly impact business costs. technology allows for high-quality differ based on the skill level of the workforce. production, even though labor costs might Influences and Goals of International Business: Companies participate in international business to achieve the following key objectives: 1.Expand Sales: 1.Entering international markets allows companies to increase their customer base by reaching new regions and demographics, ultimately boosting sales and revenue. 2.Acquire Resources: 1.Business look foreign resources such as capital and technologies and information because those are either not available in their country or those can reduce the costs of the company. 3.Minimize Risk: 1.Companies who seek out foreign markets minimize swings in sales and profits arising out of business cycles recessions and expansions which Problems in International Business Political and Legal Economic Differences Differences in the currency Differences in the Differences units Language Problems in International Business Differences in the Trade Restrictions High Cost of Distance Differences in Trade Marketing Infrastructure Practices Problems in International Business Political and Legal Differences Different countries have unique political systems and legal frameworks that impact how businesses operate. For example, regulations around labor, taxes, and environmental standards can vary widely. Political instability or changes in government can lead to unexpected changes in these regulations, affecting business operations. Companies must understand and comply with the local laws and be prepared to adapt to political changes. Economic Differences Economies differ in terms of their level of development, inflation rates, and overall economic stability. For example, emerging markets might experience rapid growth but also high inflation, while developed economies may offer stability but slower growth. These economic conditions can influence pricing strategies, market demand, and Problems in International Business Differences in Currency Units When trading internationally, businesses deal with multiple currencies. Exchange rate fluctuations can impact the cost of importing and exporting goods, as well as profitability. For instance, if a company’s home currency strengthens against the foreign currency, its exports might become more expensive and less competitive abroad. Managing currency risk through hedging strategies and careful financial planning is crucial Economic Differences Language barriers can create challenges in communication, leading to misunderstandings and errors. These barriers can affect negotiations, marketing messages, customer service, and documentation. Businesses need to invest in translation services and cultural training to ensure clear Problems in International Business Differences in the Marketing Infrastructure Marketing practices and distribution channels vary by country. For example, digital marketing strategies that work in one country might not be effective in another due to different media consumption habits or regulatory restrictions. Companies must adapt their marketing strategies to align with local preferences and infrastructure. Trade Restrictions Governments may impose trade barriers such as tariffs, quotas, and embargoes, which can increase the cost of doing business and restrict market access. These restrictions can affect the flow of goods and services and may require companies to find alternative markets or adjust their supply chains. Problems in International Business High Cost of Distance: Operating in distant markets can lead to higher costs associated with transportation, logistics, and communication. Managing a global supply chain involves coordinating shipments, dealing with customs, and ensuring timely delivery, all of which can add to operational expenses. Trade Practices Business customs and practices vary across cultures and countries. This includes negotiation styles, contract terms, and relationship management. Companies must understand and respect these differences to build effective business relationships and avoid conflicts.  02 THANK YOU RESOURCES https://www.piie.com/microsites/globalization/what-is-globalization  ESSAY Businesses must adapt to the diverse cultures, laws, and regulations of the countries QUESTION they expand into. Beyond the example I provided, why do you believe it is important for companies to respect each country's unique characteristics when engaging in international trade?