Title: Anyone believe It
1- Anyone believe Its not a Globalized Economy?
Fisher-Price recall Chinese-made Toys
contaminated with Lead-based Paint
Insanity is doing the same thing over and over
again and expecting different results. (Albert
Einstein)
2INTERNATIONAL COMMERCE___________________________
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- Why are Nike's shoes made in Vietnam but Toyota's
Tundra trucks are built in San Antonio? - __________________________________________________
___ - What is this situation's net on-shoring/off-shori
ng" result? - Why isnt everyone in Ohio happy with this?
- Would a law taxing foreign-earned Net Income of
US-based companies fix problem?
3INTERNATIONAL COMMERCE___________________________
_________________________________
- A Global Balance Sheet might show the US as the
World's largest Debtor (Borrower) and China as
the World's largest Creditor (Lender) - ______________________________
- How did this happen?
- Has this always been the case?
- Is it something to worry about?
- What should (could) be done about it?
4INTERNATIONAL COMMERCE
5INTERNATIONAL COMMERCE___________________________
_________________________________
Where does our oil come from? What happens if US
becomes energy-independent?
Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day) Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day) Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day) Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day) Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day) Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day)
Country Aug-09 Jul-09 YTD 2009 Aug-08 YTD 2008
CANADA 2,007 2,110 1,928 1,873 1,926
MEXICO 1,057 985 1,126 1,292 1,209
VENEZUELA 1,007 865 1,014 1,146 1,049
NIGERIA 877 858 694 1,035 998
SAUDI ARABIA 745 1,137 1,022 1,533 1,537
IRAQ 500 365 459 663 675
ALGERIA 404 143 253 348 313
ANGOLA 352 320 484 483 512
BRAZIL 269 375 332 169 217
COLOMBIA 260 286 261 247 190
- Import 269 more from Canada than Saudi Arabia
Source Energy Information Administration, US
Dept. of Energy
6ENERGY TRIVIA
US is Worlds Third largest Oil Producer (about
10) but Consumes about 24
About one-half of Imported Oil comes from Western
Hemisphere Nations
Nearly 50 of Energy is Produced from Coal and
Natural Gas Nuclear Capacity same as 1996 but
Applications for 26 New Plants pending
Source Energy Information Administration, US
Dept. of Energy
7Where are Global Markets Demographics
Population Growth Rates
8Where are Global Markets Demographics
Fertility Rates Number of children born to women
aged 15 to 49
9INTERNATIONAL COMMERCE___________________________
_________________________________
How do you Compete Internationally?
2008 Chevrolets Trax
1968 Fords World Car
- Or does Global Competition offer Unique Market
Segments and Countless Opportunities for Product
Differentiation? - Approaches. (1) Direct (2) Alliances (3)
Licensing
10INTERNATIONAL COMMERCE___________________________
_________________________________
EXCHANGE RATES Express Relationship between
Currencies of Transacting Countries
- 2001 (Strong Dollar) 1 USD 1.18
- 0.85 USD 1
- ________________________________________________
_ - 2005 (Weak Dollar) 1 USD 0.86 1.17 USD
1 - ________________________________________________
_ - 2008 (Very Weak Dollar) 1 USD 0.67 1.48
USD 1 - ________________________________________________
_ - Nov 2009 (No Change?) 1 USD 0.66 1.50 USD
1
11Historical Exchange Rates
Monthly Average Exchange Rates US Dollars per
Euro
Concerns about Inflation and US Economys
Recovery have weakened Dollar
- Cf. Textbook, pp. 118-127
12INTERNATIONAL COMMERCE___________________________
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Exchange Rate Impacts on Exports and Imports
MSRP 84,475 85,000
Cost to Buy in USA Germany
2001 (Strong Dollar) 71,804 100,301
2005 (Weak Dollar) 98,836 73,100
2009 (Very Weak Dollar) 126,713 56,950
13INTERNATIONAL COMMERCE___________________________
_________________________________
Germanys new finance minister has echoed
Chinese warnings about the growing threat of
fresh global asset price bubbles, fueled by low
US interest rates and a weak dollar. Financial
Times, Nov. 20, 2009
14Did you know China has only one time zone?
15Another Perspective on Balance of TradeHow does
US/China Relationship look now?
Current Account Balance of Payments As a
Percentage of GDP
16Which Countries are Growing? Which are not?
Where are Opportunities?
Growth in GDP per capita Percentage change,
annual rate
17INTERNATIONAL COMMERCE___________________________
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- LEGAL SYSTEM
- How does Society redress Inequitable Treatment?
- Contract Enforcement Will Contracts be
consistently Enforced? - Property Rights Do they include Intellectual
Property? - Product Safety and Liability Are there
standards? What kind of liability?
18INTERNATIONAL COMMERCE___________________________
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- CULTURE
- What are a Societys Shared and Learned Values?
How does it Live? - Ethics and Religion How do you reconcile
conflicting ethics? Can religion influence
business decisions? - Male/Female Roles and Authority What about
Cultures where Women dont (cant) exercise
authority? - Subtleties of Language, Tone and Manner Does it
matter how things are said?
19INTERNATIONAL COMMERCE___________________________
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- GLOBALIZED INSTITUTIONS
- Laws, Customs and Institutions (Public/Private)
that Manage, Expedite and Regulate Global Trade - World Trade Organization (WTO)
- World Bank
- Global-Scale Businesses
- United Parcel Service (UPS)
201907 Delivering documents by Bicycle in
Seattle Today 11th Largest Airline in the
World Processes Daily 2 of the Worlds
GDP Ships more than 13.5 Million
Packages/Day Largest User of Wireless
Technology The Clipboard Since 1996, spent
1 Billion on Supply Chain Management Services,
including Financing, that are available to any
Business or Person wanting to be Globalized
21INTERNATIONAL COMMERCE___________________________
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- Motivating Forces of Globalization
- Political Reduced Tariffs
- Technological Faster, More Reliable
Transportation and Communication
1950 1990 2000
France 18 5.9 3.9
Italy 25 4.9 3.9
USA 14 4.8 3.9
22INTERNATIONAL COMMERCE___________________________
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23INTERNATIONAL COMMERCE___________________________
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- EUROPEAN UNION (EU)
- Total Population Rate Increase 4.1
(Natural 0.4 Net Migration 3.7)
Natural Increase Rate
Germany -1.7
Italy -0.5
UK 1.4
USA 5.7
India 14.8
24THE CHINA FACTOR
- Worlds Leading Producer of Steel, Copper, Coal,
Aluminum and Cement
- 2005 Second Largest Oil Importer
- 2006 Second Largest Auto Market
Richmond, VA 3.42 Guangzhou, China 1.41
25- Positive Economic Benefits
- Lower Prices, Job Creation and Economic Growth
- Negative Impacts
- Shifting Job Distribution Diminished Sovereign
Authority Multiple Tax and Regulatory Standards
- Is it worth it? Do Benefits outweigh Costs?
26INTERNATIONAL COMMERCE___________________________
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- "Problem in Australia, chief. Everyone seems to
be asleep."Cartoon by Leo Cullum