International Business: Business in a Borderless World

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International Business Business in a Borderless
World
3

• Business 1000
• Introduction to Business

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Learning Objectives

• Explore some of the factors within the
  international trade environment that influence
  business.
• Investigate some of the economic,
  legal-political, social-cultural, and
  technological barriers to international business.
• Specify some of the agreements, alliances, and
  organizations that may encourage trade across
  international boundaries.
• Summarize the different levels of organizational
  involvement in international trade.
• Contrast two basic strategies used in
  international business.
• Assess the opportunities and problems facing a
  small business considering expanding into
  international markets.

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What is International Business?
The buying, selling and trading of goods and
services across national boundaries
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The Global Marketplace

• Total volume of world trade is 8 trillion
  annually
• Globalization is occurring the world is becoming
  a single large market an interconnected system

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Absolute Comparative Advantage

• Absolute Advantage
• One source one producer most efficient producer
• Comparative Advantage
• Specialized production due to relative efficiency

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Trade Between Countries

• Importing
• Exporting
• Balance of Trade

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Balance of Trade
Imports lt Exports Trade Surplus (Favourable)
Exports lt Imports Trade Deficit (Unfavourable)
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Top 5 Countries Canada Traded with in 2000
Exports ( billions) Imports ( billions) Trade Balance ( billions)
United States 359.2 229.5 129.0 Surplus
Japan 9.1 16.6 7.5 Deficit
United Kingdom 5.7 13.0 7.3 Deficit
China 3.6 11.3 7.7 Deficit
Mexico 2.0 12.1 10.1 Deficit
Source Statistics Canada and US Census Bureau,
http//www.strategis.ic.gc.ca/sc_mrkti/tdst/tdo/td
o.php
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International Trade Barriers

• Economic
• Economic development
• Infrastructure
• Exchange rate
• Legal / Political
• Laws and regulations
• Tariffs and trade regulations
• Exchange controls, quotas, and embargoes
• Political barriers

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International Trade Barriers, Cont

• Social / Cultural
• Differences in spoken and body language
• Differences in family roles and in perception of
  time, religion and customs
• Technological

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GATT and NAFTA

• General Agreement on Tariffs and Trade (GATT)
• Trade agreement that provides a forum for tariff
  negotiations and a place where international
  trade problems can be discussed/solved
• North American Free Trade Agreement (NAFTA)
• Eliminates most tariffs and trade restrictions on
  agricultural and manufactured products between
  Canada, Mexico and US (1994-2009)

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Increasing Global Involvement
Multinational Corporation Direct Investment Joint
Ventures Contract Manufacturing Licensing/Franchis
ing Trading Companies Exporting
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Developing Strategies

• Multi-national Strategy
• Global Strategy