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Understanding business 8th by mcchugh nickels chapter 03

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CHAPTER

Competing*
in Global
Markets

3

Nickels

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McHugh

McGraw-Hill/Irwin

Understanding Business, 8e

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McHugh
1-1

3-1

© 2008 The McGraw-Hill Companies, Inc., All Rights


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The Dynamic Global Market
World Population by continent:

** The U.S. is the largest importing nation in the World!
3-2


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Growing World Population

In
Billions

Source: Population Reference Bureau

3-3


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Why Trade With
Other Nations?

• No nation can produce all
its needs

• Mutually beneficial
exchange

• Natural Resources or

Technology- Produce or
Buy?
3-4


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Theories of Advantage
Comparativ
e

U. S.
China

China

U. S.
Output per
Unit of
Input

Softwar
e

Clothin
g
3-5


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Theories of Advantage
Absolut = Virtual
e SouthMonopoly
Africa

Output
per Unit of
Input

The Rest of
the World

Diamond
Production

3-6


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Global Competitiveness
Country

Strengths

United States

Technology,
R & D Spending

Finland

Univ. Enrollment, Efficient Legal
System, Business Ethics

Taiwan

Cell-phone Ownership,
Tech. Innovation,
Local Firms Competitiveness

Singapore

Savings Rate, Math/Science
Education, Political Trust

Sweden

H.S. Enrollment, Press Freedom,
Phone Access

3-7


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Global Trade

• Goods & Services
• Importing
• Exporting

• Measuring Trade

• Balance of Trade/Payments
• Trade Deficit
• Dumping
3-8


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U. S. Trade in
Goods & Services (Billions)
Balance of
Trade

Source: St. Louis Business Monthly, Oct. 1999 & World Trade Organization & Wikipedia

3-9


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Leading Goods
Exporters/Importers
In Billions $
Country
United States
Germany
Japan
France
United Kingdom
World Total
Source: Wikipedia, 2005

Exports
928
1016
539
443
374
9,099

Imports
1,476
717
402
420
439
8,823
3-10


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Strategies for
Reaching Global Markets


Licensing



Exporting



Franchising



Contract
Manufacturing



Joint Ventures



Joint Ventures &
Strategic Alliances



Foreign Direct
Investment

3-11


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Country Presence
of Well-Known Companies

Source: World Features Syndicate

3-12


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Starbucks’ Expansion
World Locations

Source: Starbucks.com May 2006

3-13


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Most Spoken Languages
Most Spoken
Languages
in the U.S.

Most Spoken
Languages
in the World

Source: 2005 CIA World Factbook

3-14


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Foreign Direct
Investments in the U.S.

Source: Bureau of Economic Analysis, 2004

3-15


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World’s Largest MNCs
1) Wal-Mart Stores 
2) Exxon Mobil 
3) General Motors 
4) BP 
5) Ford Motor 
6) Daimler Chrysler 
7) Royal Dutch/Shell
8) General Electric 
9) Toyota Motor 
10)Mitsubishi

Revenue ($Billions)
217
213
175
174
162
136
135
125
121
112

Source: Business Week; Morgan Stanley Capital International; and S&P Compustat

3-16


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What’s On Your Pizza








Costa Rica - Coconut
France - Bacon, onion and fresh cream
India - Pickled ginger, minced mutton and tofu
Australia - Shrimp and pineapple
Pakistan - Curry
Brazil - Green peas
Japan - Squid and mayo jaga

Source: World Features Syndicate

3-17


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Forces Affecting Trading
in Global Markets

• Socio-cultural
• Economic & Financial
• Legal & Regulatory
• Physical & Environmental

3-18


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Cultural Differences
in Global Markets





Language
Religion
Values &
Attitudes

• Social

Structure

• Aesthetics

• Personal

Communication
3-19


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Did You Know?


In Turkey it’s rude to cross your arms
while you are facing someone.



In the Arab world the left hand is
considered unclean; don’t eat with it!

• In India never pat someone’s head,
it’s the seat of the soul.

• The Chinese associate gifts such as
straw sandals, clocks and
handkerchiefs with funerals.

3-20


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Economic & Financial Forces

• No Worldwide Currency
• Currency Fluctuations
• Floating Exchange Rates
• Bartering/Countertrading
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U.S. Oil Imports

Source: Gibson Consulting 2005

3-22


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Nations That Have Not
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* Converted to the Metric System

United
States

Liberi
a

Source: 2005 Yourunits.com

Myanma
r
(Burma)

3-23


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Legal & Regulatory
Forces

1. Inconsistent Laws &
Regulations

2. Foreign Corrupt

Practices Act of 1978

3. Local Business Contact
Required

3-24


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Developing Countries
Need Infrastructure
• 1.2 billion people lack clean
drinking water

• 2 billion people
lack electricity

• 3 billion people lack adequate
sanitation

3-25


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