Ch 1 International

Business
 International Transactions - export-import trade, direct
foreign investment - wholly owned subsidiaries, joint
ventures; licensing, franchising, outsourcing, and
management contracts.
 More than one set of environmental variables.
 Interactions between countries - Trade and foreign
policies, Tariffs and other barriers, and Exchange rates.
 Variables which are Especially Important- Infrastructure,
Market structure, and Socio/cultural variables.
The Global Business
Environment
 Collapse of communist economies.
 Economic power of western nations.
 Rise of newly industrialized nations.
 Free market economies.
 Belief in open markets, trade and foreign
investments as the road to economic
development.
The Global Business
Environment
 Trade Agreements and stabilization of trade
policies*.
 Regional trade blocks.
 Free Market Economies*.
 Measures to facilitate trade.
 Globalization of Markets*
 Big Emerging Markets*
 The internet*
* (see slides)
The Global Bus. Env. - Free
Market Economies
 Privatization and deregulation.
 Especially in financial services, transportation
and communications.
 Lower barriers to trade.
The Global Bus. Env. -
Trade Agreements
 World Trade Organization (W.T.O)
 North American free Trade Area (N.A.F.T.A)
 European Union (E.U)
 A.S.E.A.N. Free Trade Area (A.F.T.A.)
 Southern Common Market (Mercosur)
Asia-Pacific Economic Cooperation
(A.P.E.C)
World Trade Organization
 Created at the conclusion of the last G.A.T.T.
agreement.
 149 countries (as of December 2005)
 Functions:
• Administering WTO trade agreements (e.g.,GATT, GATS, TRIPS)
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations 
 WTO | About the organization
 North American Free Trade
Agreement – NAFTA

GNP: $10.8 trillion; 406 million people

03/09/98 Copyright 1997 by Houghton Mifflin Company. All rights reserved.

European Union

GNP $9 trillion; 386 million people

 Belgium  Netherlands 2004 – Czech Republic
 Denmark  Portugal Cyprus, Estonia,
 France  Spain Hungary, Poland,
 Germany  U.K. Slovenia, Bulgaria,
 Greece  Austria Latvia, Lithuania,
 Ireland  Finland Malta, Romania,
 Italy  Sweden Slovakia.
 Luxembourg
ASEAN/ A.F.T.A.
ASEAN Free Trade
ASEAN Area
 GNP: 546 Billion: 512 million People
Brunei
 Brunei
 Indonesia
 Laos
 Laos
 Myanmar
 Malaysia
 Malaysia
 Myanmar
 Indonesia
 Philippines
 Singapore
 The Philippines
 Thailand
 Singapore
 Vietnam  Thailand
A.F.T.A.
M-6

CHINA

BHU.
INDIA
BNGL. Hamol TAIWAN
MYANMAR Halphong Hong Kong
LAOS
Vietlane
Rangoon THAILAND Manila
VIETNAM
Bangkok
CAMBODIA
Phnom Peih Ho Chi PHILIPPINES
Minh city

Kuala Lumpur BRUNEI

MALAYSIA
Medan
SINGAPORE
Palembang INDONESIA
PAPU NEW
Jakarta
Sematany GUINEA
Bandung
Surabaya

AUSTRALIA
Southern Cone Common Market
(Mercosur)

GNP: $1.3 trillion; 220 million people

 Argentina Bolivia

 Brazil Chile

 Paraguay Uruguay
Mercosur
APEC - Asia Pacific
Economic Cooperation
 Australia, Brunei, Canada, Chile, China, Hong
Kong, Indonesia, Japan, Korea, Malaysia,
Mexico, New Zealand, The Philippines, Papua
New Guinea, Singapore, Taiwan, Thailand and
the U.S.
 Forum for promoting trade liberalization and
economic cooperation
The Global Bus. Env. -
Globalization of Markets
 Global linkages - trade, financial markets, tech.,
comm. & transportation, etc.
 Global Competition.
 Global market segments.
 Mass Marketing and Global Strategies.
 Restructuring of Organizations
 Mergers, consolidations, centralization, global
production strategies, global supply & R&D
arrangements, etc.
The Global Bus. Env. - Big
Emerging Markets.

Asia - ASEAN, CEA, India, South

Korea.
Latin America - Mexico, Argentina,
Brazil.
Africa - South Africa.
Europe - Poland, Turkey
The Global Bus. Env. -
Internet

Emerging as a major international

business tool for - Sales (both
business-to-business and consumer),
research, advertising, and
communications.
Problems with govt. regulations,
tariffs, and taxation.
Reasons for Expanding
into International Markets
 Domestic Market Saturated
 Increase market size and extend product life cycle
 Enhance your return on invested capital
 Enhance location advantages for suppliers or customers
 Higher Sales, Economies of Scale, Risk Diversification,
transfer of knowhow, global brands etc.
 Growth Opportunities
 Globalization of Market