International Business, 6th Edition

Global Marketplaces and

Business Centers

2-1
Griffin & Pustay
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THE WORLD ECONOMY

2-2
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MARKETPLACES OF NORTH AMERICA
1. United States
Third largest population in world
Fourth largest land mass
Largest economy
27 percent of world’s GDP in 2006
Prime market for exports

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THE U.S. DOLLAR

2-4
Invoicing Flight
currency capital

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2. Canada
 Second largest land mass
 80 percent of population concentrated along U.S./Canadian
border

2-5
 Rich natural resources
 Trade with U.S. - single largest bilateral trade relationship in
the world
Advantages of Canada
 Proximity to U.S. market

 Stability of legal and political systems

 Excellent infrastructure and educational systems

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HEADQUARTERS OF WORLD’S LARGEST
CORPORATIONS IN 2007 BY COUNTRY

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3. Mexico
 Largest Spanish-speaking nation
 Federal government system

 Participant in NAFTA along with U.S. and Canada

2-7
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 CENTRAL AMERICA AND THE
CARIBBEAN
Economic development hindered by:
Politicalinstability
Chronic U.S. military intervention

2-8
Inadequate educational systems
Weak middle class
Poverty
Import limitations

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MARKETPLACES OF WESTERN EUROPE

2-9
European Union Member Countries

Other Countries in Western Europe

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EURO COUNTRIES
 Belgium  Ireland
 France  Greece

2-10
 Luxembourg  Portugal

 Germany  Spain

 Italy  Austria

 Netherlands  Finland

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MARKETPLACES OF EASTERN
EUROPE
 Belarus
 Russia

2-11
 Georgia
 Estonia
 Moldova
 Latvia
 Ukraine
 Lithuania
 Azerbaijan
 Armenia

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MARKETPLACES OF CENTRAL
EUROPE
 Romania  Albania
 Bosnia-Herzegovina  Austria

 Croatia  Bulgaria

 Macedonia  Czech Republic

 Slovenia  Slovak Republic

 Serbia  Hungary

 Montenegro  Poland

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MARKETPLACES OF ASIA
 Japan  India
 Australia and New  Afghanistan and Central

2-13
Zealand Asian Republics
 The Four Tigers  Southeast Asian

 China Countries

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JAPAN
 Second largest economy
 GDP of $4.3 trillion in 2006

2-14
 Industries controlled by keiretsu
 GDP growth rate of 1.6 percent
(since 2000)

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THE FOUR TIGERS

2-15
South Korea Taiwan

Singapore Hong Kong

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CHINA
 World’s most populous country –
approximately 1.3 billion people

2-16
 Communist ideology mixed with market-
oriented economic policies
 Heavy FDI

INDIA
 World’s second most populous country
 Per capita GDP of $820
 British colony until 1947

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SOUTHEAST ASIAN COUNTRIES
 Thailand, Malaysia, and Indonesia
 Low labor costs

2-17
 Significant FDI in recent years

 Continued recovery from currency crisis in 1997

and 1998

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MARKETPLACES OF
AFRICA AND THE MIDDLE EAST
 Middle East
 Africa  Cradle of civilization
 867 million people  Major economies:

2-18
 54 countries  Saudi Arabia
 Major economies:
 Kuwait
 South Africa  UAE
 Ivory Coast

 Algeria

 Nigeria

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MARKETPLACES OF SOUTH
AMERICA
 Brazil  Colombia
 Bolivia  French Guiana

2-19
 Uruguay  Paraguay

 Argentina  Peru

 Chile  Ecuador

 Venezuela

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Legal, Technological, Accounting
and Political Environment
THE LEGAL ENVIRONMENT:
DIFFERENCES IN LEGAL SYSTEMS
 Common Law
 Civil Law

 Religious Law

 Bureaucratic Law
THE LEGAL ENVIRONMENT:
DOMESTICALLY ORIENTED LAWS

Impact

International Business practices of

Firm’s foreign firms
competitiveness
domestic of domestic
operating outside
the country’s
operations firms borders
THE LEGAL ENVIRONMENT:
LAWS DIRECTLY AFFECTING
INTERNATIONAL BUSINESS TRANSACTIONS
 Sanctions

 Embargos

 Export control of dual-use products

 Extraterritoriality
THE LEGAL ENVIRONMENT:
LAWS DIRECTED AGAINST FOREIGN FIRMS

 Nationalization

 Expropriation

 Confiscation

 Privatization

 Repatriation
THE LEGAL ENVIRONMENT:
IMPACTS OF MNCS ON HOST COUNTRIES

-Economic
-Political
-Cultural

Positive Negative
Effects Effects
THE TECHNOLOGICAL
ENVIRONMENT
 Foundation& Determinants
Resource base
Investments in infrastructure and human
capital
Technology transfer
Protection of intellectual property rights
THE ACCOUNTING ENVIRONMENT:
THE ROOTS OF NATIONAL DIFFERENCES

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THE ACCOUNTING ENVIRONMENT:
DIFFERENCES IN ACCOUNTING PRACTICES
 Valuation and Revaluation of Assets
 Valuation of Inventories

 Dealing with the Tax Authorities

 Use of Accounting Reserves

 Other Differences
THE ACCOUNTING ENVIRONMENT:
IMPACT ON CAPITAL MARKETS

 Evaluating the performance of firms

incorporated in different countries
 Assessing the riskiness of potential loans
THE POLITICAL ENVIRONMENT:
POLITICAL RISK

Political Risks

Owners Operatin Transfer

hip Risk g Risk Risk
THE POLITICAL ENVIRONMENT:
POLITICAL RISK

Political risks

Macropolitica
Micropolitical
l
THE POLITICAL ENVIRONMENT:
POLITICAL RISK

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THE POLITICAL ENVIRONMENT:
POLITICAL RISK ASSESSMENT
 Democracy or dictatorship?
 Free market or government control?

 Public or private sector customers?

 Arbitrary change to policies or rule of law?

 Stability of the existing government?

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END LESSON