C H AP T E R

SLIDE 1

CHAPTER

Business in the
Global Economy
3-1

International Business Basics

3-2

The Global Marketplace

3-3

International Business Organizations

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Principles of Business, 8e

3-2

The Global
Marketplace

Goal 1 Describe the components of the

international business environment.
Goal 2 Identify examples of formal trade
barriers.
Goal 3 Explain actions to encourage
international trade.
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SLIDE 2

INTERNATIONAL BUSINESS
ENVIRONMENT

C H AP T E R

SLIDE 3

Geography location, climate, terrain,

seaports, and natural resources of a
country have an impact on international
trade for that country
Ex. Hot weather will limit the types of crops
that can be grown. Rivers and seaports allow
for better shipping for international trade.

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Principles of Business, 8e

C H AP T E R

SLIDE 4

Cultural influences accepted behaviors,

customs, and values of a society impact
international business.
Ex. Hugging vs handshake, mexico
businesses close early for siesta (a relaxing
rest period)

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Principles of Business, 8e

C H AP T E R

SLIDE 5

Economic development
Literacy level better education systems
usually provide better goods and services
Technology increased technology means
faster and more efficient production
Agricultural dependency land, and
agriculture can limit or increase trade abilities

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Principles of Business, 8e

C H AP T E R

SLIDE 6

Political and legal concerns

governments regulate fair advertising and
enforce contracts.
Require safety inspections, etc. which make
trade difficult for some countries, and more
trustworthy for others.

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Principles of Business, 8e

ELEMENTS OF INTERNATIONAL
BUSINESS ENVIRONMENT

2012 Cengage Learning. All Rights Reserved.

C H AP T E R

SLIDE 7

Principles of Business, 8e

C H AP T E R

SLIDE 8

Checkpoint
List the four main elements of the
international business environment.
Geography
Cultural influences
Economic development
Political and legal concerns

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Principles of Business, 8e

C H AP T E R

INTERNATIONAL
TRADE BARRIERS

SLIDE 9

Quotas Ex. Oil quotas to keep prices stable

Tariffs

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Principles of Business, 8e

C H AP T E R

SLIDE 10

QUOTAS

Reasons for quotas - governments set a

limit on the amount of a product that may
be imported or exported within a given time.
To keep supply low and prices the same
To express displeasure at the policies of the
importing country
To protect one of a countrys industries from too
much competition from abroad

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Principles of Business, 8e

C H AP T E R

SLIDE 11

TARIFFS
Reasons for tariffs - taxes on certain
imported products keeps prices of
competition higher to encourage
purchasing locally.

To set amount per pound, gallon, or other unit

To set the value of a good

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Principles of Business, 8e

C H AP T E R

EMBARGOES

SLIDE 12

Reasons for embargoes the stopping of an

import or export completely
To protect their own industries, national security, etc.

To protect a countrys industries from

international competition more than the quota
or tariff will achieve
To prevent sensitive products from falling into
the hands of unfriendly groups or nations

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Principles of Business, 8e

C H AP T E R

SLIDE 13

Checkpoint
What are three formal trade barriers?
Quotas
Tariffs
Embargoes

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Principles of Business, 8e

C H AP T E R

FREE-TRADE ZONES

SLIDE 14

Used to promote international business in

a selected area where products can be
imported duty-free and then stored,
assembled, and/or used in manufacturing
Usually located around a seaport or airport

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Principles of Business, 8e

C H AP T E R

FREE-TRADE AGREEMENTS

SLIDE 15

Member countries agree to remove duties

and trade barriers on products traded
among them
Results in increased trade between
members

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Principles of Business, 8e

C H AP T E R

SLIDE 16

COMMON MARKETS
Allow companies to invest freely in each
members country
Allow workers to move freely across
borders
Examples

European Union (EU)

Latin American Integration Association (LAIA)

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Principles of Business, 8e

C H AP T E R

Checkpoint

SLIDE 17

What actions could be taken to

encourage international trade?
Actions that could be taken to encourage
international trade include free-trade zones,
free-trade agreements, and common
markets.

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Principles of Business, 8e