CHAPTER 3 Doing Business in Global Markets McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc All rights reserved NAME that COMPANY This Swissbased company has many foreign subsidiaries including Jenny Craig (weight management), Ralston Purina, Chef America (maker of Hot Pockets) and Dreyer’s Ice Cream in the United States as well as Perrier in France. The company employs over 328,000 people and has operations in almost every country in the world. Name that company! 1-2 BUSINESS in the GLOBAL MARKET LO 31 • Over 90% of companies doing business globally believe it is important for employees to have international experience • U.S. organizations (like UPS, MLB, the NFL and the NBA) are also expanding abroad 3-3 WORLD POPULATION by CONTINENT LO 31 3-4 WORLD POPULATION GROWTH LO 31 3-5 IMPORTING and EXPORTING LO 31 • Importing Buying products from another country • Exporting Selling products to another country • The U.S. is the largest importing and the second largest exporting nation in the world 3-6 CAN YOU SPARE a DIME? LO 31 Home Countries for Some of the World’s Billionaires • U.S. – 516 billionaires • China – 136 billionaires • Russia – 88 billionaires • Germany – 82 billionaires • India – 54 billionaires • U.K. – 43 billionaires • Hong Kong – 41 billionaires Source: Forbes, www.forbes.com, accessed November 2014 3-8 TRADING with OTHER NATIONS LO 31 • Countries with abundant natural resources (like Venezuela or Russia) need technological resources from other countries (like Japan) • Global trade allows countries to produce what they make best and buy what they need from others • Free Trade The movement of goods and services among nations without political or economic barriers 3-9 Company % of Earnings From Outside U.S Source: Investment Advisor, Advisor, August 2000 3-10 COMPARATIVE and ABSOLUTE ADVANTAGE 3-11 TRADE PROTECTIONISM 3-58 TARIFFS 3-59 IMPORT QUOTAS and EMBARGOS 3-60 WORLD TRADE ORGANIZATION 3-61 COMMON MARKETS 3-62 EU MEMBERS 3-63 NAFTA and CAFTA 3-64 NAFTA OBJECTIVES 3-65 NEW FREE TRADE AGREEMENTS 3-66 TEST PREP • What are the advantages and disadvantages of trade protectionism and of tariffs? • What is the primary purpose of the WTO? • What is the key objective of a common market like the EU? • Which three nations comprise NAFTA? 3-67 FUTURE of GLOBAL TRADE 3-68 OUTSOURCING Photo Credit: Vitor Lima 3-69 OFFSHORE OUTSOURCING 3-70 3-71 TEST PREP • What are the major threats to doing business in global markets? • What key challenges must India and Russia face before becoming global economic leaders? • What does the acronym BRIC stand for? • What are the two primary concerns about offshore outsourcing? 3-74 ... UPS, MLB, the NFL and the NBA) are also expanding abroad 3- 3 WORLD POPULATION by CONTINENT LO 3 1 3- 4 WORLD POPULATION GROWTH LO 3 1 3- 5 IMPORTING and EXPORTING LO 3 1 • Importing Buying products from another country... more efficiently than all other countries 3- 14 ABSOLUTE ADVANTAGE Absolute = Virtual Monopoly South Africa The Rest of the World 3- 15 Diamond Production GOING GLOBAL with a SMALL BUSINESS LO 3 2 • Small businesses may be the key in ... Manufacturing 3- 27 LICENSING 3- 28 EXPORT ASSISTANCE CENTERS and EXPORT TRADING CENTERS LO 3 3 • EACs provide hands-on exporting assistance and trade-finance support for small and medium-sized businesses