Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
THE GLOBAL MARKETPLACE 3-2 Goals Describe the components of the international business environment. Identify examples of formal trade barriers Explain actions to encourage international trade. International Business Environment Businesses should consider four main factors when doing business abroad Geography Cultural Influences Economic Development Political & Legal Concerns Geography Location, climate, terrain, seaports, and natural resources of a country influences business activity. Countries with few natural resources must depend on imports. Cultural Influences Culture is the accepted behaviors, customs, and values of a society. A society’s culture has a strong influence on business activities. Factors that affect international trade Language Religion Values Customs Social relationships Economic Development Factors that affect levels of economic development: Literacy Level: countries with better education systems usually provide more and better goods and services for their citizens Technology: automated production, distribution, and communications systems allow companies to create and deliver goods, services, and ideas quickly Agricultural Dependency: does not allow a country to have a manufacturing base Infrastructure: transportation, communication, and utility systems. Political & Legal Concerns In some countries the activities of consumers and business operators are restricted The most common political and legal factors that affect international business activities are Type of government The stability of government Government policies toward business International Trade Barriers Government actions can create trade barriers. Formal Trade Barriers Quotas: a set limit the quantity of a product that may be imported or exported within a given period Tariffs: tax placed on imported goods A high tariff tends to lower the demand for the product and reduce the quantity of that import Embargoes: completely stop the import or export of a product Informal Trade Barriers consist of the culture, traditions, and religion of a country These are not based on formal government actions but they do restrict trade Encouraging International Trade Government view exporting as an effective way to create jobs and foster economic prosperity Efforts to encourage international trade Free-trade zones Free-trade agreements Common markets Free-Trade Zones 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. The importer pays duty only when the product leaves the zone. Free-Trade Agreements Member countries agree to remove duties, also called import taxes, and trade barriers on products traded among them. Results in increase trade between members Example: NAFTA (North America Free Trade Agreement) established by the U.S., Canada, and Mexico Established in 1994 Does away with tariffs Designed to enlarge the markets and economic bases of the countries involved Common Markets AKA Economic Community: Members do away with duties (taxes) and other trade barriers Allow companies to invest freely Allow workers to move freely across borders. Have a common external duty on products being imported from nonmember countries. Example: the European Union (EU) and the Latin American Integration Assoc. (LAIA) Goals are to expand trade & promote regional economic integration