Understanding business 8th by mcchugh nickels chapter 03

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CHAPTER

Competing*
in Global
Markets

3

Nickels

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McHugh

McGraw-Hill/Irwin
Understanding Business, 8e

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McHugh
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© 2008 The McGraw-Hill Companies, Inc., All Rights

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The Dynamic Global Market
World Population by continent:

** The U.S. is the largest importing nation in the World!
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Growing World Population

In
Billions

Source: Population Reference Bureau

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Why Trade With
Other Nations?

• No nation can produce all
its needs

• Mutually beneficial
exchange

• Natural Resources or

Technology- Produce or
Buy?
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Theories of Advantage
Comparativ
e

U. S.
China

China

U. S.
Output per
Unit of
Input

Softwar
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Clothin
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Theories of Advantage
Absolut = Virtual
e SouthMonopoly
Africa

Output
per Unit of
Input

The Rest of
the World

Diamond

Production

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Global Competitiveness
Country

Strengths

United States

Technology,
R & D Spending

Finland

Univ. Enrollment, Efficient Legal
System, Business Ethics

Taiwan

Cell-phone Ownership,
Tech. Innovation,
Local Firms Competitiveness

Singapore

Savings Rate, Math/Science
Education, Political Trust

Sweden

H.S. Enrollment, Press Freedom,
Phone Access

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Global Trade

• Goods & Services
• Importing
• Exporting

• Measuring Trade

• Balance of Trade/Payments
• Trade Deficit
• Dumping
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U. S. Trade in
Goods & Services (Billions)
Balance of
Trade

Source: St. Louis Business Monthly, Oct. 1999 & World Trade Organization & Wikipedia

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Leading Goods
Exporters/Importers
In Billions $
Country
United States
Germany
Japan
France
United Kingdom
World Total
Source: Wikipedia, 2005

Exports
928
1016
539
443
374
9,099

Imports
1,476
717
402
420
439
8,823
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Strategies for
Reaching Global Markets
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Licensing

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Exporting

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Franchising

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Contract
Manufacturing

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Joint Ventures

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Joint Ventures &
Strategic Alliances

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Foreign Direct
Investment

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Country Presence
of Well-Known Companies

Source: World Features Syndicate

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Starbucks’ Expansion
World Locations

Source: Starbucks.com May 2006

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Most Spoken Languages
Most Spoken
Languages

in the U.S.

Most Spoken
Languages
in the World

Source: 2005 CIA World Factbook

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Foreign Direct
Investments in the U.S.

Source: Bureau of Economic Analysis, 2004

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World’s Largest MNCs
1) Wal-Mart Stores 
2) Exxon Mobil 

3) General Motors 
4) BP 
5) Ford Motor 
6) Daimler Chrysler 
7) Royal Dutch/Shell
8) General Electric 
9) Toyota Motor 
10)Mitsubishi

Revenue ($Billions)
217
213
175
174
162
136
135
125
121
112

Source: Business Week; Morgan Stanley Capital International; and S&P Compustat

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What’s On Your Pizza
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Costa Rica - Coconut
France - Bacon, onion and fresh cream
India - Pickled ginger, minced mutton and tofu
Australia - Shrimp and pineapple
Pakistan - Curry
Brazil - Green peas
Japan - Squid and mayo jaga

Source: World Features Syndicate

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Forces Affecting Trading
in Global Markets

• Socio-cultural

• Economic & Financial
• Legal & Regulatory
• Physical & Environmental

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Cultural Differences
in Global Markets

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Language
Religion
Values &
Attitudes

• Social

Structure

• Aesthetics

• Personal

Communication
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Did You Know?
•

In Turkey it’s rude to cross your arms
while you are facing someone.

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In the Arab world the left hand is
considered unclean; don’t eat with it!

• In India never pat someone’s head,
it’s the seat of the soul.

• The Chinese associate gifts such as
straw sandals, clocks and
handkerchiefs with funerals.

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Economic & Financial Forces

• No Worldwide Currency
• Currency Fluctuations
• Floating Exchange Rates
• Bartering/Countertrading
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U.S. Oil Imports

Source: Gibson Consulting 2005

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Nations That Have Not
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* Converted to the Metric System

United

States

Liberi
a

Source: 2005 Yourunits.com

Myanma
r
(Burma)

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Legal & Regulatory
Forces

1. Inconsistent Laws &
Regulations

2. Foreign Corrupt

Practices Act of 1978

3. Local Business Contact
Required

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Developing Countries
Need Infrastructure
• 1.2 billion people lack clean
drinking water

• 2 billion people
lack electricity

• 3 billion people lack adequate
sanitation

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