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