INTERNATIONAL COMMERCE ____________________________________________________________

1
INTERNATIONAL COMMERCE___________________________
_________________________________

• Issues with Cross-Border Commercial Transactions
• Currency
• Legal and Transactional Practices
• Social and Cultural
• Transactional Infrastructure
• Technology
• Resource Availability

2
INTERNATIONAL COMMERCE___________________________
_________________________________

• Forms of International Business
• Direct Import/Export
• Direct Foreign Investment
• Sole Venture
• Partnership
• Portfolio Investments
• Licensing, Franchising or Management
  Contracts Strategic Alliance

3
INTERNATIONAL COMMERCE___________________________
_________________________________

• Globalization
• Transition to Integrated and Interdependent
  World Economy
• Occurring at Three Levels
• Markets
• Production
• Institutions

4
INTERNATIONAL COMMERCE___________________________
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• Globalized Markets
• Merger of National Markets into Global Market
  Worldwide Products Produced for
  Worldwide Market
• Globalized Production
• Integrateable International Labor, Land and
  Capital Factors Reliably and Efficiently
  Transportable

5
INTERNATIONAL COMMERCE___________________________
_________________________________

• Globalized Institutions
• Laws, Customs and Institutions that Manage,
  Expedite and Regulate Global Trade
• World Trade Organization (WTO)
• World Bank
• United Nations
• United Parcel Service (UPS)

6

1907 Delivering documents by Bicycle in
Seattle Today 11th Largest Airline in the
World Processes Daily 2 of the Worlds
GDP Ships more than 13.5 Million
Packages/Day Largest User of Wireless
Technology the Clipboard Since 1996, spent 1
Billion on Supply Chain Management Services,
including Financing, that are available to any
Business or Person wanting to be Globalized
7

UPS Trade Management Services In today's
marketplace, companies considering sourcing or
selling their products overseas must evaluate
many more options than in the past and process
greater amounts of information in order to make
decisions. And cultural barriers and complex
compliance initiatives make global trade even
more of a challenge. To adapt to this new
business arena, companies need more than just
additional information. In order to make
effective business decisions, they need clear and
customized advice from experienced professionals.
UPS Trade Management Services provides clients
with customized assessments regarding complex
compliance and administrative issues facing
global companies.
8
INTERNATIONAL COMMERCE___________________________
_________________________________

• Organized in 1995 as Successor to General
  Agreement on Trades and Tariffs (GATT)
• Headquartered in Geneva. 144 Member Countries
• Goal is to help producers of goods and services,
  exporters and importers conduct business
•  Administers WTO trade agreements Forum for
  trade negotiations Handling trade
  disputes Monitor national trade
  policies Technical assistance and training for
  developing countries

9
INTERNATIONAL COMMERCE___________________________
_________________________________

• World Banks mission is to fight
• poverty and improve living standards
• of people in developing world
• It is a Development Bank that provides loans,
  policy advice, technical assistance and
  knowledge-sharing services to low and middle
  income countries to reduce poverty
• Conceived during World War II at Bretton Woods,
  New Hampshire, World Bank initially helped
  rebuild Europe
• In 2004 provided 20.1 billion for 245 projects
  in developing countries worldwide
• Reconstruction is important focus natural
  disasters, humanitarian emergencies and
  postconflict rehabilitation needs

 
                                                                                                                                                                                                                                                                                                                                                                        
10
INTERNATIONAL COMMERCE___________________________
_________________________________

• Motivating Forces of Globalization
• Political Reduced Tariffs
• Technological Faster, More Reliable
  Transportations and Communications

1950 1990 2000
France 18 5.9 3.9
Italy 25 4.9 3.9
USA 14 4.8 3.9
11
INTERNATIONAL COMMERCE___________________________
_________________________________

• Motivating Forces of Globalization
• Positive Economic Benefits Lower Prices, Job
  Creation and Economic Growth
• Negative Impacts Higher-Paying Jobs Move to
  Low-Wage Countries, Diminished Sovereign
  Authority and No Tax or Regulatory Standards

12
INTERNATIONAL COMMERCE___________________________
_________________________________

• Exchange Rates
• Expresses Relationship between Currencies of
  Transacting Countries
• 2001 (Strong Dollar) 1 USD 1.18
• 0.85 USD 1
• 2005 (Weak Dollar) 1 USD 0.79
• 1.27 USD 1

13
INTERNATIONAL COMMERCE___________________________
_________________________________

• Political, Legal and Cultural Issues
• Political Systems and Approach
• Democratic All Institutions Accountable to
  Elected, Representative Government
• Socialistic Collective State Interest
  controls all Property and Factors of
  Production
• Theocratic Single Person or Institution is
  Controlling Authority

14
INTERNATIONAL COMMERCE___________________________
_________________________________

• Political, Legal and Cultural Issues
• Legal System Reflects Political Systems
  Attitude about Right of Redress for
  Inequitable Treatment
• Contract Enforcement Reliable Belief that
  Lawful Contracts will be Enforced
• Property Rights, especially Intellectual
  Property
• Product Safety and Liability

15
INTERNATIONAL COMMERCE___________________________
_________________________________

• Political, Legal and Cultural Issues
• Culture Shared and Learned Values and Norms.
  Prescribe a Societys Design of How it Lives
• Inseparable Elements of Ethics and Religion may
  underlie Societys Culture and Political
  Approach
• Male/Female Roles in Authority-based Relations
• Subtleties of Language, Tone and Manner

16
INTERNATIONAL COMMERCE___________________________
_________________________________

• Comparative Statistics

EU-25 China USA
Population 455M 1.3B 293M
GDP (USD) 11.02 T 1.6 T 11.00T
Unemployment 9.0 9.8 5.6
Inflation 2.0 5.0 2.3
GDP Growth 2.1 9.5 3.3
Hourly Wage 5.65 40 7.25
17
INTERNATIONAL COMMERCE___________________________
_________________________________

• The China Factor
• During 2003, China purchased
• Nearly ¼ of Worlds Aluminum and Steel
• Almost One-Third of Iron Ore
• 40 of Cement
• During last 20 years
• City of Shenzhen grew from 70,000 to 7 Million
• 300 Million Chinese have migrated from Rural
  Areas to Industrialized Cities

18
INTERNATIONAL COMMERCE___________________________
_________________________________

• European Union (EU)
• Total Population Rate Increase 4.1

Natural Rate of Population Increase
Germany -1.7
Italy -0.5
UK 1.4
France 3.5