International business 5th griffin chapter 02

Chapter Objectives 1 • Evaluate the impact of the political and economic characteristics of the world’s various marketplaces on business • Appreciate the uses of national income data in

Chapter Objectives 1

• Evaluate the impact of the political and economic characteristics of the world’s various marketplaces on business

• Appreciate the uses of national income data in making business decisions

• Discuss North America as a major

marketplace and business center in the world economy

Chapter Objectives 2

• Describe Western Europe as a major marketplace and business center in the world economy

• Discuss the problems facing the

economies of the former communist countries of Eastern and Central Europe

Chapter Objectives 3

• Discuss Asia as a major marketplace and business center in the world economy

• Assess the development challenges

facing African, Middle Eastern, and South American countries

Vital Information in International Business

characteristics

World Economic Activity

• The Triad

– Japan – European Union – United States

• The Quad

– Triad – Canada

Figure 2.1a Shares of World’s GDP, 1970

Figure 2.1b Shares of World’s GDP, 2004

Map 2.1 North America

United States

• Third largest population in world

• Fourth largest land mass

• Largest economy

• 30 percent of world’s GDP in 2004

• Prime market for exports

The U.S Dollar

Invoicingcurrency

Flightcapital

Figure 2.2 Headquarters of World’s Largest Corporations in 2005 by Country

Canada

• Second largest land mass

• 80 percent of population concentrated along U.S./Canadian border

• Rich natural resources

• Trade with U.S - single largest bilateral trade relationship in world

Advantages of Canada

• Proximity to U.S market

• Stability of legal and political systems

• Excellent infrastructure and educational systems

Mexico

• Largest Spanish-speaking nation

• Federal government system

• Participant in NAFTA along with U.S and Canada

Central America and the Caribbean

• Economic development hindered by

– Political instability – Chronic U.S military intervention – Inadequate educational systems – Weak middle class

– Poverty – Import limitations

Marketplaces of Western Europe

European Union Member Countries

Other Countries in Western Europe

Map 2.2 Western Europe

Map 2.3 Eastern Europe

Map 2.4 Central Europe

• Southeast Asian Countries

Map 2.5 Asia

Japan

• Second largest economy

• GDP of $4.6 trillion in 2004

• Industries controlled by keiretsu

• GDP growth rate of 1.3 percent

Map 2.6 Australia and New Zealand

The Four Tigers

China

• World’s most populous country

• Communist ideology mixed with oriented economic policies

market-• Heavy FDI

Afghanistan and the Central Asian Republics

Southeast Asian Countries

• Thailand, Malaysia, and Indonesia

• Low labor costs

• Significant FDI in recent years

• Continued recovery from currency crisis

in 1997 and 1998

Marketplaces of Africa and the Middle East

• Africa

– 867 million people – 54 countries

• Saudi Arabia

• Kuwait

• UAE

Map 2.7 Africa and the Middle East

Map 2.8 The Middle East

Map 2.9 South America