International Business -Multinational Corporations

Student Target: be able to define multinational corporations and identify their products as imports or exports.

BMWMunich, Germany

ToyotaToyota City, Japan

Coca-ColaAtlanta, GA; USA

AdidasHerzogenaurach, Germany

PumaHerzogenaurach, Germany

McDonaldsOak Brook, IL; USA

NikeBeaverton, OR; USA

HyundaiSeoul, South Korea

Giorgio ArmaniMilan, Italy

Red BullSalzberg, Austria

SonyTokyo, Japan

SiemensMunich, Germany

IsuzuTokyo, Japan

Shell (Royal Dutch Shell)The Hague, The Netherlands

British PetroleumLondon, England

DeBeersSouthdale, South Africa

Cadbury SchweppesLondon, England

Louis VuittonParis France

Qantas Airlines: Sydney, Australia

WAL-MARTBentonville, Arkansas; USA

VolkswagenWolfsburg, Germany

AccentureLargest consulting business in the

worldHamilton, Bermuda

Juan Valdez CafesBogota, Colombia

BayerBarmen, Germany

PEPSINew York City, NY; USA

Why Global?1. Profit!!2. Changes in the domestic market3. New or larger markets in other countries4. Lower production costs abroad5. Treaties or trading blocs

Imports & ExportsSelling products or services to buyers in

another country is known as: _____________

____________ refers to buying goods and services made in a foreign country.

How is a product deemed an import or export if parts are made in several different countries?If _____% of the product is made in the U.S. it can

be labeled “Made in the U.S.A.”

IMPORT

EXPORT

51

Import or Export?1. Boeing (U.S.) makes and sells planes to Qantas (Australia)

AirlinesImport for Qantas/Australia; Export for Boeing/U.S.

2. CDW (U.S.) purchases Acer (Taiwan) laptops.Import for CDW/U.S.; Export for Acer/Taiwan

3. Mitsubishi Endeavors sold to car dealerships in Tokyo.Import for Car Dealerships/Japan; Export for Mitsubishi/U.S.

Governmental Policies on Int’l Business1. Tariffs: taxes placed on foreign goods

Ex: U.S. places a 10% tariff on foreign jeans. $30 jeans now cost: $33

2. Dumping: selling goods in a foreign market below cost or below the cost in their home country to drive out competitors (like a retail store using a loss leader).

3. Quota: places limits on the number of products that can enter

4.Embargo: no products allowed/acceptedExample?

Foreign CurrenciesExchange rate: value of one country’s currency

expressed in the currency of another country.$1US = ¥125 (Jap.Yen). A 12,500 ¥ camera in

the U.S. would cost:If exchange rate changes to ¥ 100 camera in U.S.

now costs:

$100

$125

World CurrenciesYen ¥

JapanDollar

U.S. Dollar, Canadian Dollar, Australian Dollar, New Zealand Dollar

RealBrazil

YuanChina

FrancSwitzerland

Pound £U.K.

RandSouth Africa

RupeeIndia

PesoArgentine Peso,

Mexican PesoEuro €

Germany, Italy, Netherlands, France, Spain

Treaties & Trading BlocsTreaties:

WTO: enforces rules governing international trade

NAFATA: free trade among U.S., Mexico and CanadaU.S. signed it originally with just….

EU: 27 European countriesWhy? Removes traiffs, encourages trade with the free

movement of people, goods and capital.Bulgaria and Romania recent additions in 200718 of 27 nations have adopted the Euro as their

currencyU.K.?

Canada

Balance of TradeImports vs. Exports

Imports exceed Exports = Trade deficit (negative)

Exports exceed Imports = Trade surplus (positive)

U.S. Trade deficit

Top 10 U.S. Trading Partners (in billions)1.  Canada: $518.10

2.  China: $345.453.  Mexico: $315.59

4.  Japan: $176.305.  Germany: $129.73

6.  United Kingdom: $97.22

7.  South Korea: $71.70

8.  France: $62.039.  Saudi Arabia:

$59.3210.  Brazil: $54.14