1,Part One: Environmental Foundation,Chapter One: Worldwide Developments,2,Objectives of the Chapter REVIEW current trends in international investment and trade EXAMINE the present economic status in the major regions of the global community ANALYZE some of the major developments and issues in various regions of the world,3,Introduction International Management The process of applying management concepts and techniques in a multinational environment,4,Multinational Corporation (MNC) Operates in more than one country Sells its products in international markets Managers and owners are of different nationalities Must learn to work effectively with people from different countries,5,Small and medium-sized businesses are being affected by the trend toward internationalization,6,Increasing Internationalization Regional Developments North American Free Trade Agreement (NAFTA) A free trade agreement between the U.S., Canada, and Mexico which has in essence removed all barriers to trade May expand to include Latin American countries,7,European Union (EU) Consists of 27 (2010) countries Most trade barriers have been removed Euro is the common currency Pacific Rim Japan and China are the dominant economies Association of Southeast Asian Nations (ASEAN),8,International Investment and Trade Foreign direct investment (FDI) The amount invested in another country Approximately 80% of all international investments come from developed countries,9,International trade has increased substantially over the last two decades Percentage of world trade accounted for by the three major trading blocs has remained fairly consistent Groups share of imports and exports remains in the range of 55 - 59 percent,10,-MNCs buy domestic companies rather than trying to export products to that country,11,RECENT TRENDS IN FOREIGN DIRECT INVESTMENT IN OECD COUNTRIES. /dataoecd/13/30/35439819.pdf. 2007-9-9,Table 1-1,12,Table 1-2 Top 10 trading Partners of the U.S.: 1999,Importing U.S. Exporting U.S. Rank Country/District Exports* Rank Country/District Imports* 1 Canada 166,600.0 1 Canada 198,711.1 2 Mexico 86,908.9 2 Japan 130,863.9 3 Japan 57,465.7 3 Mexico 109,720.5 4 U.K. 38,407.1 4 China 81,788.2 5 Germany 26,800.2 5 Germany 55,228.4 6 South Korea 22,958.4 6 U.K. 39,237.2 7 Netherlands 19,436.6 7 Taiwan 35,204.4 8 Taiwan 19,131.4 8 South Korea 31,178.6 9 France 18,877.4 9 France 26,708.6 10 Singapore 16,247.3 10 Italy 22,356.5,* in millions of dollars,13,Table 1-3 Top Ten Countries/District with which the U.S. Trades: For the month of June 2007 The values given are for Imports and Exports added together. These Countries/District represent 66.85% of U.S. Imports, and 64.64% of U.S. Exports in goods. Source: /foreign-trade/top/dst/current/balance.html. 2007-9-9,14,15,Table 1-4 Top Ten Countries/District with which the U.S. Trades: For the month of June 2010 The values given are for Imports and Exports added together. These Countries/District represent 66.75% of U.S. Imports, and 62.08% of U.S. Exports in goods. Source: /foreign-trade/top/dst/current/balance.html. 2010-8-16,16,17,Economic Status and Issues of the Major Regions North America NAFTA has resulted in: Elimination of tariffs as well as import and export quotas Opening of government procurement markets to companies in partner countries,18,Increased opportunity to make investments in partner countries Increased ease of travel between partner countries Removal of restrictions on agricultural products, auto parts, and energy goods,19,United States U.S. MNCs have holdings throughout the world Foreign MNCs find U.S. to be a lucrative market,20,North America (cont.) Canada U.S.s largest trading partner Legal and business environments similar to those of the U.S. Target of increased international investment,21,Mexico Economic fortunes have varied in the recent past Mexican firms expanding worldwide operations,22,Economic Status and Issues of the Major Regions (cont.) South America Countries have experienced difficult economic problems,23,Brazil Attracted substantial foreign investment Economic future still uncertain Chile Economic success story in South America Future still uncertain,24,Mercosur and Andean Common Market promote economic and social integration and cooperation Countries increasingly looking to trade with the U.S.,25,Economic Status and Issues of the Major Regions (cont.) Europe Privatization of traditionally nationalized industries EU intended eliminate all trade barriers among member countries,26,EU-based firms “plan globally, act locally” To gain a foothold in the EU, foreign MNCs have: created acquisitions and alliances begun co-operative research and development programs,27,European Research Cooperation Agency EU agency that funds projects in a number of fields to make Europe more productive and competitive in the world market Future challenge is the absorption of formerly communist Eastern neighbors,28,Europe (cont.) Central and Eastern Europe Collapse of the Soviet Union in 1991 Glasnost (openness) Perestroika (economic and political restructuring),29,Russia Undergone economic reform Many attempts to stimulate the economy Greater privatization required Criminal activity increasing,30,Czech Republic, Hungary, and Poland Former communist countries that have become most visible in international arena Some former communist countries are struggling,31,Economic Status and Issues of the Major Regions (cont.) Asia Japan Economic success in the 1970s and 1980s attributed to: Cultural values,32,Ministry of International Trade and Industry Government agency that identifies and ranks national commercial pursuits Guides the distribution of national resources to meet these goals,33,Keiretsus Organizational arrangement in which a large group of vertically integrated companies are bound together by cross-ownership, interlocking directorates, and social ties provide goods and services,34,Severe recession during the past ten years Target for foreign investment,35,Asia (cont.) China Large reported annual growth in GDP Attracts substantial foreign investment MNCs find it difficult to do business in China,36,The Four Tigers South Korea Chaebols Large, family-held conglomerates that have considerable political and economic power Hit hardest by Southeast Asia economic crisis,37,The Four Tigers (cont.) Hong Kong Headquarters for successful multinational operations in Asia,38,Singapore Leader and financial center of Southeast Asia One of the most competitive nations Taiwan Economy dominated by technologically sophisticated industries,39,Southeast Asian Countries Baby Tigers lack the economic prowess of the Four Tigers,40,Table 1-5 Worlds Most Competitive Nations/District: 2000 Rank,United States 1 Singapore 2 Finland 3 Netherlands 4 Switzerland 5 Luxembourg 6 Ireland 7 Germany 8 Sweden 9 Iceland 10 Canada 11 Denmark 12 Australia 13 Hong Kong 14 United Kingdom 15,41,Country Rankings 2009-2010 1. Switzerland 9. Canada 2. US 10. Netherlands 3. Singapore 11. Hong Kong SAR 4. Sweden 12. Taiwan, China 5. Denm