anyone believe it’s not a globalized economy?
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Anyone believe It’s not a Globalized Economy?. Fisher-Price recall Chinese-made Toys contaminated with Lead-based Paint. “Insanity is doing the same thing over and over again and expecting different results.” (Albert Einstein). - PowerPoint PPT PresentationTRANSCRIPT
Anyone believe It’s Anyone believe It’s not a Globalized not a Globalized
Economy?Economy?
Fisher-Price Fisher-Price recall Chinese-recall Chinese-made Toys made Toys contaminated contaminated with Lead-based with Lead-based PaintPaint
““Insanity is doing the same Insanity is doing the same thing thing over and over over and over again and expecting again and expecting different results.” different results.” (Albert Einstein)(Albert Einstein)
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
Why are Nike's shoes made in Vietnam Why are Nike's shoes made in Vietnam but Toyota's Tundra trucks are but Toyota's Tundra trucks are
built in San Antonio?built in San Antonio?__________________________________________________________________________________________________________
What is this situation's “net on-What is this situation's “net on-shoring/off-shoring" result? shoring/off-shoring" result?
Why isn’t everyone in Ohio happy Why isn’t everyone in Ohio happy with this?with this?
Would a law taxing foreign-Would a law taxing foreign-earned Net Income of US-based earned Net Income of US-based companies fix problem? companies fix problem?
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
A Global Balance Sheet might show the A Global Balance Sheet might show the US as the World's largest Debtor US as the World's largest Debtor
(Borrower) and China as the World's (Borrower) and China as the World's largest Creditor (Lender)largest Creditor (Lender)
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How did this happen?How did this happen?
Has this always been the case?Has this always been the case?
Is it something to worry about?Is it something to worry about?
What should (could) be done What should (could) be done about it?about it?
INTERNATIONAL INTERNATIONAL COMMERCECOMMERCE
INTERNATIONAL INTERNATIONAL COMMERCECOMMERCE
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Crude Oil Imports (Top 10 Countries)(Thousand Barrels per Day)
Country Aug-09 Jul-09 YTD 2009 Aug-08 YTD 2008
CANADA 2,007 2,110 1,928 1,873 1,926
MEXICO 1,057 985 1,126 1,292 1,209
VENEZUELA 1,007 865 1,014 1,146 1,049
NIGERIA 877 858 694 1,035 998
SAUDI ARABIA 745 1,137 1,022 1,533 1,537
IRAQ 500 365 459 663 675
ALGERIA 404 143 253 348 313
ANGOLA 352 320 484 483 512
BRAZIL 269 375 332 169 217
COLOMBIA 260 286 261 247 190
Where does our oil come from?What happens if US becomes “energy-
independent?”
Import 269% more from Canada than Saudi Arabia
Source: Energy Information Administration, US Dept. of Energy
Source: Energy Information Administration, US Dept. of Energy
US is World’s Third largest Oil Producer (about 10%) but
Consumes about 24%
About one-half of Imported Oil comes from Western Hemisphere
Nations
Nearly 50% of Energy is Produced from Coal and Natural Gas
Nuclear Capacity same as 1996 but Applications for 26 New Plants pending
ENERGY ENERGY TRIVIATRIVIA
Where are Global Markets: Demographics
Population Growth Rates
Fertility RatesNumber of children born
to women aged 15 to 49
Where are Global Markets: Demographics
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
How do you Compete Internationally?
2008Chevrolet’s “Trax”
1968Ford’s “World Car”
Or does Global Competition offer Unique Market Segments and Countless Opportunities for Product Differentiation?
Approaches. (1) Direct (2) Alliances (3) Licensing
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
2001 (“Strong Dollar”)2001 (“Strong Dollar”)$ 1 USD = 1.18€$ 1 USD = 1.18€$ 0.85 USD = 1€$ 0.85 USD = 1€__________________________________________________________________________________________________
2005 (“Weak Dollar”)2005 (“Weak Dollar”)$1 USD = 0.86€$1 USD = 0.86€$1.17 USD = 1€$1.17 USD = 1€__________________________________________________________________________________________________
2008 (“Very Weak Dollar”)2008 (“Very Weak Dollar”)$1 USD = 0.67€$1 USD = 0.67€$1.48 USD = 1€$1.48 USD = 1€__________________________________________________________________________________________________
Nov 2009 (Nov 2009 (No Change?No Change?) ) $1 USD = 0.66€$1 USD = 0.66€$1.50 USD = 1€$1.50 USD = 1€
EXCHANGE RATESEXCHANGE RATESExpress Relationship between Currencies of Transacting CountriesExpress Relationship between Currencies of Transacting Countries
Historical Exchange Historical Exchange RatesRates
Monthly Average Exchange Rates: US Dollars per Euro
Concerns about Inflation and US
Economy’s Recovery have
weakened Dollar
CfCf. Textbook, pp. 118-. Textbook, pp. 118-127127
Exchange Rate Impacts on Exports and
Imports
MSRPMSRP 84,475 84,475 €€ $ 85,000$ 85,000
Cost to Buy inCost to Buy in USAUSA GermanyGermany
2001 (Strong Dollar)2001 (Strong Dollar) $ 71,804$ 71,804 100,301 100,301 €€
2005 (Weak Dollar)2005 (Weak Dollar) $ 98,836$ 98,836 73,100 73,100 €€
2009 (Very Weak 2009 (Very Weak Dollar)Dollar) $ 126,713$ 126,713 56,950 56,950 €€
INTERNATIONAL INTERNATIONAL COMMERCECOMMERCE
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INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
“Germany’s new finance minister has echoed Chinese warnings about the growing threat of fresh global asset price bubbles, fueled by low US interest rates and a weak dollar.” Financial Times, Nov. 20, 2009
THE CHINA THE CHINA FACTORFACTOR
Did you know China has only one time zone?
Current Account Balance of Current Account Balance of PaymentsPayments
As a Percentage of GDP
Another Perspective on Balance of Another Perspective on Balance of TradeTradeHow does US/China Relationship look now?How does US/China Relationship look now?
Growth in GDP per Growth in GDP per capitacapita
Percentage change, annual Percentage change, annual raterate
Which Countries are Growing? Which Which Countries are Growing? Which are not?are not? Where are Opportunities?Where are Opportunities?
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
LEGAL SYSTEMLEGAL SYSTEMHow does Society redress Inequitable Treatment?How does Society redress Inequitable Treatment?
Contract EnforcementContract Enforcement:: Will Will Contracts be consistently Contracts be consistently Enforced?Enforced?
Property RightsProperty Rights:: Do they Do they include Intellectual Property?include Intellectual Property?
Product Safety and Product Safety and LiabilityLiability:: Are there standards? Are there standards? What kind of liability?What kind of liability?
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
CULTURECULTURE What are a Society’s Shared and Learned What are a Society’s Shared and Learned
Values? How does it “Live?”Values? How does it “Live?”
Ethics and ReligionEthics and Religion:: How do you How do you reconcile conflicting ethics? Can reconcile conflicting ethics? Can religion influence business decisions?religion influence business decisions?Male/Female Roles and AuthorityMale/Female Roles and Authority:: What about Cultures where Women What about Cultures where Women don’t (can’t) exercise authority?don’t (can’t) exercise authority?Subtleties of Language, Tone and Subtleties of Language, Tone and MannerManner: : Does it matter how things Does it matter how things are said?are said?
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
GLOBALIZED INSTITUTIONSGLOBALIZED INSTITUTIONS Laws, Customs and Institutions Laws, Customs and Institutions
(Public/Private) that Manage, Expedite and (Public/Private) that Manage, Expedite and Regulate Global TradeRegulate Global Trade
World Trade Organization World Trade Organization (WTO)(WTO)
World BankWorld BankGlobal-Scale BusinessesGlobal-Scale Businesses
United Parcel Service (UPS)United Parcel Service (UPS)
19071907: : Delivering documents by Bicycle in Delivering documents by Bicycle in SeattleSeattle
TodayToday: : 1111thth Largest Airline in the World Largest Airline in the WorldProcesses Daily 2% of the World’s GDPProcesses Daily 2% of the World’s GDPShips more than 13.5 Million Ships more than 13.5 Million
Packages/DayPackages/DayLargest User of Wireless Technology: Largest User of Wireless Technology:
The ClipboardThe ClipboardSince 1996, spent $1 Billion on Supply Chain Since 1996, spent $1 Billion on Supply Chain Management Services, including Financing, Management Services, including Financing, that are that are available to any Business or Person available to any Business or Person wanting to be Globalizedwanting to be Globalized
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
Motivating Forces of GlobalizationMotivating Forces of Globalization
Political: Reduced TariffsPolitical: Reduced Tariffs
Technological: Faster, More Reliable Technological: Faster, More Reliable Transportation and CommunicationTransportation and Communication
19501950 19901990 20002000
FranceFrance 18%18% 5.9%5.9% 3.9%3.9%
ItalyItaly 25%25% 4.9%4.9% 3.9%3.9%
USAUSA 14%14% 4.8%4.8% 3.9%3.9%
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
EUROPEAN UNION (EU)EUROPEAN UNION (EU) Total Population Rate Increase: 4.1% Total Population Rate Increase: 4.1%
(Natural: 0.4%; Net Migration: 3.7%)(Natural: 0.4%; Net Migration: 3.7%)
Natural Increase RateNatural Increase Rate
GermanyGermany -1.7%-1.7%
ItalyItaly -0.5%-0.5%
UKUK 1.4%1.4%
USAUSA 5.7%5.7%
IndiaIndia 14.8%14.8%
THE CHINA THE CHINA FACTORFACTOR World’s Leading World’s Leading
Producer of Steel, Producer of Steel, Copper, Coal, Copper, Coal, Aluminum and CementAluminum and Cement2005: Second Largest Oil 2005: Second Largest Oil ImporterImporter
2006: Second Largest Auto 2006: Second Largest Auto MarketMarket
Richmond, VA: $3.42Richmond, VA: $3.42
Guangzhou, China: $1.41Guangzhou, China: $1.41
Is it worth it? Do Benefits outweigh Costs?Is it worth it? Do Benefits outweigh Costs?
Positive Economic BenefitsPositive Economic Benefits
Lower Prices, Job Creation and Economic GrowthLower Prices, Job Creation and Economic Growth
Negative ImpactsNegative Impacts
Shifting Job Distribution; Diminished Sovereign Shifting Job Distribution; Diminished Sovereign Authority; Multiple Tax and Regulatory StandardsAuthority; Multiple Tax and Regulatory Standards
INTERNATIONAL COMMERCEINTERNATIONAL COMMERCE____________________________________________________________
"Problem in Australia, chief. Everyone "Problem in Australia, chief. Everyone seems to be asleep."seems to be asleep."
Cartoon by Leo Cullum Cartoon by Leo Cullum