Chapter 03 – Doing Business in Global Markets
3-1
Doing Business in
Global Markets
chapter
=
what’s new in this edition 3.3
brief chapter outline and learning goals 3.3
lecture outline and lecture notes 3.5
PowerPoint slide notes 3.53
lecture links 3.78
lecture link 3-1: CHINA BESTS THE UNITED STATES IN AUTO SALES 3.78
lecture link 3-2: URBAN OUTFITTERS’S EUROPEAN EXPANSION 3.79
lecture link 3-3: DISNEY’S SECOND TRY IN CHINA 3.79
lecture link 3-4: FOREIGN ETIQUETTE TIPS 3.80
lecture link 3-5: BLOOD TYPE MATTERS IN JAPAN 3.81
lecture link 3-6: BRIBERY PITFALLS 3.81
lecture link 3-7: DOES TRADE PROTECTION PROTECT OR RISK YOUR 3.82
FUTURE?
lecture link 3-8: EGYPT AND THE RELIABILITY OF SOCIAL MEDIA 3.82
lecture link 3-9: GOOGLE VS. CHINA 3.83
lecture link 3-10: INDIAN CALL CENTERS EXPAND TO THE UNITED STATES 3.84
3
Chapter 03 – Doing Business in Global Markets
3-2
critical thinking exercises 3.85
critical thinking exercise 3-1: WHICH COUNTRY? 3.85
critical thinking exercise 3-2: EVALUATING GLOBAL EXPANSION 3.86
critical thinking exercise 3-3: CURRENCY SHIFTS 3.88
bonus cases 3.90
bonus case 3-1: MAKING A MINT ON MAKE-BELIEVE 3.90
bonus case 3-2: GAP’S EVOLVING VIEW OF ETHICS 3.92
bonus case 3-3: COOLING OFF THE SWEATSHOPS 3.94
bonus case 3-4: AFRICA: THE NEW INDIA? 3.96
what’s new in
this edition
additions to the 10th edition:
revisions to the 10th edition:
deletions from the 9th edition:
Chapter 03 – Doing Business in Global Markets
3-3
• brief chapter outline
and learning goals
c h a p t e r 3
Doing Business in Global Markets
Getting To Know YANG LAN, COFOUNDER AND CHAIR OF SUN
MEDIA GROUP
learning goal 1
Discuss the importance of the global market and the roles of comparative advantage and ab-
solute advantage in global trade.
I. THE DYNAMIC GLOBAL MARKET
II. WHY TRADE WITH OTHER NATIONS?
Chapter 03 – Doing Business in Global Markets
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learning goal 4
Evaluate the forces that affect trading in global markets.
V. FORCES AFFECTING TRADING IN GLOBAL MARKETS
learning goal 5
Debate the advantages and disadvantages of trade protectionism.
VI. TRADE PROTECTIONISM
learning goal 6
Discuss the changing landscape of the global market and the issue of offshore outsourcing.
VII. THE FUTURE OF GLOBAL TRADE
A. The Challenge of Offshore Outsourcing
B. Globalization and Your Future
VIII. SUMMARY
Chapter 03 – Doing Business in Global Markets
Getting to Know YANG LAN of SUN MEDIA GROUP
Known as the Chinese Oprah, Lan’s show attracts 200 million viewers. Her media success
has led Lan to purchase various publications and websites. In 2000, she launched her own tele-
vision network. The network, Sun TV, failed and Lan sold it in 2003. She bounced back and
used her entrepreneurial talents to succeed in other areas. Sun Media Group produces television
shows and contains a jewelry and credit card line. Lan believes the growth of Chinese media
will eventually lead to a more open press.
I. THE DYNAMIC GLOBAL MARKET
A. THE IMPORTANCE OF INTERNATIONAL MAR-
KETS
(Students should read the chapter before guessing the company’s name: Yum! Brands.)
Chapter 03 – Doing Business in Global Markets
3-6
(See complete PowerPoint slide notes on page 3.53.)
(See complete PowerPoint slide notes on page 3.53.)
(See complete PowerPoint slide notes on page 3.54.)
Chapter 03 – Doing Business in Global Markets
(See complete PowerPoint slide notes on page 3.54.)
(See complete PowerPoint slide notes on page 3.54.)
(See complete PowerPoint slide notes on page 3.55.)
China has overtaken Germany as the world’s largest ex-
porter. With its growing economic clout, China has dethroned
the United States as the world’s largest car market. (See the
complete lecture link on page 3.78 in this manual.)
3-8
II. WHY TRADE WITH OTHER NATIONS?
A. Reasons FOR trading with other nations include:
3-9
(See complete PowerPoint slide notes on page 3.55.)
(See complete PowerPoint slide notes on page 3.55.)
(See complete PowerPoint slide notes on page 3.56.)
(See complete PowerPoint slide notes on page 3.56.)
Chapter 03 – Doing Business in Global Markets
3-10
This text figure shows some arguments for and against free
trade.
(See complete PowerPoint slide notes on page 3.56.)
(See complete PowerPoint slide notes on page 3.57.)
(See complete PowerPoint slide notes on page 3.57.)
Chapter 03 – Doing Business in Global Markets
sports, and much more.
2. COMPARATIVE ADVANTAGE THEORY states
that a country should sell to other countries those
A. The real potential in global markets may be with
SMALL BUSINESSES.
Chapter 03 – Doing Business in Global Markets
(See complete PowerPoint slide notes on page 3.58.)
(See complete PowerPoint slide notes on page 3.58.)
(See complete PowerPoint slide notes on page 3.59.)
(See complete PowerPoint slide notes on page 3.59.)
3-13
3. Getting started in global trade can be through ob-
servation, determination, and risk.
B. IMPORTING GOODS AND SERVICES
a. Just about anything that is used in the United
Chapter 03 – Doing Business in Global Markets
SPOTLIGHT ON
small
business
(Text page 64)
PPT 3-19
A Small
Business with a
Big Vision
(See complete PowerPoint slide notes on page 3.60.)
(See complete PowerPoint slide notes on page 3.60.)
(See complete PowerPoint slide notes on page 3.60.)
The popularity of KidZania, a brand of “edutainment”
theme parks headquartered in Mexico, has taken off with par-
ents and kids all around the world. (See the complete case,
discussion questions, and suggested answers beginning on
page 3.90 of this manual.)
Urban Outfitters jumped the cultural hurdles of selling in
Europe by designing clothes with a European appeal and not
just offering the same products as in American stores. (See the
complete lecture link on page 3.78 in this manual.)
This exercise asks students to use Internet research to eval-
uate a possible expansion into one of two countries (See com-
plete exercise on page 3.85 of this manual.)
Chapter 03 – Doing Business in Global Markets
tion’s exports compared to its imports measured
over a particular period.
ports) plus money flows from other factors such
(See complete PowerPoint slide notes on page 3.61.)
This text figure lists the major trading countries in the
world.
(See complete PowerPoint slide notes on page 3.61.)
(See complete PowerPoint slide notes on page 3.61.)
Chapter 03 – Doing Business in Global Markets
learning goal 3
Illustrate the strategies used in reaching global markets and explain the role of multina-
tional corporations.
IV. STRATEGIES FOR REACHING GLOBAL
MARKETS
A. The following are some ways an organization can par-
ticipate in global trade.
3. The PROBLEMS of licensing:
a. Often a firm must grant licensing rights to its
product for an extended period.
b. If a product experiences remarkable growth in
Chapter 03 – Doing Business in Global Markets
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(See complete PowerPoint slide notes on page 3.62.)
(See complete PowerPoint slide notes on page 3.62.)
(See complete PowerPoint slide notes on page 3.63.)
Chapter 03 – Doing Business in Global Markets
C. EXPORTING
1. The Department of Commerce created EXPORT
ASSISTANCE CENTERS (EACs) to provide
hands-on exporting assistance and trade-finance
ness sells the rights to use the business name.
2. Franchising is popular both domestically and in
global markets.
3. Examples: Subway, Holiday Inn, and Dunkin’ Do-
nuts.
Chapter 03 – Doing Business in Global Markets
When Disneyland Hong Kong was opened, cultural discon-
nects were discovered. As Disney licenses another park in
Asia, it aims to correct its mistakes. (See the complete lecture
link on page 3.79 in this manual.)
(See complete PowerPoint slide notes on page 3.63.)
(See complete PowerPoint slide notes on page 3.63.)
(See complete PowerPoint slide notes on page 3.64.)