INTBUSN

• Agreements between countries in the same geographic regions to reduce tariffs and non tariff barriers
• PROMOTE FREE TRADE

eliminates all barriers of trading goods and services among member countries

Iceland, Norway, Switzerland, and Liechtenstein

• Free Trade
• Customs Union
• Common Market
• Economic Union
• Political Union

• all countries involved have the same trade restrictions
• Eliminates barriers of free trade between neighboring countries
• Common External trade policy
• Andean Community( (Bolivia, Columbia, Ecuador, Peru)

No barriers all countries have the same policy MERCOSUR (Brazil, Argentina, Paraguay, Uruguay)

• Same common currency and common monetary and fiscal policy
• EU

Central Political Apparatus that is in charge of the economic, social, and foreign policy of the states

• Free trade and investment
• Political cooperation
• Dependent on each other

• Loss of national sovereignty
• Cultural, language, and loss of control

when low cost producers within free trade are replaced with high cost domestic producers

occurs when high cost suppliers within free trade replace lower cost external suppliers (higher cost has better strategy)

• 27 members
• EFTA- 4 members
• Formed because of world war 2 on western Europe
• They wanted lasting peace and own political control

• Formed at the Treat of Rome ( formed institutions of EU)
• Wanted to become a common market

• Wanted a single market
• Wanted faster economic growth

• European Council
• European Commission
• European Parliament
• The Court of Justice

controlling authority of the EU

in charge of implementing and monitoring laws and policies

• Democratic part of EU
• members elected by the people
• works with the European council

• Judge from each country
• There for business reasons

• Adopted the euro(single currency)
• Euro is the 2nd largest currency
• Used by 18 of the 27 member states

• Having a single currency is better than multiple
• Easier to compare price
• Increases range of investment options

• Loss of control over national monetary policy
• EU is not an optimal currency area

• Abolishes tariffs
• Removes barriers on cross-border flow of services
• Protects intellectual property
• Removes a lot of restriction’s within FDI
• Each country can have their own environmental standards

• Mexico benefits (job increase)
• US. and Canada benefit
• Increase imports by Mexico
• Access to large market
• Low cost labor
• Low prices for consumers

• Agriculture (tariff on corn decreased)
• Jobs decline in U.S.
• Canada Pollution

• Formerly The Andean Pact
• Operates as a custom union
• Wants the creation of free trade

• Was a free trade pact between Brazil and Argentina
• Accused of trade diversion

• Central American trade agreement
• Wanted to lower trade barriers between u.s and members

established a customs union Caribbean

• Used to convert the currency of one country into the currency of another
• Provides insurance against foreign exchange risk(consequences of unpredictable changes in exchange rates)

• rate that one currency is converted into another
• Events in the market affect sales, profits, and strategy
• Determined by supply and demand for different currencies

• Country’s price inflation
• Country’s interest rate
• Market psychology

the short term movement of funds from one currency to another in order to gain a profit from the change in exchange rates

when a firm insures itself against exchange risk

• rate that the currency is converted into another currency on a particular day
• Based on supply and demand

• to unsure against a possible adverse foreign exchange rate movement
• Two parties agree to exchange currency at a specific date in the future
• Used for 30,90,or 180 days in the future

• a purchase and sale at the same time for the same amount of foreign exchange for two different value dates
• Between banks
• Businesses and their banks
• Between governments

buying a currency low and selling it high

• Identical products sold in different countries must sell for the same price when their price is in the same currency
• If not there can be arbitrage
• In competitive markets free of transportation and barriers to trade

• The price of a “basket of goods” should roughly be equivalent in each country
• In relatively efficient markets

Any two countries, the spot exchange rate should change in an equal amount but in opposite direction to the difference in nominal interest rates between two countries

• Traders can join the bandwagon and move exchange rates based on group expectations
• Influences short term exchange rate movements
• Government intervention can prevent from starting

Forward exchange rates do the best at forecasting future spot exchange rates so investing in forecasting services is a waste of money

Companies can improve the foreign exchange market’s estimate of future exchange rates by investing in forecasting services

• Prices reflect all available information
• Forward exchange rates should be unbiased prediction of future spot rates

Analyzes factors such as interest rates, monetary policy, inflation rates, or balance of payments info to predict exchange rates

Uses charts trend with the assumption that past trends are reasonable predicators of future trends and waves

Government allows both residents and non residents to purchase unlimited amount of foreign currency with domestic currency

• Non residents can convert their holdings of domestic currency into foreign currency
• Residents are limited in some way

Both residents and non residents cant convert their holdings

barter like agreements, goods and services are sold for other goods and services

Extent that the income from individual transactions are affected by fluctuations in foreign exchange values

Impact of currency exchange rate changes on reported financial statements of a company

Extent that a firms future internal earning power is affected by changes in rates

Buy forward Use swaps Lead and lag payables and receivables

Institutional arrangements that countries adopt to govern exchange rates

• when a country allows the foreign exchange market to determine the relative value of a currency
• Euro, dollar, and yen are floating

When a country fixes the value od its currency relative to a reference currency

tries to hold the value of its currency within a range of a reference currency such as the US dollar

• When a country fixes their currencies against each other at some mutually agreed on exchange rate
• European monetary system

that countries peg currencies to gold

• new international monetary system that would facilitate postwar economic growth
• Established the IMF to maintain order Established The World Bank to promote general economic development
• Countries can borrow money in 2 ways(IBRD scheme, money is raised through bond sales) (International Development Agency, IDA loans go only to the poorest countries)

• Collapsed when increases in welfare programs
• Vietnam ware was finances by increasing money supply causing inflation

• New exchange rate system established in Jamaica
• Rules: Floating rates were acceptable, gold was abandoned, total annual IMF quotas

• Monetary policy autonomy
• Automatic trade balance adjustments

• Monetary disciple
• Minimizes speculation
• Reduces uncertainty

• choices firms offer to its targeted market pricing strategy
• product attributes
• distribution strategy
• communication strategy

• Argues that the markets were becoming similar making it unnecessary to localize the marketing mix
• NOT RIGHT

• Cultural differences
• Economic differences
• Trade barriers
• Difference in product and technical standards

• Identifying strict groups of people whom purchasing behaviors differ
• Segmented by geography demography, socio-cultural factors, psychological factors

• Retail concentration
• Channel length
• Channel Exclusivity
• Channel quality

• Number of intermediaries between producer and the consumer
• (short channel- sells directly… long channel- sells through someone else)

How difficult it is for outsider to access

The expertise, competencies, and skills of established retailers and ability to sell and support products

• Direct selling
• Sales promotions
• Direct marketing
• Advertising

• emphasizes personnel selling
• For industrial product or new products
• Short channels
• Few print or electronic media is available

• emphasizes mass media advertising
• For consumer good products
• Long channels
• Media is available to carry the marketing message

charging different prices for the same product

• Measure of responsiveness of demand for a product to changes in price
• Elastic- small price change =larger demand
• Inelastic- large price change= small demand

using profit gained in one market to support pricing to drive competitors out in another market

firms in one market may have an impact on a rivals pricing strategy in another

low prices worldwide in attempt to build global sales volume quickly

When selling a product for a price less than the cost of producing it

Regulations designed to promote competition and restrict monopoly

Selection of employees who have skills required to perform a certain job

fill management positions with parent country nationals

recruit host country national to manage subsidiaries in their own country

seek the best people regardless of nationality for key jobs

• is the premature return of an expatriate manager to the home country
• Ethnocentric and geocentric

equalizing purchasing power across countries so employees have same standard of living

• Growth
• Innovation
• Financing

just wants to give money and watch the company grow

companies that look for promising to make money of them

• Provides micro loans (50-300)
• used to start small businesses in order to get entrepreneurs out of poverty
• Mohammad Unis
• Started with small businesses by women

agreement to give another firm has the right to use your patent or trademark for a royalty fee(technology or pharmaceutical)

agreement to give another firm the rights (food industry, hotels, rental cars)

that shows the step by step process a small or medium enterprise must go through