The Dynamic Global Market

Importance of Global Experience

- Many companies value employees with international experience due to the vast global market of over 7.7 billion potential customers compared to the 328 million in the United States.

Examples of Global Business

- U.S. consumers purchase substantial goods from Canada, Mexico, and China.

- Costco’s first store in Shanghai saw massive customer turnout.

- Walmart and PepsiCo have expanded into South Africa.

- Major League Baseball is broadcast in 189 countries.

- NBA and NFL have played regular season games in London and Mexico.

- NBC paid $1 billion to broadcast England's Premier League in the U.S.

- U.S. film stars attract global audiences.

Key Terms in Global Trade

- Importing: Buying products from another country.

- Exporting: Selling products to another country.

- The U.S. is the largest importer and the second-largest exporter, behind China.

Why Trade with Other Nations?

- No nation can produce all products its people want.

- Nations trade to meet each other's needs, leveraging their strengths in production.

- Free Trade: Movement of goods and services without political or economic barriers.

Pros of Free Trade

- Access to a global market of 7.7 billion customers.

- Increased productivity from focusing on comparative advantages.

- Keeps prices down, controlling inflation.

- Encourages innovation and competitive business practices.

- Provides access to foreign investments, keeping interest rates low.

Cons of Free Trade

- Domestic job losses due to increased imports or shifts to low-wage markets.

- Potential pay cuts for workers due to employer threats of relocation.

- Loss of service and white-collar jobs from overseas operations.

- Domestic companies may lose comparative advantages to global competitors.

Theories of Comparative and Absolute Advantage

- Comparative Advantage theory: Countries should produce and export goods they produce efficiently and import those they don't. ( it does this better than this)

- Example: The U.S. has a comparative advantage in software development but not in coffee or shoe production.

- Absolute Advantage: A country can produce a product more efficiently than others, though such advantages are rare and often temporary due to global competition. ( it does this good)