HOW DOES

GLOBALIZATION
AFFECT
INTERNATIONAL
BUSINESS?

ANSWERS TO COME

GLOBALIZATION INVOLVES THE GROWING INTERDEPENDENCE OF THE

WORLD’S ECONOMIES.

GLOBALIZATION CREATES A VARIETY OF INTERNATIONAL BUSINESS

OPPORTUNITIES.

INTERNATIONAL BUSINESS IS DONE BY GLOBAL SOURCING, IMPORT, EXPORT,

LICENSING, AND FRANCHISING.

INTERNATIONAL BUSINESS IS DONE BY JOINT VENTURES AND WHOLLY OWNED

SUBSIDIARIES.

INTERNATIONAL BUSINESS IS COMPLICATED BY DIFFERENT LEGAL AND

POLITICAL SYSTEMS.

TRAVELS OF A T-SHIRT IN A GLOBAL

ECONOMY

TRAVELS OF
T-SHIRT IN A
GLOBAL
ECONOMY

AMERICAN CUSTOMER
GIVES USED T-SHIRT TO
LOCAL CHARITY.

AMERICAN CUSTOMER
BUYS NEW T-SHIRT AT
TOURIST SHOP IN FLORIDA.

AMERICAN FIRM BUYS

WHITE T-SHIRTS, SILK
SCREEN THEM, SELLS
THEM TO LOCAL VENDORS.
CHINESE FACTORY
MANUFACTURES WHITE
T-SHIRTS FOR EXPORT.

START

COTTON IS RAISED ON
WEST TEXAS FARM
AND SOLD TO CHINA.

FINISH

AFRICAN CUSTOMER
BUYS USED T-SHIRT AT
LOCAL MARKET IN
TANZANIA

RECYCLING FIRM SELLS

T-SHIRT TO VENDOR IN
EAST AFRICA.

AMERICAN CUSTOMER
GIVES USED T-SHIRT TO
LOCAL CHARITY

HOW DOES A T-SHIRT

TRAVEL THROUGH THE
WORLD’S GLOBAL
ECONOMY?

THE SKETCH ON THE PREVIOUS SLIDE SHOWS HOW T-SHIRT

BEGINNING AS COTTON GROWN IN TEXAS THAT IS SHIPPED TO
CHINA, WHERE IT IS PROCESSED AND WHITE T-SHIRTS ARE
MANUFACTURED. THE WHITE SHIRTS ARE MANUFACTURED. THE
WHITE SHIRTS COME BACK TO THE UNITED STATES, WHERE THEY
ARE SILK-SCREENED AND SOLD TO RETAIL SHOPS FOR RESALE FOR
CUSTOMERS. IF CUSTOMERS DONATE USED T-SHIRTS TO A CHARITY,
THEY MAY GO TO A RECYCLER WHO SELLS THEM TO VENDORS IN
OTHER COUNTRIES, WHERE THE USED T-SHIRTS GET SOLD AGAIN TO
LOCAL CUSTOMERS.

GLOBALIZATION INVOLVES THE

GROWING INTERDEPENDENCE OF
THE WORLD’S ECONOMIES
THE TERM "GLOBAL ECONOMY" REFERS TO THE
INTERRELATED GLOBAL ECONOMIC ACTIVITY THAT
OCCUR ACROSS MANY COUNTRIES. THESE
ECONOMIC OPERATIONS HAVE THE POTENTIAL TO
BENEFIT OR HARM THE COUNTRIES CONCERNED.

THE GLOBAL ECONOMY

COMPRISES SEVERAL
CHARACTERISTICS, SUCH AS:

GLOBALIZATION

INTERNATIONAL TRADE

INTERNATIONAL FINANCE

GLOBAL INVESTMENT

GLOBALIZATION

THROUGH THE GLOBAL NETWORK OF

COMMERCE, COMMUNICATION,
IMMIGRATION, AND TRANSPORTATION,
NATIONAL AND REGIONAL ECONOMIES,
COMMUNITIES, AND CULTURES HAVE
GROWN INCREASINGLY INTERCONNECTED.
THE GLOBAL ECONOMY AROSE AS A
RESULT OF THESE CHANGES. DOMESTIC
ECONOMIES HAVE GROWN MORE
COHERENT AS A RESULT OF THE GLOBAL
ECONOMY AND GLOBALIZATION,
RESULTING IN IMPROVED PERFORMANCE.

INTERNATIONAL TRADE

GLOBALIZATION IS SAID TO HAVE

INFLUENCED INTERNATIONAL TRADE. IT
REFERS TO THE INTERCHANGE OF
COMMODITIES AND SERVICES
BETWEEN NATIONS, AS WELL AS HOW
IT HAS AIDED COUNTRIES IN
SPECIALIZING IN ITEMS WHERE THEY
HAVE A COMPETITIVE EDGE. THIS IS
A CONCEPT IN ECONOMICS THAT
REFERS TO A COUNTRY'S CAPACITY TO
CREATE PRODUCTS AND SERVICES AT A
LOWER OPPORTUNITY COST THAN ITS
TRADING RIVALS.

INTERNATIONAL FINANCE

MONEY CAN BE TRANSPORTED

BETWEEN NATIONS AT A QUICKER RATE
THAN COMMODITIES, SERVICES, OR
PEOPLE, MAKING INTERNATIONAL
FINANCE ONE OF THE MOST IMPORTANT
ASPECTS OF A GLOBAL ECONOMY.
CURRENCY EXCHANGE RATES AND
MONETARY POLICY ARE EXAMPLES OF
SUBJECTS IN INTERNATIONAL FINANCE.

GLOBAL INVESTMENT

THIS IS A METHOD FOR

INVESTING THAT IS NOT
LIMITED BY GEOGRAPHICAL
BORDERS. FOREIGN DIRECT
INVESTMENT IS THE MOST
COMMON KIND OF GLOBAL
INVESTMENT (FDI).

WHY IS GLOBAL ECONOMY

IMPORTANT?

MICRO AND MACROECONOMIC SIGNIFICANCE:

AS THE WORLD'S POPULATION GROWS, EMERGING MARKETS

EXPAND ECONOMICALLY, MAKING THEM ONE OF THE MAJOR
ENGINES OF GLOBAL ECONOMIC GROWTH. EMERGING MARKET
GROWTH AND RESILIENCE ARE ENCOURAGING SIGNS FOR THE GLOBAL
ECONOMY. YOU MUST FIRST GRASP THE IDEA OF
MICROECONOMICS BEFORE MOVING ON TO THE FOLLOWING STEP.

IT IS THE STUDY OF THE BEHAVIOR OF FAMILIES, PEOPLE, AND

BUSINESSES IN TERMS OF RESOURCE ALLOCATION AND
DECISION-MAKING. IN LAYMAN'S WORDS, THIS AREA OF
ECONOMICS INVESTIGATES HOW INDIVIDUALS MAKE DECISIONS,
WHAT VARIABLES INFLUENCE THEIR CHOICES, AND HOW THESE
CHOICES AFFECT THE PRICE, DEMAND, AND SUPPLY OF
COMMODITIES ON THE MARKET.

AS A RESULT, FROM THE STANDPOINT OF MICROECONOMICS,

THESE DEVELOPING MARKETS ARE HOME TO SOME OF THE
WORLD'S GREATEST COMPANIES WITH HIGH MARKET VALUE, AS
WELL AS SOME OF THE WORLD'S WEALTHIEST INDIVIDUALS,
RESULTING IN A MORE EQUITABLE DISTRIBUTION OF INCOME IN
THESE NATIONS. HOWEVER, POVERTY STILL EXISTS IN MANY OF
THESE DEVELOPING NATIONS, AND MORE EFFORT HAS TO BE DONE
TO ERADICATE IT.

LONG-TERM GLOBAL
ECONOMIC OUTLOOK

FINANCIAL AND ECONOMIC PREDICTIONS BASED ON

DEMOGRAPHIC TRENDS AND CAPITAL PRODUCTIVITY MODELS
SUGGEST THAT GDP GROWTH IN EMERGING MARKET
NATIONS WILL CONTINUE TO BE FAVORABLE IN 2019.
ACCORDING TO FOCUS ECONOMICS' 2019 EMERGING
MARKET ECONOMIC FORECAST, INDIA'S ECONOMY WILL
GROW BY 7.5 PERCENT, 6.6 PERCENT IN THE PHILIPPINES,
6.3 PERCENT IN CHINA, 5.3 PERCENT IN INDONESIA, 5.1
PERCENT IN EGYPT, 4.9 PERCENT IN MALAYSIA, 3.8
PERCENT IN PERU, AND 3.7 PERCENT IN MOROCCO.

WHO CONTROLS THE GLOBAL

ECONOMY?

MANY PEOPLE BELIEVE THAT GOVERNMENTS OF THE WORLD'S MAJOR ECONOMIES

DOMINATE THE GLOBAL ECONOMY, HOWEVER THIS IS A FREQUENT FALLACY. DESPITE
THE FACT THAT GOVERNMENTS HAVE AUTHORITY OVER ECONOMIES, IT IS THE MAJOR
BANKS AND BUSINESSES WHO CONTROL AND FINANCE THESE GOVERNMENTS.

THIS INDICATES THAT BIG FINANCIAL INSTITUTIONS CONTROL THE GLOBAL ECONOMY.
ACCORDING TO INTERNATIONAL FINANCIAL NEWS, US BANKS ARE INVOLVED IN A
VARIETY OF CONVENTIONAL GOVERNMENT SECTORS, INCLUDING ELECTRICITY
GENERATION, OIL REFINING AND DISTRIBUTION, AND THE OPERATION OF PUBLIC ASSETS
LIKE AIRPORTS AND RAILWAY STATIONS.

INSOURCING VS OUTSOURCING

INSOURCING
INSOURCING IS A BUSINESS
TECHNIQUE THAT INVOLVES
PERFORMING WORK THAT WOULD
OTHERWISE BE OUTSOURCED OUT
IN-HOUSE.

BRINGING IN EXPERTS TO MEET

TEMPORARY REQUIREMENTS OR
TRAINING CURRENT EMPLOYEES TO
DO WORK THAT WOULD OTHERWISE
BE OUTSOURCED ARE COMMON
EXAMPLES OF INSOURCING.

OUTSOURCING

OUTSOURCING IS THE PROCESS OF CONTRACTING

A THIRD PARTY TO EXECUTE SERVICES OR
MANUFACTURE ITEMS THAT WOULD OTHERWISE
BE CONDUCTED IN-HOUSE BY THE COMPANY'S
OWN WORKERS AND PERSONNEL. OUTSOURCING
IS A COST-CUTTING STRATEGY USED BY
BUSINESSES TO REDUCE COSTS.

HUMAN RESOURCE MANAGEMENT, FACILITIES

MANAGEMENT, SUPPLY CHAIN MANAGEMENT,
ACCOUNTING, CUSTOMER SUPPORT AND
SERVICE, MARKETING, COMPUTER AIDED
DESIGN, RESEARCH, DESIGN, CONTENT WRITING,
ENGINEERING, DIAGNOSTIC SERVICES, AND
LEGAL PAPERWORK ARE EXAMPLES OF
FREQUENT OUTSOURCING ACTIVITIES.”

GLOBALIZATION CREATES A
VARIETY OF INTERNATIONAL
BUSINESS OPPORTUNITIES

INTERNATIONAL BUSINESS REFERS TO ANY SCENARIO IN WHICH

PRODUCTS OR SERVICES ARE PRODUCED OR DISTRIBUTED ACROSS
NATIONAL BORDERS. GLOBALIZATION, OR THE TREND TOWARD A MORE
INTERCONNECTED AND INTEGRATED GLOBAL ECONOMY, EXPANDS
WORLDWIDE ECONOMIC PROSPECTS.

WHY BUSINESSES GO
GLOBAL?

PROFIT – GAIN PROFITS THROUGH EXPANDED OPERATIONS.

CUSTOMERS – ENTER NEW MARKETS TO GAIN CUSTOMERS.

SUPPLIERS – GET ACCESS TO PRODUCTS, SERVICES AND

MATERIALS.

CAPITAL – GET ACCESS TO FINANCIAL RESOURCES.

LABOR – GET ACCESS TO LOW-COST, TALENTED WORKERS.

RISK – SPREAD ASSETS AMONG MULTIPLE COUNTRIES.

INTERNATIONAL BUSINESS – ISSUES

AND CHALLENGES

PRODUCING AND SELLING GOODS AND SERVICES BETWEEN/AMONG COUNTRIES IS

REFERRED TO AS INTERNATIONAL BUSINESS. IF A COMPANY PRODUCES IN ONE COUNTRY
AND SELLS IN ANOTHER, IT IS CONSIDERED TO BE INTERNATIONAL.

ALTERNATIVELY, IT MAY MAKE ITEMS IN A FOREIGN NATION BUT EXCLUSIVELY SELL

THEM IN ITS OWN COUNTRY. ALTERNATIVELY, IT MAY PRODUCE IN ONE NATION YET
SELL IN BOTH THE UNITED STATES AND OTHER COUNTRIES. IT'S ATTRACTIVE TO DO
FOREIGN BUSINESS. DOING FOREIGN BUSINESS, ON THE OTHER HAND, COMES WITH ITS
OWN SET OF DIFFICULTIES AND OBSTACLES.

LANGUAGE BARRIER

IT IS THE MOST SIGNIFICANT THING TO TAKE INTO ACCOUNT WHEN THINKING OF

TAKING BUSINESS INTERNATIONALLY. THE LANGUAGE BARRIER DOESN’T JUST
MEAN A PROBLEM IN COMMUNICATION. BUT, ONE MUST ALSO CONSIDER IF
THE NAME OF THE PRODUCT FITS WELL IN THE FOREIGN LANGUAGE OR NOT. FOR
EXAMPLE, MERCEDES-BENZ WHEN ENTERING CHINA CHOSE A LOCAL NAME,
WHICH WAS SIMILAR TO “BENZ”: BĒNSǏ. HOWEVER, IN THE LOCAL
LANGUAGE, IT MEANT “RUSH TO DEATH.” THE AUTOMAKER THEN HAS TO
CHANGE ITS NAME TO BĒNCHÍ, MEANING ‘RUN.’

CULTURAL DIFFERENCES

EVERY COUNTRY HAS ITS OWN CULTURE AND TRADITIONS. IT IS

ALSO CRITICAL FOR A FOREIGN FIRM TO RESPECT THOSE CULTURES
IN ORDER TO SUCCEED. HOLIDAYS, FOOD, FESTIVALS, SOCIAL
NORMS, AND MORE ARE ALL PART OF CULTURE. MCDONALD'S, FOR
EXAMPLE, DOES NOT OFFER MEAT OR PORK IN INDIA DUE TO
RELIGIOUS RESTRICTIONS. FURTHERMORE, THE FAST-FOOD
COMPANY OFFERS MORE VEGETARIAN ALTERNATIVES IN INDIA
THAN ANYWHERE ELSE IN THE WORLD.

MANAGING GLOBAL
TEAMS

WHEN YOU RUN AN INTERNATIONAL COMPANY

WITH OPERATIONS IN MANY COUNTRIES, YOU'LL
HAVE TO INTERACT WITH PEOPLE FROM ALL WALKS
OF LIFE. DUE TO THE VARIATIONS IN LANGUAGE,
CULTURE, AND TIME ZONES, MANAGING THOSE
PERSONNEL IS UNDOUBTEDLY A PROBLEM.
HOWEVER, BY ENGAGING WITH WORLDWIDE
TEAMS ON A REGULAR BASIS, THIS BARRIER MAY
BE OVERCOME. IT WILL AID IN THE GRADUAL
MELTING OF DIFFERENCES.

CURRENCY EXCHANGE AND

INFLATION RATE

THE VALUE OF ONE COUNTRY'S

CURRENCY IN RESPECT TO ANOTHER IS
KNOWN AS THE EXCHANGE RATE.
THE EXCHANGE RATE BETWEEN THE
TWO NATIONS IS NOT STABLE AND IS
CONSTANTLY CHANGING. WHEN
MAKING ANY FINANCIAL CHOICE,
YOU MUST CONSIDER CURRENCY
RATES BECAUSE THEY MIGHT IMPACT
THE ULTIMATE PAYMENT AND HENCE
THE FIRM EARNINGS.

DECIDING COMPANY
STRUCTURE

MAKING IT BIG ON THE WORLD

SCENE NECESSITATES DECIDING
ON AN EFFECTIVE CORPORATE
STRUCTURE. A WELL-STRUCTURED
ORGANIZATION HELPS A FIRM TO
MAKE RAPID AND BETTER
DECISIONS. ONE KEY FACTOR TO
CONSIDER WHILE DECIDING ON A
STRUCTURE IS THE LOCATION OF
THE HEADQUARTERS AND THE
NUMBER OF OFFICES A FIRM WILL
HAVE.

FOREIGN POLITICS AND

POLICIES

A COUNTRY'S POLITICS AND POLICIES

HAVE A SIGNIFICANT IMPACT ON A
COMPANY'S PERFORMANCE. ANY NEW
GOVERNMENT POLICY ON TAXES, LABOR
LAWS, AND OTHER ISSUES MIGHT HAVE A
DIRECT INFLUENCE ON THE COMPANY'S
COSTS. AS A RESULT, IT IS CRITICAL FOR A
FIRM TO KEEP A CAREFUL EYE ON THE
POLITICS AND POLICIES OF THE COUNTRY
IN WHICH IT OPERATES.

INTERNATIONAL
ACCOUNTING

A COMPANY'S ABILITY TO FUNCTION

BECOMES EXTREMELY CHALLENGING IF IT
LACKS ADEQUATE BOOKKEEPING.
ACCOUNTING BECOMES MUCH MORE
IMPORTANT IN THE CASE OF
MULTINATIONAL ENTERPRISE. ADHERING
TO INTERNATIONAL ACCOUNTING
STANDARDS IS A DIFFICULT TASK, SINCE IT
TAKES A GREAT DEAL OF WORK TO ADHERE
TO VARIOUS TAX SYSTEMS. A
CORPORATION, ON THE OTHER HAND, MAY
SOLVE THIS PROBLEM BY HIRING THE
PROPER ACCOUNTING PROFESSIONALS.

PRODUCT PRICING

SETTING THE PRICING OF A PRODUCT IN A FOREIGN

MARKET IS A DIFFICULT TASK. A FIRM MUST EVALUATE
ITS COSTS, SHIPPING COSTS, AND THE PRICE OF SIMILAR
ITEMS FROM LOCAL RIVALS WHEN DETERMINING THE
APPROPRIATE PRICING. FURTHERMORE, WHILE PRICING
YOUR PRODUCT, THINK ABOUT HOW YOU WANT TO
MARKET IT — AS A LOW-COST ITEM OR AS A HIGH-END
BRAND.

IKEA, A LOW-COST EUROPEAN

FURNITURE RETAILER, FOR
EXAMPLE, STRUGGLED TO
ESTABLISH TRACTION IN CHINA
AT FIRST. THIS IS DUE TO THE
LOW-COST ITEMS AVAILABLE
FROM LOCAL VENDORS. IKEA
SUBSEQUENTLY MOVED
PRODUCTION TO CHINA,
WHICH ALLOWED THEM TO
LOWER PRODUCT PRICING.

PAYMENT METHODS

WHEN A FIRM OPERATES GLOBALLY, IT

MUST CHOOSE PAYMENT OPTIONS THAT
ARE EASY FOR LOCAL CUSTOMERS. NOT
ONLY MUST THE ORGANIZATION CONSIDER
CONVENIENCE, BUT IT MUST ALSO
CONSIDER THE COST OF THE DIFFERENT
PAYMENT OPTIONS BEFORE MAKING A
FINAL DECISION. IN ADDITION, THE
BUSINESS MUST MAKE CERTAIN THAT THE
PAYMENT METHOD IT CHOOSES IS
RELIABLE, SAFE, AND SECURE. IT IS
PREFERABLE IF A FIRM OFFERS BOTH
WORLDWIDE AND LOCAL PAYMENT
OPTIONS, SUCH AS PAYPAL AND YANDEX
MONEY IN RUSSIA.

SUPPLY CHAIN RISKS

IN ORDER TO SUCCEED IN A
FOREIGN MARKET, A FIRM
MUST HAVE A SHORT AND
EFFECTIVE SUPPLY CHAIN.
HOWEVER, DUE TO REGIONAL
AND REGULATORY VARIANCES,
MANAGING SUCH SUPPLY
CHAINS IS A DIFFICULT
PROCESS.

ENVIRONMENTAL CONCERNS

IT IS CRITICAL FOR A FIRM TO OBSERVE

ENVIRONMENTAL REGULATIONS WHEN IT
BEGINS OPERATIONS IN A FOREIGN
COUNTRY. IT SHOULD ALSO MAKE
SPECIAL MEASURES TO ALLEVIATE
ENVIRONMENTAL ISSUES IN THE AREAS
WHERE IT WORKS. ANY FAILURE ON THE
SIDE OF THE FIRM TO ADDRESS SUCH
CONCERNS, WHETHER THROUGH
IGNORANCE OR AVOIDANCE, WOULD
HARM THE COMPANY'S BRAND IMAGE
AND UNDERMINE ITS BUSINESS.
FURTHERMORE, THE COMPANY'S
SMOOTH OPERATION WOULD BE
HAMPERED BY LOCAL SOCIAL
ORGANIZATIONS.

INTERNATIONAL BUSINESS IS DONE

BY GLOBAL SOURCING,
IMPORT/EXPORT, LICENSING, AND
FRANCHISING

GLOBAL SOURCING IS A PROCUREMENT METHOD IN

WHICH A COMPANY PURCHASES GOODS AND
SERVICES FROM INTERNATIONAL MARKETPLACES
BEYOND GEOPOLITICAL BORDERS IN ORDER TO SAVE
MONEY BY UTILIZING LOW-COST RAW MATERIALS
AND SKILLED LABOR FROM LOW-COST NATIONS.
BUSINESSES CAN USE GLOBAL SOURCING TO ACCESS
SOPHISTICATED TALENTS, RESOURCES, AND
TECHNOLOGY THAT AREN'T AVAILABLE IN THEIR
NATIVE NATION.

A FAMOUS EXAMPLE OF GLOBAL SOURCING IS

BUSINESS PROCESS OUTSOURCING (BPO). SEVERAL
CORPORATIONS HAVE BUILT UP CONTACT CENTERS IN
ASIAN NATIONS LIKE INDIA AND THE PHILIPPINES TO
TAKE ADVANTAGE OF THE LOW-COST, TRAINED
WORKFORCE AVAILABLE.
THE TOPIC OF GLOBAL SOURCING STRATEGY HAS
SPARKED HEATED DISCUSSION. MANY BUSINESSES
THAT DEPENDED ON A SUPPLIER HEADQUARTERED IN
CHINA FACED UNANTICIPATED INTERRUPTIONS AS A
RESULT OF THE COVID-19 OUTBREAK AND THE
ACCOMPANYING SUPPLY CHAIN PROBLEMS. THE
RELIANCE ON A SINGLE AREA HAS AN INFLUENCE ON
COMPANY CONTINUITY IN NUMEROUS SITUATIONS.

DUE TO A LACK OF ALTERNATIVE SUPPLIERS, SOME OF

THESE FIRMS WERE FORCED TO TEMPORARILY HALT
OPERATIONS, WHILE OTHERS WERE FORCED TO SHUT.

IMPORTS AND EXPORTS

IMPORTS AND EXPORTS ARE TWO DIFFERENT

THINGS. IMPORTS AND EXPORTS, THE MOST
BASIC AND WIDELY UTILIZED TECHNIQUE,
CAN BE CONSIDERED THE BASIS OF
INTERNATIONAL TRADE.

IMPORTS ARE PRODUCTS THAT ARE BROUGHT

INTO A COUNTRY'S MARKETS FOR
CONSUMPTION, WHEREAS EXPORTS ARE
COMMODITIES THAT ARE SOLD TO OTHER
NATIONS. IN A NUTSHELL, IMPORTS REFER TO
THE INFLUX OF GOODS, AND EXPORTS REFER
TO THE OUTFLOW OF COMMODITIES IN
WHATEVER FORM.

LICENSING

ONE OF THE SIMPLEST METHODS TO

DEVELOP A BUSINESS OVERSEAS IS TO
LICENSE IT. WHEN A BUSINESS HAS A
STANDARDIZED PRODUCT WITH
OWNERSHIP RIGHTS, IT MAY UTILIZE
LICENSING TO DISTRIBUTE AND SELL IT
INTERNATIONALLY. PATENTS,
COPYRIGHT, TRADEMARKS, AND OTHER
TYPES OF LICENSES ARE ONLY A FEW
EXAMPLES. LICENSING AGREEMENTS
ARE COMMONLY USED TO DISTRIBUTE
PRODUCTS SUCH AS BOOKS AND
MOVIES WORLDWIDE.

FRANCHISING

FRANCHISING, WHICH IS COMPARABLE TO

LICENSING, IS A VERY SUCCESSFUL WAY TO
DEVELOP A FIRM BOTH DOMESTICALLY AND
GLOBALLY.

A PARENT COMPANY GRANTS ANOTHER FIRM

THE PERMISSION TO CONDUCT BUSINESS
UNDER THE PARENT COMPANY'S NAME,
BRAND, AND PRODUCTS. THE FRANCHISOR IS
THE PARENT FIRM, WHILE THE FRANCHISEE IS
THE RECEIVING COMPANY.

THE FRANCHISEE CONCEPT HAS BEEN UTILIZED

BY SEVERAL OF THE WORLD'S LARGEST FOOD
BUSINESSES TO GROW GLOBALLY.
MCDONALD'S, PIZZA HUT, STARBUCKS,
DOMINO'S PIZZA, AND MANY OTHERS ARE
EXAMPLES.

INTERNATIONAL BUSINESS IS
DONE BY JOINT VENTURES AND
WHOLLY OWNED SUBSIDIARIES.

JOINT VENTURES

THE TERM "JOINT VENTURE" REFERS TO

THE FORMATION OF A BUSINESS THAT
IS JOINTLY OWNED BY TWO OR MORE
SEPARATE COMPANIES. THERE ARE
THREE NOTABLE APPROACHES TO
MAKE IT A REALITY:

A FOREIGN INVESTOR WHO

PURCHASES A STAKE IN A LOCAL
BUSINESS.

A LOCAL COMPANY BUYS A STAKE IN

A FOREIGN COMPANY THAT ALREADY
EXISTS.
A NEW COMPANY IS BEING FORMED
BY BOTH INTERNATIONAL AND LOCAL
ENTREPRENEURS.

FOR EXAMPLE, THE

MAHINDRA-RENAULT JOINT
VENTURE, WHICH WAS ESTABLISHED
IN 2007, BRINGS TOGETHER INDIA'S
LEADING CAR MANUFACTURER
MAHINDRA & MAHINDRA WITH
THE WORLD-RENOWNED VEHICLE
MANUFACTURER RENAULT SA OF
FRANCE.

WHOLLY OWNED
SUBSIDIARY

A TOTALLY OWNED SUBSIDIARY IS A

CORPORATION WHOSE COMMON STOCK IS
OWNED ENTIRELY (100%) BY ITS
PARENT.

THE PARENT BUSINESS CAN DIVERSIFY,

MANAGE, AND PERHAPS DECREASE ITS
RISK BY FORMING WHOLLY OWNED
SUBSIDIARIES.

LEGAL CONTROL OVER OPERATIONS,

GOODS, AND PROCEDURES IS OFTEN
RETAINED BY WHOLLY OWNED
SUBSIDIARIES.

GLOBAL STRATEGIC
ALLIANCE

A STRATEGIC ALLIANCE IS AN AGREEMENT BETWEEN TWO FIRMS TO COLLABORATE ON A

MUTUALLY ADVANTAGEOUS INITIATIVE WHILE MAINTAINING EACH COMPANY'S
AUTONOMY. THE ARRANGEMENT IS LESS COMPLICATED AND LESS ENFORCEABLE THAN A
JOINT VENTURE, WHICH INVOLVES TWO COMPANIES POOLING RESOURCES TO FORM A
NEW COMPANY.

A FIRM MAY FORM A STRATEGIC PARTNERSHIP TO ENTER A NEW MARKET, STRENGTHEN

ITS PRODUCT LINE, OR GAIN A COMPETITIVE ADVANTAGE.
THE PARTNERSHIP ALLOWS TWO COMPANIES TO COLLABORATE ON A COMMON AIM THAT
BENEFITS BOTH. THE CONNECTION MIGHT BE TEMPORARY OR LONG-TERM, WITH A
FORMAL OR INFORMAL ARRANGEMENT.

A STRATEGIC ALLIANCE IS A PARTNERSHIP BETWEEN TWO FIRMS THAT

HAVE AGREED TO POOL THEIR RESOURCES TO WORK ON A SPECIFIC,
MUTUALLY BENEFICIAL PROJECT.

A STRATEGIC ALLIANCE AGREEMENT MIGHT AID IN THE

DEVELOPMENT OF A MORE EFFICIENT PROCEDURE FOR A FIRM.

STRATEGIC PARTNERSHIPS ENABLE TWO OR MORE ORGANIZATIONS,

PEOPLE, OR OTHER ENTITIES TO COLLABORATE ON SIMILAR OR RELATED
OBJECTIVES.

FOREIGN SUBSIDIARY

A FOREIGN SUBSIDIARY COMPANY IS A FIRM THAT IS OWNED TO SOME

EXTENT BY ANOTHER COMPANY FROM ANOTHER NATION. A SUBSIDIARY
FIRM IS SOMETIMES KNOWN AS A DAUGHTER COMPANY. A HOLDING
COMPANY, OFTEN KNOWN AS A PARENT COMPANY, IS THE FIRM THAT
OWNS THE SUBSIDIARY.

IT'S WORTH NOTING THAT, WHILE A PARENT BUSINESS MIGHT CONTROL 100
PERCENT OF A DAUGHTER FIRM, THE TWO COMPANIES ARE NOT COMBINED
INTO ONE. IN TERMS OF TAXATION AND RESPONSIBILITY, THE SUBSIDIARY
IS TREATED AS A SEPARATE LEGAL ENTITY FROM THE OWNING COMPANY.

THE HOLDING COMPANY, ON THE OTHER HAND, HAS A PROPORTIONAL

IMPACT ON THE SUBSIDIARY'S POLICIES, CHOICES, AND GOALS, BASED ON
THE PARENT COMPANY'S OWNERSHIP SHARE IN THE SUBSIDIARY.

GREEN FIELD VENTURE

A GREEN-FIELD (SOMETIMES "GREENFIELD")

VENTURE IS ONE IN WHICH A PARENT FIRM
ESTABLISHES A SUBSIDIARY IN A SEPARATE
NATION AND BUILDS ITS OPERATIONS FROM THE
GROUND UP. THESE PROJECTS MIGHT INCLUDE
THE DEVELOPMENT OF NEW DISTRIBUTION
HUBS, OFFICES, AND RESIDENTIAL QUARTERS IN
ADDITION TO NEW MANUFACTURING FACILITIES.
INTERNATIONAL BUSINESS IS
COMPLICATED BY DIFFERENT
LEGAL AND POLITICAL
SYSTEMS.

WORLD TRADE
ORGANIZATION

THE WORLD TRADE ORGANIZATION

(WTO) IS THE SOLE INTERNATIONAL
ORGANIZATION THAT DEALS WITH
INTERNATIONAL TRADE RULES. THE
WTO ACCORDS, NEGOTIATED AND
SIGNED BY THE MAJORITY OF THE
WORLD'S TRADING NATIONS AND
RECOGNIZED BY THEIR PARLIAMENTS,
ARE AT ITS HEART. THE OBJECTIVE IS
TO MAKE TRADING AS EASY,
PREDICTABLE, AND UNRESTRICTED AS
FEASIBLE.

THE WORLD TRADE

ORGANIZATION (WTO) HAS
164 MEMBERS AND 25
OBSERVER COUNTRIES. ON 14
JULY 2016, LIBERIA BECAME
THE 163RD MEMBER, WHILE
AFGHANISTAN BECAME THE
164TH MEMBER ON 29 JULY
2016. THE EUROPEAN UNION,
AS WELL AS EACH EU COUNTRY
INDIVIDUALLY, IS A MEMBER, IN
ADDITION TO STATES.

WHICH COUNTRY IS NOT A

WTO MEMBER? ONLY 14
NATIONS ARE NOT MEMBERS
OF THE WTO.

THESE COUNTRIES DO NOT

WANT TO JOIN THE CLUB.

ARUBA, ERITREA, KIRIBATI,

KOSOVO, MARSHALL ISLANDS,
MICRONESIA, MONACO,
NAURU, NORTH KOREA,
PALAU, PALESTINIAN
TERRITORIES, SAN MARINO,
SINT MAARTEN, AND TUVALU
ARE THE COUNTRIES IN
QUESTION.

MOST FAVORED NATION

STATUS

THE MOST-FAVORED-NATION
(MFN) STATUS IS AN ECONOMIC
SITUATION IN WHICH A COUNTRY
BENEFITS FROM ITS TRADING
PARTNER'S BEST TRADE TERMS. THIS
IMPLIES IT HAS THE LOWEST
TARIFFS, THE FEWEST TRADE
OBSTACLES, AND THE GREATEST
IMPORT QUOTAS OF ANY COUNTRY
(OR NONE AT ALL). TO PUT IT
ANOTHER WAY, ALL MFN TRADING
PARTNERS MUST BE TREATED THE
SAME.

TARIFFS

A TARIFF IS A LEVY PLACED ON

GOODS IMPORTS AND EXPORTS BY
THE GOVERNMENT OF A COUNTRY
OR A SUPRANATIONAL UNION.
IMPORT TARIFFS CAN BE A KIND OF
FOREIGN TRADE REGULATION AND
POLICY THAT CHARGES IMPORTED
ITEMS TO STIMULATE OR SAFEGUARD
HOME INDUSTRY, IN ADDITION TO
BEING A SOURCE OF INCOME FOR
THE GOVERNMENT.

NONTARIFF BARRIERS

A NONTARIFF BARRIER IS A TRADE

RESTRICTION USED BY
GOVERNMENTS TO ACHIEVE THEIR
POLITICAL AND ECONOMIC
OBJECTIVES, SUCH AS A QUOTA,
EMBARGO, OR PUNISHMENT.
NONTARIFF BARRIERS (RATHER
THAN REGULAR TARIFFS) ARE
COMMONLY USED BY COUNTRIES
IN INTERNATIONAL COMMERCE.
QUOTAS, EMBARGOES,
PENALTIES, AND LEVIES ARE
EXAMPLES OF NONTARIFF
OBSTACLES.

PROTECTIONISM

PROTECTIONISM IS A TERM USED TO

DESCRIBE GOVERNMENT POLICIES
THAT LIMIT FOREIGN COMMERCE IN
ORDER TO BENEFIT DOMESTIC
BUSINESSES. PROTECTIONIST
POLICIES ARE TYPICALLY USED TO
BOOST DOMESTIC ECONOMIC
ACTIVITY, BUT THEY CAN ALSO BE
INTRODUCED TO ADDRESS SAFETY OR
QUALITY ISSUES.

TODAY IN GOVERNMENT CLASS WE WILL DISCUSS TRADE AND THE GLOBAL ECONOMY
0:18
FOR MANY YEARS THE UNITED STATE GOVERNMENT ENCOURAGE AMERICAN BUSINESSES TO
SELL THEIR PRODUCT TO COUNTRIES OVERSEAS.
0:26
HOWEVER, IN RECENT YEARS AMERICAN ACTUALLY IS BUYING MORE GOODS THAN THEY SELL
TO THEM.
0:32
NOW IS A GOOD TIME TO DISCUSS SOME VOCABULARY TERMS FOR LATER TO TRADE.
0:38
IMPORT; MEANS TO BUY GOODS FROM OTHER COUNTRIES,
0:42
WHILE EXPORT MEAN TO SELL GOODS TO OTHER COUNTRIES.
0:46
WHEN YOU IMPORT MORE GOODS FROM OTHER COUNTRIES THAN YOU EXPORT, IT IS CALL A
TRADE DEFICIT.
0:51
THE UNITED STATE IS CURRENTLY RUNNING A TRADE DEFICIT.
0:56
WHEN GOVERNMENTS WANTS TO ENCOURAGE TRADE BETWEEN THEIR COUNTRIES, THEY
WRITE TRADES AGREEMENTS
1:01
WHEN THEY WANT TO DISCOURAGE TRADE AMONG THEIR COUNTRIES THEY INTRODUCE
TRADE BARRIERS.
1:07
A TRADE AGREEMENT IS JUST WHAT IT SOUNDS LIKE,
1:10
ITS AN AGREEMENT AMONG TWO OR MORE COUNTRIES THAT INCREASES TRADE BY MAKING
IT MORE BENEFICIAL FOR BOTH PARTIES.
1:18
A TRADE BARRIER IS AN OBSTACLE TO TRADE BETWEEN TWO OR MORE NATION.
1:23
A GOOD EXAMPLE OF A TRADE BARRIER IS A TARIFF
1:26
OR A TAX ON IMPORTED GOODS.
1:29
TARIFF MAKE MORE EXPENSIVE TO BUY AND SELL IMPORTED PRODUCTS
1:34
AND THEREFORE, DISCOURAGE TRADE.
1:37
NOW WILL LOOK AT A COUPLE OF EXAMPLE OF TRADE AGREEMENT FROM AROUND THE
WORLD;
1:42
THE ASIAN PACIFIC ECONOMIC COOPERATION ALSO KNOWN AS THE APEC
1:48
BEGAN IN 1989, TO PROMOTE ECONOMIC GROWTH IN TRADE COOPERATION IN THE PACIFIC
RIM
1:54
ITS FIRST MEETING INCLUDED AUSTRALIA, BRUNEI,
1:57
JERUSALEM, CANADA,
2:00
INDONESIA, JAPAN, SOUTH KOREA, MALAYSIA, NEW ZEALAND, PHILIPPINE, SINGAPORE,
THAILAND AND THE UNITED STATES.
2:11
THESE COUNTRIES DISCUSS WAY TO COOPERATE IN THE FAST GROWING REGIONS.
2:16
OVER TIME THE APEC HAS WORKED TOGETHER TO QUICKLY AND SAFELY MOVE GOODS
BETWEEN MEMBER COUNTRIES AND CREATE NEW JOBS.
2:24
IN ORDER TO MAKE A NEW POLICY
2:27
ALL THE MEMBER COUNTRIES MUST AGREED.
2:29
THIS IS CALLED THE CONSENSUS.
2:32
ANOTHER EXAMPLE IS THE EUROPEAN UNION OR EU.
2:37
THE EU WAS CREATED IN 1993,
2:40
ITS PURPOSE IS PROMOTE COOPERATION IN BOTH ECONOMIC AND POLITICS AMONG
EUROPEAN COUNTRIES
2:46
THE EU HAS A COMMON CURRENCY KNOWN AS THE EURO,
2:50
THE'RE NOT TRADE BARRIER BETWEEN COUNTRIES IN THE EUROPEAN UNION.
2:54
IN 1994 THE UNITED SATES, CANADA AND MEXICO AGREED TO THE NORTH AMERICA FREE-
TRADE AGREEMENT OR NAFTA.
3:03
THIS AGREEMENT REMOVES MORE TRADE BARRIERS AMOUNTS THE THREE COUNTRIES.
3:07
OVERALL THE AGREEMENT HAS INCREASE TRADES AMONG THE THREE COUNTRIES, SPECIALLY
FOR AGRICULTURAL PRODUCTS.
3:15
IN GENERAL, CITIZENS AND POLITICIANS IN THE UNITED SATES DISAGREE ABOUT
INTERNATIONAL TRADE.
3:21
SOME AMERICANS WANTS THE UNITED STATES TO INCREASES TRADE WITH OTHER COUNTRIES
IN ORDER TO LOWER LABOR COST,
3:27
WHILE OTHERS PREFER MORE TRADE BARRIERS TO PROTECT US INDUSTRIES AND WORKERS.
3:33
HISTORICALLY, TRADE BARRIERS HAS BEEN SHOWN TO SLOWED ECONOMIC GROWTH AND
DEVELOPMENT.
3:37
AN EXAMPLE OF THIS IS THE GREAT DEPRESSION OF THE 1930,
3:42
IN RESPONSE TO THE FINANCIAL CRISIS MANY COUNTRIES AROUND THE WORLD
3:46
INCREASED TARIFF TO PROTECT THEIR INDUSTRIES AND
3:49
TO EARN MONEY BY TAXING OTHER COUNTRIES.
3:52
THE RESULT WAS DECREASED WORLD TRADE,
3:54
WHICH ENDED UP HURTING THE COUNTRIES ECONOMIES, AS THEY COULDN'T SUSTAIN
THEMSELVES
3:58
WITHOUT MONEY BEEN MADE BY SELLING GOODS TO OTHER COUNTRIES.
4:02
AND ULTIMATELY, THIS PROLONGED THE GREAT DEPRESSION.

OH HEY THERE TODAY WE ARE GOING TO

0:03
EXPLAIN YOU WHAT INTERNATIONAL
0:04
FRANCHISES ARE YOU MIGHT HAVE HEARD
0:06
ABOUT THEM AND YOU MIGHT EVEN BE AT ONE
0:08
OF THESE RIGHT NOW BUT DO YOU KNOW WHAT
0:10
IT REALLY IS AND HOW IT WORKS WELL LET'S
0:13
FIGURE IT OUT INTERNATIONAL FRANCHISES
0:15
ARE A SYSTEM BASED ON THE LICENSING OF
0:17
THE RIGHT TO DUPLICATE A SUCCESSFUL
0:19
BUSINESS FORMAT IN FOREIGN MARKETS THE
0:22
FRANCHISOR RUNS THE FRANCHISEE THE
0:24
EXCLUSIVE POWER TO DISTRIBUTE ITS
0:26
PRODUCTS OR SERVICES IN ESTABLISHMENTS
0:28
ARE EQUIPPED THE SAME AS WELL AS THE
0:30
RIGHT TO USE INTELLECTUAL PROPERTY
0:32
RIGHTS LIKE COMMERCIAL SIGNS BRANDS
0:34
TRADEMARKS ETC AND A TECHNICAL AND
0:38
COMMERCIAL SUPPORT FOR DISTRIBUTION TO
0:39
BE CARRY OUT CORRECTLY BASICALLY YOU
0:42
WILL BE BUYING A BUSINESS THAT IS
0:43
ALREADY CREATED IN EXCHANGE FOR A FEE
0:46
SOME EXAMPLES OF INTERNATIONAL
0:47
FRANCHISES THAT YOU MIGHT KNOW FOR THE
0:49
POPULARITY ARE MCDONALD'S KFC SUBWAY
0:52
AMONG OTHERS LET'S MOVE ON TO THE
0:55
CHARACTERISTICS OF THIS BUSINESS MODEL
0:56
HERE THE FRANCHISEE MUST FOLLOW THE
0:58
INSTRUCTIONS STATED BY THE FRANCHISOR
1:00
REGARDING TO APPEARANCE
1:01
COMMERCIALIZATION AND CORPORATE IMAGE OF
1:03
THE AUTHORIZED PREMISES FOR THE SERVICES
1:07
PROVIDER THE FRANCHISEE MUST PAY THE
1:09
FRANCHISOR A SERIES OF DIFFERENT PIECE
1:11
FOR EACH SERVICE LIKE SALES ARE
1:13
BAPTIZING P ETCETERA
1:14
THE TWO PRINCIPLE KINDS OF FRANCHISE
1:17
CONTRACTS IN INTERNATIONAL MARKETS ARE
1:19
DIRECT FRANCHISE AGREEMENT AND MASTER
1:21
FRANCHISE AGREEMENT THE FIRST ONE IS
1:24
DIRECT CONTRACTS BETWEEN THE FRANCHISOR
1:26
OF THE SUB FRANCHISOR AND THE FRANCHISEE
1:29
MASTER IT'S A FRANCHISOR THAT GRANTS
1:32
ANOTHER PARODY RIGHTS TO SUB FRANCHISE
1:35
WITHIN A GIVEN TERRITORY IN
1:37
INTERNATIONAL MARKETS RELATIONSHIPS
1:39
BETWEEN THE FRANCHISOR AND THE PRACTICE
1:40
E ARE GOVERNED THROUGH AN INTERNATIONAL
1:42
FRANCHISE AGREEMENT INTERNATIONAL
1:45
FRANCHISING CAN BE AN AMAZING
1:46
OPPORTUNITY TO EXPAND OPERATIONS WITH
1:48
SIGNIFICANTLY LESS RISK AND WITH HIGHER
1:50
RATES OF SUCCESS AND COMPANY OWN
1:52
EXPANSION HOWEVER THERE ARE MANY FACTORS
1:54
TO CONSIDER BEFORE DECIDING TO FOLLOW
1:56
THIS MODEL LIKE HOW ADAPTABLE THE
1:58
BUSINESS IS AND THE BENEFITS AREN'T
2:00
RISKS OF INTERNATIONAL EXPANSION SOME
2:02
BUSINESS REQUIRE A LEVEL OF ADAPTATION
2:03
TO ACCOMPLISH THE QUADRA VARIATION
2:06
OUR LEGISLATIONS OF THE COUNTRIES THAT
2:07
YOU'RE EXPECTING TO REACH OKAY SO NOW
2:12
WILL YOU LIKE TO KNOW WHAT ADVANTAGES
2:14
WILL BRING YOU INTERNATIONAL FRANCHISING
2:16
WELL HERE I WILL TELL YOU IN FIVE POINTS
2:20
FIRST INTERNATIONAL FRANCHISING ALLOWS
2:24
ORGANIZATIONS TO ENTER OVERSEAS MARKETS
2:26
EXPAND THEIR PRODUCTS AND REACH NEW
2:29
CUSTOMERS IN A LOWER RISK MODEL THAN
2:32
TRADITIONAL COMPANY IN OLD EXPANSION
2:35
SECOND THIS ALSO MEANS THAT THE
2:38
ORGANIZATION DOES NOT HAVE TO SPEND TIME
2:41
AND MONEY RECRUITING A FULL COMPLETENESS
2:44
OF STAFF IN THE AREA AND RECOLLECTING
2:47
CURRENT STAFF OR OFFICES TO THE AREA
2:51
FRANCHISE COMPANIES USUALLY PROVIDES
2:54
EXTENSIVE TRAINING AND SUPPORT TO THEIR
2:57
FRANCHISES IN EFFORT TO HELP THEM
2:59
SUCCEED
3:00
THIRD WHEN YOU EXPAND THE FRANCHISE
3:05
INTERNATIONALLY YOU CAN SOMETIMES TAKE
3:07
ADVANTAGE OF NEW MARKETS THAT ARE
3:10
UNFAMILIAR WITH YOUR BUSINESS MODEL IF
3:13
YOU OWN THE FIRST BUSINESS OF ITS KIND
3:16
IN AN INTERNATIONAL MARKET YOU MAY BE
3:19
ABLE TO BRING IN SUBSTANTIAL PURPOSE
3:22
WHEN A NEW BUSINESS COMES INTO A REGION
3:25
AND THE PEOPLE LIKE IT IT CREATES A CASH
3:28
COW FOR YOGA
3:30
FOR DEPENDING ON WHERE YOU DECIDE TO
3:34
EXPAND YOU MAY BE ABLE TO TAKE ADVANTAGE
3:37
OF FAVORABLE GOVERNMENT REGULATIONS YOU
3:41
MAY BE ALSO ABLE TO SAVE MONEY ON TAXES
3:46
AND FEES AND FIGHT LAST BUT NOT LEAST
3:51
THE CORPORATE IMAGE AND BRAND ARE
3:54
ALREADY A RECOGNIZED CONSUMERS ARE
3:57
GENERALLY MORE COMFORTABLE PURCHASING
4:00
ITEMS THEY ARE FAMILIAR WITH AND WORKING
4:03
WITH COMPANIES THAT THEY KNOW AND TRUST
4:05
YOU DO NOT NEED TO WORRY FROM THINGS
4:08
LIKE MARKETING AND BRAND RECOGNITION
4:11
BECAUSE IT ALREADY COMES WITH IT SO NOW
4:19
YOU MIGHT BE WONDERING ABOUT THE
4:21
DISADVANTAGES OF INTERNATIONAL
4:23
FRANCHISING WELL THERE ARE SOME OF THEM
4:26
FRANCHISES CAN BE COSTLY TO IMPLEMENT
4:28
THE FEES TEND TO BE HIGH FRANCHISORS
4:33
USUALLY REQUIRE FRANCHISES TO FOLLOW
4:36
THEIR OPERATIONS MANUAL EXACTLY HOW IT
4:39
IS IN ORDER TO ENSURE CONSISTENCY
4:43
FRANCHISES MUST BE VERY GOOD AT
4:45
FOLLOWING DIRECTIONS IN ORDER TO
4:47
MAINTAIN THE IMAGE A LEVEL OF SERVICE
4:49
ALREADY STARTED IF DIFFERENT CHOICES
4:54
MAKES FEWER DECISIONS OR SOME OTHER
4:56
FRANCHISE DECREASE QUALITY AND CLIENTS
4:58
FIND OUT ABOUT IT THEN THE BROWN LOSES
5:01
RECOGNITION THAT IS GOING TO AFFECT YOU
5:03
DIRECTLY
5:10
YOU

HI GUYS I'M SAY ME AND I'LL BE TALKING

0:03
ABOUT WHOLLY OWNED SUBSIDIARIES SO WHAT
0:10
ARE WHOLLY OWNED SUBSIDIARIES A WHOLLY
0:13
OWNED SUBSIDIARY IS A COMPANY THAT IS
0:15
COMPLETELY OWNED BY ANOTHER COMPANY THE
0:18
COMPANY THAT OWNS THE SUBSIDIARY IS
0:20
CALLED THE PARENT COMPANY OR THE HOLDING
0:21
COMPANY HOW DO THEY FUNCTION THE PARENT
0:27
COMPANY OF THE SUBSIDIARY WILL OWN ALL
0:29
OF THE LATTER'S COMMON STOCK THE PARENT
0:33
COMPANY CAN ALSO CHOOSE THE MEMBERS THAT
0:34
CONSTITUTE THE SUBSIDIARIES BOARD OF
0:36
DIRECTORS MARVEL AND VOLKSWAGEN ARE SOME
0:41
EXAMPLES NOW LET'S TALK ABOUT SOME
0:46
EXAMPLES OF WHOLLY OWNED SUBSIDIARIES
0:48
ONE EXAMPLE WOULD BE WALT DISNEY COMPANY
0:51
ACQUIRING MARVEL ENTERTAINMENT IN 2009
0:53
FOR 4 BILLION U.S. DOLLARS
0:56
ANOTHER EXAMPLE WOULD BE VOLKSWAGEN
0:59
GROUP SELLING CARS UNDER AUDI BENTLEY
1:01
LAMBORGHINI AND MORE NEXT LET'S LOOK AT
1:06
SOME ADVANTAGES FIRSTLY IT IS EASIER TO
1:10
MANAGE THE SUBSIDIARY UNDER THE SAME
1:12
GUIDELINES OR OPERATING PROCEDURES AS
1:14
LEADERSHIP HAS ALREADY ESTABLISHED FROM
1:16
THE PARENT COMPANY SECONDLY THE PARENT
1:19
COMPANY MAY APPLY ITS OWN DATA ACCESS
1:21
AND SECURITY MEASURES FOR THE SUBSIDIARY
1:23
AS A METHOD OF REDUCING THE RISK OF
1:25
LOSING INTELLECTUAL PROPERTY TO OTHER
1:27
COMPANIES IN ADDITION SIMILAR FINANCIAL
1:30
SYSTEMS SHARING ADMINISTRATIVE SERVICES
1:33
AND CREATING SIMILAR MARKETING PROGRAMS
1:35
BETWEEN THE PARENT COMPANY AND
1:36
SUBSIDIARY CAN CUT DOWN ON COSTS FOR
1:38
BOTH COMPANIES LESLIE THE DISADVANTAGES
1:44
OF WHOLLY OWNED SUBSIDIARIES INCLUDE
1:46
FIRSTLY ESTABLISHING A WHOLLY OWNED
1:48
SUBSIDIARY MAY RESULT IN THE PARENT
1:50
COMPANY PAYING TOO MUCH ASSETS
1:52
ESPECIALLY IF OTHER COMPANIES ARE
1:54
COMPETING FOR THE SAME BUSINESS SECONDLY
1:57
ESTABLISHING RELATIONSHIPS WITH VENDORS
1:59
AND LOCAL CLIENTS CAN ALWAYS BE
2:01
TIME-CONSUMING WHICH MAY HINDER THE
2:03
COMPANY OPERATIONS THIRDLY CULTURAL
2:06
DIFFERENCES MAY POSE AS A PROBLEM WHEN
2:08
HIRING STAFF LESLIE THE PARENT COMPANY
2:12
SUFFERS FROM RISK OF OWNING THE
2:13
SUBSIDIARY AND THIS RISK MAY INCREASE
2:15
WHEN LOCAL LAWS DIFFER SIGNIFICANTLY
2:16
FROM THE LAWS IN THE PARENT COMPANY'S
2:18
COUNTRY IN CONCLUSION
2:22
A WHOLLY OWNED SUBSIDIARY IS A COMPANY
2:25
WHOSE COMMON STOCK IS COMPLETELY OWNED
2:27
BY A PARENT COMPANY WHOLLY OWNED
2:29
SUBSIDIARIES ALLOW THE PARENT COMPANY TO
2:32
DIVERSIFY AND MINIMIZE THEIR RISK OF
2:34
BEING NEGATIVELY AFFECTED AS EACH OF
2:35
THEIR SUBSIDIARY COMPANIES IS PROTECTED
2:37
FROM EACH OTHER'S LIABILITIES IN GENERAL
2:40
WHOLLY OWNED SUBSIDIARIES POSSESS LEGAL
2:43
CONTROL OVER OPERATIONS PRODUCTS AND THE
2:45
WAY THINGS ARE HANDLED IN THEIR
2:47
SUBSIDIARY COMPANIES

WITHOUT TRADE THE PRICE OF GOODS AND

0:09
SERVICES WOULD BE FAR HIGHER THAN IT IS
0:11
TODAY WITHOUT TRADE MANY ENTREPRENEURS
0:15
FROM COMPANIES LARGE AND SMALL WOULD
0:17
LACK OPPORTUNITIES IN MARKET PLACES FAR
0:20
AWAY WHAT YOU GET WITH TRADE IS THE
0:24
WHOLE WORLD AT YOUR DISPOSAL AT YOUR
0:27
FINGERTIPS BUT IF YOU DON'T HAVE A
0:29
GUIDELINE IF YOU DON'T HAVE A FRAMEWORK
0:31
WITHIN WHICH TO OPERATE TRADING IN THIS
0:34
BIG WORLD CAN BE VERY CONFUSING AND VERY
0:37
COMPLICATED BRITAIN IS A TRADING NATION
0:42
AND HAS BEEN FOR CENTURIES BUSINESSES
0:44
LARGE AND SMALL SELL GOODS AND SERVICES
0:48
ALL OVER THE WORLD BUT ABSENT RULES
0:51
ABSENT THE KNOWLEDGE OF WHAT IS GOING ON
0:54
ON THE GROUND SEIZING THOSE
0:56
OPPORTUNITIES BECOMES MUCH MORE
0:58
DIFFICULT THE WTO IS ABOUT TRANSPARENCY
1:01
YOU KNOW THE LAW OF THE LAND WHEN YOU
1:04
TRY TO ENGAGE IN BUSINESS IN FOREIGN
1:06
MARKETS YOU DON'T KNOW THAT WITHOUT
1:08
THESE KINDS OF RULES
1:11
BRITAIN IS A FOUNDING MEMBER OF THE WTO
1:14
WHICH MEANS THAT SINCE 1995 BRITAIN HAS
1:17
BEEN TRADING ON WTO TERMS THIS SIMPLY
1:20
MEANS THE RULES OF THE GAME OUTSIDE OF
1:24
THE EUROPEAN UNION AND THOSE COUNTRIES
1:27
WITH WHICH THE EU HAS TRADE AGREEMENTS
1:29
SO FOR MANY OF BRITAIN'S TRADING
1:32
PARTNERS CHINA INDIA BRAZIL THE UNITED
1:35
STATES THE TERMS OF TRADE WILL REMAIN
1:37
THE SAME
1:38
[MUSIC]
1:41
BRITAIN HAS BEEN AN ADVOCATE FOR OPEN
1:44
AND EXPANDING TRADE FOR CENTURIES THIS
1:47
PUSH TO TRY AND OPEN MARKETS TO TRY AND
1:49
CONNECT PEOPLE FROM AROUND THE WORLD
1:51
THROUGH COMMERCE IS SOMETHING THAT MAKES
1:54
BRITAIN GET A FINDER IN THE
1:56
INTERNATIONAL COMMUNITY WITH BRITAIN NOW
1:59
TAKING ITS SEAT AS AN INDEPENDENT VOICE
2:01
INSIDE THE WTO MANY WTO MEMBERS ARE
2:05
LOOKING TO BRITAIN TO BE A FLAG BEARER
2:08
IN THE FUTURE

WE ALL KNOW THAT OUTSOURCING

0:06
IS WHEN A COMPANY HIRES OUTSIDE EXPERTS
0:08
LIKE A FIRM IN BANGALORE OR SHANGHAI OR
0:11
A TRADITIONAL MANAGEMENT CONSULTING FIRM
0:13
TO SOLVE A CHALLENGE OR TAKE ADVANTAGE
0:15
OF AN OPPORTUNITY FOR THEM
0:18
ANOTHER FORM OF OUTSOURCING IS WHEN A
0:20
COMPANY CREATES A BANGALORE OR A
0:22
TRADITIONAL MANAGEMENT CONSULTING FIRM
0:24
INSIDE ITS OWN WALLS THIS USUALLY SMALL
0:28
NUMBER OF EMPLOYEES ARE SPECIALLY
0:30
APPOINTED TO TEMPORARILY EXCHANGE THEIR
0:32
DAY JOBS FOR A STRATEGICALLY CRITICAL
0:35
PROJECT DESIGNED TO SOLVE A CHALLENGE OR
0:37
TAKE ADVANTAGE OF AN OPPORTUNITY ON
0:39
BEHALF OF THE COMPANY BOTH FORMS OF
0:43
OUTSOURCING OPERATE ON THE SAME
0:44
PRINCIPLES AN OUTSIDE FIRM OR INSIDE SET
0:47
OF EMPLOYEES IS LITERALLY OR EFFECTIVELY
0:50
HIRED TO TAKE RESPONSIBILITY USUALLY
0:53
EXCLUSIVELY FOR CREATING THE SOLUTIONS
0:55
AND EXECUTING THE TASKS INSOURCING IS
0:59
WHEN AN ORGANIZATION LEVERAGES AND
1:01
COORDINATES THE ENERGY AND EXPERTISE OF
1:03
ITS OWN EMPLOYEES TO ADDRESS ITS MOST
1:06
PRESSING CHALLENGES AND PURSUE ITS MOST
1:08
STRATEGIC OPPORTUNITIES THIS
1:11
COLLABORATIVE OF FULL-TIME EMPLOYEES
1:12
SHARES RESPONSIBILITY FOR ALL OF THE
1:15
WORK BY DESIGN IT IS INCLUSIVE THE
1:18
ORGANIZATION TABS ITS OWN TALENT TO TAKE
1:20
ON AN IMPORTANT INITIATIVE USING THE
1:22
EXPERTISE FOR WHICH THEY WERE HIRED
1:24
OUTSOURCING IS MOST EFFECTIVE WHEN AN
1:27
ORGANIZATION'S PRIMARY GOALS ARE LIMITED
1:29
IN TERMS OF TIME AND NARROW IN TERMS OF
1:32
SCOPE AMONG OTHERS THESE GOALS OFTEN
1:35
INCLUDE REDUCTION OF COSTS MITIGATION OF
1:38
SKILL SHORTAGES ELIMINATION OF SERVICES
1:41
AND SHIFTING OF CERTAIN TASKS AWAY FROM
1:43
FULL-TIME EMPLOYEES A COMMON FUNCTION TO
1:46
OUTSOURCE IS IT WHEN INCREMENTAL OR
1:50
TACTICAL CHANGE IS REQUIRED OUTSOURCING
1:52
IS THE APPROPRIATE ACTION INSOURCING IS
1:55
MOST EFFECTIVE WHEN AN ORGANIZATION'S
1:57
PRIMARY GOALS ARE CONTINUOUS IN TERMS OF
2:00
TIME AND MULTIFACETED IN TERMS OF SCOPE
2:02
THESE GOALS ARE INCLUSIVE AND EXPANSIVE
2:05
AND INCLUDE INCREASING REVENUES AND/OR
2:08
PROFITS AND INCREASING EFFECTIVENESS AND
2:10
EFFICIENCY
2:11
THEREFORE THEY OFTEN REQUIRE MULTIPLE
2:14
FUNCTIONS
2:15
DEPARTMENTS OR DIVISIONS TO TAKE PART
2:17
THIS HAPPENS WHEN THE ORGANIZATION KNOWS
2:19
THAT IN ORDER TO ACHIEVE THOSE GOALS AND
2:21
MUST TRANSFORM ITSELF AND IF THE ONLY
2:23
WAY TO TRANSFORM IS THROUGH ITS OWN
2:25
PEOPLE IT MUST ENGAGE AND EQUIP THE
2:29
HEADS HEARTS AND HANDS OF EMPLOYEES
2:31
LEVERAGE EMPLOYEE NETWORKS TO ENABLE
2:33
ACCELERATION AND SUSTAIN THE CAPABILITY
2:36
AND CAPACITY TO TAKE ON UNFORESEEN
2:38
FUTURE CHALLENGES AND OPPORTUNITIES WHEN
2:41
LARGE-SCALE CHANGE IS ACQUIRED
2:42
INSOURCING IS THE MEANS TO ACCOMPLISH IT
2:45
IN A WORLD IN WHICH CHANGE IS HAPPENING
2:47
FASTER THAN OUR ABILITY TO KEEP UP WITH
2:49
IT
2:49
ORGANIZATIONS CLEARLY NEED TO IMPROVE
2:51
THEIR ABILITY TO INSOURCE
2:52
THOSE ORGANIZATIONS THAT BUILD IN
2:55
SOURCING SKILLS PERSPECTIVES PROCESSES
2:58
AND STRUCTURES WILL WIN IN THE MARKET
3:00
CONTINUOUSLY THOSE THAT ATTEMPT
3:03
LARGE-SCALE CHANGE THROUGH OUTSOURCING
3:04
WILL NOT

GLOBAL TRADE MANAGEMENT SOFTWARE WAS

0:03
FIRST DEVELOPED IN RESPONSE TO THE
0:05
EXPLOSIVE GROWTH OF MANUFACTURING IN
0:07
CHINA
0:08
AND OTHER REGIONS AROUND THE WORLD TODAY
0:11
IT'S NO LONGER SUFFICIENT TO SIMPLY FIND
0:13
CHEAP LABOR AND COMPANIES CAN'T HIRE
0:15
MORE PEOPLE TO SOLVE SUPPLY CHAIN
0:17
PROBLEMS IN THE NEW MILLENNIUM STAYING
0:19
COMPETITIVE MEANS CONSISTENTLY IMPROVING
0:21
SUPPLY CHAIN AGILITY
0:22
COMPRESSING CYCLE TIMES OPTIMIZING
0:25
SOURCING DECISIONS
0:26
LOWERING DISTRIBUTION COSTS CEMENTING
0:29
RELATIONSHIPS WITH
0:30
STRATEGIC SUPPLIERS AND DELIVERING ON
0:32
INCREASINGLY COMPLEX CUSTOMER DEMANDS
0:34
WITHOUT A COMPREHENSIVE PLANNING AND
0:36
EXECUTION SYSTEM THAT HELPS MANAGE AND
0:38
INTEGRATE PROCESSES INTO ONE CONTINUOUS
0:41
STREAM OF ACTIVITY
0:42
COMPANIES RISK LOSING GROUND TO MORE
0:44
FORWARD-THINKING COMPETITORS
0:45
GLOBAL TRADE FUNCTIONALITY CAN BE
0:47
BROADLY DIVIDED INTO THREE MAJOR
0:49
CATEGORIES
0:50
GLOBAL SOURCING ENCOMPASSES A WIDE RANGE
0:52
OF AREAS IN THE PRODUCT LIFE CYCLE
0:54
SUCH AS COLLABORATIVE PRODUCT
0:56
DEVELOPMENT ESTABLISHING DIGITAL
0:58
CONNECTIONS WITH SUPPLIERS REGULATORY
1:00
AND QUALITY TESTING
1:01
AND VISIBILITY TO ORDER AND PRODUCTION
1:03
STATUS
1:04
TRADE COMPLIANCE COVERS ITEM
1:06
CLASSIFICATION IMPORT AND EXPORT LICENSE
1:09
MANAGEMENT
1:09
TRADE DOCUMENTATION AND PARTICIPATION IN
1:12
FREE
1:13
DUTY DEFERRED OR PREFERENTIAL TRADE
1:15
PROGRAMS
1:16
INTERNATIONAL SUPPLY CHAIN EXECUTION AND
1:18
VISIBILITY
1:19
FACILITATES THE EXECUTION OF
1:21
CROSS-BORDER SHIPPING AND TRANSPORTATION
1:24
AND ALLOWS VISIBILITY INTO INTERNATIONAL
1:26
TRADING PARTNER PROCESSES AND EVENTS
1:28
INCLUDING MILESTONE ALERTS AND ESTIMATED
1:30
DELIVERY NOTICES
1:32
MANY RETAILERS AND MANUFACTURERS HAVE
1:34
FAILED TO RECOGNIZE THE IMPORTANCE OF A
1:36
SCALABLE
1:37
INTEGRATED PLATFORM TO MANAGE THE LEVEL
1:39
OF COMPLEXITY INHERENT IN TODAY'S GLOBAL
1:42
SUPPLY CHAINS
1:43
AS A RESULT THEY'RE STRUGGLING WITH
1:45
BLOATED COSTS
1:46
SUPPLY CHAIN DELAYS AND BLACK HOLES AND
1:49
POOR CUSTOMER SERVICE
1:51
IT'S BECOME IMPOSSIBLE TO SYNCHRONIZE
1:53
PRODUCT DEVELOPMENT
1:54
GLOBAL SOURCING TRADE MANAGEMENT GLOBAL
1:57
LOGISTICS
1:58
AND FINANCE OPERATIONS E2 OPEN WORKS
2:01
WITH SOME OF THE WORLD'S MOST SUCCESSFUL
2:03
COMPANIES TO IMPLEMENT THE GTM SOLUTIONS
2:06
THEY NEED TO STAY COMPETITIVE
2:08
FIND OUT MORE

WELCOME TO THE INVESTORS TRADING ACADEMY TALKING GLOSSARY OF FINANCIAL TERMS

AND EVENTS.
0:09
OUR WORD OF THE DAY IS “JOINT VENTURE”.
0:12
A JOINT VENTURE OR JV IS A BUSINESS AGREEMENT IN WHICH THE PARTIES AGREE TO
DEVELOP, FOR
0:17
A FINITE TIME, A NEW ENTITY AND NEW ASSETS BY CONTRIBUTING EQUITY.
0:22
THEY EXERCISE CONTROL OVER THE ENTERPRISE AND CONSEQUENTLY SHARE REVENUES,
EXPENSES
0:27
AND ASSETS.
0:28
THERE ARE OTHER TYPES OF COMPANIES SUCH AS JV LIMITED BY GUARANTEE, JOINT
VENTURES LIMITED
0:34
BY GUARANTEE WITH PARTNERS HOLDING SHARES.
0:37
IN EUROPEAN LAW, THE TERM 'JOINT VENTURE' OR JOINT UNDERTAKING IS AN ELUSIVE LEGAL
CONCEPT,
0:43
BETTER DEFINED UNDER THE RULES OF COMPANY LAW.
0:46
IN FRANCE, THE TERM 'JOINT VENTURE' IS VARIOUSLY TRANSLATED 'ASSOCIATION
D'ENTREPRISES', 'ENTREPRISE
0:52
CONJOINTE', 'COENTREPRISE' OR 'ENTREPRISE COMMUNE'.
0:57
IN GERMANY, 'JOINT VENTURE' IS BETTER REPRESENTED AS A 'COMBINATION OF COMPANIES'
1:02
A JOINT VENTURE TAKES PLACE WHEN TWO PARTIES COME TOGETHER TO TAKE ON ONE
PROJECT.
1:06
IN A JOINT VENTURE, BOTH PARTIES ARE EQUALLY INVESTED IN THE PROJECT IN TERMS OF
MONEY,
1:11
TIME, AND EFFORT TO BUILD ON THE ORIGINAL CONCEPT.
1:14
WHILE JOINT VENTURES ARE GENERALLY SMALL PROJECTS, MAJOR CORPORATIONS ALSO USE
THIS METHOD IN
1:19
ORDER TO DIVERSIFY.
1:21
A JOINT VENTURE CAN ENSURE THE SUCCESS OF SMALLER PROJECTS FOR THOSE THAT ARE
JUST STARTING
1:25
IN THE BUSINESS WORLD OR FOR ESTABLISHED CORPORATIONS.
1:29
SINCE THE COST OF STARTING NEW PROJECTS IS GENERALLY HIGH, A JOINT VENTURE ALLOWS
BOTH
1:34
PARTIES TO SHARE THE BURDEN OF THE PROJECT, AS WELL AS THE RESULTING PROFITS.
1:38
ALTHOUGH JVS REPRESENT A GREAT WAY TO POOL CAPITAL AND EXPERTISE AND REDUCE THE
EXPOSURE
1:43
OF RISK TO ALL INVOLVED, THEY DO PRESENT SOME UNIQUE CHALLENGES AS WELL.

A TARIFF IS ESSENTIALLY A TAX ON GOODS

0:02
AND SERVICES THAT ARE IMPORTED THE
0:05
PURPOSE OF A TARIFF IS GENERALLY TO
0:07
PROTECT THE PRODUCT OR A SERVICE THAT IS
0:09
DOMESTICALLY PRODUCED HERE THE BASICS OF
0:12
HOW A TARIFF MIGHT WORK LET'S IMAGINE
0:14
THAT COUNTRY A PRODUCES WIDGETS AND
0:16
COUNTRY B PRODUCES SIMILAR WIDGETS
0:19
COUNTRY B IS ABLE TO PRODUCE THEIR
0:20
WIDGETS FOR TEN DOLLARS EACH
0:22
WHILE IN COUNTRY A IT COST THEM FOURTEEN
0:25
DOLLARS TO PRODUCE THEIR WIDGETS WELL IN
0:27
AN EFFORT TO GET MORE BUSINESS THE
0:29
MANUFACTURERS IN COUNTRY B DECIDE TO
0:31
SELL THEIR WIDGETS IN COUNTRY A FOR JUST
0:34
THIRTEEN DOLLARS A WIDGET AS YOU CAN
0:36
IMAGINE THIS ISN'T GOOD FOR THE
0:37
MANUFACTURERS IN COUNTRY A NOW THEY
0:39
CAN'T SELL THEIR WIDGETS FOR A PROFIT
0:41
WELL BUSINESS BEGINS TO SLOW FOR THE
0:43
MANUFACTURERS IN COUNTRY A AND BECAUSE
0:45
BUSINESS IS SLOWING THEY MUST LET GO OF
0:47
SOME OF THEIR WORKERS WELL THE
0:49
GOVERNMENT IN COUNTRY A DOESN'T LIKE
0:50
THIS SO THEY DECIDE TO IMPOSE A TARIFF
0:52
ON ALL WIDGETS THAT ARE IMPORTED INTO
0:54
COUNTRY A FROM COUNTRY B THEY ARE GOING
0:58
TO CHARGE FIVE DOLLARS PER WIDGET TO ALL
1:00
IMPORTS WELL NOW THE MANUFACTURERS IN
1:03
COUNTRY A ARE THRILLED THEY CAN SELL
1:05
THEIR WIDGETS FOR LET'S SAY FIFTEEN
1:06
DOLLARS A WIDGET AND THE COMPETITORS IN
1:08
COUNTRY B CAN'T BEAT THEIR PRICE SO THAT
1:11
IS ESSENTIALLY HOW A TARIFF WORKS NOW
1:13
THE REAL QUESTION IS IS THIS GOOD OR BAD
1:15
WELL FOR THE WIDGET MANUFACTURING
1:17
COUNTRY A IT'S A GREAT THING THEY WERE
1:19
LOSING MONEY BEFORE WITH NO REAL WAY TO
1:21
COMPETE BUT NOW THEY'RE SELLING THE
1:23
WIDGETS AGAIN FOR A PROFIT AND THEY CAN
1:25
HIRE AGAIN IN THEIR BUSINESSES GROWING
1:27
SO WHAT ABOUT POTENTIAL NEGATIVES WELL
1:30
ONE POTENTIAL NEGATIVE IS RETALIATION BY
1:32
COUNTRY BE PERHAPS COUNTRY B IS UPSET BY
1:35
THIS WIDGET TARIFFS AND PERHAPS THEY PUT
1:37
THEIR OWN TARIFFS ON LET'S SAY CHICKENS
1:39
THAT ARE IMPORTED INTO THEIR COUNTRY
1:41
FROM COUNTRY A AND ALSO LET'S IMAGINE
1:43
THAT THERE'S A LOT OF CHICKENS THAT GETS
1:45
SHIPPED FROM COUNTRY AID TO COUNTRY B
1:47
WELL THIS COULD BE THE BEGINNING OF A
1:48
TRADE WAR A NO VOTE AND OFTEN TAKES A
1:50
LONG TIME FOR TRADE WARS TO PLAY OUT
1:52
THERE TENDS TO BE MANY LOSERS AND ONLY A
1:54
FEW WINNERS IN A TRADE WAR ANOTHER
1:57
CONSIDERATION IS THE END USER YOU MIGHT
1:59
HEAR AN ARGUMENT SAYING SOMETHING LIKE
2:01
THAT COUNTRY A MANUFACTURERS WERE TAKEN
2:03
OFF THE HOOK INSTEAD OF COUNTRY A
2:05
MANUFACTURERS HAVING TO INNOVATE OR
2:06
CUTTING COSTS TO COMPETE WITH THE
2:08
MANUFACTURER IN THE COUNTRY B INSTEAD
2:10
THE GOVERNMENT STEPPED IN SO WHAT ABOUT
2:12
THE END USER THE PEOPLE
2:13
OR COMPANIES THAT BOUGHT THOSE WIDGETS
2:15
BEFORE USED TO PAY JUST $13 PER WIDGET
2:18
THANKS TO THE IMPORTED WIDGETS BUT NOW
2:20
IT'S COSTING THEM $15 A WIDGET WHICH
2:22
MAKES THEIR EXPENSES HIGHER SO OUR
2:24
TARIFFS GOOD OR BAD WELL YOU DECIDE
2:27
SINCE IT SEEMS THAT THE ANSWER TO THAT
2:28
QUESTION DEPENDS ON WHO YOU ASK

WE HAVE ALL HEARD SOMETHING ABOUT

0:09
PROTECTORS ON SKATEBOARDS MOTORBIKES OR
0:14
MOUNTAIN BIKES PROTECTORS KEEP US SAFE
0:17
FROM INJURIES THIS IS WHAT THE LATIN
0:20
ROOT CROTA SHARE ACTUALLY MEANS TO
0:23
PROTECT THESE DAYS WE FREQUENTLY READ
0:27
BUSINESS NEWS HEADLINES LIKE THE
0:29
GOVERNMENT IS TAKING PROTECTIONIST
0:31
MEASURES BUT WHAT PRECISELY DOES
0:34
PROTECTIONISM MEAN AND WHAT IS ITS
0:37
CONNECTION WITH BUSINESS LET'S TAKE THE
0:40
IMAGINARY COUNTRY OF DRAWNED
0:42
BY INTRODUCING PROTECTIONIST MEASURES
0:45
PRESIDENT RIDICULOU HAS A CLEAR
0:48
OBJECTIVE TO SHIELD THE DOMESTIC ECONOMY
0:50
FROM COMPETITION FROM FOREIGN COMPANIES
0:55
MEASURES LIKE THIS MAY INVOLVE
0:57
INCREASING IMPORT TERRACE COMMODITY
1:00
TRADER MIKE FOR INSTANCE LOOKS ABROAD TO
1:03
BUY HIS STEEL CHEAPLY WHICH HE THEN
1:06
SHELLED IN DRAWNED BUT THE HIGHER COSTS
1:10
OF PURCHASE FORCED HIM TO INTRODUCE
1:12
SIGNIFICANT PRICE INCREASES AS WELL AND
1:15
THAT SCARES OFF HIS CUSTOMERS NOW HE
1:18
ONLY BUY FEEL ON THE DOMESTIC MARKET IN
1:21
OTHER WORDS THE DEMAND FOR PRODUCTS
1:23
MANUFACTURED LOCALLY RISES AND THE
1:26
SUPPLY OF FOREIGN PRODUCTS DROPS
1:29
INITIALLY IT SHOULD HELP TO MAKE PLENTY
1:31
OF JOBS IN THE COUNTRY SECURE PRESIDENT
1:36
RIDICULOU USES THESE MEASURES TO ISOLATE
1:39
DRAWING FROM THE FOREIGN MARKETS
1:41
EMERGING SECTORS BENEFIT INITIALLY AS
1:44
WELL MIKE'S SISTER SARAH
1:46
FOR INSTANCE WORKS AT A START-UP IN
1:49
DRAWLING VALLEY THAT MANUFACTURES DRONES
1:53
CORPORATIONS FROM ABROAD ARE NO LONGER
1:56
ABLE TO COMPETE DIRECTLY SO SARAH HAS
1:59
TIME TO TEST HOW THE COMPANY'S DRONE
2:01
PERFORM ON THE HOME MARKET AND HOW THEY
2:04
CAN BE MANUFACTURED AS CHEAPLY AS
2:06
POSSIBLE
2:08
SO PROTECTIONISM CAN INITIALLY LEAD TO
2:10
GREATER PROSPERITY ESPECIALLY IN LARGE
2:13
COUNTRIES LIKE DRAWNED BUT ALWAYS AT THE
2:17
EXPENSE OF OTHER COUNTRIES AND THAT HAS
2:20
CONSEQUENCES THERE IS A LACK OF
2:24
INTERNATIONAL COMPETITION AND THERE IS A
2:26
SLUMP IN INNOVATION THIS MEANS THE
2:30
PRODUCTS ARE NO LONGER STATE-OF-THE-ART
2:32
AND OFTEN EVEN MORE EXPENSIVE THAN
2:34
BEFORE FOODS THAT YOU KNOW GROW IN DRAWL
2:37
AND BANANAS FOR INSTANCE SIMPLY
2:40
DISAPPEAR FROM THE MARKET AND PRESIDENT
2:44
RIDICULOU HE ENDS UP SITTING ON A
2:46
MOUNTAIN OF DEBT CAUSED BY AN EMERGING
2:48
IMBALANCE
2:49
HE SUPPORTED DOMESTIC COMPANIES WITH
2:51
PLENTY OF MONEY BUT GROWTH HAS SUFFERED
2:54
AT THE SAME TIME AS THE COMPANIES ARE
2:57
USUALLY ONLY ABLE TO SELL THEIR PRODUCTS
2:59
ON THE DOMESTIC MARKET IN RESPONSE TO
3:04
PRESIDENT RIDICULOUS UNILATERAL ACTIONS
3:06
FORMER TRADE PARTNERS NOW ALSO TURN
3:09
THEIR BACKS ON DRAWL AND WHAT'S MORE
3:12
THEY TOO INTRODUCED PROTECTIONIST
3:14
POLICIES TO ISOLATE THEIR MARKETS THERE
3:17
IS A RISK OF A PROTECTIONIST SPIRAL
3:19
WHICH IN EXTREME CASES CAN EVEN LEAD TO
3:23
A GLOBAL ECONOMIC CRISIS LIKE IN THE
3:25
1930S PRESIDENT RIDICULOU HAD ONLY
3:29
INTENDED TO PROTECT THE DOMESTIC ECONOMY
3:32
BUT NOW HE HAS ACHIEVED PRECISELY THE
3:35
OPPOSITE HE GRADUALLY REALIZED THAT
3:38
ALTHOUGH ECONOMIC PROTECTIONISM CAN
3:40
PROVIDE DRAWIN WITH SHORT-TERM BENEFITS
3:42
IN THE LONG TERM IT WILL INEVITABLY LEAD
3:45
TO CATASTROPHIC CONSEQUENCES SO HE
3:48
DECIDES WITHOUT FURTHER ADO THAT THE
3:51
ELEVATED IMPORT TARIFFS NEED TO BE
3:53
REDUCED AND THEN INSTEAD THE COUNTRY
3:57
SHOULD STRENGTHEN ITS RELATIONSHIPS WITH
3:59
IMPORTANT TRADE PARTNERS