Copyright © Glencoe/McGraw-Hill Slide 1 of 11 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 7.2 The Global Economy In this

Copyright © Glencoe/McGraw-Hill Slide 1 of 11

BUSINESS MANAGEMENTReal-World Applications & Connections

GLENCOE

SectionSection 7.2The Global Economy

In this section: A global economy is an economy in which companies compete actively with businesses from all over the world. This section discusses:

• The Rise of the Global Economy• Doing Business Globally



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What You’ll Learn

• How NAFTA has increased international trade within North America.

• How managers decide how to get involved in the global economy.• How managers deal with the challenges they face when working

in a different culture.



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Why It’s Important

Business managers must understand how to function in the global economy.



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Key Terms

• global economy

• free trade area

• multinational corporation



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The Rise of the Global Economy

• Improvements in Telecommunications Technology• Political Changes• Free Trade Areas

Many factors have led to the rise of the global economy.



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NAFTA

• The largest free trade area in the world is in North America. • NAFTA stands for North American Free Trade Agreement.• Businesses in the United States, Mexico, and Canada can sell their

products anywhere in North America without facing major trade restrictions.



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Forms of International Operations

• Working through a foreign intermediary• Signing a licensing agreement with a foreign company• Forming a strategic alliance• Becoming a multinational corporation



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Multinational Companies

• Use imported materials.• Produce goods in other countries.• Sell products in other countries.

There are many ways for companies to do business globally.



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Fig 2-1

Challenges of Working in an International Environment

• work with customers, producers, suppliers, and employees from different countries

• become familiar with and show respect for local laws and customs

• be aware of different cultural attitudes

Managers must learn to:



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Fact and Idea Review

1. What is NAFTA?

2. What is a multinational corporation?

3. What are some of the challenges business managers who work in foreign countries face?

4. Give two examples of foreign business customs that differ from customs in the United States.

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Copyright © Glencoe/McGraw-Hill Slide 1 of 11 BUSINESS MANAGEMENT Real-World Applications & Connections GLENCOE Section 7.2 The Global Economy In this