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Running Head: LITERATURE REVIEW 2
LITERATURE REVIEW 2
Effect of Tobacco Use
Gideon Aryertey
Embry Riddle Aeronautical University
Introduction
Over decades, many individuals have been using tobacco
without being aware of its harmful effects. For instance, in the
U.S., the rate of cigarette smoking increased immensely in the
early twentieth century. This was due to the invention of the
cigarette rolling machine as well as an increase in the
advertisement of tobacco products. As a result, cigarette
smoking expanded regardless of the opposition of religious
leaders or other members. Tobacco consumption reaches its
peak especially between the ages of 20 to 40 in both females
and males although statistically males consume more than
females. Furthermore, the smoking rate amongst African-
Americans (16.7%) are higher than the national average in
comparison to Caucasians (16.6%). In fact, mixed race
individuals and American Indian/Alaska Natives have higher
smoking rates than African-Americans. As a result, this shows
that there’s a big issue with the use of tobacco. Tobacco has led
to many diseases such as lung cancer, diabetes, heart disease,
stroke. It also leads to addiction. However, it is significant for
one to overcome the addiction of tobacco use to improve their
health status. Educating people about the harmful effect of
tobacco consumption and making tobacco less affordable will
correspond to a gradual decrease in its use.
Tobacco use has caused numerous deaths amongst individuals
despite their socioeconomic backgrounds. For instance,
approximately 30 percent of people who perish due to cancer in
the United States; 80 percent of these deaths are caused by lung
cancer. lung cancer is the main cause of cancer related deaths in
the youth and adults. (Addicott, Sweitzer & McClernon, 2018).
Lung cancer attacks both genders and the treatment process can
be very complex. Consumers of tobacco are affected by this
disease because it exterminates the cells responsible for fighting
against the disease. Also, the use of tobacco affects the proper
functioning of all the organs in the body. Other than lung
cancer, tobacco consumption can also lead to mouth, esophagus,
larynx, liver, kidney, bladder, cervix, pharynx, stomach,
myeloid leukemia, pancreas and colon cancers (Ebbert,
Elrashidi & Stead, 2015).
In fact, about 7300 nonsmokers die from lung disease every
year according to the International Agency that is responsible
for Research on Cancer (IARC) after being exposed to tobacco.
Additionally, a 2009 survey that was conducted in China
indicated that about 38 percent of smokers were aware that
smoking contributes to attack of coronary heart disease while 27
percent were aware that it can lead to a stroke (Ambrose, et. al,
2017). However, individuals who smoke about five cigarettes a
day showed signs of various diseases and damages to the blood
vessels (Gilreath, et. al, 2016). In fact, blood vessels are
thickened and then become narrower. As a result, the flow of
blood from various body tissues and organs varies translating to
heart disease. Failure of the heart to work correctly corresponds
to high death rates because vitamins, proteins, and
carbohydrates are not distributed to all parts of the body.
(Landin, et. al, 2017). Nicotine is
the primary chemical in tobacco that leads to addiction. It can
be absorbed in the bloodstream of tobacco users or even inhaled
through cigarette smoke. Nicotine increases the percentage of
dopamine that stimulates regions of the brain. (Lee, et. al. 2015)
Conclusion
It is obvious according to research conducted that tobacco use
weakens the cells responsible for preventing the diseases that
occur which will eventually result in death if action is not
taken. Tobacco use amongst youths and adults have led to more
negative outcomes than positive. Therefore, all organizations
that are responsible for reducing the use of tobacco should
continue educating individuals about the harmful effects of
tobacco as well as making it less affordable.
References
Addicott, M. A., Sweitzer, M. M., & McClernon, F. J. (2018).
The Effects of Nicotine and Tobacco Use on Brain Reward
Function: Interaction With Nicotine Dependence
Severity. Nicotine & Tobacco Research.
Dahlin, S., Gunnerbeck, A., Wikström, A. K., Cnattingius, S., &
Bonamy, A. K. E. (2016). Maternal tobacco use and extremely
premature birth–a population‐based cohort study. BJOG: An
International Journal of Obstetrics & Gynaecology, 123(12),
1938-1946.
Ebbert, J. O., Elrashidi, M. Y., & Stead, L. F. (2015).
Interventions for smokeless tobacco use cessation. Cochrane
Database of Systematic Reviews, (10).
Gilreath, T. D., Leventhal, A., Barrington-Trimis, J. L., Unger,
J. B., Cruz, T. B., Berhane, K., ... & Pentz, M. A. (2016).
Patterns of alternative tobacco product use: emergence of
hookah and e-cigarettes as preferred products amongst
youth. Journal of Adolescent Health, 58(2), 181-185.
Kasza, K. A., Ambrose, B. K., Conway, K. P., Borek, N.,
Taylor, K., Goniewicz, M. L., ... & Kaufman, A. R. (2017).
Tobacco-product use by adults and youths in the United States
in 2013 and 2014. New England Journal of Medicine, 376(4),
342-353.
Landin, M., Kubasiak, J. C., Schimpke, S., Poirier, J., Myers, J.
A., Millikan, K. W., & Luu, M. B. (2017). The effect of tobacco
use on outcomes of laparoscopic and open inguinal hernia
repairs: a review of the NSQIP dataset. Surgical
endoscopy, 31(2), 917-921.
Lee, Y. O., Hebert, C. J., Nonnemaker, J. M., & Kim, A. E.
(2015). Youth tobacco product use in the United
States. Pediatrics, 135(3), 409-415.
Levy, D. T., Mays, D., Boyle, R. G., Tam, J., & Chaloupka, F.
J. (2016). The effect of tobacco control policies on US
smokeless tobacco use: a structured review. Nicotine and
Tobacco Research, 20(1), 3-11.
McNeill, A., Gravely, S., Hitchman, S. C., Bauld, L.,
Hammond, D., & Hartmann‐Boyce, J. (2017). Tobacco
packaging design for reducing tobacco use. Cochrane Database
of Systematic Reviews, (4).
Wehring, H., Powell, M., Sayer, M., Hackman, A., Buchanan,
R., Nichols, R., ... & Earl, A. (2019). T85. THE EFFECT OF
ADJUNCT ARIPIPRAZOLE ON MEASURES OF TOBACCO
USE AND CRAVING IN WOMEN WITH PSYCHOTIC
DISORDERS. Schizophrenia Bulletin, 45(Supplement_2), S236-
S236.
Competing in World Markets
http://www.wileybusinessupdates.com
Chapter
4
1
Explain why nations trade.
Describe how trade is measured between nations.
Identify the barriers to international trade.
Discuss reducing barriers to international trade.
Explain the decisions to go global.
1
Learning Objectives
2
3
5
4
2
Boosts economic growth
Expands markets
More efficient production systems
Less reliance on the economies of home nations
Exports: Domestically produced goods and services sold in
markets in other countries.
Imports: Foreign-made products and services purchased by
domestic consumers.
Why Nations Trade
3
Decisions to operate abroad depend upon availability, price, and
quality of:
Labor
Natural resources
Capital
Entrepreneurship
Companies doing business overseas must make strategic
decisions.
International Sources of Factors of Production
4
As developing nations expand into the global marketplace,
opportunities grow.
Many developing countries have posted high growth rates of
annual GDP.
Current GDP data
Size of the International Marketplace
5
Population Size and Prosperity
Though developing nations generally have lower per capita
income, many have strong GDP growth rates and their huge
populations can be lucrative markets.
6
Top 10 Trading Partners with U.S.
7
Absolute advantage: Country can maintain a monopoly or
produce at a lower cost than any competitor.
Example: China’s domination of silk production for centuries.
Comparative advantage: Country can supply a product more
efficiently and at lower cost than it can supply other goods,
compared with other countries.
Example: India’s combination of a highly educated workforce
and low wage scale in software development.
Absolute and Comparative Advantage
8
Balance of trade: Difference between a nation’s imports and
exports.
Balance of payments: Overall flow of money into or out of a
country.
Balance of payments surplus = more money into country than
out
Balance of payments deficit = more money out of country than
in
Measuring Trade Between Nations
9
Major U.S. Exports and Imports
U.S. demand for imported goods is partly a reflection of the
nation’s prosperity and diversity.
U.S. imports more goods than it exports but exports more
services than it imports.
10
Currency rates are influenced by:
Domestic economic and political conditions
Central bank intervention
Balance-of-payments position
Speculation over future currency values
Values fluctuate, or “float,” depending on supply and demand.
National governments can deliberately influence exchange rates.
Business transactions are usually conducted in currency of the
region where they happen.
Rates can quickly create or wipe out competitive advantage.
Exchange Rates
11
Barriers to International Trade
12
Language: Potential problems include mistranslation,
inappropriate messaging, lack of understanding of local
customs, and differences in taste.
Values and Religious Attitudes: Differing values about business
efficiency, employment levels, importance of regional
differences, and religious practices, holidays, and values about
issues such as interest-bearing loans.
Economics: A country’s size, per-capita income, and stage of
economic development are factors to consider before embarking
on an international business venture.
Social, Cultural, and Economic Differences
13
Political Climate
Stability is a key consideration.
Legal Environment
U.S. law
International regulations
Country’s law
Climate of corruption. Foreign Corrupt Practices Act forbids
U.S. companies from bribing foreign officials, candidates, or
government representatives.
International Regulations
Treaties between U.S. and other nations.
Tariffs are taxes charged on imported goods.
Enforcement problems, as with piracy.
Political and Legal Differences
14
Government Corruption
Transparency International produces an annual corruption index
for businesspeople and the general public.
15
Tariffs - taxes, surcharges, or duties on foreign products.
Tariffs generate income for the government.
Protective tariffs raise prices of imported goods to level the
playing field for domestic competitors.
Nontariff Barriers - also called administrative trade barriers
Quotas limit the amount of a product that can be imported over
a specified time period.
Dumping is the act of selling a product abroad at a very low
price.
An embargo imposes a total ban on importing a specified
product.
Types of Trade Restrictions
16
The world is moving toward more free trade.
There are many communities and groups that monitor and
promote trade
International Economic Communities reduce trade barriers and
promote regional economic cooperation.
Free-trade area: Members trade freely among selves without
tariffs or trade restrictions.
Customs union: Establishes a uniform tariff structure for
members’ trade with nonmembers.
Common market: Members bring all trade rules into agreement.
Reducing Barriers to Trade
17
General Agreement on Tariffs and Trade (GATT)
Most industrialized nations found organization in 1947 to
reduce tariffs and relax quotas.
The World Trade Organization succeeded GATT
Representatives from 153 countries
Reduce tariffs and promote trade
World Bank
Funds projects to build and expand infrastructure in developing
countries
International Monetary Fund (IMF)
Operates as lender to troubled nations in an effort to promote
trade
Organizations Promoting International Trade
18
North American Free Trade Agreement (NAFTA)
World’s largest free-trade zone: United States, Canada, Mexico.
U.S. and Canada are each other’s biggest trading partners.
Central America-Dominican Republic Free Trade Agreement
(CAFTA)
Free-trade zone among United States, Costa Rica, the
Dominican Republic, El Salvador, Guatemala, Honduras, and
Nicaragua.
$40 billion traded annually between U.S. and these countries.
European Union
Best-known example of a common market.
Goals include promoting economic and social progress,
introducing European citizenship as complement to national
citizenship, and giving EU a significant role in international
affairs.
International Economic Communities
19
Determining which foreign market(s) to enter
Analyzing the expenditures required to enter a new market
Deciding the best way to organize the overseas operations
Going Global
20
International Trade Research
21
Risk increases with the level of involvement
Many companies employ multiple strategies
Exporting and importing are entry-level strategies
Importing is the process of bringing in goods produced abroad.
Exporting is the act of selling your goods overseas.
Levels of International Involvement
22
Subcontracting involves hiring local firms to distribute,
produce, or sell goods and services.
Contractual Agreements
23
The ultimate level of global involvement is direct investment.
Directly operating production and marketing in foreign country
Acquisition
Joint ventures
Overseas division
Direct Investment
24
Multinational corporation (MNC) - An organization with
significant foreign operations and marketing activities outside
its home country.
Multinational Corporations
25
Economic Challenges Facing Contemporary Business
http://www.wileybusinessupdates.com
Chapter
3
1
Discuss microeconomics and explain the forces of demand and
supply.
Describe macroeconomics and the issues for the entire
economy.
Identify how to evaluate economic performance.
Discuss government’s attempts to manage economic
performance.
1
Learning Objectives
2
3
4
2
Analysis of the choices people and governments make in
allocating resources.
Includes microeconomics and macroeconomics
Economics
3
Microeconomics
The study of small economic units, such as individual
consumers, families, and businesses.
Supply: Amount of goods and services for sale at different
prices.
Demand: Willingness and ability of consumers to purchase
goods and services at different prices.
4
Factors Driving Demand
Demand curve - shows the amount of a product buyers will
purchase at different prices.
Driven by variety of factors such as competition, price, larger
economic events, and consumer preferences.
5
Demand Curve
A change in overall demand shifts to a new demand curve.
6
Supply Curve Example
Supply curve - shows the relationship between different prices
and the quantities that sellers will offer for sale, regardless of
demand.
7
How Demand and Supply Interact
Supply and demand curves meet at the equilibrium price.
Buyers and sellers make choices that restore the equilibrium
price.
Changes affect both supply and demand.
8
Macroeconomics
Issues for the Entire Society
Political, social, and legal environments differ in every country.
Economies generally classified in one of three categories:
Private enterprise system: capitalism or market economy
Planned economies: socialism, communism
Mixed economies (combinations of the two)
9
Capitalism
The Private Enterprise System and Competition
Businesses meet needs of consumers and are rewarded through
profit.
Government favors a hands-off approach.
Marketplace competition regulates economic life.
Four degrees of competition:
Pure competition
Monopolistic competition
Oligopoly
Monopoly
10
Types of Competition
11
Planned Economies
Communism
Property owned and shared by the community under a strong
central government.
Adopted in early 20th century by many nations, but
government-owned
monopolies often suffered from inefficiency.
Socialism
Government ownership and operation of major industries, such
as health care or communications.
Some private ownership of industry allowed.
Government controls determine business ownership, profits, and
resource allocation.
12
Mixed Market Economies
Economic systems that combine features of private enterprise
and planned economies.
Mixture of public and private enterprise can vary widely from
country to country.
Process of converting a publicly owned company to a private
one is called privatization.
13
Comparing Economic Systems
14
Evaluating Economic Performance
Economic system should provide stable business environment
and sustained growth.
Business decisions and consumer behavior differ at various
stages of the business cycle:
Prosperity—High consumer confidence, businesses expanding
Recession—Cyclical economic contraction lasting for six
months or longer
Depression—Extended recession
Recovery—Declining unemployment, increasing business
activity
15
Productivity and GDP
Productivity: Relationships between the goods and services
produced and the inputs needed to produce them.
Gross Domestic Product (GDP): Sum of all goods and services
produced within a nation’s boundaries; a measure of national
productivity.
GDP is tracked in the United States by the Bureau of Economic
Analysis, a division of the U.S. Department of Commerce.
16
Price-Level Changes
Inflation is rising prices caused by a combination of excessive
consumer demand and increases in the costs of raw materials.
Core inflation rate measures inflation minus energy and food
prices.
Hyperinflation - Soaring consumer prices.
Inflation devalues money. People can purchase less with what
they have (decreased purchasing power).
Deflation is when prices continue to fall. Deflation can cause a
weakened economy.
17
Measuring Price-Level Changes
Changing prices are tracked by the Consumer Price Index (CPI).
The monthly average change in prices of goods and services.
A multitude of items is priced to compile the data included in
the “CPI Market Basket.”
The Bureau of Labor Statistics calculates the CPI monthly along
with other economic measures.
18
CPI Market Basket
19
Employment Levels
The unemployment rate is the percentage of total workforce
actively seeking work but currently unemployed.
Bureau of Labor Statistics
Unemployment “game show”
20
Managing the Economy’s Performance
Monetary Policy - government actions to increase or decrease
the money supply and change banking policy and interest rates
to influence consumer spending.
Expansionary monetary policy: Efforts to increase the money
supply to reduce costs of borrowing and encourage new
investment.
Restrictive monetary policy: Efforts to decrease the monetary
supply to curb rising prices and overexpansion.
The Federal Reserve System formulates and implements
monetary policy.
Government uses monetary and fiscal policy to fight
unemployment,
Government uses monetary and fiscal policy to fight
unemployment, increase spending, and reduce the duration and
severity of economic recession.
21
Fiscal Policy
Fiscal Policy - Government actions to influence economic
activity through decisions about taxes and spending.
The Federal Budget - Annual plan for how the government will
raise and spend money in the coming year. The primary sources
of government funds:
taxes, borrowing, fees
22
Fiscal Policy
When the government spends more than the amount of money it
raised, there is a budget deficit. When we borrow money to
cover the deficit, the national debt is increased. (Debt clock)
If the government has more money than it spends, there is a
budget surplus.
National debt is tracked by the Government Accountability
Office.
23
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Running Head LITERATURE REVIEW2LITERATURE REVIEW 2.docx

  • 1. Running Head: LITERATURE REVIEW 2 LITERATURE REVIEW 2 Effect of Tobacco Use Gideon Aryertey Embry Riddle Aeronautical University Introduction Over decades, many individuals have been using tobacco without being aware of its harmful effects. For instance, in the U.S., the rate of cigarette smoking increased immensely in the early twentieth century. This was due to the invention of the cigarette rolling machine as well as an increase in the advertisement of tobacco products. As a result, cigarette smoking expanded regardless of the opposition of religious leaders or other members. Tobacco consumption reaches its peak especially between the ages of 20 to 40 in both females and males although statistically males consume more than females. Furthermore, the smoking rate amongst African- Americans (16.7%) are higher than the national average in comparison to Caucasians (16.6%). In fact, mixed race individuals and American Indian/Alaska Natives have higher smoking rates than African-Americans. As a result, this shows
  • 2. that there’s a big issue with the use of tobacco. Tobacco has led to many diseases such as lung cancer, diabetes, heart disease, stroke. It also leads to addiction. However, it is significant for one to overcome the addiction of tobacco use to improve their health status. Educating people about the harmful effect of tobacco consumption and making tobacco less affordable will correspond to a gradual decrease in its use. Tobacco use has caused numerous deaths amongst individuals despite their socioeconomic backgrounds. For instance, approximately 30 percent of people who perish due to cancer in the United States; 80 percent of these deaths are caused by lung cancer. lung cancer is the main cause of cancer related deaths in the youth and adults. (Addicott, Sweitzer & McClernon, 2018). Lung cancer attacks both genders and the treatment process can be very complex. Consumers of tobacco are affected by this disease because it exterminates the cells responsible for fighting against the disease. Also, the use of tobacco affects the proper functioning of all the organs in the body. Other than lung cancer, tobacco consumption can also lead to mouth, esophagus, larynx, liver, kidney, bladder, cervix, pharynx, stomach, myeloid leukemia, pancreas and colon cancers (Ebbert, Elrashidi & Stead, 2015). In fact, about 7300 nonsmokers die from lung disease every year according to the International Agency that is responsible for Research on Cancer (IARC) after being exposed to tobacco. Additionally, a 2009 survey that was conducted in China indicated that about 38 percent of smokers were aware that smoking contributes to attack of coronary heart disease while 27 percent were aware that it can lead to a stroke (Ambrose, et. al, 2017). However, individuals who smoke about five cigarettes a day showed signs of various diseases and damages to the blood vessels (Gilreath, et. al, 2016). In fact, blood vessels are thickened and then become narrower. As a result, the flow of blood from various body tissues and organs varies translating to heart disease. Failure of the heart to work correctly corresponds to high death rates because vitamins, proteins, and
  • 3. carbohydrates are not distributed to all parts of the body. (Landin, et. al, 2017). Nicotine is the primary chemical in tobacco that leads to addiction. It can be absorbed in the bloodstream of tobacco users or even inhaled through cigarette smoke. Nicotine increases the percentage of dopamine that stimulates regions of the brain. (Lee, et. al. 2015) Conclusion It is obvious according to research conducted that tobacco use weakens the cells responsible for preventing the diseases that occur which will eventually result in death if action is not taken. Tobacco use amongst youths and adults have led to more negative outcomes than positive. Therefore, all organizations that are responsible for reducing the use of tobacco should continue educating individuals about the harmful effects of tobacco as well as making it less affordable. References Addicott, M. A., Sweitzer, M. M., & McClernon, F. J. (2018). The Effects of Nicotine and Tobacco Use on Brain Reward Function: Interaction With Nicotine Dependence Severity. Nicotine & Tobacco Research. Dahlin, S., Gunnerbeck, A., Wikström, A. K., Cnattingius, S., & Bonamy, A. K. E. (2016). Maternal tobacco use and extremely premature birth–a population‐based cohort study. BJOG: An International Journal of Obstetrics & Gynaecology, 123(12), 1938-1946. Ebbert, J. O., Elrashidi, M. Y., & Stead, L. F. (2015). Interventions for smokeless tobacco use cessation. Cochrane Database of Systematic Reviews, (10). Gilreath, T. D., Leventhal, A., Barrington-Trimis, J. L., Unger, J. B., Cruz, T. B., Berhane, K., ... & Pentz, M. A. (2016). Patterns of alternative tobacco product use: emergence of hookah and e-cigarettes as preferred products amongst youth. Journal of Adolescent Health, 58(2), 181-185. Kasza, K. A., Ambrose, B. K., Conway, K. P., Borek, N., Taylor, K., Goniewicz, M. L., ... & Kaufman, A. R. (2017).
  • 4. Tobacco-product use by adults and youths in the United States in 2013 and 2014. New England Journal of Medicine, 376(4), 342-353. Landin, M., Kubasiak, J. C., Schimpke, S., Poirier, J., Myers, J. A., Millikan, K. W., & Luu, M. B. (2017). The effect of tobacco use on outcomes of laparoscopic and open inguinal hernia repairs: a review of the NSQIP dataset. Surgical endoscopy, 31(2), 917-921. Lee, Y. O., Hebert, C. J., Nonnemaker, J. M., & Kim, A. E. (2015). Youth tobacco product use in the United States. Pediatrics, 135(3), 409-415. Levy, D. T., Mays, D., Boyle, R. G., Tam, J., & Chaloupka, F. J. (2016). The effect of tobacco control policies on US smokeless tobacco use: a structured review. Nicotine and Tobacco Research, 20(1), 3-11. McNeill, A., Gravely, S., Hitchman, S. C., Bauld, L., Hammond, D., & Hartmann‐Boyce, J. (2017). Tobacco packaging design for reducing tobacco use. Cochrane Database of Systematic Reviews, (4). Wehring, H., Powell, M., Sayer, M., Hackman, A., Buchanan, R., Nichols, R., ... & Earl, A. (2019). T85. THE EFFECT OF ADJUNCT ARIPIPRAZOLE ON MEASURES OF TOBACCO USE AND CRAVING IN WOMEN WITH PSYCHOTIC DISORDERS. Schizophrenia Bulletin, 45(Supplement_2), S236- S236. Competing in World Markets http://www.wileybusinessupdates.com
  • 5. Chapter 4 1 Explain why nations trade. Describe how trade is measured between nations. Identify the barriers to international trade. Discuss reducing barriers to international trade. Explain the decisions to go global. 1 Learning Objectives 2 3 5
  • 6. 4 2 Boosts economic growth Expands markets More efficient production systems Less reliance on the economies of home nations Exports: Domestically produced goods and services sold in markets in other countries. Imports: Foreign-made products and services purchased by domestic consumers. Why Nations Trade 3 Decisions to operate abroad depend upon availability, price, and quality of: Labor Natural resources Capital Entrepreneurship
  • 7. Companies doing business overseas must make strategic decisions. International Sources of Factors of Production 4 As developing nations expand into the global marketplace, opportunities grow. Many developing countries have posted high growth rates of annual GDP. Current GDP data Size of the International Marketplace
  • 8. 5 Population Size and Prosperity Though developing nations generally have lower per capita income, many have strong GDP growth rates and their huge populations can be lucrative markets. 6 Top 10 Trading Partners with U.S.
  • 9. 7 Absolute advantage: Country can maintain a monopoly or produce at a lower cost than any competitor. Example: China’s domination of silk production for centuries. Comparative advantage: Country can supply a product more efficiently and at lower cost than it can supply other goods, compared with other countries. Example: India’s combination of a highly educated workforce and low wage scale in software development. Absolute and Comparative Advantage 8 Balance of trade: Difference between a nation’s imports and exports. Balance of payments: Overall flow of money into or out of a country. Balance of payments surplus = more money into country than
  • 10. out Balance of payments deficit = more money out of country than in Measuring Trade Between Nations 9 Major U.S. Exports and Imports U.S. demand for imported goods is partly a reflection of the nation’s prosperity and diversity. U.S. imports more goods than it exports but exports more services than it imports. 10
  • 11. Currency rates are influenced by: Domestic economic and political conditions Central bank intervention Balance-of-payments position Speculation over future currency values Values fluctuate, or “float,” depending on supply and demand. National governments can deliberately influence exchange rates. Business transactions are usually conducted in currency of the region where they happen. Rates can quickly create or wipe out competitive advantage. Exchange Rates 11 Barriers to International Trade
  • 12. 12 Language: Potential problems include mistranslation, inappropriate messaging, lack of understanding of local customs, and differences in taste. Values and Religious Attitudes: Differing values about business efficiency, employment levels, importance of regional differences, and religious practices, holidays, and values about issues such as interest-bearing loans. Economics: A country’s size, per-capita income, and stage of economic development are factors to consider before embarking on an international business venture. Social, Cultural, and Economic Differences 13 Political Climate Stability is a key consideration. Legal Environment U.S. law International regulations
  • 13. Country’s law Climate of corruption. Foreign Corrupt Practices Act forbids U.S. companies from bribing foreign officials, candidates, or government representatives. International Regulations Treaties between U.S. and other nations. Tariffs are taxes charged on imported goods. Enforcement problems, as with piracy. Political and Legal Differences 14 Government Corruption Transparency International produces an annual corruption index for businesspeople and the general public.
  • 14. 15 Tariffs - taxes, surcharges, or duties on foreign products. Tariffs generate income for the government. Protective tariffs raise prices of imported goods to level the playing field for domestic competitors. Nontariff Barriers - also called administrative trade barriers Quotas limit the amount of a product that can be imported over a specified time period. Dumping is the act of selling a product abroad at a very low price. An embargo imposes a total ban on importing a specified product. Types of Trade Restrictions 16 The world is moving toward more free trade.
  • 15. There are many communities and groups that monitor and promote trade International Economic Communities reduce trade barriers and promote regional economic cooperation. Free-trade area: Members trade freely among selves without tariffs or trade restrictions. Customs union: Establishes a uniform tariff structure for members’ trade with nonmembers. Common market: Members bring all trade rules into agreement. Reducing Barriers to Trade 17 General Agreement on Tariffs and Trade (GATT) Most industrialized nations found organization in 1947 to reduce tariffs and relax quotas. The World Trade Organization succeeded GATT Representatives from 153 countries Reduce tariffs and promote trade World Bank Funds projects to build and expand infrastructure in developing countries International Monetary Fund (IMF) Operates as lender to troubled nations in an effort to promote
  • 16. trade Organizations Promoting International Trade 18 North American Free Trade Agreement (NAFTA) World’s largest free-trade zone: United States, Canada, Mexico. U.S. and Canada are each other’s biggest trading partners. Central America-Dominican Republic Free Trade Agreement (CAFTA) Free-trade zone among United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. $40 billion traded annually between U.S. and these countries. European Union Best-known example of a common market. Goals include promoting economic and social progress, introducing European citizenship as complement to national
  • 17. citizenship, and giving EU a significant role in international affairs. International Economic Communities 19 Determining which foreign market(s) to enter Analyzing the expenditures required to enter a new market Deciding the best way to organize the overseas operations Going Global
  • 18. 20 International Trade Research 21 Risk increases with the level of involvement Many companies employ multiple strategies Exporting and importing are entry-level strategies Importing is the process of bringing in goods produced abroad. Exporting is the act of selling your goods overseas.
  • 19. Levels of International Involvement 22 Subcontracting involves hiring local firms to distribute, produce, or sell goods and services. Contractual Agreements 23 The ultimate level of global involvement is direct investment. Directly operating production and marketing in foreign country Acquisition Joint ventures Overseas division
  • 20. Direct Investment 24 Multinational corporation (MNC) - An organization with significant foreign operations and marketing activities outside its home country. Multinational Corporations 25 Economic Challenges Facing Contemporary Business http://www.wileybusinessupdates.com
  • 21. Chapter 3 1 Discuss microeconomics and explain the forces of demand and supply. Describe macroeconomics and the issues for the entire economy. Identify how to evaluate economic performance. Discuss government’s attempts to manage economic performance. 1 Learning Objectives 2 3 4
  • 22. 2 Analysis of the choices people and governments make in allocating resources. Includes microeconomics and macroeconomics Economics 3
  • 23. Microeconomics The study of small economic units, such as individual consumers, families, and businesses. Supply: Amount of goods and services for sale at different prices. Demand: Willingness and ability of consumers to purchase goods and services at different prices. 4 Factors Driving Demand Demand curve - shows the amount of a product buyers will purchase at different prices. Driven by variety of factors such as competition, price, larger economic events, and consumer preferences. 5
  • 24. Demand Curve A change in overall demand shifts to a new demand curve. 6 Supply Curve Example Supply curve - shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand.
  • 25. 7 How Demand and Supply Interact Supply and demand curves meet at the equilibrium price. Buyers and sellers make choices that restore the equilibrium price. Changes affect both supply and demand. 8 Macroeconomics Issues for the Entire Society
  • 26. Political, social, and legal environments differ in every country. Economies generally classified in one of three categories: Private enterprise system: capitalism or market economy Planned economies: socialism, communism Mixed economies (combinations of the two) 9 Capitalism The Private Enterprise System and Competition Businesses meet needs of consumers and are rewarded through profit. Government favors a hands-off approach. Marketplace competition regulates economic life. Four degrees of competition: Pure competition Monopolistic competition Oligopoly Monopoly 10
  • 27. Types of Competition 11 Planned Economies Communism Property owned and shared by the community under a strong central government. Adopted in early 20th century by many nations, but government-owned monopolies often suffered from inefficiency. Socialism Government ownership and operation of major industries, such as health care or communications. Some private ownership of industry allowed.
  • 28. Government controls determine business ownership, profits, and resource allocation. 12 Mixed Market Economies Economic systems that combine features of private enterprise and planned economies. Mixture of public and private enterprise can vary widely from country to country. Process of converting a publicly owned company to a private one is called privatization. 13
  • 29. Comparing Economic Systems 14 Evaluating Economic Performance Economic system should provide stable business environment and sustained growth. Business decisions and consumer behavior differ at various stages of the business cycle: Prosperity—High consumer confidence, businesses expanding Recession—Cyclical economic contraction lasting for six months or longer Depression—Extended recession Recovery—Declining unemployment, increasing business activity 15
  • 30. Productivity and GDP Productivity: Relationships between the goods and services produced and the inputs needed to produce them. Gross Domestic Product (GDP): Sum of all goods and services produced within a nation’s boundaries; a measure of national productivity. GDP is tracked in the United States by the Bureau of Economic Analysis, a division of the U.S. Department of Commerce. 16 Price-Level Changes Inflation is rising prices caused by a combination of excessive consumer demand and increases in the costs of raw materials. Core inflation rate measures inflation minus energy and food prices. Hyperinflation - Soaring consumer prices. Inflation devalues money. People can purchase less with what they have (decreased purchasing power).
  • 31. Deflation is when prices continue to fall. Deflation can cause a weakened economy. 17 Measuring Price-Level Changes Changing prices are tracked by the Consumer Price Index (CPI). The monthly average change in prices of goods and services. A multitude of items is priced to compile the data included in the “CPI Market Basket.” The Bureau of Labor Statistics calculates the CPI monthly along with other economic measures. 18
  • 32. CPI Market Basket 19 Employment Levels The unemployment rate is the percentage of total workforce actively seeking work but currently unemployed. Bureau of Labor Statistics Unemployment “game show” 20
  • 33. Managing the Economy’s Performance Monetary Policy - government actions to increase or decrease the money supply and change banking policy and interest rates to influence consumer spending. Expansionary monetary policy: Efforts to increase the money supply to reduce costs of borrowing and encourage new investment. Restrictive monetary policy: Efforts to decrease the monetary supply to curb rising prices and overexpansion. The Federal Reserve System formulates and implements monetary policy. Government uses monetary and fiscal policy to fight unemployment, Government uses monetary and fiscal policy to fight unemployment, increase spending, and reduce the duration and severity of economic recession. 21 Fiscal Policy Fiscal Policy - Government actions to influence economic activity through decisions about taxes and spending. The Federal Budget - Annual plan for how the government will raise and spend money in the coming year. The primary sources
  • 34. of government funds: taxes, borrowing, fees 22 Fiscal Policy When the government spends more than the amount of money it raised, there is a budget deficit. When we borrow money to cover the deficit, the national debt is increased. (Debt clock) If the government has more money than it spends, there is a budget surplus. National debt is tracked by the Government Accountability Office. 23