Describe the influence the mainly political international institutions have on international businesses and their relevance to international business.

International organizations such as the United Nations, military alliances, and ASEAN can have profound influence on international businesses. By providing a forum for governments to talk to each other, they contribute toward peace and stability, conditions that stimulate international business. Such dialogue also results in collaborative efforts that support multilateral cooperation in areas of immediate concern to business, such as maritime agreements, communication accords, and other rules and standards. In addition, many of these institutions support development projects, which stimulate business directly, through their contracts, and also through their support of the development of markets.

Identify the major organs of the United Nations, their general purpose, and their significance to international business.

The work of the United Nations is carried out through five main bodies or organs: the General Assembly, the Security Council, the Economic and Social Council, the International Court of Justice, and the Secretariat. The General Assembly is a forum where every nation has one vote; the Security Council focuses on peace and security and has permanent members and elected members; the Economic and Social Council addresses issues related to trade, education, health, and other economic and social issues; the International Court of Justice hears cases between nations; and the Secretariat, headed by the secretary-general, is the administrative arm of the UN. The UN has a variety of agencies throughout the world that work to promote peace and stability and to facilitate trade and economic activity.

Discuss the World Trade Organization and its predecessor, GATT.

The WTO attempts to remove trade barriers worldwide. Its membership is composed of the major trading countries in the world, so it has the potential to significantly influence world trade. The WTO routinely issues decisions on trade disputes between countries. GATT, the predecessor of the WTO, greatly contributed to the growth of trade through trade liberalization.

Appreciate the resources of the Organisation for Economic Cooperation and Development.

OECD conducts extensive research on a wide variety of international business and economic subjects, and it produces highly regarded individual country surveys. These resource materials are valuable to researchers and businesspeople as they develop an understanding of markets.

Describe the major purpose and effectiveness of OPEC.

The major purpose of OPEC is to allow developing nations to increase their price control over the oil they are selling on international markets. OPEC has had periods of marked effectiveness. Today, despite unrest in the Middle East and the ability of OPEC to influence oil prices in the short term, the number of non-OPEC nations that produce or soon will be producing oil has increased significantly. Adding to the OPEC dilemma is the possibility that price gouging will lead to the development of fuel alternatives and increased conservation and, eventually, to a reduction in demand. Admittedly, the popularity of SUVs in the U.S. market suggests that the price of oil would have to escalate considerably to trigger this possibility.

Identify economic integration agreements and the effectiveness of the major ones.

The four major forms of economic integration are the free trade area (tariffs abolished among members), the customs union (a free trade agreement plus a common external tariff), the common market (a customs union plus mobility of services, people, and capital), and complete economic integration (a common market plus a common currency). NAFTA has been quite effective, while Mercosur, whose goal is a common market, has faced difficulties recently, as has the Andean Community. The EU has been markedly successful.

Explain the North American Free Trade Agreement and its impact on business.

NAFTA was ratified by Canada, Mexico, and the United States. Its purpose is to facilitate trade among the three countries. NAFTA lowers tariffs on goods moving from one NAFTA country to another and makes it easier for businesses to sell goods and operate in other NAFTA countries.

Discuss the impact of the EU and its future challenges.

The EU is a supranational entity with 25 European membernations. Its purpose is to integrate the economies of its membernations, creating a trading region where goods, services, people, and capital move freely. In recent years, the EU has made major steps toward political union as well. The EU is a regional government and as such has regulatory power over social and environmental matters, including mergers and business operations, in Europe. The EU adopted a common currency, the euro, which is being used in 12 EU countries. The EU's success at monetary integration reduces the risk for businesses within the EMU. The EU can be seen as one large market with fewer restrictions than existed among the 25 nations before integration.