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HIST 309

History of Modern Business 2

Roots of American Business Abroad -1950s and 1960s -House income up, 1950s -Period of civil rights movement, 1960s -U.S. is producing 40% of all the world's goods -Manufacturing not in Asia & Europe -1950s American firms invest overseas in FDI
Multinational Enterprises (MNE) & Foreign Detect Investment (FDI) -Breton-wood system created in 1954 and said American $ would be the central currency that all other currencies would be based on -Gold fixed at $33 an ounce -American Goods overseas would be cheaper
Cultural challenges to selling overseas -Firms had to change their product to local tastes and cultural standards -ex: McDonald's with problems beyond the menu
Why sell overseas? -cheaper labor and real estate -market penetration - sell where you build -The sooner a firm can be their the more more likely they are to be excepted as a local good
Tex Thornton -founds Electro Dynamics -he buys Litton Industry who was making air crafts that he would sell to the military -he buys up other companies that make transistors for radios, cash register, typewriters, office equipment, ship for leisure activities
Vietnam War -Started in the 1950s with the U.S. supporting the french in Vietnam because they want France on their side during the cold war -At the Geneva conference Vietnam in split on the 17th parallel -French say Vietnam want to be communist
Cuba/Fidel Castro -Eisenhower launches operation mongoose, after the Bay of Pigs invasion fails, to assassinate Fidel Castro -No off the plans to assassinate Castro get to him -A hot line, with a secrete code, created for communication between the U.S. & the Soviet Union
Vietnam War and the American Military Industrial Complex -You could only learn how to fight from past wars & the Vietnam War involved Guerilla War Fair & fighting in the jungles -U.S. creates the first shipping containers to transport goods to Vietnam
Social & Political Unrest, 1960s -Vietnam War becomes unpopular with the middle class -War costing billions $ John F Kennedy's brother & Martin Luther King, Jr were assassinated -Nixon plans to turn Vietnam over to the local & to support them
What caused, inflation & unemployment =, stagflation? -Vets returning that couldn't find jobs -Baby boomers are becoming of age & are looking for jobs -More U.S. $ over seas then the U.S. can pay back in gold -Rising prices do to inflation
Smithsonian Agreement -The Breton-wood system would end -The U.S. $would float like other currency -Gold price was to float causing gold prices to sore -$ was overvalued & it plumits
Nixon -Elected in 1968 -secret meeting in China to see if they would be receptive to the U.S. meeting with them -President and first lady go to visit China, and Moscow -Opens the door to China -Wins election of 1972 by a landslide
Watergate -People who work for the commission to elect the next president break into Watergate -Gerald Ford replaces Nixon after he resigns -Nixon resigns after the Republican party says they can no longer support him against congress
Oil Crisis of the 1970s -Egypt & Syria launch a surprise attack on Israel in 1973 -U.S. supports Israel & gives them access to satellite intel -OPEC raises prices to all countries & puts an embargo on oil to the U.S. -U.S. gas doubles in price -People switch to Japanese cars
Ohio, 1968 -Sets up a trade office in Japan that becomes a failure -The office switches from advertising Ohio products to trying to get companies to invest in Ohio
Soichiro Honda -Invents Honda -Learns how to fix cars after the Kanto earthquake -After WWII he puts generators on old generators on bikes -He sells scooter and then motorcycles -In the 60s he builds the 1st Honda car
Toyota -Largest auto manufacturer in Japan in 60s and in the world today -During the Korean War Toyota build jeeps & light tanks for the U.S. witch saves them both -Sets up a driving school after WWII to teach people to drive -No incentive to invest in US
Honda in America -Honda decides Americans would be their customers -Offers small car that are attractive during the oil crisis -Opens a factory in Ohio near Columbus and employs people with no experience building cars -Has a few workers doing multiple jobs
U.S. restricts the number off foreign cars that can be imported -Honda gets around this by selling Honda cars mad in America -This convinces Toyota to invest in the U.S. open its own factory
Volts Wagon (VW) failure in America -Purchased an old AMC factory in western PA -Lose buyers due to bad quality -VW closes the factory
Delaware get companies to invest in it in the 1970s -Lowest bond rating of any state in the 70s -DuPont is laying off workers -1981 Delaware creates the Financial Center Development Act -If credit card banks open up operation in DE they could charge whatever interest rates they want
Sam Walton -Founded Walmart in 1962 -Buys a 5 & 10s in Arkansas & after losing that buys more 5 & 10s in rural AR, OK, TX -He believed rural America was being undeserved -Hands on Management from Bentonville, AR
Walmart's Problem? -Operating in urban areas because of their business model -They need lots of space & the space in urban areas are expensive compared to rural areas
China & FDI -Any company that wants to open up in China most be at least 51% owned by a Chinese firm -China is competing with countries that have lower wages then they do, like Vietnam & Indonesia
Why are American companies investing overseas in the 1980's? -For cheaper land, labor, and materials -For the first time in the 80s not just to sell overseas, but to bring goods back to the U.S.
Ronald Reagan -Regan says the U.S. will cut back on spending & they do the opposite and increase spending -Reagan Doctrine says the U.S. will try t o stop and overthrow communist governments
Consumer Spending Changes -People Saved money during WWII and have extra money to spend in the 50s -50s marketing for teens starts -Credit becomes available in the 50s & people buy thing that they hadn't previously bough before
Involving business model -Global flow of money -EX: U.S. invest in Chinese made goods that are sold in the U.S. the Chinese may buy -Every one invested in each-other
Created by: NickUD