This document provides an overview of international business and trade agreements. It discusses key concepts such as entry strategies, international trade approaches, and Incoterms. Some key points:
1) International business involves the exchange of goods, services, knowledge, and skills across countries. Common entry strategies for international trade include exporting, contractual agreements like licensing and franchising, and establishing production facilities in foreign markets.
2) Firms take different approaches to international business such as ethnocentric, polycentric, and geocentric based on how they adjust their products and marketing for different countries.
3) Incoterms are international commercial terms that clarify responsibilities and costs around transportation and delivery of goods in international trade agreements. Common
This document provides an overview of international business and trade agreements. It discusses key concepts such as entry strategies, international trade approaches, and Incoterms. Some key points:
1) International business involves the exchange of goods, services, knowledge, and skills across countries. Common entry strategies for international trade include exporting, contractual agreements like licensing and franchising, and establishing production facilities in foreign markets.
2) Firms take different approaches to international business such as ethnocentric, polycentric, and geocentric based on how they adjust their products and marketing for different countries.
3) Incoterms are international commercial terms that clarify responsibilities and costs around transportation and delivery of goods in international trade agreements. Common
This document provides an overview of international business and trade agreements. It discusses key concepts such as entry strategies, international trade approaches, and Incoterms. Some key points:
1) International business involves the exchange of goods, services, knowledge, and skills across countries. Common entry strategies for international trade include exporting, contractual agreements like licensing and franchising, and establishing production facilities in foreign markets.
2) Firms take different approaches to international business such as ethnocentric, polycentric, and geocentric based on how they adjust their products and marketing for different countries.
3) Incoterms are international commercial terms that clarify responsibilities and costs around transportation and delivery of goods in international trade agreements. Common
This document provides an overview of international business and trade agreements. It discusses key concepts such as entry strategies, international trade approaches, and Incoterms. Some key points:
1) International business involves the exchange of goods, services, knowledge, and skills across countries. Common entry strategies for international trade include exporting, contractual agreements like licensing and franchising, and establishing production facilities in foreign markets.
2) Firms take different approaches to international business such as ethnocentric, polycentric, and geocentric based on how they adjust their products and marketing for different countries.
3) Incoterms are international commercial terms that clarify responsibilities and costs around transportation and delivery of goods in international trade agreements. Common
INTERNATIONAL TRADE AND AGREEMENTS o Advantage: Customer satisfaction
(ITA) REVEIEWER (1ST SEM) o Disadvantage: Costly
• Regiocentric – a company that is operating LESSON 1: Introduction to International Business successfully in a foreign country thinks of ➢ DEFINITION – exchange of goods and exporting other neighboring countries of the services, resources, and knowledge & skills host country among individuals & businesses in two or more • Geocentric – company analyses the tastes, countries preference and needs of the customer in all ➢ NATURE/ CHARACTERTISTICS foreign the tastes, preferences and needs of • Accurate information & timely the customer in all foreign markets and then • The size of the international business adopts a standardized marketing mix for all • Market segmentation the foreign markets. • International markets have more potential o Disadvantage: Can’t adjust to its than domestic markets country ➢ SCOPE ➢ PROBLEMS • International marketing • Political factors • International finance and investments • High foreign investments and high cost • Foreign exchange • Exchange instability • Global human resource • Entry requirements ➢ FEATURES • Tariffs, quota, etc. • Large scale operations • Competition and bureaucracy • Integration of economics • Technological policy • Dominated by developed countries and • Quality management MNCs LESSON 2: Entry Strategies • Benefits to participating countries • Keen competition ➢ DEFINITION – influenced by the firm and • Special role of science and technology product characteristics and the domestic and • International restrictions international market characteristics ➢ IMPORTANCE ➢ EXPORTING 1. Earn foreign exchange • Direct Exporting – firm itself performs the 2. Optimum utilization of resources can export (packaging and certificates) import it o Implementation 3. Achieve its objectives ▪ Sending international sales 4. To spread business risks representatives into the foreign 5. Improve organization’s efficiency market 6. Get benefits from Government ▪ Selecting local representatives or 7. Expand and diversing agents to prospect the market 8. Increase competitive capacity ▪ Using independent local distributors ➢ APPROACHES OF INTERNATIONAL who will buy the products to resell BUSINESS them in the local market • Ethnocentric – target market is own country ▪ Creating a fully owned commercial o Advantage: Supplies cannot be out of subsidiary to have a greater control stock in over foreign operations o Disadvantage: No international o E.g., Powerfreight Logistic Servives Inc. recognition – has direct and consolidated air • Polycentric – adjusting the products to meet services from main airports to the world the preferences of their consumer in each including pick up, export preparation & international market customs clearance, assembly, and •Joint Ventures – firm is formed and creating distribution a third firm • Indirect Exporting – firm is not engaging in o Ford Motor Company and Jiangling international marketing Motors o Methods ➢ MERGERS AND ACQUISITIONS ▪ Deal with foreign sales through the • Mergers – legal consolidation of two domestic sales organization companies into one entity, e.g, Bayo and ▪ Use of international trading Unica Hija companies with local offices all • Acquisitions – one company takes over over the world another, e.g., Emperador and Fundador ▪ Export management company located in the same country as the LESSON 3: Incoterms producing firm, and which plays the ➢ DEFINITION – standard sets of trading terms role of an export department and conditions designed to assist traders when o E.g., Galley Support – use indirect goods are sold and transported exporting to sell its product into the ➢ THE ELEVEN RULES ARE DIVIDED market of the Asia Pacific region INTO TWO MAIN GROUPS ➢ CONTRACTUAL AGREEMENT • Rules for any Transport Mode (land) • Licensing and Franchising – licensing is o Ex Works firm in one country permits a firm in another o Free Carrier country to use the products or trademarks, o Carriage Paid To e.g., universal music publishing group; o Carriage & Insurance Paid To franchising allows entrepreneurs to use the o Delivered at Place Unloaded company’s business plan and process in o Delivered at Place exchange of initial fees and revenues, e.g., o Delivered Duty Paid big brew • Rules for Sea & Inland Waterway Only o RISK – in licensing, foreign may begin o Free Alongside Ship to act on its own and may therefore lose o Free on Board that market o Cost and Freight • Strategic Alliance – two companies typically o Cost Insurance and Freight pool resources to create a separate business ➢ SPECIFICATIONS: COST entity • Packaging – responsibility of seller o E.g., BTS and Samsung • Loading from warehouse – loaded in the • Contract Manufacturing – firm’s product is delivery truck produced in the foreign market by local • Pre-carriage – from warehouse to customs producer under contract with the firm and needs requirements to pass o E.g., Foxconn – manufacturer of iPhone • Export Customs Clearance – package will be for Apple and Xbox One for Microsoft cleared after the requirements are passed; ➢ PRODUCTION FACILITY AND FOREIGN advisable to be responsibility of the seller MARKET • Handling at Departure – will be handled at • Assembly Operations – firm produces most the port of the components or ingredients of its • Main Transportation – can be land, water, or product and ships them to foreign markets to air be put together as a finished product • Transportation Insurance – depends on who o E.g., Mercedez-Benz will pay the insurance • Wholly Owned Manufacturing Facility – the • Handling at Arrival – package arrived at firm will be the one who will be country of buyer manufacturing or completing the product o E.g., Wrangler • Import Customs Clearance – will be approve ➢ FREE ALONGSIDE SHIP (FAS) by customs ❖ Obligations of Seller • Post-carriage – unloaded from the por and - Packaging will be load in the truck to deliver it to the - Loading from warehouse warehouse - Pre-carriage • Unloading into warehouse – package - Export customs clearance accepted ▪ Obligations of Buyer ➢ FREE ON BOARD (FOB) - Handling at departure ❖ Obligations of Seller - Main transportation - Packaging - Transportation insurance - Loading from warehouse - Handling at arrival - Pre-carriage - Import customs clearance - Export customs clearance - Post-carriage - Handling at departure - Unloading into warehouse ▪ Obligations of Buyer ➢ EX WORKS (EXW) - Main transportation ❖ Obligations of Seller - Transportation insurance - Packaging - Handling at arrival ▪ Obligations of Buyer - Import customs clearance - Loading from warehouse - Post-carriage - Pre-carriage - Unloading into warehouse - Export customs clearance ➢ COST OF FREIGHT (CFR) - Handling at departure ❖ Obligations of Seller - Main transportation - Packaging - Transportation insurance - Loading from warehouse - Handling at arrival - Pre-carriage - Import customs clearance - Export customs clearance - Post-carriage - Handling at departure - Unloading into warehouse - Main transportation ➢ FREE CARRIER (FCA) ▪ Obligations of Buyer ❖ Obligations of Seller - Transportation insurance - Packaging - Handling at arrival - Loading from warehouse - Import customs clearance ▪ Obligations of Buyer - Post-carriage - Pre-carriage - Unloading into warehouse - Export customs clearance ➢ COST INSURANCE AND FREIGHT (CIF) - Handling at departure ❖ Obligations of Seller - Main transportation - Packaging - Transportation insurance - Loading from warehouse - Handling at arrival - Pre-carriage - Import customs clearance - Export customs clearance - Post-carriage - Handling at departure - Unloading into warehouse - Main transportation ➢ CARRIAGE PAID TO (CPT) - Transportation insurance ❖ Obligations of Seller ▪ Obligations of Buyer - Packaging - Handling at arrival - Loading from warehouse - Import customs clearance - Pre-carriage - Post-carriage - Export customs clearance - Unloading into warehouse - Handling at departure - Main transportation - Post-carriage ▪ Obligations of Buyer - Unloading into warehouse - Transportation insurance ➢ DELIVERED AT PLACE (DAP) - Handling at arrival ❖ Obligations of Seller - Import customs clearance - Packaging - Post-carriage - Loading from warehouse - Unloading into warehouse - Pre-carriage ➢ CARRIAGE & INSURANCE PAID TO - Export customs clearance (CIP) - Handling at departure ❖ Obligations of Seller - Main transportation - Packaging - Transportation insurance - Loading from warehouse ▪ Obligations of Buyer - Pre-carriage - Handling at arrival - Export customs clearance - Import customs clearance - Handling at departure - Post-carriage - Main transportation - Unloading into warehouse - Transportation insurance ➢ DELIVERED DUTY PAID (DDP) – all are ▪ Obligations of Buyer obligations of seller - Handling at arrival LESSON 4: Trade and Development - Import customs clearance - Post-carriage ➢ DEFINITION – trade feres to the exchange of - Unloading into warehouse goods and services across borders; development ➢ DELIVERED AT PLACE UNLOADED encompasses improvements in a nation’s living (DPU) standards, economic well-being, and overall ❖ Obligations of Seller quality of life - Packaging ➢ BENEFITS OF INTERNATIONAL TRADE - Loading from warehouse FOR DEVELOPMENT - Pre-carriage • Can lead to economic development - Export customs clearance ➢ TRADE BARRIERS AND THEIR IMPACT - Handling at departure • Trade barriers are obstacles that restrict or - Main transportation impede the free flow of goods and services ▪ Obligations of Buyer between countries - Transportation insurance • Tariffs, quotas, and non-tariff barriers can - Handling at arrival hinder trade and have adverse effects on a - Import customs clearance nation’s development, potentially leading to - Post-carriage economic inequality and reduced access to - Unloading into warehouse foreign markets ➢ DELIVERED AT TERMINAL (DAT) ➢ TARIFFS – taxes or duties imposed by a ❖ Obligations of Seller government on imported or, in some cases, - Packaging exported goods; based on the value or quantity - Loading from warehouse of the imported goods - Pre-carriage ➢ QUOTAS – numerical limits imposed by a - Export customs clearance government on the quantity of specific goods - Handling at departure that can be imported or exported during a - Main transportation specified period - Transportation insurance ➢ NON-TARIFF BARRIERS (NTBSs) – various ▪ Obligations of Buyer measures that countries use to restrict or regulate - Handling at arrival international trade - Import customs clearance ➢ TRADE POLICIES AND THEIR IMPLICATIONS • Types of Trade Policies 1. Protectionism – involves imposing barriers to trade, such as tariffs, import quotas, and subsidies, to protect domestic industries from foreign competition 2. Free Trade – promote open markets and minimal government intervention, fostering international cooperation and economic growth • Economic Implications 1. Economic Growth – expanding market access and fostering competition 2. Trade Deficits/ Surpluses – can affect trade balance, leading to trade deficits (import > export) or surpluses (export > import)