chapter 6 international trade 1 marketing essentials chapter 6 international trade section 6.2...

Chapter 6 International Trade 1

Marketing EssentialsMarketing Essentials

Chapter 6 International Trade

Section 6.2 International Business


SECTION 6.2SECTION 6.2

What You'll LearnWhat You'll Learn

How businesses can get involved in international trade

The standard business practices involved in importing and exporting

The cultural, economic, and political factors that should be considered when deciding whether to do business abroad

International BusinessInternational Business


SECTION 6.2SECTION 6.2 International BusinessInternational Business

Why It's ImportantWhy It's Important

Doing business in a foreign country can be very different than doing business in the United States. Besides language barriers, there are many other factors that must be considered in international business. Costly problems may arise without this understanding.



Key TermsKey Terms

customs brokers

freight forwarders

multinationals

mini-nationals

joint ventures

nationalize



While governments make trade agreements, it is businesses that actually trade with one another. There are three basic means of getting involved in international trade:

importing

exporting

setting up shop abroad

Business Involvement in International Trade



Imports

Imports are subject to the requirements of the U.S. Customs service, as well as domestic standards such as those imposed by the Food and Drug Administration.

Businesses often hire customs brokers, licensed specialists who know the laws, procedures, and tariffs required for importation.



Exports

Other nations have similar means of controlling and documenting imports. U.S. businesses must follow certain rules when exporting their goods. Most businesses hire international freight forwarders licensed by the U.S. Maritime Commission to handle export details.



Multinationals are large corporations that have operations in several countries.

Mini-nationals are midsize and smaller companies that have operations in foreign countries.

Joint ventures are partnerships with domestic companies in other countries.

Setting Up Shop in a Foreign Country



All these companies have operations in many countries. How many of these companies do you recognize?

Largest Global Public Corporations



Businesspeople must keep in mind special considerations when doing business abroad:

cultural factors

economic factors

political and legal factors

technical factors

Special Considerations in International Business



Differences in language and culture make international trade more challenging than doing business at home. What is common practice in one country may take on a different meaning elsewhere.

Cultural Factors

Example: Gift giving is considered part of business etiquette in the Asia, but may seem like an illegal bribe in the U.S.



Consider the following key economic factors when doing business in another country:

Economic Factors

infrastructure

cost and quality of labor

taxes

standard of living



A government's stability is an important factor when considering international business operations.

When a country nationalizes private property, the government takes ownership, and the owners generally get nothing in return. Bolivia, for example, nationalized all of its businesses in the early 1950s.

Political and Legal Factors



Technology is changing the ways that businesses can get involved in international trade. Companies of all sizes can create Web sites and begin doing business abroad through e-commerce. When studying a country's technology, you need to look at the use of computers, faxes, voice mail, cellular phones, and the Internet.

Technological Factors



U.S. companies have been cutting down on their investments in China. With China being one of the largest potential markets in the world, why do you think companies are reluctant to invest?

U.S. Contracts with China



As you can see by this graph, not many homes in China have standard telephones. One reason is because China doesn't have adequate infrastructure, which makes the cost of telephone service very high. What type of phone is selling like hotcakes in China because of this? Do you think it would be worthwhile for the Chinese government to install traditional telephone lines throughout China?

Household Technology

Households in China

Television

Radio

Telephone

89%

57%

25%



When marketing products in foreign countries, companies must make product and promotion decisions. Customization means creating completely new products for specific countries.Globalization occurs when a company does not change anything about its product or promotion.Product Adaptation is changing a product to make it more appropriate for a country's preferences.Promotion Adaptation involves changing the promotion to meet foreign customers' way of thinking.

Customization vs. Globalization


6.2 ASSESSMENTASSESSMENT

Reviewing Key Terms and Concepts

1. How can a business get involved in international trade?

2. Why do importers use customs brokers?

3. What type of business helps exporters?

Slide 1 of 2



Reviewing Key Terms and Concepts

4. What difficulty did Chevrolet have in South America with its Nova model automobile?

5. How can a country's poor infrastructure create opportunities for foreign businesses?

Slide 2 of 2



Thinking Critically

Do you see anything wrong with countries that offer incentives, such as reduced taxes, to foreign investors but not to local businesses?


End of Section 6.2

Marketing EssentialsMarketing Essentials

chapter 6 international trade 1 marketing essentials chapter 6 international trade section 6.2...

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