International Trade and The Global Marketplace

International Trade Exchange of Good and Services between nations

IMPORTS… Goods & Services PURCHASED from other countries EXPORTS… Goods & Services SOLD to other countries

Licensing Letting another company use a trademark, patent, special formula, or company name for a fee. Disney Toys at Walmart Spiderman Happy Meal Toys

Multinationals Large Corporations that operate in several countries GE Microsoft Intel McDonalds More and more are adding subsidiaries

Tariff – TAX that is imposed on imports. Quota – QUANTITY limits on imported goods

EMBARGO Total BAN of specific goods coming into and leaving a country Health: Poisoned fruit, pesticide problems Political: End war through economic means Cuba (over 50 year US embargo) Vietnam (lifted in the ’80’s) Persian Gulf / Iraq

American raised Blank Angus Beef Hand massaged Kobe Beef from Japan Protectionism Government restricts import to protect domestic industries The opposite of free trade American raised Blank Angus Beef Hand massaged Kobe Beef from Japan

World Trade Organization Global coalition of 135 governments that make rules about trade. GATT (General Agreement on Tariffs & Trade Before WTO……..No real enforcement of agreements, so WTO was formed to settle disagreements

Comparative Advantage The value a nation gains by selling goods that it produces most efficiently. Countries specializing USA – High Tech (computers, machinery), Steel Japan/Korea/China – Toys, Clothing, Shoes (cheaper labor)

Infrastructure The basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed for the operation of business and industry.

Absolute Advantage When a country has special natural resources or talents that allow them to produce an item at the LOWEST possible cost (No one else can compare). CHINA……..Silk MALAYSIA……..Rubber BRAZIL………Coffee

Global Marketing Strategies Customization Creating entirely new products and promotions for a specific country or region Globalization Same package and promotions used all around the world

Global Marketing Strategies Product Adaptation Keeps company name but changes products to meet local tastes Promotion Adaptation Changing some or part of message and images used in other countries