Section 6.2 International Business Marketing Essentials n Chapter 6 International Trade Section 6.2 International Business

International Business SECTION 6.2 International Business What 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 Business SECTION 6.2 International Business Why 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.

International Business SECTION 6.2 International Business Key Terms customs brokers freight forwarders multinationals mini-nationals joint ventures nationalize

International Business SECTION 6.2 International Business Business Involvement in International Trade 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

International Business SECTION 6.2 International Business 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.

International Business SECTION 6.2 International Business 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.

International Business SECTION 6.2 International Business Setting Up Shop in a Foreign Country 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.

International Business SECTION 6.2 International Business Largest Global Public Corporations All these companies have operations in many countries. How many of these companies do you recognize?

International Business SECTION 6.2 International Business Special Considerations in International Business Businesspeople must keep in mind special considerations when doing business abroad: cultural factors economic factors political and legal factors technical factors

International Business SECTION 6.2 International Business Cultural Factors 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. Example: Gift giving is considered part of business etiquette in the Asia, but may seem like an illegal bribe in the U.S.

International Business SECTION 6.2 International Business Economic Factors Consider the following key economic factors when doing business in another country: infrastructure cost and quality of labor taxes standard of living

International Business SECTION 6.2 International Business Political and Legal Factors 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.

International Business SECTION 6.2 International Business Technological 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.

International Business SECTION 6.2 International Business U.S. Contracts with China 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?

International Business SECTION 6.2 International Business Household Technology Households in 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? Television 89% Radio 57% Telephone 25%

International Business SECTION 6.2 International Business Customization vs. Globalization 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.

Reviewing Key Terms and Concepts ASSESSMENT 6.2 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 ASSESSMENT 6.2 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

ASSESSMENT Thinking Critically 6.2 Do you see anything wrong with countries that offer incentives, such as reduced taxes, to foreign investors but not to local businesses?

Marketing Essentials End of Section 6.2