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

2. 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

3. 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.

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

5. 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

6. 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.

7. 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.

8. 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.

9. 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?

10. 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

11. 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.

12. 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

13. 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.

14. 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.

15. 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?

16. 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%

17. 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.

18. 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

19. 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

20. 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?

21. Marketing Essentials
End of Section 6.2