Importing, Exporting, and Trade Relations CHAPTER 6 6/17/2018 CHAPTER 6 Importing, Exporting, and Trade Relations 6-1 Importing Procedures 6-2 Exporting Procedures 6-3 Importance of Trade Relations 6-4 The Nature of Competition INTERNATIONAL BUSINESS

LESSON 6-1 Importing Procedures GOALS Explain the importance of importing. Identify the four steps for importing.

Importance of Importing 6 Importance of Importing Product demand Lower costs Production inputs

Importing Activities 6 STEP 1: Determine demand STEP 2: Contact suppliers STEP 3: Finalize purchase STEP 4: Receive goods

Import Assistance 6 Customs and Border Protection (CBP) Food and Drug Administration (FDA) U.S. Department of Agriculture (USDA)

LESSON 6-2 Exporting Procedures GOALS Identify the steps of the exporting process. Describe the exporting of services.

The Exporting Process 6 STEP 1: Find potential customers STEP 2: Meet the needs of customers STEP 3: Agree on sales terms STEP 4: Deliver products or services STEP 5: Complete the transaction

Sales Terms 6 Free on board (FOB) Cost, insurance, and freight (CIF) Cost and freight (C&F)

6 Export Documents Bill of lading Certificate of origin

Obstacles to Exporting 6 Obstacles to Exporting No company representatives in foreign countries Products not appropriate for foreign consumers Insufficient production facilities to manufacture enough goods for exporting High costs of doing business in other countries Difficulty understanding foreign business procedures Difficulty obtaining payment from foreign customers

Commonly Exported Services 6 Commonly Exported Services Hospitality Hotels, food service Entertainment Movies, music, television production, amusement parks Financial services Insurance, real estate

LESSON 6-3 Importance of Trade Relations GOALS Identify the economic effects of foreign trade. Describe the types of trade agreements between countries.

The Economic Effect of Foreign Trade 6 The Economic Effect of Foreign Trade Balance of trade Trade deficit Trade surplus Balance of payments Positive, or favorable Negative, or unfavorable

Trade Agreements 6 Promote economic development Encourage international business activities

The World Trade Organization 6 The World Trade Organization Deals with rules of trade between nations Helps producers of goods and services, exporters, and importers conduct their business Encourages international trade

6 Regional Cooperation Economic community Common market

6 Barter Agreements Direct barter Countertrade

6 Free-Trade Zones An area designated by a government for duty-free entry of nonprohibited goods Commonly located at a point of entry into a nation

LESSON 6-4 The Nature of Competition GOALS List factors that affect international business competition. Explain the types of competitive market situations.

International Business Competition 6 International Business Competition Factors affecting competition Number of companies Business costs Product differences Benefits and concerns of competition

Types of Competitive Situations 6 Types of Competitive Situations Pure competition Monopolistic competition Oligopoly Monopoly

Competitive Market Situations 6 Competitive Market Situations Pure Competition Many sellers Same product Monopolistic Competition Many sellers Slightly different product Oligopoly Few sellers Slightly different product Monopoly One seller Usually government regulated