International Trade and The Global Marketplace Global Analysis

International Trade International trade is the exchange of goods and services between nations. International trade is necessary because of the interdependence of nations. It benefits consumers, producers, workers, and nations in different ways Governments are involved in international trade through monitoring trade between countries and establishing trade regulations. Currently the US has a negative balance of trade, also called a trade deficit.

Three types of trade barriers are tariffs, quotas, and embargos. Tariffs – are a tax on imports; generally low ie. 25 cents per item/pound Protective tariffs – generally high; purpose to insure domestic products can compete with imports Quotas – limits the quantity or monetary value of a product that can be imported Embargo – is a total ban on specific goods

Three significant trade agreements and alliances that foster free trade are: The World Trade Organization (WTO): a coalition of nations that makes rules governing international trade. Successor to the GAIT (General Agreement on Tariffs and Trade. The North American Free Trade Agreement (NAFTA): is an international trade agreement among the US, Canada, and Mexico. The main objective was to get rid of trade barriers and investment restrictions. The European Union (EU): established to create free trade among its’ members as well as a common currency (the euro) and a central bank. The common goal of these agreements is to establish trade guidelines and set up trading alliances.

The Global Marketplace Businesses can get involved in international trade through importing, exporting, licensing, contract manufacturing, joint ventures, and foreign direct investments. A global environmental scan analyzes political, economic, socio-cultural, and technological factors. Global marketing strategy options include globalization, adaptations, or product and promotion, and customization.

The Global Marketplace Global marketing strategy options include: globalization – selling the same product with the same promotion methods in all countries adaptations – involves changing some part of the product and/or promotion to appeal to customers in different countries or regions customization – creating entirely new products and promotions for a specific country or region.

The Global Marketplace Licensing involves letting another company use a trademark, patent, special formula, company name, or intellectual property for a fee Contract manufacturing involves hiring a foreign manufacturer to make products according to a company’s specifications

The Global Marketplace Joint venture is a business enterprise that a domestic company and a foreign company undertake together Foreign direct investment (FDI) is the establishment of a business in a foreign country

Global Environmental Scan A global environmental scan includes analysis of political and economic factors. Political factors include government stability and trade regulations/laws Economic factors include infrastructure, labor force, employee benefits, taxes, standard of living, and foreign exchange rate

Global Environmental Scan Socio-cultural factors include: Language differences Cultures Holidays Religion Technological factors include Measurement systems Internet access Mobile devices