Trading Internationally

8/6/2019 Trading Internationally

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International Tradey Image of the country as a supplier of good useful productsy Image of the company trying international marketing as a

supplier of good value for money products

y Brand image of the producty Companies need to work on these issues in close

coordination with the government and other companies,trading organisations.

y Companies need to learn how the trade theories affect

international marketing.y Countries should get out of the belief from the sixteenth to

eighteenth century where it was considered that only acountrys government can become an exporter and notindividual companies



Trade -internationaly Companies have to realise that today it is the

economies of scale and experience curve with newertechnologies bringing in the cost leadership, besidesproduct differentiation that brings in competitiveadvantage to them. The companies need to have theirhand on the market pulse to be able to supply theproduct immediately even when the need is only

dormant.y The theory of comparative advantage, rather than

absolute advantage works for the companies if they can accurately determine the levels of such advantage.



Trade internationaly The companies have to realise the importance and the

affect of tariff and no tariff barriers in different countriesand they can take advantage of these barriers.

y Companies have to understand the balance of paymentand balance of trade between countries for getting thebest out of these situations

y Several countries, including India give different incentives

for current account, capital account and reserves forinternational marketers

y Companies must understand the commodity, bilateral andmultilateral agreements



Trade internationaly The employment factor in the host country, revenue

and transfer of dividends in foreign currency along

with fluctuations in consumption usually govern thehost countrys government policies on internationaltrade.

y Companies need to learn about import quota

restrictions especially in garment trade



Host Governmentsy Countries governments want to influence trade for

economic, social or political objective. A variety of

measures are tried by them to balance conflictingobjectives and appease various interest groups. Like inIndia the government has been walking a tight rope asit wants to invite FDIs where foreign companies canhave majority share holdings even up to hundredpercent and the labour unions keep resenting theproliferation of foreigners in to Indian business world.



Host politicsy Political concerns are the main reasons for

governmental interference in the international trade

rather than economic factors.P

olitical problems haveled to serious conflicts within and among nations. Thismanifests in several ways including the fear of loss of jobs for the local residents. However, companies donot find any barriers holding their internationalforays. In fact most governments assiduously makeefforts to assist such companies in their overseas ventures.



Home-Host Trade-problemsy As a boost to local business, which is saved of facing

international competition

y When the country can not provide the necessary infrastructure required by international traders

y When the countrys political agenda does not match with free trade

y When the economic level of the country is low and theconsumers are not able to afford anything beyond foodand other items of dire necessity.



Competitive Advantagey Availability of advance technology

y Availability of low cost and yet skilled labour

y Availability of raw materialsy Proximity of markets

y Availability of low cost finance

y Country having good infrastructure base



Trade Policies

y In deciding with which countries they should have importexport ties

y What product/s they should be importing and exporting to which country

y Whether these products should be fully manufactured inthe home country or partly there and the rest in the hostcountry

yShould the manufacture be out-sourced to a third country

y If the manufacturing is not in the home country, whatquality control measures are required to be taken to ensurestandards of quality are maintained



8 Theories of International Tradey Mercantilism

y Absolute advantage

y Natural advantagey Acquired advantage

y Country size

y Comparative advantage

y Factor proportions

y Product life cycle



Protectionists Governmentsy Some countries believe that protection to local small

industry is required otherwise local industry would be

wiped out. India too, had the protectionists policy towards the local industry to a large extent. However,in such countries, the consumers are the mainsufferers as they have to accept the product with whatever quality standards it is sold as the choices arelimited to them.



World Commercey The world of commerce has undergone a sea change in

the following manner-

y Fast changing technologies

y Shortening of product life cycles

y New channels of distribution

y New avenues for advertising and promotion.



WHY EXPORT FROM INDIA?y Export imperatives for India come from the following

reasons-

yMore efficient production

y Better quality norms

y Lower operating costs

y Availability of raw materials in the international

market at competitive prices

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Trading Internationally