International Trade and The Global Marketplace International Trade

International Trade and The Global Marketplace

International Trade • Exchange of Good and Services between nations

IMPORTS… ØGoods & Services PURCHASED from other countries EXPORTS… ØGoods & Services SOLD to other countries

Licensing • Letting another company use a trademark, patent, special formula, or company name for a fee. – Disney Toys at Walmart – Spiderman Happy Meal Toys

Multinationals • Large Corporations that operate in several countries – – GE Microsoft Intel Mc. Donalds • More and more adding subsidiaries

• Tariff – TAX that is imposed on imports. • Quota – QUANTITY limits on imported goods

EMBARGO • Total BAN of specific goods coming into and leaving a country – Health: Poisoned fruit, pesticide problems – Political: End war through economic means • Cuba (over 50 year US embargo) • Vietnam (lifted in the ’ 80’s) • Persian Gulf / Iraq

Protectionism • Government restricts import to protect domestic industries – The opposite of free trade American raised Blank Angus Beef Hand massaged Kobe Beef from Japan

World Trade Organization • Global coalition of 135 governments that make rules about trade. – GATT (General Agreement on Tariffs & Trade • Before WTO……. . No real enforcement of agreements, so WTO was formed to settle disagreements

Comparative Advantage • The value a nation gains by selling goods that it produces most efficiently. – Countries specializing • USA – High Tech (computers, machinery), Steel • Japan/Korea/China – Toys, Clothing, Shoes (cheaper labor)

Infrastructure • The basic physical and organizational structures and facilities (e. g. , buildings, roads, and power supplies) needed for the operation of business and industry.

Absolute Advantage • When a country has special natural resources or talents that allow them to produce an item at the LOWEST possible cost (No one else can compare). – CHINA……. . Silk – MALAYSIA……. . Rubber – BRAZIL………Coffee

Global Marketing Strategies • Customization – Creating entirely new products and promotions for a specific country or region • Globalization – Same package and promotions used all around the world

Global Marketing Strategies • Product Adaptation – Keeps company name but changes products to meet local tastes • Promotion Adaptation – Changing some or part of message and images used in other countries