The major gain of international trade is that it has brought about increased prosperity by allowing nations to specialize in producing those goods and services at which they are relatively efficient. The relative efficiency of a country in producing a particular product can be described in terms of the amounts of other, alternative products that could be produced by the same inputs. When considered this way, relative efficiencies are described as the comparative advantages. All nations can do simultaneously gain from exploiting their comparative advantages, as well as from the large-scale production and broader choice of products that are made possible by the international trade. Suppose that Japan is relatively more efficient in producing steel than food and the United States is relatively more efficient in producing food than steel. So we can expect food to be cheap relative to steel in United States, and steel to be cheap relative Continue reading
International Business Basics
Control Mechanisms for Multinational Enterprises
Controlling is tool for achieving organizational goals and activities. Control is management’s planning, implementation, evaluation, and correction of performance to ensure that the organization meets its objectives in the short, medium and long terms. In the case of Multinational Enterprises, the top management’s toughest challenge is to balance the company’s global needs with its need to adapt to country-level differences. Read: Control in Multinational Enterprises Some of the mechanisms that Multinational Enterprises use to help ensure that control is implemented are given below: 1. Corporate Culture Every company has certain common values that its employees share, expect fellow members to follow. Corporate culture is a form of implicit control mechanism that helps enforce the company’s explicit control mechanisms. Employees conform to company traditions of work commitment, interactions with customers and so on. These are unwritten, informal, but more effective. But MNEs have more difficulty relying on a corporate culture for Continue reading
Place Component of the Global Marketing Mix
The American Marketing Association defines channel of distribution as “An organized network of agencies and institutions, which in combination, perform all the activities required to link producers with users to accomplish the marketing task.” Distribution is the physical flow of goods through channels; as suggested by the definition, channels are comprised of a coordinated group of individuals or firms that performs functions adding utility to a product or service. The major types of channel utility are: Place (the availability of a product or service in a location that is convenient to a potential customer); Time (the availability of a product or service when desired by a customer); Form (the product is processed, prepared and ready to use, and in proper condition); and Information (answers to questions and general communication about useful product features and benefits are available). Since these utilities can be a basic source of competitive advantage and product Continue reading
Export Packing List
The export packing list, which may be shown on the commercial invoice or separately, should contain item by item, the contents of cases or containers or of a shipment’s cases, with each item listed separately and with its weight and description set forth in such a manner as to permit a check of the contents by the customs on arrival at the port of destination as well as by the importer. The export packing list must be made in accordance with the instructions of the customer. Great care should be exercised to make certain that the contents of the packages are exactly as indicated in the export packing list. Any variation from what is shown in the export packing list, commercial invoice, or consular invoice may, and usually does, render the consignee liable to heavy fines. In short, in the matter of packing for overseas markets, the exporter should take Continue reading
Promotion Component of the Global Marketing Mix and Global Promotion Strategies
Marketing communications–the promotion “P” of the marketing mix–refers to all forms of communications that organizations use to establish meaning and influence buying behavior among existing and potential customers. Marketing communications should be designed to tell customers about the benefits and values that a product or service offers. The principal forms of marketing communications that is/ the elements of the promotion mix are Advertising, Personal selling, Publicity and Sales Promotion. All of these elements can be utilized in global marketing; however, the environment in which marketing communications programs are implemented can vary from country to country. Advertising may be defined as any sponsored, paid communication placed in a mass-medium vehicle. Advertising plays a more important communication role in the marketing of consumer products than industrial products. Frequently purchased, low-cost products generally require heavy advertising support. Not surprisingly, consumer products companies top the list of big advertising spenders. Global Promotion Strategies Companies Continue reading
Role of Clearing and Forwarding (C&F) Agents in Exports
Shipping is the most commonly used method of dispatching goods to a foreign country. Under shipment, one shall cover all the procedural aspects from the time the product meant for export leaves the factory site till it is loaded on board the ship and the relevant documents are collected from the shipping company. Since the type of work involved is somewhat specialized it is usually entrusted to the clearing and forwarding agents. This section focus on role of clearing and forwarding agents in export assignment. 1. Customs Formalities Goods can be shipped out of India only after obtaining the customs clearance. To obtain the customs clearance, the clearing and forwarding agent should submit a shipping bill in the prescribed form. The shipping bill is to be prepared in quadruplicate. The shipping bills should be accompanied by the following documents. Contract with the overseas buyer in original. Invoice for the Continue reading