International Business: Importing, Exporting, and Trade Relations

6 CHAPTER Importing, Exporting, and Trade Relations 6-1Importing Procedures 6-2 Exporting Procedures 6-3 Importance of Trade Relations 6-4 The Nature of Competition

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

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

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

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

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

6 The Exporting Process 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

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

6 Export Documents • Bill of lading • Certificate of origin

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

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

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

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

6 Trade Agreements • Promote economic development • Encourage international business activities

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

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

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

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

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

International Business: Importing, Exporting, and Trade Relations