FHF

Exporting & importing

Trading companies

Licensing and franchising

Contract manufacturing

Joint ventures

Direct investment

Multinational corporations Many companies’ involvement in international trade

begins with importing goods for resale

Getting Involved in Getting Involved in International BusinessInternational Business

3-24

FHF

Countertrade Agreements Bartering products for other products instead of

for currency

Export agents are middlemen that help companies by handling their international transactions

Trading Company Buys goods in one country and sells them to

buyers of another country

Handles all activities required to move products from one country to another

Getting Involved in Getting Involved in International TradeInternational Trade

3-25

FHF

A trade arrangement where one company allows another company to use its company name, products, patents, brands, trademarks, raw materials, and production processes in exchange for a fee or royaltyMany products are licensed and produced by local companies internationally

LicensingLicensing

3-26

FHF

A form of licensing where a company (franchiser) agrees to provide a franchisee a name, logo, operational guidelines, products, etc., in return for a financial commitment and the agreement to conduct business in accord with the franchiser’s standard of operationMcDonald’s is the world’s largest franchise in terms of revenues

FranchisingFranchising

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FHF

The hiring of a foreign company to produce a specified volume of the initiating company’s product to specificationThe final product carries the domestic firm’s nameCommon in high-tech industries, automotive industry and food manufacturingMany clothing manufacturers use contract manufacturing

Contract ManufacturingContract Manufacturing

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FHF

The relocation of a business process by a company or subsidiary to another countryDifferent from outsourcingThe company retains control of the processNot subcontracting to a different companyAppealing because of lower wages, high skills, time zone differences

OffshoringOffshoring

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FHF

Other Forms of Engaging in Other Forms of Engaging in International TradeInternational Trade

Joint VentureThe sharing of the costs of operation of a business between a foreign company and a local partner

Strategic AllianceA partnership formed to create competitive advantage on a worldwide basis

Direct InvestmentThe ownership of overseas facilities

3-30

FHF

The highest level of international business involvement

Operates on a worldwide scale without significant ties to a single nation or region

Largest MNCs are wealthier than most countries Antiglobalization activists contend that MNCs are

responsible for growing wealth disparity and misusing scarce resources

Multinational CorporationsMultinational Corporations

3-31

FHF

Multinational StrategyA plan used by international companies that involves customizing products, promotion and distribution according to cultural technological, regional and national differences

Global Strategy (Globalization)A strategy that involves standardizing products (promotion and distribution) for the whole world as if it were a single entity.

International Business StrategiesInternational Business Strategies

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FHF

Many political barriers to trade have fallen in recent decades

Navigating international business remains complicated Technology and improved standards of living globally are

creating tremendous new marketing opportunities Governments and business organizations exist to help

businesses looking to go international

Managing the Challenges of Managing the Challenges of Global BusinessGlobal Business

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