IMPORTANT DEFINITIONS

Important Definitions

Tariff A tax levied by a government against certain imported products. Tariffs are designed to raise revenue or to protect domestic firms. Quota A limit on the amount of goods that an importing country will accept in certain product categories. It is designed to conserve on foreign exchange and to protect local industry and employment. Embargo A ban on the import of a certain product. Exchange Controls Government limits on the amount of its foreign exchange with other countries and on its exchange rate against other countries. Economic Community A group of nations organized to work towards common goals in the regulation of international trade.
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Important Definitions

Standardized Marketing Mix An international marketing strategy for using basically the same product, advertising, distribution channels and other elements of the marketing mix in all the companys international markets. Adapted Marketing Mix An international marketing strategy for adjusting the marketing mix elements to each international target market, bearing more costs but hoping for a larger market share and return.

Product Adaptation Adapting a product to meet local conditions or wants in foreign markets.
Communication Adaptation A global communication strategy of fully adapting advertising messages to local markets. Whole-channel View Designing international channels that take into account all the necessary links in distributing the sellers products to final buyers, including the sellers headquarters organization, channels between nations and channels within nations.
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Intellectual Property

Intellectual property (IP) refers to creations of the mind: inventions, literary

and artistic works, and symbols, names, images, and designs used in commerce.

Intellectual property is divided into two categories: Industrial property,

which includes inventions (patents), trademarks, industrial designs, and geographic indications of source; and Copyright, which includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs. Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and those of broadcasters in their radio and television programs.

TRIPS

Agreement on Trade related aspects of Intellectual Property Rights (TRIPS) The agreement recognizes that widely varying standards in the

protection and enforcement of IPR and the lack of a multilateral framework of

principles, rules and disciplines dealing with International trade in counterfeit goods have been a growing source of tension in international economic relations. Rules and disciplines were needed to cope up with these tensions. To that end, the agreement addresses:
The applicability of basic GATT principles and those of relevant IPR agreements. The provision of adequate IPR.

The provision of effective enforcement measures for those rights.

Multilateral dispute settlement. Transitional arrangements.
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Generalised System of Preferences (GSP)

Generalised System of Preferences (GSP) The conception and implementation of GSP is one of the principal achievements of

UNCTAD in the 1964 Geneva conference. It is a system of allowing

preferential tariff rates, that is less or very much reduced tariff rates, in favour of certain products of developing countries, to be exported to developed nations. It was then argued that in order to promote

exports of manufacturers from developing nations to developed

nations, special tariff concessions should be allowed by the developed countries on such items of imports from developing nations. The main purpose of the system was to formulate an international trade policy, which would help raise the material wealth of the developing countries through trade rather than aid
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EPRG Framework

EPRG

Framework

Managements

orientation

toward

the

internationalization of the firms operations affects each of the functional

areas of the firm, and, as such, has a direct impact on the marketing
functions within the firm. Companies philosophies on international involvement can be described, based on the EPRG Framework, as ethonocentric, polycentric, regiocentric and geocentric.

Ethonocentric Orientation Company strategies consistent with the belief that domestic strategies, techniques and personnel are superior to foreign ones and therefore provide the most effective framework for the companys overseas involvement Companies adopting this perspective, view international operations and customers as secondary to domestic operations and customers.
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Justin's Globe-Hex model

Justin's Globe-Hex model offers six strategies for success:

Infrastructure development Export led growth policy Proactive and planned participation Agriculture promotion

Import of raw materials

Safeguards against unrealistic imports.
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INCOTERMS and Engels Law

INCOTERMS have given some uniform export terms for delivery which are used all over the world. They indicate: The charge and expense, which must be paid by the seller (FOB, C&F, CIF) Place of delivery of goods The point of time where the goods and their transit risks are transferred

Engel's Law: Engel's Law is the observed phenomenon that when a familys income increases, the proportion of money they spend on food

decreases. His conclusion was based on a budget study of 153 Belgian

families and was later verified by a number of other statistical inquiries into consumer. This law was given by him in a paper published by him in 1857.
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International Commercial Terms (Incoterms)

Incoterms are standard trade definitions most commonly used in international sales contracts. Devised and published by the International Chamber of Commerce, they are at the heart of world trade. Among the best known Incoterms are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To).

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Strategic Alliance

A strategic alliance is essentially a partnership in which you combine

efforts in projects ranging from getting a better price for supplies by buying in bulk together to building a product together with each of you providing part of its production. The goal of alliances is to minimize risk while maximizing your leverage and profit.

An alliance is simply a business-to-business collaboration. Another term that is frequently used in conjunction with alliances is establishing a business network. Alliances are formed for joint marketing, joint sales or distribution, joint production, design collaboration, technology licensing, and research and development.

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GATS

The General Agreement on Trade in Services (GATS) came into existence as a result of the Uruguay Round of negotiations and entered into force on 1 January 1995, with the establishment of the WTO.

The main purpose for the creation of the General Agreement on Trade in Services (GATS) was to create a credible and reliable system of international trade rules, which ensured fair and equitable treatment of all countries on the principles of non-discrimination. It aims at stimulating trade and development by seeking to create a predictable policy environment wherein the member countries voluntarily undertake to bind their policy-regimes relating to trade in services.
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Quantitative Restrictions

Explicit limits, or quotas, on the physical amounts of

particular commodities that can be imported or exported during a specified time period, usually measured by volume but sometimes by value. The quota may be applied on a selective basis, with varying limits set according to the country of origin or destination, or on a quantitative global basis that only specifies the total limit and thus tends to benefit more efficient suppliers.

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Regional Trading Arrangement

A regional trading arrangement is an agreement among

governments to liberalise trade and possibly to coordinate other trade related activities. There are four principal types of regional trading arrangements:

- free trade area;

- customs union; - common market;

- economic union.

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Common Market

A group of nations that have eliminated tariffs and sometimes other barriers that impede trade with each other while maintaining a common external tariff on goods imported from outside the union.

A common market is a customs union with provisions to liberalise

movement of regional production facts (people and capital). The

Southern Cone Common Market (MERCOSUR) of Argentina, Brazil, Paraguay and Uruguay is an example of a common market.

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Customs Union

A customs union is a free trade area that also

establishes a common tariff and other trade policies with non-member countries. The Czech and Slovak Republics established a customs union to preserve previous commercial relationships between themselves and with third parties. The Arab Common Market is moving toward a customs union.
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Economic Union

An economic union is a common market with provisions for the harmonisation of certain economic policies, particularly

macroeconomic
economic union.

and

regulatory.

The

European Union is an example of an

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Free Trade Area

A free trade area is a grouping of countries within which tariffs and non-tariff trade barriers between the members are generally abolished but with no common trade policy toward nonmembers. The North American Free Trade Area (NAFTA) and the European Free Trade Association

(EFTA) are examples of free trade areas.

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Tax Haven

A country that imposes little or no income taxes. Because of this, businesses in high tax countries find that operating in a tax haven saves a

significant

amount

of

money.

The

Cayman

Islands and Bermuda are two countries that are tax havens. Generally businesses operating in tax

havens also enjoy a great deal of privacy.

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