Answer No.

An import is a good or service bought in one country that was produced in

another. Imports and exports are the components of international trade. If the value of a
country's imports exceeds the value of its exports, the country has a negative balance of
trade, also known as a trade deficit.

Exports refer to the sale of goods and services from domestic economy to the rest of the world.
Whereas Imports refers to the purchase of goods and services by domestic economy from the
rest of the world.

Exporting refers to sending goods for sale to another country. Exporting goods from company’s
home base will not be beneficial if company can gain location economies by shifting its
production to other country.

Companies export because: -

 It helps in increasing sales and profits because of additional foreign sales and selling
products and services to foreign market.
 It helps in enhancing competitiveness as the company venture in international arena.
 It helps in gaining global market share from huge international marketplace.
 It promotes diversification by capturing additional foreign market.
 It helps the company to expand because of its presence in the foreign market.
 It helps the company to gain new knowledge and experience from international
market.

Reasons for which companies export:

 Exporting is a scenario where the goods and services are sold to a foreign country. Companies
involve in exporting their products as it could fetch them more profit. Companies look for
market where the demand for their product is high. They then export their finished products at
a higher price.

Exporting helps a company to expand sales, diversify sales, or gain experience. Also it is a low-
cost, low-risk way of getting started in international business. Countertrade is selling goods or
services that are paid for with other goods or services. It can take the form of barter, counter
purchase, offset, switch trading and buyback.

Answer No.2
Counter trade:

Countertrade means a variety of barter-like techniques used to exchange goods or services

without the involvement of cash. It is also known as barter or reciprocal trade. It is the most
simplest form of trade when the value of goods exchanged are the same and the shipments
also take place at the same time. The two forms of countertrade are counter purchases and
offsets. There are certain less commonly used countertrade arrangements are buy-back, switch
trade and compensation trade.

Use of counter trade:

Various companies of the developed countries use countertrade to gain presence in developing
countries and to diversify the operations. Also countries with limited currency reserves also use
counter trade to promote and increase foreign trade, as well as attract key industries. It is most
suited to large firms with presence across diversified markets, products and experience in
international markets. Hence, they are in a better position to manage cost and risks of
countertrade.

Barter system
A barter system is an old method of exchange. This system has been used for centuries and long
before money was invented. People exchanged services and goods for other services and goods
in return. Today, bartering has made a comeback using techniques that are more sophisticated
to aid in trading; for instance, the Internet. In ancient times, this system involved people in the
same area, however today bartering is global. The value of bartering items can be negotiated
with the other party. Bartering doesn't involve money which is one of the advantages. You can
buy items by exchanging an item you have but no longer want or need. Generally, trading in
this manner is done through online auctions and swap markets.

Example:

Bartering with Consumer Goods

in its simplest form, bartering is the exchange of one valuable product for another between two
individuals. Person A has two chickens but wants to get some apples; meanwhile, Person B has
a bushel of apples but wants some chickens. If the two can find each other, Person A might
trade one of his chickens for a half-bushel of Person B's apples. No medium of exchange is used.
The problem posed by simple bartering is what economists call the "double coincidence of
wants." In this case, Person A is not satisfied unless he crosses paths with a chicken-wanting
apple-carrier, while Person B needs an apple-wanting chicken-carrier.
Answer No.5

Corporate Social Responsibility (CSR):

It is defined as the business function where companies need to contribute to society while
fulfilling their business objectives.
Corporate Social Responsibility involves contributing to the sustainability of the society and
social and economic welfare of the society. Corporate Social Responsibility activities should be
sustainable over long period of times to keep current and future generation at an advantage.

Corporate social responsibility shows the commitment of the business for wellbeing of others
and make an important impact related to environment, community, philanthropy and so on.

It is important especially for new companies to utilize corporate social responsibility and
implement it effectively. It helps for building reputation and necessary for responsible business.
It is also important for saving costs and reducing any business waste with use of environmental
and sustainable measures.
It is useful for new company to build awareness around its company and build reputation which
counts. It helps to establish and responsible and sustainable business.

The new company can take advantage of environmental corporate social responsibility to make
an impression and focus on issues like climate change and sustainable, eco-friendly materials
for its product offerings.

Answer No.4

Definition of globalization:
 Globalization refers to the process of integration and interaction between different
countries of the world with respect to movement of people, goods and capital between
countries.
 Advancements in the means of transportation and technology have further facilitated
the process of globalization.
  It is characterized by free movement of people, goods, services, capital and
technology which has further strengthened the interdependence between economies.
 Economies are so well knit as a result of globalization that economic fluctuations in
one economy has its effects on the other economies also.

Types of globalization

According to different areas, globalization has been classified into three types:

1. Economic globalization

It comprises of integration of production, finance, technology, organizations, institution and

labor of different countries. It has been facilitated by advancement of technology and cutting
down trade barriers by countries.

2. Cultural globalization

It refers to free movement and integration of ideas, cultures, and values between different
countries.

3. Political globalization

It involves expansion of global political system and its institutions which keep a watch over
international relations.

Factors Favoring Industry Globalization

1. Markets
 Homogeneous customer needs
 Global customer needs
 Global channels
 Transferable marketing approaches

2. Costs
 Large-scale and large-scope economies
 Learning and experience
 Sourcing efficiencies
  Favorable logistics
 Arbitrage opportunities
 High research-and-development (R&D) costs

3. Governments
 Favorable trade policies
 Common technological standards
 Common manufacturing and marketing regulations

4. Competition
 Interdependent countries
 Global competitors

Market:

The more similar markets in different regions are, the greater the pressure for an industry to
globalize. Coca-Cola and PepsiCo, for example, are fairly uniform around the world because the
demand for soft drinks is largely the same in every country. The airframe-manufacturing
industry, dominated by Boeing and Airbus, also has a highly uniform market for its products;
airlines all over the world have the same needs when it comes to large commercial jets.

Costs

In both of these industries, costs favor globalization. Coca-Cola and PepsiCo realize economies
of scope and scale because they make such huge investments in marketing and promotion.
Since they’re promoting coherent images and brands, they can leverage their marketing dollars
around the world. Similarly, Boeing and Airbus can invest millions in new-product R&D only
because the global market for their products is so large.

Government and competition:

Obviously, favorable trade policies encourage the globalization of markets and industries.
Governments, however, can also play a critical role in globalization by determining and
regulating technological standards.

These are a few key drivers of industry change. However, there are particular implications of
technological and business-model breakthroughs for both the pace and extent of industry
change. The rate of change may vary significantly from one industry to the next; for instance,
the computing industry changes much faster than the steel industry. Nevertheless, change in
both fields has prompted complete reconfigurations of industry structure and the competitive
positions of various players. The idea that all industries change over time and that business
environments are in a constant state of flux is relatively intuitive.

Technological Change

Rapid and sustained technological change has reduced the cost of transmitting and
communicating information – sometimes known as “the death of distance” – a key factor
behind trade in knowledge products using web technology.

Differences in Tax System

The desire of businesses to benefit from lower unit labor costs and other favorable production
factors abroad has encouraged countries to adjust their tax systems to attract foreign direct
investment (FDI). Many countries have become engaged in tax competition between each other
in a bid to win lucrative foreign investment projects.

Less Protectionism

Old forms of non-tariff protection such as import licensing and foreign exchange controls have
gradually been dismantled. Borders have opened and average import tariff levels have fallen.

That said, it is worth knowing that, in the last few years, there has been a rise in non-tariff
barriers such as import quotas as countries have struggled to achieve real economic growth and
as a response to persistent trade and current account deficits.

Answer No.3
International business expansion  (or internationalization) is the process of taking a
domestic, or local company, and expanding it to the international market. Some companies
also want to maximize economies of scale, which is the concept that the more they
produce, the less it will cost them.

International expansion is necessary for business because of uncertainty/low growth in local

markets. For e.g. if you consider top economies in the world such as The US, China, and
European markets are slowing down and companies growth in these markets stagnated. To
grow, businesses need to expand to other markets such as India, Middle East, and African
countries to sustain the profits. International expansion helps the companies to leverage local
resources for its international customers. For many manufacturing companies such as
Automobile, Engineering, international expansion means, building global supply chains across
the globe.

For e.g. Wal-Mart operates internationally and it helps to source products from low-cost
countries such as China, India and Taiwan and supply to the developed markets such as US and
Europe. International expansion helps companies to leverage global skills/scarce resources of
other countries to the local markets. It gives competitive advantage in highly competitive
markets.

Rationale for International Expansion

Companies embark on an expansion strategy for one or more of the following reasons:

 To improve the cost-effectiveness of their operations.

 To expand into new markets for new customers.
 To follow global customers.
Table:

WHY?
Step 1:
Primary reasons a company would decide to expand internationally are as follows:

• Expanding markets and increasing sales are one of the primary reasons.

• Companies get globalized in order to become a market leader.

• The company may choose to enter into international market in order to diversify a
company’s product line.

• Markets and investments would be protected by companies once they enter into
international market and get engaged in an international business.

• Controlling the expenses is again one of the most important reasons. Company would
buy the resources to gain cost advantage.

For example, the company which is located in Canada gets most of their resources from
China; the company would look forward to get situated near China.

• Another reason would be, to get protected from their competitors or to gain
advantage over them; the company would decide to expand internationally.

Step 2:

The three motivational factors that induce a company to go global are as follows:

• Economies of Scale – The advantage that a company gain through mass production to
achieve the lowest possible production cost per unit.
• Economies of scope – The advantage that a firm gains by producing different varieties
of products and services and at different regions.
• Low-Cost Production Factors – It is an opportunity to purchase the resources at the
lower possible cost.
Jaguar Land Rover decided to manufacture cars outside the UK for the first time. In
recent years, it has rapidly expanded in its home UK and the company is planning to go
to Brazil and implement the strategies that they had implemented in India.

Jaguar Land Rover moves to other countries to gain the opportunity of producing at a
lower price and to gain economies of scale.

WHERE?
Organization or company always go with the soft criteria, Where;

 Economic and political stability is up to the mark.

 Freedom of capital flows.

 Intellectual property issues.

 Easily available human resources or work force.

  Friendly Government policies.

 Technology reliability.

 No culture discrimination.

 Business friendly Tax Policies.

HOW?
 Do it on our own (likewise companies do expansion on its own self and under its
own resources)

 In other end, we need local partner for a business expansion from that particular
country, it will minimize our work force, capital, time and resources.

 At the end, how big or how fast: company wants expansion in that particular
country, as per that company’s rules and regulations.

Some more explanations is given below:

Planning for International Expansion

As companies look for growth in new areas of the world, they typically prioritize which
countries to enter. Because many markets look appealing due to their market size or low-cost
production, it is important for firms to prioritize which countries to enter first and to evaluate
each country’s relative merits. For example, some markets may be smaller in size, but their
strategic complexity is lower, which may make them easier to enter and easier from an
operations point of view. Sometimes there are even substantial regional differences within a
given country, so careful investigation, research, and planning are important to do before entry.

International Market Due Diligence 

International market due diligence involves analyzing foreign markets for their potential size,
accessibility, cost of operations, and buyer needs and practices to aid the company in deciding
whether to invest in entering that market. Market due diligence relies on using not just
published research on the markets but also interviews with potential customers and industry
experts.

Evaluating whether to enter a new market is like peeling an onion—there are many layers. For
example, when evaluating whether to enter China, the advantage most people see immediately
is its large market size. Further analysis shows that the majority of people in that market can’t
afford US products, however. But even deeper analysis shows that while many Chinese are
poor, the number of people who can afford consumer products is increasing.

Regional Differences

The next part of due diligence is to understand the regional differences within the country and
to not view the country as a monolith. For example, although companies are dazzled by China’s
large market size, deeper analysis shows that 70 percent of the population lives in rural areas.
This presents distribution challenges given China’s vast distances. In addition, consumers in
different regions speak different dialects and have different tastes in food. Finally, the
purchasing power of consumers varies in the different cities. City dwellers in Shanghai and
Tianjin can afford higher prices than villagers in a western province.

Let’s look at a specific example. To achieve the dual goals of reducing operations costs and
being closer to a new market of customers, for instance, numerous high-tech companies
identify Malaysia as an attractive country to enter. Malaysia is a relatively inexpensive country
and the population’s English skills are good, which makes it attractive both for finding local
labor and for selling products. But even in a small country like Malaysia, there are regional
differences. Companies may be tempted to set up operations in the capital city, Kuala Lumpur,
but doing a thorough due diligence reveals that the costs in Kuala Lumpur are rising rapidly. If
current trends continue, Kuala Lumpur will be as expensive as London in five years. Therefore,
firms seeking primarily a lower-cost advantage would do better to locate to another city in
Malaysia, such as Penang, which has many of the same advantages as Kuala Lumpur but does
not have its rising costs.

Understanding Local Customers

Entering a market means understanding the local consumers and what they look for when
making a purchase decision. In some markets, price is an important issue. In other markets,
such as Japan, consumers pay more attention to details—such as the quality of products and
the design and presentation of the product or retail surroundings—than they do to price. The
Japanese demand for perfect products means that firms entering Japan might have to spend a
lot on quality management. Moreover, real-estate costs are high in Japan, as are freight costs
such as fuel and highway charges. In addition, space is limited at retail stores and stockyards,
which means that stores can’t hold much inventory, making replenishment of products a
challenge. Therefore, when entering a new market, it’s vital for firms to perform full, detailed
market research in order to understand the market conditions and take measures to account
for them.

How to learn the needs of a new foreign market

The best way for a company to learn the needs of a new foreign market is to deploy people to
immerse themselves in that market. Larger companies, like Intel, employ ethnographers and
sociologists to spend months in emerging markets, living in local communities and seeking to
understand the latent, unarticulated needs of local consumers. For example, Dr. Genevieve Bell,
one of Intel’s anthropologists, traveled extensively across China, observing people in their
homes to find out how they use technology and what they want from it. Intel then used her
insights to shape its pricing strategies and its partnership plans for the Chinese consumer
market.

Differential and Capability

When entering a new market, companies also need to think critically about how their products
and services will be different from what competitors are already offering in the market so that
the new offering provides customers value.

Companies trying to penetrate a new market must be sure to have some proof that they can
deliver to the new market; this proof could be evidence that they have spoken with potential
customers and are connected to the market. Related to firm capability, another factor for firms
to consider when evaluating which country to enter is that of “corporate fit.” Corporate fit is
the degree to which the company’s existing practices, resources and capabilities fit the new
market.

Industry Dynamics

In some cases, the decision to enter a new market will depend on the specific circumstances of
the industry in which the company operates. For example, companies that help build
infrastructure need to enter countries where the government or large companies have a lot of
capital, because infrastructure projects are so expensive.
Political stability

Political stability, legal security, and the “rule of law”, the presence of and adherence to laws
related to business contracts, for example; are important considerations prior to market entry
regardless of which industry a company is in.