Student ID: 712310

Course Title: Certificate in International Trade

Module: Fundamentals of International Business

Study Period:

Date of Submission:

Submission Deadline:

Word Count – 1648 (excluding tables, titles, charts, references and glossary)

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Contents

Page 1. Assessment details

Page 2. Contents Page
Page 3-6. Assessment 2 part 1
Page 7-9. Assessment 2 part 2
Page 10. References

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Fundamentals of International Business – First Assessment

I. Discuss the different business departments essential to fulfilling international

trade sales.

International trade represents all trade in goods and services between two or more states,
comprising export, import, re-export and transit.

At the start of the export procedure within the organization that I represent, as motivation
were several factors such as: worldwide economic partnerships, favorable managerial
attitudes, growth and profit objectives, the competent marketing advantages, international
exchange of experience, the existence of market opportunities, policies to encourage exports,
etc. A special advantage that would be for the organization that I represent, is an
innovational product what we have that would assault the markets of European Union and
other countries of the world , because the whole world's population today is aimed at healthy
lifestyle and a healthy feeding.

The business structure of the company will always influence the quality and the reputation
of the firm, mainly in international trade. If the departments are not responsible the firm risk
to not have a credibility or the access to other markets. Some of the departments that are
involved in the internationalization are: marketing, procurement, production, administration,
finance, stock control, customer services etc. Having the correct business structure when
importing or exporting is absolutely vital. Smaller businesses will combine many of those
functions. For example, in our company we combine sales with marketing, customer service
and procurement. There is one department that is responsible for linking more functions. The
finance, credit control are combined in one department that is linked with the accountancy.
The following diagram represents the departments of a small or medium-sized company,
which is implemented in the company in which I activate.

CEO

Production Commercial Finance Export Logistics

Region Region Internal Export

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Analyzing the chart abоve we can conclude that each department work together with each
other, and those that were well thought combined with objectives. I want to mention that even
if the number of departments within the organization hаs been reduced, service quality has
not suffered.

Export service company collaborates with other departments in developing and

implementing an export strategy. The main objectives of the specific functions of foreign
trade transactions are:

- Marketing function: defining marketing policy (setting the marketing mix, establishing
forms of internationalization etc), studying foreign market, establishing marketing techniques,
design and implementation of promotional policy;

-Commercial function: foreign market research, tendering, negotiation, contracting, service

assurance after- selling;

-Logistics function: the formalities for achieving international transportation, cargo insurance,
customs regulation issues etc.

-Financial function: making payments, secure financing operations, control operations

profitability;

-The juridical function: checking the validity of the contract, contract drafting, monitoring and
dispute resolution, information on national and international regulations in the field of foreign
trade;

Departments specified above are based on four objectives that help the company to engage
in international business: sales growth, purchasing resources, competitive risk minimization,
diversification of supply sources and markets.

At the time when the organization forward looking for growth internationally, it is
necessary to plan a strategy that would respond to certain questions:

1. What the organization could do better?

2. What opportunities is faces?

3. What is happening in the business sector which will affect its future?

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In order to improve international trade in the organization to determine market

opportunities and competitive advantage, based on inspection results of marketing that
highlight: risks, favorable situations, strengths and weaknesses of the organization. By
translating them into practice is required to create such a system of relations between
enterprise and environment to ensure that its placement in the best possible position in
confrontation with other competitors.

In this case we use The SWOT Analysis, Porter 5 Forces and a general meeting in which
there will be a brainstorming themed improvement in the organization of international trade.

The organization what I represent provide a good product requirements in international

trade. The requirements are defined by:

1. Have the ability to meet an objective requirement of the buyer.

2. Be consistent with use.

3. Innovativeness. - The product offered by the organization I represent is something

exclusive that will produce interest

4. The release of foreign markets a corresponding stage in their life cycle.

5. Product compatibility with the state of the market that are offered.

6. The product has a high and constant quality.

7. The time deliveries.

Also a method to measure growth and performance is decentring production by:

1. production contract with a local company

2. Assemble and / or production of parts on the foreign market

3. The transfer of licenses, know-how, patents.

Factors that may cause the company to resort to strategic solution are:

1. advantages result from the foreign markets with own production;

2. gaining customer confidence;

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3. high transport costs for certain components;

4. lower import duties for components than for finished products.

So, for promoting international trade in the organization there are plenty of strategic
methods but will be implemented in the organization who have the most valuable results.

II. Explain why internationalisation can be an appropriate option for a business

reliant solely on domestic (home) sales.

Export indirectly involves separation of the production function of the marketing, the last
being able to be taken from several categories of companies, namely: companies acting in the
name and on their own, companies acting in his own name and on the account of others
(commissioners) and companies working in the name and on the account of others (agents or
representatives). In the first case, the manufacturer sells a commercial firm - which in turn
performs exports in name and on their own. The manufacturer takes no risks or costs related
to marketing its wares abroad, he not having direct link with the foreign market. The trader, in
turn, seeks to recover profits from the difference between the purchase price and the sale, he
made entirely activities negotiating, contracting and conducting foreign trade operations.
Exports in this formula is practiced by small and medium enterprises that either can not or do
not find it effective to create their own structures export or export situation is not a high share
in the turnover of the production company. The category includes companies that operate

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independent trade houses, specialized foreign trade companies, trade companies that had been
read wholesale and retail trade firms.

Most managers enter foreign mаrkets through exporting. By using an indirect channel , a
manufacturer can begin exporting with low start up costs; it allows him to tests the result of
his product in a low-risk experimental fashion. Yet indirect exporting leаds to an inevitable
lack of control over his foreign sales. After initial exposure into the foreign market more
аmbitious managers will prefer using a direct export channel. 

Direct export means creating organizational structures and marketing outsourced these
include: commercial office (representation) , branch and the subsidiary.

Sales office represents a compartment operative implanted abroad, which has no legal
personality who has a specialized intermediary between the commercial company that has
established and its trading partners.

Branch is a secondary office of the company located abroad without legal personality.
Branch transmits orders to the parent company , ensure clearance of goods, making local
deliveries, tracks the performance of contracts, dealing with after-sale etc.

Subsidiary is a company established abroad, which has legal personality. In this case the
branch performs production activities and trading activities both within the import country as
well as on other markets.

1. Direct export channels are:

Agents- they are an individual or legal entity authorized to act on behalf of another
individual or legal entity.

Distributors- they are an agent who sells directly for a supplier and maintains an inventory
of the supplier’s products.

2. Joint Ventures- is a combination of two or more individuals or legal entities who

undertake together a transaction for mutual gain or to engage in a commercial enterprise
together with mutual sharing of profits and losses. 

3. Contractual entry modes

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Licensing - the transfer of industrial property rights, patents, trademarks or proprietary know-
how from a licensor in one country to a licensee in a second country. 

Franchising - to authorize others to use a company’s name and sell its goods.

In the organizаtion that I represent in the international trading method will be taken
direct export by opening a commercial office, which will help increase sales, after that in
perspective the organization amended to be the subsidiаry.

Analyzing the proposed theme, we concluded that the benefits of internationalization are:

1. Product capitalization worldwide - no company is immune from international

competition. If a company wants to remain viable in the long term, it could be forced to
confront foreign competition on the field, prior to a meeting on the internal market.

2. The financial benefit

3. Establishing a network of multinational

4. Competitive Advantages

5. Technical advantages

6. Advantages compared with the competition results

7. Small or saturated domestic markets - if the company can not expand the domestic
market, internationalization is the only solution to continue its development. In fact, most
companies go international long before the domestic market saturation, because it is easier to
address new markets abroad than to fight to get the last possible domestic sales.

8. Economies of scale - for many industries, the cost of originating a new product is so
great that must be distributed on a production volume very high to be profitable internal
market of Moldova can not absorb one such production volumes, which is why firms address
some foreign markets with their products.

Depending on the level of internationalization in which the company is, the primary
objective of which must leave any political design or development strategy is to sustain
competitive advantage, to turn a valuable input into a more valuable output.

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9. Diversifying markets - the greater the range of markets served, the less the company will
suffer in the event of a market fall because it will be able to compensate for the loss of that
market, with benefits accruing to other markets.

References:

http://www.startupoverseas.co.uk/news/benefits-of-exporting-for-a-small-business.html

http://www.internationaltrade.co.uk

Bibliography:

1. Postgraduate specialization

INTERNATIONAL MANAGEMENT TRANSACTIONS

Conf. univ. dr. DANA BLIDEANU

Bucharest 2002

2. Bradley F., Marketing internaţional, Editura Teora, Bucureşti, 2001

3. Cateora Ph., International Marketing, Irwin McGraw-Hill, Boston, 1990

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4. Danciu V., Marketing internaţional. Provocări şi tendinţe la începutul mileniului

trei, Editura Economică , Bucureşti, 2005

5. Danciu V., Marketing internaţional. Studii. Analize. Planuri. Cazuri.Teste, Editura

Independenţa economică Piteşti, 2004

6. Pop N.Al., Dumitru I., Marketing internaţional, Editura Uranus, Bucureşti, 2001

7. Sasu C., Marketing internaţional, Editura Polirom, Iaşi, 1998/ediţia a treia 2005

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