International Trade

y Image of the country as a supplier of good useful products y Image of the company trying international marketing as a supplier of good value for money products y Brand image of the product y Companies need to work on these issues in close coordination with the government and other companies, trading organisations. y Companies need to learn how the trade theories affect international marketing. y Countries should get out of the belief from the sixteenth to eighteenth century where it was considered that only a country s government can become an exporter and not individual companies

Trade -international
y Companies have to realise that today it is the

economies of scale and experience curve with newer technologies bringing in the cost leadership, besides product differentiation that brings in competitive advantage to them. The companies need to have their hand on the market pulse to be able to supply the product immediately even when the need is only dormant. y The theory of comparative advantage, rather than absolute advantage works for the companies if they can accurately determine the levels of such advantage.

Trade international
y The companies have to realise the importance and the affect of tariff and no tariff barriers in different countries and they can take advantage of these barriers. y Companies have to understand the balance of payment and balance of trade between countries for getting the best out of these situations y Several countries, including India give different incentives for current account, capital account and reserves for international marketers y Companies must understand the commodity, bilateral and multilateral agreements

Trade international
y The employment factor in the host country, revenue

and transfer of dividends in foreign currency along with fluctuations in consumption usually govern the host country s government policies on international trade. y Companies need to learn about import quota restrictions especially in garment trade

Host Governments
y Countries governments want to influence trade for

economic, social or political objective. A variety of measures are tried by them to balance conflicting objectives and appease various interest groups. Like in India the government has been walking a tight rope as it wants to invite FDIs where foreign companies can have majority share holdings even up to hundred percent and the labour unions keep resenting the proliferation of foreigners in to Indian business world.

Host politics
y Political concerns are the main reasons for

governmental interference in the international trade rather than economic factors. Political problems have led to serious conflicts within and among nations. This manifests in several ways including the fear of loss of jobs for the local residents. However, companies do not find any barriers holding their international forays. In fact most governments assiduously make efforts to assist such companies in their overseas ventures.

Home-Host Trade-problems
y As a boost to local business, which is saved of facing

international competition y When the country can not provide the necessary infrastructure required by international traders y When the country s political agenda does not match with free trade y When the economic level of the country is low and the consumers are not able to afford anything beyond food and other items of dire necessity.

Competitive Advantage
y Availability of advance technology y Availability of low cost and yet skilled labour y Availability of raw materials y Proximity of markets y Availability of low cost finance y Country having good infrastructure base

Trade Policies
y In deciding with which countries they should have import export ties y What product/s they should be importing and exporting to which country y Whether these products should be fully manufactured in the home country or partly there and the rest in the host country y Should the manufacture be out-sourced to a third country y If the manufacturing is not in the home country, what quality control measures are required to be taken to ensure standards of quality are maintained

8 Theories of International Trade

y Mercantilism y Absolute advantage y Natural advantage y Acquired advantage y Country size y Comparative advantage y Factor proportions y Product life cycle

Protectionists Governments
y Some countries believe that protection to local small

industry is required otherwise local industry would be wiped out. India too, had the protectionists policy towards the local industry to a large extent. However, in such countries, the consumers are the main sufferers as they have to accept the product with whatever quality standards it is sold as the choices are limited to them.

World Commerce
y The world of commerce has undergone a sea change in

the following mannery Fast changing technologies y Shortening of product life cycles y New channels of distribution y New avenues for advertising and promotion.

WHY EXPORT FROM INDIA?

y Export imperatives for India come from the following y y y y

reasonsMore efficient production Better quality norms Lower operating costs Availability of raw materials in the international market at competitive prices