Business and International Trade.docx
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Business and International Trade.docx
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BusinessandInternationalTrade
BusinessandInternationalTrade
Abstract
BusinessandInternationalTradeconsistsofbusinesstransactionsbetweenpartiesfrommorethanonecountry.Examplesofinternationalbusinesstransactionsincludebuyingmaterialsinonecountryandshipthemtoanotherforprocessingorassembly,shippingfinishedproductsfromonecountrytoanotherforretailsale,buildingaplantinaforeigncountrytocapitalizeonlowerlaborcosts,orborrowingmoneyfromonebankinonecountrytofinanceoperationsinanother.Thepartiesinvolvedinsuchtransactionsmayincludeprivateindividuals,individualcompanies,groupsofcompanies,and/orgovernmentalagencies.
Keywords:
business,economic,internationaltrade,culture
Introduction
Internationaltradealsocalledforeigntrade,worldtradeoroverseastrade,inessence,istheexchangeofcapital,goodsandservicesacrossnationalboundaries.Internationaltradeistheexchangeofgoodsandservicesbetweencountries.
Generallyspeaking,internationaltradeconsistsoffourdifferentprocesses:
preparatorywork,businessnegotiation,signingofabusinesscontractandimplementationofthebusinesscontract.Priortodoingbusiness,anewlyestablishedfirmoranoldonewishingtoenlargeitsbusinessscopeneedstodosomepreparatorywork.Afterestablishingbusinessrelationswithforeigncompanies,exportermaybeginbusinessnegotiationwithforeigncounterparts.Afterbusinessnegotiationandhavingreachedanagreement,bothpartiesofabusinesstransactionsignawrittencontract.Oncethesalescontractiseffectivelycontractinstrictcompliancewiththestipulationinthecontract.Therearedifferencesbetweeninternationaltradeanddomestictrade.
Typicalpracticesininternationaltrade:
Tradewayistopointtointheinternationaltradeofvariousmethods(Sen,A.1987).Alongwiththedevelopmentofinternationaltrade,tradeisalsobecomingmorediverseways.Noteinthesaleofthesetway,andunderwriting,agent,consignment,auction,biddingandtendering,futurestrading,countertrade,etc.
Exclusivesalesareusedtoininternationaltradebyoneoftheway.Inourexportbusiness,accordingtothecharacteristicsofcertaingoodsandexpandingexportsneed,inthepropermarket,selecttheappropriatecustomers,alsocanuseunderwritingway(Morgan,J.,&Prieur,F.2011).
Exclusivesalesreferstothealterationofthe(principal)throughtheagreementacertaingoodsoronekindofgoodsinacertainareaandwithinthetimelimittherightofadministrationofaspecificcustomerorcompanytoforeigntradepractices(Boucekkine,R.,Krawczyk,J.,Vall´ee,T.2010).Althoughexclusivesalesmanisalsosolddecide,butwiththeunilateralunderwritingusuallyexportdifferentnote.Itbesidesthepartieshavetosignthecontractforthesaleofoutside,stillmustbesignedbytheunderwritingagreementinadvance.Theunderwritingway,buyandselltherightsandobligationsofthepartieswiththeunderwritingagreementisdetermined.Thesalescontractconcludedbythealsomustcomplywiththeprovisionsoftheunderwritingagreement.
TakePackingandShipmentasexample,packingandShipmentarecloselylinkedtoeachother.Ininternationaltrading,thegoodsbeforeshipmentpackagingisaveryimportantlink.Appropriatepackagingcanprotectthegoodsfromdamagingduringshipment.Anumberofgoodgoodspackagingwillpromoteitstransportation.Inaddition,packagealsocontainsalargenumberofimportantinformationwhichisneededbytheconsumers.Packingclauseisalsooneoftheimportantcontentintradingcontract.Accordingtothefunctionofpackaging,packagingcanbedividedintotwocategories;theyaretransportpackagingandpackagingsales.
Considerationsininternationaltrade:
Itispossibletoimprovethecompany’smarketvaluewhenhedgingreducedthetaxorunderinvestmentcostsofthecompany.Especially,whencurrencyhedgingreducesthelikelihoodofpayingdistresscosts,firmmarketvalueadds.Thereareotherstrategieswhichcanbeusedtohedgingsuchascurrencyoption,leadingandlagging.Theproblemabouthowtoselecttheappropriatestrategytomanageriskdependsonthelevelofawarenessofthecompany.Arationalstrategyisaccordingtothecompany’smarketshare,company’sstructure,cashflowandthedegreeofspecializationonforeignexchangemarket.Inmyopinion,thereisnouniversalstrategy,onlythestrategywhichismostsuitedtotherealitiesofthecompany.
CulturalFactorsinInternationalBusiness
Understandingculturedifferencesiscriticaltothesuccessoffirmsengagingininternationalbusiness.WithChina’senteringintoWTOandChineseeconomy’sextensivelyblendingwithworldeconomy,culturaldifferencebetweenChinaandtheWestiscertainlyreflectedininternationalbusinessactivities.ThearticleanalyzesthegeneraryideasofcultureandinternationalbusinessandthebasicdifferencesinvaluesandmodeofthinkingbetweenChinaandtheWest,andalsoelaboratestheirpossibleimpactsontheinterculturalbusinessactivitiessuchasinternationalbusinessnegotiation.Atlastitalsotalksabouthowtounderstandnewculturetodogoodtotheinternationalbusinesscommunication.TheytendtoexpresstheirpointsdirectlyandfranklywithoutthinkingabouttheensuingconfrontationtotheChineseparty.
Whatiscultureandhowitaffectsinternationalbusiness?
Abriefintroductionofcultureandhowitselementsaffectinternationalbusiness.
Asociety’scultureaffectsthepolitical,economic,socialandethicalrulesafirmmustfollowinitsbusinessdealingswithinthatsociety.Thereareculturaldifferencesininternationalbusinessnegotiation
Cultureisthecollectionofvalues,beliefs,behaviors,customsandattitudesthatdistinguishonesocietyfromanother.Asociety’sculturedeterminestherulesthatgovernhowfirmsoperateinthesociety.Asociety’sculturedetermineshowitsmemberscommunicateandinteractwitheachother.Thebasicelementsofculturearesocialstructure,language,communication,religion,andvaluesandattitudes.Theinteractionoftheseelementsaffectsthelocalenvironmentinwhichinternationalbusinessoperate.
Socialstructure.Basictoeverysocietyisitssocialstructure,theoverallframeworkthatdeterminestherolesofindividualsinthesociety,thestratificationofthesociety,andindividual’smobilitywithinthesociety.
Language
Linguistictiesoftencreateimportantcompetitiveadvantagesbecausetheabilitytocommunicateissoimportantinconductingbusinesstransactions.Becauselanguageservesasawindowonthecultureofasociety,manyinternationalbusinessexpertsthinkthatwestudentsshouldnotonlymasteraforeignlanguagebutbeexposedtotheculturebehindit.Forexample,theword“Yes”and“No”hasdifferentmeaningindifferentcountry.Soweshouldknowexactlywhatthewordreallymeantoavoidmisunderstandingininternationalbusiness.
Communication
Likecommunication,cultureisprevalenceandhasaprofoundeffectonhumans.Cultureisalsoinvisibleyetpervasive.Aswegoaboutourdailylives,wedonothaveagreatsenseofourculture’sinfluence.Cultureexisteverywherearoundusbetweendifferentnationsevendifferentcountries(Helm,C.2003).Culturehasadirectinfluenceonthephysical,relationalandperceptualenvironment.Yetmostofourthoughts,emotions,andbehaviorsareprofoundlyaffectedbydifferentcultures.Forexample,whenwedobusinesswithpeoplefromdifferentculturesordifferentcountries,weneedtocommunicatewiththem;weneedexchangedifferentviewsaboutthebusinessonthematterofinformation.
Religion
Religionisanimportantaspectofmostsocieties.Itaffectsthewaysinwhichmembersofasocietyrelatetoeachotterandtooutsiders.Itisresearchedthatapproximately85percentoftheworld’speopleclaimsomereligionsaffiliation.Religionshapestheattitudesthatitsadherentshavetowardwork,consumption,individualresponsibility,andplanningforthefuture.SociologistMaxWeber,forexample,hasattributedtheriseofcapitalisminWesternEuropetotheProtestantethic,whichstressesindividualhardwork,frugalityandachievementasmeansofglorifyingGod.Religionaffectsthebusinessenvironmentinmanyotherimportantways.Oftenreligionimposeconstrainsontherolesofindividualsinsociety.Forexample,insomeSaudiArabiacountrieswomenwerenotallowedtocontactwithstrangemalesandwereprovidedwithlimitedjobopportunities.Religionalsoaffectsthetypesofproductsconsumersmaypurchaseaswellasseasonalpatternsofconsumption.InmostChristiancountries,forexample,theChristmasseasonisaquitebusyperiodforbusinessmenandisthesametotheChineseNewYear(Boucekkine,R.,Krawczyk,J.,Vall´ee,T.2010).Inaword,theimpactofreligiononinternationalbusinessvariesfromcountrytocountry.
ValuesandAttitudes
Culturealsoaffectsandreflectsthesecularvaluesandattitudesofthemembersofasociety.Valuesaretheprinciplesandstandardsacceptedbythemembers;attitudesencompasstheactions,feelings,andthoughtsthatfromthosevalues.Culturevaluesoftenstemfromdeep-seatedbeliefsabouttheindividual’spositioninrelationtohisorherdeity,thefamily,andthesocialhierarchythatwediscussedearlier.Cultureattitudestowardsuchfactorsastime,age,educationandstatusreflectthesevaluesinturnshapethebehaviorofandopportunitiesavailabletointernationalbusinessoperatinginagivenculture.Forexample,whenfacingwithproblems,westerncompaniestendtobemore“selfish”fortheywouldcutemployeestomaintaintheoperati
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