INTERNATIONAL TRADE & RISK
INHOUDSTAFEL
INTERNATIONAL TRADE & RISK .................................................................................................... 1
Chapter 1: Introduction to international trade ................................................................................... 4
Trade is central to ending global poverty ...................................................................................... 4
Open trade policies enable economic growth for all ..................................................................... 4
Why international trade? ............................................................................................................... 7
World trade .................................................................................................................................... 8
Belgium’s status ........................................................................................................................... 13
Chapter 2: Globalization ................................................................................................................... 15
What is globalization .................................................................................................................... 15
Drivers of globalisation ................................................................................................................ 17
Trade policies & agreements........................................................................................................ 18
The emergence of global institutions........................................................................................... 21
Chapter 3: national differences ........................................................................................................ 22
Political factors ............................................................................................................................. 23
Economical factors ....................................................................................................................... 24
Socio-cultural factors ................................................................................................................... 32
Technological factors ................................................................................................................... 34
Environmental factors .................................................................................................................. 34
Political / legal factors .................................................................................................................. 35
Chapter 4: the strategy of an international business ....................................................................... 36
Strategy and the firm ................................................................................................................... 36
Global expansion .......................................................................................................................... 38
Cost pressure and pressure for local responsiveness .................................................................. 41
1
, Choosing a strategy ...................................................................................................................... 42
Chapter 5: Entry strategy and strategic alliances............................................................................. 44
Entry strategy considerations ...................................................................................................... 44
Basic entry decisions .................................................................................................................... 46
Entry modes ................................................................................................................................. 47
Selecting an entry mode .............................................................................................................. 52
Strategic alliances ......................................................................................................................... 53
Chapter 7: Transport documents ...................................................................................................... 54
Introduction ................................................................................................................................. 54
Bill of lading .................................................................................................................................. 56
Inland waterway Bill of lading ...................................................................................................... 58
CMR – consignment note ............................................................................................................. 59
CIM – consignment note .............................................................................................................. 60
Air way bill ( AWB) ........................................................................................................................ 60
Other documents in international trade ...................................................................................... 61
Chapter 9: International payment techniques .................................................................................. 62
Introduction ................................................................................................................................. 62
Cash in advance ............................................................................................................................ 63
Letter of credit.............................................................................................................................. 64
Documentary collection ............................................................................................................... 66
Open account ............................................................................................................................... 67
Chapter 9: Incoterms ........................................................................................................................ 68
Introduction ................................................................................................................................. 68
What are incoterms...................................................................................................................... 69
Incoterms – group 1 ..................................................................................................................... 71
Incoterms – Group 2 .................................................................................................................... 75
2
, Incorrect usage of incoterms ....................................................................................................... 77
Chapter 10: global production & supply chain management ........................................................... 78
What is SCM, what is logistics ...................................................................................................... 78
SCM as a competitive weapon ..................................................................................................... 80
Optimizing your supply chain ....................................................................................................... 82
OUtsourcing ................................................................................................................................. 86
Chapter 11: risk in international trade ............................................................................................. 87
Risk of non-payment .................................................................................................................... 87
Political risk .................................................................................................................................. 89
Currency exchange rate risk ......................................................................................................... 90
Transport & logistical risk ............................................................................................................. 91
Administrative risk ....................................................................................................................... 93
Economical risk............................................................................................................................. 93
legal risk........................................................................................................................................ 94
Chapter 6: Transport modes and intermediares............................................................................... 95
1 modes of transport.................................................................................................................... 95
Transport Intermediaries ........................................................................................................... 102
3
, CHAPTER 1: INTRODUCTION TO INTERNATIONAL TRADE
International trade is a set of market transactions that aim to exchange capital, goods, and services
between foreign countries across their international borders. These transaction cannot be detached
from the political reality and choices surrounding it.
TRADE IS CENTRAL TO ENDING GLOBAL POVERTY
The role of trade in supporting growth and reducing poverty
WTO = World Trade Organisation
They stand for:
- More employment, reduced underemployment
- Open trade is vital, trade creates wealth
- Financial growth
- Reduces poverty
- Ethical
In the clip nothing is wrong, but it needs to be more nuanced there is also some criticism
Negative = some countries are going back to a more protectionist environment / climate pollution.
OPEN TRADE POLICIES ENABLE ECONOMIC GROWTH FOR ALL
Trade is central to ending global poverty. Countries that are open to international trade tend to
grow faster, innovate, improve productivity and provide higher income and more opportunities to
their people.
Open trade also benefits lower-income households by offering consumers more affordable goods
and services.
Integrating with the world economy through trade and global value chains helps drive economic
growth and reduce poverty—locally and globally.
• Technological innovations make it possible to support bigger volumes and more complex
supply chains in international trade:
- Innovations in transport : containers, commercial jet travel,…
- Innovations in communication:
Communication between people via platforms like Teams
Communication between companies via ERP-linking (Enterprise Resources Planning)
= Everything that happens within your company (ERP) is de overarching thing that helps you
4
INHOUDSTAFEL
INTERNATIONAL TRADE & RISK .................................................................................................... 1
Chapter 1: Introduction to international trade ................................................................................... 4
Trade is central to ending global poverty ...................................................................................... 4
Open trade policies enable economic growth for all ..................................................................... 4
Why international trade? ............................................................................................................... 7
World trade .................................................................................................................................... 8
Belgium’s status ........................................................................................................................... 13
Chapter 2: Globalization ................................................................................................................... 15
What is globalization .................................................................................................................... 15
Drivers of globalisation ................................................................................................................ 17
Trade policies & agreements........................................................................................................ 18
The emergence of global institutions........................................................................................... 21
Chapter 3: national differences ........................................................................................................ 22
Political factors ............................................................................................................................. 23
Economical factors ....................................................................................................................... 24
Socio-cultural factors ................................................................................................................... 32
Technological factors ................................................................................................................... 34
Environmental factors .................................................................................................................. 34
Political / legal factors .................................................................................................................. 35
Chapter 4: the strategy of an international business ....................................................................... 36
Strategy and the firm ................................................................................................................... 36
Global expansion .......................................................................................................................... 38
Cost pressure and pressure for local responsiveness .................................................................. 41
1
, Choosing a strategy ...................................................................................................................... 42
Chapter 5: Entry strategy and strategic alliances............................................................................. 44
Entry strategy considerations ...................................................................................................... 44
Basic entry decisions .................................................................................................................... 46
Entry modes ................................................................................................................................. 47
Selecting an entry mode .............................................................................................................. 52
Strategic alliances ......................................................................................................................... 53
Chapter 7: Transport documents ...................................................................................................... 54
Introduction ................................................................................................................................. 54
Bill of lading .................................................................................................................................. 56
Inland waterway Bill of lading ...................................................................................................... 58
CMR – consignment note ............................................................................................................. 59
CIM – consignment note .............................................................................................................. 60
Air way bill ( AWB) ........................................................................................................................ 60
Other documents in international trade ...................................................................................... 61
Chapter 9: International payment techniques .................................................................................. 62
Introduction ................................................................................................................................. 62
Cash in advance ............................................................................................................................ 63
Letter of credit.............................................................................................................................. 64
Documentary collection ............................................................................................................... 66
Open account ............................................................................................................................... 67
Chapter 9: Incoterms ........................................................................................................................ 68
Introduction ................................................................................................................................. 68
What are incoterms...................................................................................................................... 69
Incoterms – group 1 ..................................................................................................................... 71
Incoterms – Group 2 .................................................................................................................... 75
2
, Incorrect usage of incoterms ....................................................................................................... 77
Chapter 10: global production & supply chain management ........................................................... 78
What is SCM, what is logistics ...................................................................................................... 78
SCM as a competitive weapon ..................................................................................................... 80
Optimizing your supply chain ....................................................................................................... 82
OUtsourcing ................................................................................................................................. 86
Chapter 11: risk in international trade ............................................................................................. 87
Risk of non-payment .................................................................................................................... 87
Political risk .................................................................................................................................. 89
Currency exchange rate risk ......................................................................................................... 90
Transport & logistical risk ............................................................................................................. 91
Administrative risk ....................................................................................................................... 93
Economical risk............................................................................................................................. 93
legal risk........................................................................................................................................ 94
Chapter 6: Transport modes and intermediares............................................................................... 95
1 modes of transport.................................................................................................................... 95
Transport Intermediaries ........................................................................................................... 102
3
, CHAPTER 1: INTRODUCTION TO INTERNATIONAL TRADE
International trade is a set of market transactions that aim to exchange capital, goods, and services
between foreign countries across their international borders. These transaction cannot be detached
from the political reality and choices surrounding it.
TRADE IS CENTRAL TO ENDING GLOBAL POVERTY
The role of trade in supporting growth and reducing poverty
WTO = World Trade Organisation
They stand for:
- More employment, reduced underemployment
- Open trade is vital, trade creates wealth
- Financial growth
- Reduces poverty
- Ethical
In the clip nothing is wrong, but it needs to be more nuanced there is also some criticism
Negative = some countries are going back to a more protectionist environment / climate pollution.
OPEN TRADE POLICIES ENABLE ECONOMIC GROWTH FOR ALL
Trade is central to ending global poverty. Countries that are open to international trade tend to
grow faster, innovate, improve productivity and provide higher income and more opportunities to
their people.
Open trade also benefits lower-income households by offering consumers more affordable goods
and services.
Integrating with the world economy through trade and global value chains helps drive economic
growth and reduce poverty—locally and globally.
• Technological innovations make it possible to support bigger volumes and more complex
supply chains in international trade:
- Innovations in transport : containers, commercial jet travel,…
- Innovations in communication:
Communication between people via platforms like Teams
Communication between companies via ERP-linking (Enterprise Resources Planning)
= Everything that happens within your company (ERP) is de overarching thing that helps you
4
