International trade
1
,Inhoud
LESSEN MR. BOLLEIRE ................................................................................................ 8
0. CHAPTER 1: GLOBAL MARKETING ................................................................................... 8
1. International business ............................................................................................................................. 8
1.1. Views on international business............................................................................................................ 8
2. Globalization vs. localization ................................................................................................................. 10
2.1. Glocalization ........................................................................................................................................ 10
3. The global marketing concept................................................................................................................ 13
3.1. Global marketing: definition ............................................................................................................... 13
1. CHAPTER 2: INTERNATIONALIZATION IN THE FIRM ........................................................ 14
1. Should we internationalize? .................................................................................................................. 14
1.1. Should we internationalize? Depends on 2 crucial dimensions ......................................................... 14
2. Start of internationalization .................................................................................................................. 16
2.1. Motives & triggers ............................................................................................................................... 16
2.2. Barriers & risks .................................................................................................................................... 16
2. CHAPTER 3: EXTERNAL ANALYSIS: MARKET SELECTION ................................................. 18
1. SME’s vs LSE’s ........................................................................................................................................ 18
2. A model for international selection ....................................................................................................... 19
2.1. Determinants for the selection of foreign markets ............................................................................. 19
3. CHAPTER 4: MARKET ANALYSIS: DESTEP........................................................................ 25
1. Demographic influences ........................................................................................................................ 25
2. Economic factors ................................................................................................................................... 25
2.1. Economic development ....................................................................................................................... 25
2.2. Exchange rates .................................................................................................................................... 27
2.3. Trade policy ......................................................................................................................................... 27
2.4. Regional economic integration............................................................................................................ 29
3. Socio-cultural factors ............................................................................................................................. 32
3.1. What is culture .................................................................................................................................... 32
3.2. Classification of culture ....................................................................................................................... 32
3.3. Levels of culture .................................................................................................................................. 35
3.4. Elements of culture to be researched ................................................................................................. 36
4. Technological factors ............................................................................................................................. 38
2
,5. Ecological/ environmental factors ......................................................................................................... 39
6. Political/legal influences ........................................................................................................................ 40
6.1. Type/form of government ................................................................................................................... 40
6.2. Pressure groups ................................................................................................................................... 40
6.3. Boycotts ............................................................................................................................................... 40
6.4. Legislation ........................................................................................................................................... 41
4. CHAPTER 5 – MARKET ATTRACTIVENESS ....................................................................... 42
1. Analysis of the market attractiveness .................................................................................................... 42
2. National competitiveness: MACRO ........................................................................................................ 42
2.1. Porter’s Diamond ................................................................................................................................ 42
3. Industry competitiveness: porter’s Five Forces (MESO) ......................................................................... 44
4. Customer level: competitive triangle (MICRO) ....................................................................................... 45
4.1. Red oceans .......................................................................................................................................... 45
4.2. Blue oceans ......................................................................................................................................... 45
4.3. Bleu ocean strategy/value innovation ................................................................................................. 46
5. CHAPTER 6 – MARKET ENTRY STRATEGIES..................................................................... 47
1. Export modes ........................................................................................................................................ 47
2. Contractual modes ................................................................................................................................ 49
2.1. Contract manufacturing ...................................................................................................................... 49
2.2. Licensing .............................................................................................................................................. 49
2.3. Franchising .......................................................................................................................................... 50
2.4. Strategic alliance/ joint venture .......................................................................................................... 50
3. Investment modes ................................................................................................................................. 51
3.1. Acquisition or Greenfield?................................................................................................................... 52
6. CHAPTER 7 – ADAPTING THE MARKETING MIX ............................................................. 53
1. Place (distribution) ................................................................................................................................ 53
1.1. Determinants of channel decisions ..................................................................................................... 53
1.2. Structure of the channel ..................................................................................................................... 54
1.3. Managing distribution channels .......................................................................................................... 56
2. Product .................................................................................................................................................. 57
2.1. Product definition ............................................................................................................................... 57
2.2. Product strategy .................................................................................................................................. 57
2.3. Product components ........................................................................................................................... 58
2.4. Brand decisions ................................................................................................................................... 59
3. Price ...................................................................................................................................................... 62
3.1. International vs. domestic pricing ....................................................................................................... 62
3.2. Factors influencing pricing .................................................................................................................. 62
3.3. International pricing strategies ........................................................................................................... 64
3
, 3.4. Product line pricing ............................................................................................................................. 65
4. Promotion ............................................................................................................................................. 67
4.1. standardization vs localization ............................................................................................................ 67
4.2. The product-communication mix ........................................................................................................ 68
4.3. Factors influencing communication .................................................................................................... 69
4.4. Communication tools .......................................................................................................................... 70
LESSEN MR. VAN BEVEREN ...................................................................................... 72
7. CHAPTER 1 – INTRODUCTION TO INTERNATIONAL TRADE ............................................. 72
1.1. Remark 1 ............................................................................................................................................. 72
1.2. Remark 2: can we maintain growth in a sustainable way?.................................................................. 73
1.3. Remark 3: since ca. 2016, we see a renewed increase in protectionism ............................................ 74
2. Why international trade? ...................................................................................................................... 75
2.1. Again, why international trade? .......................................................................................................... 76
3. World Trade ........................................................................................................................................... 77
4. Belgium’s status..................................................................................................................................... 79
4.1. Reasons for choosing an open economy ............................................................................................. 79
8. CHAPTER 2 – GLOBALIZATION & TRADE ORGANIZATIONS .............................................. 81
1. What is globalization? ........................................................................................................................... 81
2. Drivers of globalization .......................................................................................................................... 82
2.1. Declining Trade and Investment Barriers ............................................................................................ 82
2.2. Role of technological change .............................................................................................................. 82
3. Trade policies & agreements ................................................................................................................. 83
3.1. The 6 main instruments of trade policy .............................................................................................. 83
4. The emergence of Global Institutions .................................................................................................... 84
9. CHAPTER 3 – STRATEGY OF INTERNATIONAL BUSINESS ................................................. 86
1. Strategy and the firm ............................................................................................................................. 86
2. Cost pressures & pressures for local responsiveness.............................................................................. 87
3. Choosing a strategy ............................................................................................................................... 88
3.1. Global standardization strategy .......................................................................................................... 89
3.2. Localization strategy ............................................................................................................................ 90
3.3. Transnational strategy ......................................................................................................................... 90
3.4. International strategy .......................................................................................................................... 90
3.5. The evolution of strategy .................................................................................................................... 90
10. CHAPTER 4 – MANAGING THE SUPPLY CHAIN ............................................................ 91
4
,1. What is SCM .......................................................................................................................................... 91
2. Main supply chain processes ................................................................................................................. 91
2.1. Plan...................................................................................................................................................... 91
2.2. Source ................................................................................................................................................. 95
2.3. Make.................................................................................................................................................... 97
2.4. Deliver ................................................................................................................................................. 97
2.5. Return.................................................................................................................................................. 98
11. CHAPTER 5 – TRANSPORT MODES, INTERMEDIARIES AND DOCUMENTS IN
INTERNATIONAL TRADE ..................................................................................................... 101
1. Modes of transport ............................................................................................................................. 101
1.1. Modes of transport ........................................................................................................................... 101
1.2. Multimodal/Intermodal tranport ...................................................................................................... 102
1.3. Containers (ISO) ................................................................................................................................ 103
1.4. Other uniform dimensions ................................................................................................................ 106
2. Transport Intermediaries ..................................................................................................................... 108
2.1. Freight forwarder (FF) ....................................................................................................................... 108
2.2. Carrier ............................................................................................................................................... 109
2.3. Customs representative .................................................................................................................... 109
2.4. Freight handler/stevedoring company .............................................................................................. 109
2.5. Nation ................................................................................................................................................ 110
2.6. Shipping agent ................................................................................................................................... 110
2.7. Ship broker ........................................................................................................................................ 111
2.8. Airline agent or Airline representative .............................................................................................. 111
2.9. Air freight agent ................................................................................................................................ 111
12. CHAPTER 5. PART 2 – DOCUMENTS IN INTERNATIONAL TRADE ................................ 112
1. Introduction ........................................................................................................................................ 112
1.1. Involved parties ................................................................................................................................. 112
2. Transport documents .......................................................................................................................... 113
2.1. Bill of Lading (B/L) ............................................................................................................................. 113
2.2. Inland waterway Bill of Lading .......................................................................................................... 116
2.3. CMR-Consignment note .................................................................................................................... 116
2.4. CIM-Consignment note ..................................................................................................................... 117
2.5. Air Way Bill (AWB) ............................................................................................................................. 118
3. Other documents in International Trade .............................................................................................. 121
3.1. Import & export license .................................................................................................................... 121
3.2. Certificate of Origin (COO) ................................................................................................................ 121
3.3. Export Health Certificate ................................................................................................................... 121
3.4. Phytosanitary Certificate (PC) ........................................................................................................... 121
3.5. Inspection Certificate ........................................................................................................................ 122
3.6. Invoice ............................................................................................................................................... 122
13. CHAPTER 6 – RISKS IN INTERNATIONAL TRADE ........................................................ 123
5
,1. Risk of non-payment ........................................................................................................................... 123
1.1. Risk before delivery of the goods ...................................................................................................... 123
1.2. Risk after delivery of the goods ......................................................................................................... 123
2. Political risk ......................................................................................................................................... 124
3. Currency exchange rate risk ................................................................................................................. 125
3.1. How to handle the risk ...................................................................................................................... 125
4. Transport & logistical risk .................................................................................................................... 126
4.1. How to protect against this type of risk ............................................................................................ 126
5. Administrative risk .............................................................................................................................. 126
6. Economical risk .................................................................................................................................... 127
7. Legal risk ............................................................................................................................................. 127
14. CHAPTER 7 – INTERNATIONAL PAYMENT TECHNIQUES ............................................ 129
1. Payment techniques – introduction ..................................................................................................... 129
2. Cash in advance ................................................................................................................................... 129
3. Letter of Credit (L/C) ............................................................................................................................ 130
3.1. Involved parties ................................................................................................................................. 131
3.2. Typical transactions ........................................................................................................................... 131
3.3. Required documents ......................................................................................................................... 132
4. Documentary collection (D/C) ............................................................................................................. 133
4.1. Typical transaction ............................................................................................................................ 133
4.2. Letter of Credit vs Documentary Collection ...................................................................................... 134
5. Open account ...................................................................................................................................... 135
5.1. How does it work?............................................................................................................................. 135
15. CHAPTER 8 – INCOTERMS ....................................................................................... 136
1. Introduction ........................................................................................................................................ 136
1.1. Activities in international transport .................................................................................................. 136
1.2. International trade ............................................................................................................................ 136
2. What are incoterms ............................................................................................................................. 136
2.1. Distribution of costs .......................................................................................................................... 137
2.2. Distribution of risks ........................................................................................................................... 137
2.3. Division of tasks ................................................................................................................................. 137
2.4. What are incoterms NOT ................................................................................................................... 137
3. Incoterms – group 1............................................................................................................................. 138
3.1. EXW – Ex Works (+ named place of delivery) .................................................................................... 138
3.2. FCA – Free Carrier (+ named place of delivery) ................................................................................. 139
3.3. CPT – Carriage Paid To (+ named place of destination) ..................................................................... 139
3.4. CIP – Carriage and Insurance Paid to (+ named place of destination)............................................... 140
6
, 3.5. DAP – Delivery at Place (+ named place of destination) ................................................................... 140
3.6. DPU – delivered at Place Unloaded (+ named place of destination) ................................................ 141
3.7. DDP – delivered duty paid (+ named place of destination) ............................................................... 141
4. Incoterms – group 2............................................................................................................................. 143
5. Exercise ............................................................................................................................................... 144
5.1. Answer question 1............................................................................................................................. 145
5.2. Answer question 2 & 3 ...................................................................................................................... 146
6. Incorrect usage of Incoterms ............................................................................................................... 147
7
1
,Inhoud
LESSEN MR. BOLLEIRE ................................................................................................ 8
0. CHAPTER 1: GLOBAL MARKETING ................................................................................... 8
1. International business ............................................................................................................................. 8
1.1. Views on international business............................................................................................................ 8
2. Globalization vs. localization ................................................................................................................. 10
2.1. Glocalization ........................................................................................................................................ 10
3. The global marketing concept................................................................................................................ 13
3.1. Global marketing: definition ............................................................................................................... 13
1. CHAPTER 2: INTERNATIONALIZATION IN THE FIRM ........................................................ 14
1. Should we internationalize? .................................................................................................................. 14
1.1. Should we internationalize? Depends on 2 crucial dimensions ......................................................... 14
2. Start of internationalization .................................................................................................................. 16
2.1. Motives & triggers ............................................................................................................................... 16
2.2. Barriers & risks .................................................................................................................................... 16
2. CHAPTER 3: EXTERNAL ANALYSIS: MARKET SELECTION ................................................. 18
1. SME’s vs LSE’s ........................................................................................................................................ 18
2. A model for international selection ....................................................................................................... 19
2.1. Determinants for the selection of foreign markets ............................................................................. 19
3. CHAPTER 4: MARKET ANALYSIS: DESTEP........................................................................ 25
1. Demographic influences ........................................................................................................................ 25
2. Economic factors ................................................................................................................................... 25
2.1. Economic development ....................................................................................................................... 25
2.2. Exchange rates .................................................................................................................................... 27
2.3. Trade policy ......................................................................................................................................... 27
2.4. Regional economic integration............................................................................................................ 29
3. Socio-cultural factors ............................................................................................................................. 32
3.1. What is culture .................................................................................................................................... 32
3.2. Classification of culture ....................................................................................................................... 32
3.3. Levels of culture .................................................................................................................................. 35
3.4. Elements of culture to be researched ................................................................................................. 36
4. Technological factors ............................................................................................................................. 38
2
,5. Ecological/ environmental factors ......................................................................................................... 39
6. Political/legal influences ........................................................................................................................ 40
6.1. Type/form of government ................................................................................................................... 40
6.2. Pressure groups ................................................................................................................................... 40
6.3. Boycotts ............................................................................................................................................... 40
6.4. Legislation ........................................................................................................................................... 41
4. CHAPTER 5 – MARKET ATTRACTIVENESS ....................................................................... 42
1. Analysis of the market attractiveness .................................................................................................... 42
2. National competitiveness: MACRO ........................................................................................................ 42
2.1. Porter’s Diamond ................................................................................................................................ 42
3. Industry competitiveness: porter’s Five Forces (MESO) ......................................................................... 44
4. Customer level: competitive triangle (MICRO) ....................................................................................... 45
4.1. Red oceans .......................................................................................................................................... 45
4.2. Blue oceans ......................................................................................................................................... 45
4.3. Bleu ocean strategy/value innovation ................................................................................................. 46
5. CHAPTER 6 – MARKET ENTRY STRATEGIES..................................................................... 47
1. Export modes ........................................................................................................................................ 47
2. Contractual modes ................................................................................................................................ 49
2.1. Contract manufacturing ...................................................................................................................... 49
2.2. Licensing .............................................................................................................................................. 49
2.3. Franchising .......................................................................................................................................... 50
2.4. Strategic alliance/ joint venture .......................................................................................................... 50
3. Investment modes ................................................................................................................................. 51
3.1. Acquisition or Greenfield?................................................................................................................... 52
6. CHAPTER 7 – ADAPTING THE MARKETING MIX ............................................................. 53
1. Place (distribution) ................................................................................................................................ 53
1.1. Determinants of channel decisions ..................................................................................................... 53
1.2. Structure of the channel ..................................................................................................................... 54
1.3. Managing distribution channels .......................................................................................................... 56
2. Product .................................................................................................................................................. 57
2.1. Product definition ............................................................................................................................... 57
2.2. Product strategy .................................................................................................................................. 57
2.3. Product components ........................................................................................................................... 58
2.4. Brand decisions ................................................................................................................................... 59
3. Price ...................................................................................................................................................... 62
3.1. International vs. domestic pricing ....................................................................................................... 62
3.2. Factors influencing pricing .................................................................................................................. 62
3.3. International pricing strategies ........................................................................................................... 64
3
, 3.4. Product line pricing ............................................................................................................................. 65
4. Promotion ............................................................................................................................................. 67
4.1. standardization vs localization ............................................................................................................ 67
4.2. The product-communication mix ........................................................................................................ 68
4.3. Factors influencing communication .................................................................................................... 69
4.4. Communication tools .......................................................................................................................... 70
LESSEN MR. VAN BEVEREN ...................................................................................... 72
7. CHAPTER 1 – INTRODUCTION TO INTERNATIONAL TRADE ............................................. 72
1.1. Remark 1 ............................................................................................................................................. 72
1.2. Remark 2: can we maintain growth in a sustainable way?.................................................................. 73
1.3. Remark 3: since ca. 2016, we see a renewed increase in protectionism ............................................ 74
2. Why international trade? ...................................................................................................................... 75
2.1. Again, why international trade? .......................................................................................................... 76
3. World Trade ........................................................................................................................................... 77
4. Belgium’s status..................................................................................................................................... 79
4.1. Reasons for choosing an open economy ............................................................................................. 79
8. CHAPTER 2 – GLOBALIZATION & TRADE ORGANIZATIONS .............................................. 81
1. What is globalization? ........................................................................................................................... 81
2. Drivers of globalization .......................................................................................................................... 82
2.1. Declining Trade and Investment Barriers ............................................................................................ 82
2.2. Role of technological change .............................................................................................................. 82
3. Trade policies & agreements ................................................................................................................. 83
3.1. The 6 main instruments of trade policy .............................................................................................. 83
4. The emergence of Global Institutions .................................................................................................... 84
9. CHAPTER 3 – STRATEGY OF INTERNATIONAL BUSINESS ................................................. 86
1. Strategy and the firm ............................................................................................................................. 86
2. Cost pressures & pressures for local responsiveness.............................................................................. 87
3. Choosing a strategy ............................................................................................................................... 88
3.1. Global standardization strategy .......................................................................................................... 89
3.2. Localization strategy ............................................................................................................................ 90
3.3. Transnational strategy ......................................................................................................................... 90
3.4. International strategy .......................................................................................................................... 90
3.5. The evolution of strategy .................................................................................................................... 90
10. CHAPTER 4 – MANAGING THE SUPPLY CHAIN ............................................................ 91
4
,1. What is SCM .......................................................................................................................................... 91
2. Main supply chain processes ................................................................................................................. 91
2.1. Plan...................................................................................................................................................... 91
2.2. Source ................................................................................................................................................. 95
2.3. Make.................................................................................................................................................... 97
2.4. Deliver ................................................................................................................................................. 97
2.5. Return.................................................................................................................................................. 98
11. CHAPTER 5 – TRANSPORT MODES, INTERMEDIARIES AND DOCUMENTS IN
INTERNATIONAL TRADE ..................................................................................................... 101
1. Modes of transport ............................................................................................................................. 101
1.1. Modes of transport ........................................................................................................................... 101
1.2. Multimodal/Intermodal tranport ...................................................................................................... 102
1.3. Containers (ISO) ................................................................................................................................ 103
1.4. Other uniform dimensions ................................................................................................................ 106
2. Transport Intermediaries ..................................................................................................................... 108
2.1. Freight forwarder (FF) ....................................................................................................................... 108
2.2. Carrier ............................................................................................................................................... 109
2.3. Customs representative .................................................................................................................... 109
2.4. Freight handler/stevedoring company .............................................................................................. 109
2.5. Nation ................................................................................................................................................ 110
2.6. Shipping agent ................................................................................................................................... 110
2.7. Ship broker ........................................................................................................................................ 111
2.8. Airline agent or Airline representative .............................................................................................. 111
2.9. Air freight agent ................................................................................................................................ 111
12. CHAPTER 5. PART 2 – DOCUMENTS IN INTERNATIONAL TRADE ................................ 112
1. Introduction ........................................................................................................................................ 112
1.1. Involved parties ................................................................................................................................. 112
2. Transport documents .......................................................................................................................... 113
2.1. Bill of Lading (B/L) ............................................................................................................................. 113
2.2. Inland waterway Bill of Lading .......................................................................................................... 116
2.3. CMR-Consignment note .................................................................................................................... 116
2.4. CIM-Consignment note ..................................................................................................................... 117
2.5. Air Way Bill (AWB) ............................................................................................................................. 118
3. Other documents in International Trade .............................................................................................. 121
3.1. Import & export license .................................................................................................................... 121
3.2. Certificate of Origin (COO) ................................................................................................................ 121
3.3. Export Health Certificate ................................................................................................................... 121
3.4. Phytosanitary Certificate (PC) ........................................................................................................... 121
3.5. Inspection Certificate ........................................................................................................................ 122
3.6. Invoice ............................................................................................................................................... 122
13. CHAPTER 6 – RISKS IN INTERNATIONAL TRADE ........................................................ 123
5
,1. Risk of non-payment ........................................................................................................................... 123
1.1. Risk before delivery of the goods ...................................................................................................... 123
1.2. Risk after delivery of the goods ......................................................................................................... 123
2. Political risk ......................................................................................................................................... 124
3. Currency exchange rate risk ................................................................................................................. 125
3.1. How to handle the risk ...................................................................................................................... 125
4. Transport & logistical risk .................................................................................................................... 126
4.1. How to protect against this type of risk ............................................................................................ 126
5. Administrative risk .............................................................................................................................. 126
6. Economical risk .................................................................................................................................... 127
7. Legal risk ............................................................................................................................................. 127
14. CHAPTER 7 – INTERNATIONAL PAYMENT TECHNIQUES ............................................ 129
1. Payment techniques – introduction ..................................................................................................... 129
2. Cash in advance ................................................................................................................................... 129
3. Letter of Credit (L/C) ............................................................................................................................ 130
3.1. Involved parties ................................................................................................................................. 131
3.2. Typical transactions ........................................................................................................................... 131
3.3. Required documents ......................................................................................................................... 132
4. Documentary collection (D/C) ............................................................................................................. 133
4.1. Typical transaction ............................................................................................................................ 133
4.2. Letter of Credit vs Documentary Collection ...................................................................................... 134
5. Open account ...................................................................................................................................... 135
5.1. How does it work?............................................................................................................................. 135
15. CHAPTER 8 – INCOTERMS ....................................................................................... 136
1. Introduction ........................................................................................................................................ 136
1.1. Activities in international transport .................................................................................................. 136
1.2. International trade ............................................................................................................................ 136
2. What are incoterms ............................................................................................................................. 136
2.1. Distribution of costs .......................................................................................................................... 137
2.2. Distribution of risks ........................................................................................................................... 137
2.3. Division of tasks ................................................................................................................................. 137
2.4. What are incoterms NOT ................................................................................................................... 137
3. Incoterms – group 1............................................................................................................................. 138
3.1. EXW – Ex Works (+ named place of delivery) .................................................................................... 138
3.2. FCA – Free Carrier (+ named place of delivery) ................................................................................. 139
3.3. CPT – Carriage Paid To (+ named place of destination) ..................................................................... 139
3.4. CIP – Carriage and Insurance Paid to (+ named place of destination)............................................... 140
6
, 3.5. DAP – Delivery at Place (+ named place of destination) ................................................................... 140
3.6. DPU – delivered at Place Unloaded (+ named place of destination) ................................................ 141
3.7. DDP – delivered duty paid (+ named place of destination) ............................................................... 141
4. Incoterms – group 2............................................................................................................................. 143
5. Exercise ............................................................................................................................................... 144
5.1. Answer question 1............................................................................................................................. 145
5.2. Answer question 2 & 3 ...................................................................................................................... 146
6. Incorrect usage of Incoterms ............................................................................................................... 147
7
