International trade and logistics – book
Chapter 1 – logistics and the impact on the world’s economy
1 international entrepreneurship
1.1 the 5 W questions
The 5 W questions:
1. What is international entrepreneurship?
2. Who are these international entrepreneurs?
3. Why take the international route?
4. When would the option of taking your business international present itself?
5. Where do companies settle in this international environment?
International entrepreneurship = economic activities of a company, reaching across
borders with the ultimate goal of adding value to that company.
International entrepreneur = an individual who seeks out new business opportunities,
innovations or partnerships across national borders.
A company may consider going global when:
The domestic market becomes saturated;
Foreign demand arises/increases;
The competitive pressure increases;
Producing, sourcing or hiring abroad offers (financial) benefits;
Trade agreements/policies make expansion easier;
Etc
Expanding internationally requires significant financial investments.
Success depends less on perfect timing and more on thorough research and careful
preparation.
1.2 entrepreneurs and their companies
Annual turnover = the total revenue or sales a company generates in an financial year from
its business activities, total income before deducting expenses.
According to the EU
- Small business
o < 50 employees
o Annual turnover =< 10 million
- Medium business
o < 250 employees
o annual turnover =< 50 million
Born global firm = immediately focuses on the international market. They leverage
technology, niche markets and global networks to compete internationally from the start.
Multinational Company (MNC) = typically employ thousands of workers, generate
hundreds of millions/billions in revenue. They operate across multiple countries, often with
subsidiaries, regional headquarters or production facilities in different markets.
SMEs are often more agile and can adapt quickly to specialised markets, which allows them
to maximally benefit from the constantly changing internationally environment. However, due
1
,to their limited financial resources they cannot make big foreign direct investments like MNCs
can, the production costs of an SME will be higher, which makes competing on an
international level difficult.
Due to the large size and complexity of the MNCs, the process of decision-making is slower,
and implementing changes can be difficult. These companies often struggle to adapt their
way of working to the differing regulations when trying to enter a new market.
Economies of scale = the more a company produces, the lower the cost per unit.
Other key players within international trade:
1. initiating company
a. business that creates and offers a product/service to the market;
b. responsible for product development, branding and market positioning.
2. Mediating company
a. Offer internation distribution, bridging the gap between producers and global
markets;
b. Mostly active in industries such as marketing and logistical services.
3. Supporting company
a. Helps initiating and mediating companies trade internationally by providing
important services like financial infrastructure, legal advice, digital tools or
consulting expertise;
b. They do not handle the trade or shipment of goods.
4. Public sector
a. Sets rules and regulations, builds infrastructure that helps businesses operate
across borders.
1.3 products vs. services
Products = physical, tangible items that are produced and sold to consumers or businesses.
Can be stored, packaged, transported and so forth.
Services = intangible activities/benefits provided to customers, often requiring direct
interaction with the customer. They create value by using expertise, specialised skills or
labour to meet customer needs and solve problems.
There is a worldwide shift towards a service-driven economy
1.4 foreign direct investments (FDIS)
Foreign direct investments refer to the financial investments made with the main goal of
gaining control over a business or assets in another country.
Government decisions play a key role in attracting FDIs by companies.
Downsides of FDIs:
Give foreign investors more control within companies;
Can make a country more economically dependent on foreign investors, impacting its
political and economic autonomy.
As a country, it is crucial to make smart choices by attracting FDIs while ensuring that the
local economy is not negatively impacted. For companies, the goal is to find the best way to
invest their funds.
2
,1.5 international perspective (macro & micro)
Micro perspective focuses on impulses from the individual company.
- Internal stimuli = influence coming from inside the company
- External stimuli = influence coming from outside the company
Internal stimuli for international trade:
Growth potential;
Profit potential;
Creative new ideas;
Scale advantages;
Risk diversification;
Access to raw materials.
External stimuli for international trade:
These are external factors that influence a specific company. While they are relevant to a
company, they may also apply to other similar companies.
Following your customers;
Following your competitors;
General business climate;
Technology;
International financial flows.
Macro perspective focuses on general developments that transcend the micro
perspective. These stimuli have a much larger or even worldwide economical influence, driver
in the macro perspective apply to an entire industry/economy.
Most important changes that have stimulated international trade throughout history:
International trade framework
o WTO, IMF, World Bank, GATT
o Led to a shift towards more open borders and fewer tariffs
Market liberalisation
o No country is still economically independent although there are big differences in
the extend to which countries are willing to trade with the rest of the world
o Trumps tariffs: made importing more expensive and led the impacted countries
to respond with their own increase in tariffs
As a result, companies are changing suppliers and moving production to
avoid higher costs
This shows how government trade policies can quickly reshape global
business
Technological process
International financial framework
o SWIFT (Society for Worldwide Interbank Financial Telecommunication)
o World bank plays a crucial role by offering long-term loans and financial
assistance to developing countries
o Foreign Exchange Market (Forex) allows countries to exchange their local
currency for foreign currency they need to trade
3
, o Encompasses all the financial systems, policies and regulations that facilitate
cross-border transactions, providing the financial flexibility necessary for global
business operations.
Shift in management thinking
o EPRG model = framework used to understand how companies approach
international markets and manage their international operations based on their
mindset and attitude towards foreign markets
Ethnocentric approach = believing that their home-country strategies
and ways of doing business should work everywhere.
Polycentric approach = companies adjust their operations to fit local
markets, understanding that each country has their own culture, rules and
needs.
Regiocentric approach = focusing on entire regions rather than just
individual countries, creating a more organised and cost-efficient way to
operate in a group of countries.
Geocentric approach = companies see the world as one big market and
try to create global strategies that work everywhere, but still make small
adjustments when necessary.
1.6 product lifecycle management
Product lifecycle management (PLM) consists of 4 phases. Depending on the stage we
are in, a different approach is required when wanting to expand internationally.
1. Introduction
a. Product/service is new and requires significant investing
b. Need to advertise, do market testing, determine strategy, etc
2. Growth
a. Product/service slowly find traction and the SME will use this as a way to start
expanding internationally
b. Rapid adaptation to market feedback and increasing competition will be essential
3. Maturity
a. Product/service is well-established but the competition is fierce and growth starts
to level off
b. Main focus shifts from expanding the business to optimising the business
c. Costs need to be managed carefully, and smart choices around outsourcing,
automation and innovation will define long-term success.
4. Decline
a. Demands starts to drop (market might be getting saturated, your customers
might prefer another product, trends are changing, etc)
b. Some products may still have some life left in them in other regions, while others
might need a refresh or a complete redo
1.7 introduction of the essential supplier-customer relationship
In international trade, businesses are part of a larger network where goods, information and
money continuously move between parties. This network, known as the supply chain,
connects suppliers on one end and customers on the other, with many steps in between.
Information flow: manufacturers and suppliers sharing information with the rest of the
supply chain.
4
Chapter 1 – logistics and the impact on the world’s economy
1 international entrepreneurship
1.1 the 5 W questions
The 5 W questions:
1. What is international entrepreneurship?
2. Who are these international entrepreneurs?
3. Why take the international route?
4. When would the option of taking your business international present itself?
5. Where do companies settle in this international environment?
International entrepreneurship = economic activities of a company, reaching across
borders with the ultimate goal of adding value to that company.
International entrepreneur = an individual who seeks out new business opportunities,
innovations or partnerships across national borders.
A company may consider going global when:
The domestic market becomes saturated;
Foreign demand arises/increases;
The competitive pressure increases;
Producing, sourcing or hiring abroad offers (financial) benefits;
Trade agreements/policies make expansion easier;
Etc
Expanding internationally requires significant financial investments.
Success depends less on perfect timing and more on thorough research and careful
preparation.
1.2 entrepreneurs and their companies
Annual turnover = the total revenue or sales a company generates in an financial year from
its business activities, total income before deducting expenses.
According to the EU
- Small business
o < 50 employees
o Annual turnover =< 10 million
- Medium business
o < 250 employees
o annual turnover =< 50 million
Born global firm = immediately focuses on the international market. They leverage
technology, niche markets and global networks to compete internationally from the start.
Multinational Company (MNC) = typically employ thousands of workers, generate
hundreds of millions/billions in revenue. They operate across multiple countries, often with
subsidiaries, regional headquarters or production facilities in different markets.
SMEs are often more agile and can adapt quickly to specialised markets, which allows them
to maximally benefit from the constantly changing internationally environment. However, due
1
,to their limited financial resources they cannot make big foreign direct investments like MNCs
can, the production costs of an SME will be higher, which makes competing on an
international level difficult.
Due to the large size and complexity of the MNCs, the process of decision-making is slower,
and implementing changes can be difficult. These companies often struggle to adapt their
way of working to the differing regulations when trying to enter a new market.
Economies of scale = the more a company produces, the lower the cost per unit.
Other key players within international trade:
1. initiating company
a. business that creates and offers a product/service to the market;
b. responsible for product development, branding and market positioning.
2. Mediating company
a. Offer internation distribution, bridging the gap between producers and global
markets;
b. Mostly active in industries such as marketing and logistical services.
3. Supporting company
a. Helps initiating and mediating companies trade internationally by providing
important services like financial infrastructure, legal advice, digital tools or
consulting expertise;
b. They do not handle the trade or shipment of goods.
4. Public sector
a. Sets rules and regulations, builds infrastructure that helps businesses operate
across borders.
1.3 products vs. services
Products = physical, tangible items that are produced and sold to consumers or businesses.
Can be stored, packaged, transported and so forth.
Services = intangible activities/benefits provided to customers, often requiring direct
interaction with the customer. They create value by using expertise, specialised skills or
labour to meet customer needs and solve problems.
There is a worldwide shift towards a service-driven economy
1.4 foreign direct investments (FDIS)
Foreign direct investments refer to the financial investments made with the main goal of
gaining control over a business or assets in another country.
Government decisions play a key role in attracting FDIs by companies.
Downsides of FDIs:
Give foreign investors more control within companies;
Can make a country more economically dependent on foreign investors, impacting its
political and economic autonomy.
As a country, it is crucial to make smart choices by attracting FDIs while ensuring that the
local economy is not negatively impacted. For companies, the goal is to find the best way to
invest their funds.
2
,1.5 international perspective (macro & micro)
Micro perspective focuses on impulses from the individual company.
- Internal stimuli = influence coming from inside the company
- External stimuli = influence coming from outside the company
Internal stimuli for international trade:
Growth potential;
Profit potential;
Creative new ideas;
Scale advantages;
Risk diversification;
Access to raw materials.
External stimuli for international trade:
These are external factors that influence a specific company. While they are relevant to a
company, they may also apply to other similar companies.
Following your customers;
Following your competitors;
General business climate;
Technology;
International financial flows.
Macro perspective focuses on general developments that transcend the micro
perspective. These stimuli have a much larger or even worldwide economical influence, driver
in the macro perspective apply to an entire industry/economy.
Most important changes that have stimulated international trade throughout history:
International trade framework
o WTO, IMF, World Bank, GATT
o Led to a shift towards more open borders and fewer tariffs
Market liberalisation
o No country is still economically independent although there are big differences in
the extend to which countries are willing to trade with the rest of the world
o Trumps tariffs: made importing more expensive and led the impacted countries
to respond with their own increase in tariffs
As a result, companies are changing suppliers and moving production to
avoid higher costs
This shows how government trade policies can quickly reshape global
business
Technological process
International financial framework
o SWIFT (Society for Worldwide Interbank Financial Telecommunication)
o World bank plays a crucial role by offering long-term loans and financial
assistance to developing countries
o Foreign Exchange Market (Forex) allows countries to exchange their local
currency for foreign currency they need to trade
3
, o Encompasses all the financial systems, policies and regulations that facilitate
cross-border transactions, providing the financial flexibility necessary for global
business operations.
Shift in management thinking
o EPRG model = framework used to understand how companies approach
international markets and manage their international operations based on their
mindset and attitude towards foreign markets
Ethnocentric approach = believing that their home-country strategies
and ways of doing business should work everywhere.
Polycentric approach = companies adjust their operations to fit local
markets, understanding that each country has their own culture, rules and
needs.
Regiocentric approach = focusing on entire regions rather than just
individual countries, creating a more organised and cost-efficient way to
operate in a group of countries.
Geocentric approach = companies see the world as one big market and
try to create global strategies that work everywhere, but still make small
adjustments when necessary.
1.6 product lifecycle management
Product lifecycle management (PLM) consists of 4 phases. Depending on the stage we
are in, a different approach is required when wanting to expand internationally.
1. Introduction
a. Product/service is new and requires significant investing
b. Need to advertise, do market testing, determine strategy, etc
2. Growth
a. Product/service slowly find traction and the SME will use this as a way to start
expanding internationally
b. Rapid adaptation to market feedback and increasing competition will be essential
3. Maturity
a. Product/service is well-established but the competition is fierce and growth starts
to level off
b. Main focus shifts from expanding the business to optimising the business
c. Costs need to be managed carefully, and smart choices around outsourcing,
automation and innovation will define long-term success.
4. Decline
a. Demands starts to drop (market might be getting saturated, your customers
might prefer another product, trends are changing, etc)
b. Some products may still have some life left in them in other regions, while others
might need a refresh or a complete redo
1.7 introduction of the essential supplier-customer relationship
In international trade, businesses are part of a larger network where goods, information and
money continuously move between parties. This network, known as the supply chain,
connects suppliers on one end and customers on the other, with many steps in between.
Information flow: manufacturers and suppliers sharing information with the rest of the
supply chain.
4
