Countertrade
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Write a 3-page paper, in APA format, on the role of Government in Export/Import Environment and Countertrade. Answer the following questions with detailed examples:
a. What is Countertrade?
b. What are the different types of Countertrade?
c. What are the advantages and disadvantages of Countertrade?
d. What is a firm's Suitability to Countertrade?
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Solution Summary
The solution defines countertrade. It also discusses the different types of countertrade, its advantages and disadvantages and a firm's suitability to countertrade. References included.
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Countertrade 1
Countertrade is exchanging of services or goods that are paid for, in whole or part, with other goods or services by two countries and sometimes both parties are happy with the goods they receive but other times one country will liquidate the received asset, ultimately receiving cash in the deal. According to Dan West (1996), the following are few examples of countertrade: The first is the well known Pepsi/USSR trade whereby Pepsi-Cola delivers syrup that is paid for with Stolichnaya Vodka and Pepsi has the marketing rights of all Stolichnaya Vodka in the U.S. Just recently, Pepsi has made another innovative step by taking 17 submarines, a cruiser, a frigate, and a destroyer in payment for Pepsi products. In turn, the rag tag fleet of 20 naval vessels will be sold for scrap steel, thereby paying for Pepsi products being moved to the Soviet Union. Another example is Fisher Controls International, a subsidiary of Monsanto. It counterpurchased ball bearings and chair frames to be sold in Western Europe in a countertrade opportunity for control valves sold to Romania. This activity set Fisher apart from its competitors, and enabled it to be awarded the contract. In another case, Monsanto is helping one of its customers in Argentina gain increased exports goods of finished goods and the exported goods contain Monsanto products which resulted in increased sales. When used in a proactive manner, countertrade ...
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