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International business and trade

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Discuss the basic forms of conducting international business (export/import, licensing/franchising, contract manufacturing/outsourcing, joint ventures/alliances, and direct investment), and basic international business strategies (multinternational vs global)

Discuss the trade (economic reason why trade occurs,) the role of the World Trade Organization, regional trade agreements, and the barriers to international trade

Discuss the business ethics (concept, common issues, ethical decision factors), actions to promote ethical behavior, social responsibility (concept/dimensions, consumerism), and the business legal environment (source of law, resolution of disputes)

Plus references.

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Discuss the basic forms of conducting international business (export/import, licensing/franchising, contract manufacturing/outsourcing, joint ventures/alliances, and direct investment), and basic international business strategies (multinternational vs. global)

Export/import business- Import export businesses, also known as international trading, are one of the hottest commercial trends of this decade. American companies trade in over 2.5 trillion dollars a year in merchandise, of which small businesses control over 95 percent. As the owner of an import export enterprise, you can work as a distributor by focusing on exporting and importing goods and services that cannot be obtained on national soil (e.g., Russian caviar and French perfumes) or those that are cheaper when imported from other countries (e.g., Chinese electronics).
Source: Wise Geek. "What is an Import Export Business?" http://www.wisegeek.com/what-is-an-import-export-business.htm. April 8, 2011.

Licensing/franchising- Licensing, in the business world, is a contractual agreement to use a brand name, patent or property that is owned by another business entity. For example, a greeting card company can obtain a license to use images of Hannah Montana or "The Simpsons" characters on greeting cards.

A franchise is a business that operates under an existing brand name. Many popular businesses are franchises, including McDonald's, Subway and H&R Block.
Source:
eHow.com. "Definition of Licensing & Franchising". http://www.ehow.com/about_6068927_definition-licensing-franchising.html#ixzz1J1twLbLG. April 9, 2011.

Contract manufacturing-This refers to an arrangement wherein an international business places orders with local manufacturers for the production of goods it then sells locally or exports to other foreign markets. An example, when Coca-Cola staged a comeback to India in the early 1990s, it chose local bottling plant to bottle its cola. Local manufacturing can be dovetailed to the needs of local distribution arrangements and several cost savings benefits may be availed of.
Source:
Google Books. "International Business". http://books.google.com.ph/books. April 9, 2011.

Outsourcing- Outsourcing, in literal terms, means sourcing from outside. The term is increasingly used to refer to sub-contracting of a set of functions or processes by one firm to another, or to a group of individuals. The latter organization is often in another physical location, or another country altogether.

Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. The most common forms are information technology outsourcing (ITO) and business process outsourcing (BPO).
Sources:
Indian Child. "What is ...

Solution Summary

This solution discuss the basic forms of conducting international business (export/import, licensing/franchising, contract manufacturing/outsourcing, joint ventures/alliances, and direct investment), and basic international business strategies (multinational vs global). It discusses also the economic reason why trade occurs, the role of the World Trade Organization, regional trade agreements, and the barriers to international trade.

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Trade in International Business: Content Cow Dairy

Details: As a family firm, Content Cow Dairy and Mr. Swanson are worried about the firm's homespun and patriotic image. Mr. Swanson has seen the film clips of protestors at the World Bank and other international meetings calling for fair trade, not free trade and wants to avoid controversy. Explain to Mr. Swanson in a personal discussion the meaning of fair trade. Your 1250- to 1500-word report should include:

Discuss the difference between free and fair trade.
How does fair trade differ from free trade? Identify a product or products that are fairly traded.
Where and how are these products marketed?
Are milk and milk products generally considered fair traded goods?

Scenario:

Content Cow Dairy, Inc. began as a small, family-run dairy farm in Wisconsin in the 19th century, established by a Swedish immigrant, John Swanson. Over the years, the firm has acquired more land and now runs a herd of roughly 1,000 milk-producing cows. The firm is now incorporated for reasons of liability although the Swanson family retains control. The dairy has greatly expanded its production of milk and milk products to the point that Content Cow Dairy has sufficient cash flow to weather most fluctuations in dairy prices. The national Got Milk? campaign run by the industry helped keep consumption of milk products up in the U.S. for a number of years despite popular concerns about cholesterol and saturated fats and competition from other beverages. To maintain the company's growth and decrease its reliance on the mature American market, Karl Swanson, the President and CEO of Content Cow Dairy (and the great-grandson of its founder) is seeking new markets overseas for the company's products, particularly shelf-stable milk beverages and cheeses. Egypt is at the top of the list as a prime market and a focus of Content Cow's future plans.

Currently, no one in the firm has any experience with overseas markets or how to export products. Karl has the idea that countries without the natural endowments needed for raising dairy cattle (ample water and grazing land) might be good markets for dairy products. He is also aware that his family firm is competing for foreign markets with other U.S. firms and firms from leading dairy countries such as New Zealand and Denmark. For these reasons and on the advice of his state's department of commerce, Karl has decided to seek the assistance of a trade consulting firm, Alexander and Kravis (A&K).

A&K, Inc. is an international trade consulting service that has been in operation for the past 15 years. The principals in the firm include attorneys specializing in international trade law, economists, former members of the U.S. Foreign Service, former U.S. customs officials, logistics specialists, and customs brokers. The firm advises its clients on both importing to the U.S. and exporting from the U.S. to various foreign countries.

The firm is especially knowledgeable about business conditions in Latin America, the Middle East, and North Africa although it has access to consultants for other geographic areas. The firm is able to assist its clients in identifying potential markets for its products, developing relationships with foreign distributors, navigating U.S. export and foreign import laws, understanding foreign business practices and customs, and developing a long-term strategy for expansion of the client's business overseas. It provides specialists who can prepare the necessary export and import documents and arrange for transportation and shipping of the exports. Translation services are also available. A&K has a number of large corporations as clients but has identified a niche in serving small to midsize, family-owned firms.

As A&K's account manager for Content Cow Dairy, you are tasked with explaining various aspects of the international business environment and the export process to Mr. Swanson. You will be preparing a series of briefings, memos, and reports to help him understand.

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