NAME: KIRUBHA HARNI.

P
ROLL NUMBER :17BC145
COURSE AND YEAR: B.Com Honors 3RD YEAR
SECTION: F
QUESTION: 36. Specify the techniques countries use to
promote international trade.
There are four basic strategies of international business that countries follow:
Export/International strategy
Multidomestic strategy
Transnational strategy
Global Strategy

Export/International Strategy:
• International strategy means focusing on exporting products and services to foreign
markets, or importing goods and resources from other countries for domestic use.
• So, companies that employ this strategy are often headquartered exclusively in their
country of origin, allowing them to invest in stock and facilities overseas.
• Businesses that follow these strategies often include small local manufacturers that
export key resources to larger companies in neighboring countries.
• Companies striving to expand internationally may try a combination of strategies to see
which works the best for them in terms of logistics and profit for example a company
may use the international strategy – exporting products overseas to test the international
market and may check how successfully its products sell.
• Subsequently, the company may have the need to adjust its strategy and create a
multidomestic platform through which it can manufacture and sell its goods more
efficiently.
Multidomestic Strategy:
• In Multidomestic business strategy the companies must invest in establishing its presence
in foreign market and tailor its products and services according to the needs of a local
market rather than taking a more universal or global approach.
• Multidomestic business often keep thier company headquarters in their country of origin,
but they usually establish overseas headquarters, called subsidiaries, which are better
equipped to offer foreign consumers region specific versions of that products and
services.
• These companies also frequently lease buildings abroad to serve as sales offices,
manufacturing facilities or storage for housing service operations.
• Multidomestic strategies are largely adopted by food and beverage companies. For
example, the Kraft Heinz Company makes a specialized version of its ketchup for
customers in India which has different blend of spices that helps to match the nation’s
culinary preference.
 • Due to the specialization of the products the expenses may increase and can incur certain
level of financial risk when launching unproven products in the new market. So, the
companies usually utilize this expansion strategy in a limited number of countries.

Global Strategy:
• In an effort to expand their customer base and sell products in more foreign markets,
companies following a global strategy leverage economy of scale as much as possible to
boost their reach and revenue.
• Global companies attempt to homogenize their products and services in order to
minimize costs and reach as broad an international audience as possible.
• These companies tend to maintain a central office or headquarters, usually in their
country of origin, while also establishing dozens of operations in countries all over the
world.
• Even when keeping essential aspects of their goods and services intact, companies
adhering to the global strategy typically have to make some practical small-scale
adjustments in order to break into international markets.
• For example, software companies need to adjust the language used in their products,
while fast-food companies may add, remove or change the name of certain menu items in
order to better suit local markets while keeping their core items and global message
intact.
Transnational Strategy:
• The transnational business strategy is one of the most intricate methods that businesses
can employ when expanding internationally, and can be seen as a combination of the
global and multi-domestic strategies.
• While this strategy keeps a business’s headquarters and core technologies in its country
of origin, it also allows a company to establish full-scale operations in foreign markets.
• The decision-making, production, and sales responsibilities are evenly distributed to
individual facilities in these different markets, allowing companies to have separate
marketing, research and development departments aimed at responding to the needs of
the local consumers.
• A company that employs this strategy has the challenge of identifying the best
management tactics for achieving positive economies of scale and increased efficiency.
• Having many inter-organizational entities collaborating in dozens of foreign markets
requires a significant start-up investment.
• Costs are driven by foreign legal and regulatory concerns, hiring new employees and
buying or renting offices and production spaces.
• Therefore, this strategy is more complex than others because pressures to reduce costs are
combined with establishing value-added activities to optimize adjustments that are
necessary to gain leverage and be competitive in each local market.
Multilateral Strategy:
• Multilateralism, in the form of membership in international institutions, serves to bind
powerful nations, discourage unilateralism, and gives small powers a voice and influence
that they could not otherwise exercise.
• For a small power to influence a great power, the Lilliputian strategy of small countries
banding together to collectively bind a larger one can be effective. Similarly,
multilateralism may allow one great power to influence another great power.
• For a great power to seek control through bilateral ties could be costly; it may require
bargaining and compromise with the other great power.
 THE UNITED KINGDOM :

Brexit:
Brexit stands for British Exit. It refers to United Kingdom leaving the European Union. The
United Kingdom formally left the EU on 31st January 2020. The key change is that under Mr
Johnson's deal, a customs border will effectively be created between Northern Ireland and Great
Britain. Some goods entering Northern Ireland from Great Britain will be subject to checks and
will have to pay EU import taxes (known as tariffs).
The rest of the withdrawal agreement is
• The rights of EU citizens in the UK and British citizens in the EU (which will remain the
same during the transition)
• How much money the UK is to pay the EU (estimated to be about £30bn).

The Benefits of Brexit on The United Kingdom:

Foreign Affairs:
EU membership limits Britain’s international influence, ruling out an independent seat at the
World Trade Organization (WTO).
Sovereignty:
Britain would have more control of its laws and regulations, without risk of having
counterintuitive policies forcefully imposed.
Security:
Britain’s domestic security could benefit from full border controls, which it would gain outside
the political union.
Money:
Britain contributes billions of pounds in membership fees to the EU every year.

Trade:

Membership of the EU keeps Britain from fully capitalizing on trade with other major economies
such as Japan, India and the US.

Consumer Goods:

The average person in Britain loses hundreds of pounds each year due to EU VAT contributions
and agricultural subsidies policies.
Immigration:
They could be more selective on the immigration process and they get to have a separate visa
process which allow them to collect separate money from the people who apply for visa

Multidomestic Strategy of UK:

The United Kingdom uses the Multidomestic strategy to plant Subsidiary offices of UK based
companies in different countries in the world. The UK based companies like Vodafone, Marks
and Spencer's etc. have their subsidiary offices in other countries and they focus in tailoring its
products and services according to the needs of a local market rather than taking a more
universal or global approach.
Global Strategy:
The UK based companies like Jaguar, Jcb ltd, and Accenture plant their subsidiary offices in
other countries to promote international trade. These companies maintain the same basic
business approach in each market.
Exports and Imports of UK:
The top exports of the United Kingdom are Cars like Bentley, Rolls Royce, Jaguar etc.($45B),
Packaged Medicaments ($18.4B), Crude Petroleum ($17.8B), Gold ($16.1B) and Gas Turbines
($14.6B). Its top imports are Cars ($42B), Gold ($34.3B), Crude Petroleum($19.1B), Refined
Petroleum ($18.3B) and Packaged Medicaments ($17.6B). Companies that use this strategy
allows them to invest in stock and facilities overseas.
 THE UNITED STATES OF AMERICA :

The International/Export Strategy:

The top exports and imports of US are:
1. Machinery (including computers and hardware) – $386.4 billion
2. Electrical machinery – $367.1 billion
3. Vehicles and automobiles – $306.7 billion
4. Minerals, fuels, and oil – $241.4 billion
5. Pharmaceuticals – $116.3 billion
6. Medical equipment and supplies – $93.4 billion
7. Furniture, Lighting, and Signs – $72.1 billion
8. Plastics – $61.9 billion
9. Gems and precious metals – $60.8 billion
10. Organic chemicals – $54.6 billion
The total value of U.S. Imports for 2018 is up by 7.5% since 2017. America’s population is 330
million people, and the total dollar value of every U.S. import translates to about $9,457 for
every resident in the country.
These are the biggest U.S. trade partners
• China – $636 billion.
• Canada – $582.4 billion.
• Mexico – $557 billion.
• Japan – $204.2 billion.
• Germany – $171.2 billion.
• South Korea – $119.4 billion.
• United Kingdom – $109.4 billion.
• France – $82.5 billion.
The Multidomestic strategy used by the US:
• The US is the home for several MNC’s which is very famous all over the world one such
example is McDonald's.
• McDonald's is one of the world’s best-known brands. The company has approximately
32000 restaurants located in more than 117 countries.
• The company serves more than 58 million customers per day.
• The company uses multidomestic strategies, they alter the menu according to the needs of
the people and according to the culture that is being followed in that particular country
• For example, they introduced 100 percent beef free Menu in India because Majority of
India’s population is filled with Hindu’s and they worship cows as gods so they consider
eating beef as a sin
• China is a big market for McDonald’s, considering that it has 2,700 outlets in China. In
typical fashion, it adapted to local tastes and preferences. Instead of meat from chicken
breasts, McDonald’s uses meat from chicken thighs in its chicken burgers because it’s the
locals’ preference. Grilled Chicken Burger is a meal offered during Chinese New Year,
which is served with curly fries and Chinese horoscope with the 12 animal signs.
• The US owns several other MNC’s which use multinational companies like the PepsiCo,
Starbucks, KFC etc.
 Global Strategy used by the US:
• The US is also the Home of several MNC’s like the Google, HP, eBay, Microsoft, Apple
Inc. etc.
• Although the headquarters of these companies are in the US, they are also operated in
several other countries to improve its business worldwide.

The Multilateral Strategy by the US:

THE NAFTA:
• The North American Free Trade Agreement, or NAFTA, is a trade pact signed by the
U.S., Canada and Mexico, which made it easier for companies in those three countries to
move goods and supplies across North America’s borders.
• NAFTA is the largest free trade agreement in the world of 454 million people.
• It was signed by President Clinton and implemented in 1994.
• NAFTA was created for the United States, Canada, and Mexico in answer to trade
competition posed by China and the EU.
• NAFTA's trade area has a higher GDP than the $18.8 trillion produced by the 28
countries in the European Union.
• Between 1993 and 2019, trade between the three members quadrupled from $290 billion
to $1.23 trillion. That boosted economic growth, profits, and jobs for all three countries.
It also lowered prices for consumers.
• NAFTA boosted U.S. economic growth by as much as 0.5% a year.
• The sectors that benefited the most were agriculture, automobiles, and services.
• In April 2017, US President Donald Trump threatened to pull out of the trade agreement.
• Trump blames NAFTA for wiping out US manufacturing jobs because it allowed
companies to move factories to Mexico where labor is cheaper.
• Canada and Mexico insisted to renegotiate it instead, and Trump agreed.
• US President Donald Trump, on the campaign trail, labelled NAFTA "the worst trade
deal" ever signed by the US.
• On Jan. 29, 2020, President Donald Trump signed the United States-Mexico-Canada
Agreement or the USMCA
• The White House estimates it will create 600,000 jobs and add $235 billion to the
economy.

•
 Hong Kong

The Hong Kong is a small power country with a minimum population of 74.5 lakhs. Hong
Kong follows a free trade policy and hence maintains basically no barriers on trade. There is
no customs tariff on goods imported into or exported from Hong Kong. Import and export
licensing are kept to a minimum. Yet the country managed to hold up the trade volume of
400 percent which is very impressive and the highest among small power countries. Hong
Kong is a major exporter and importer of goods and services in Asia. It exported US$175.8
billion in goods and US$34 billion in services in 1998. In the same year the value of its
imports was US$183.7 billion for goods and US$11.7 billion for services.
Exports and imports of Hongkong:
With little agricultural land and few natural resources, Hong Kong chose to specialize its
manufacturing and exports in technology and relies heavily on imports for most goods. Hong
Kong’s top exports are computers, telephones, office machine parts, integrated circuits, and
other electronic equipment. Its top imports are crude petroleum, gold, cars, and iron ore.
Hong Kong’s top trade partner is China, but several other countries across Asia are also
prominent in Hong Kong’s trade strategy, such as Japan, South Korea, Singapore and
Vietnam.
Global Strategy:
Companies Like Fujikon follow global strategy to have subsidiaries in other countries like
USA, Russia, Italy, Bangkok etc. to promote their international trade.