Global Business Environment and Communication

BBA 1st Year
Subject- Global Business Environment and Communication
Business Communication
Introduction:
Business communication is the process of exchanging information within an organization or

between different organizations to facilitate business activities and achieve common goals.
Effective communication is crucial for the success and smooth functioning of any business. It
encompasses various forms and channels of communication, including verbal, written, and non-
verbal methods.
Advantages:
1. Clarity of Information:
Clear communication ensures that messages are easily understood, reducing the risk of
misunderstandings and confusion.
2. Improved Decision-Making:
Well-communicated information allows leaders and decision-makers to make informed and
timely decisions, contributing to the overall success of the organization.
3. Increased Efficiency:
Communication streamlines business processes, leading to improved efficiency in day-to-day
operations.
4. Employee Morale:
Open and transparent communication fosters a positive work environment, boosting employee
morale and job satisfaction.
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BBA 1st Year
5. Conflict Resolution:
Effective communication helps identify and resolve conflicts in a timely manner, preventing
escalation and maintaining a harmonious workplace.
6. Customer Relations:
Clear communication with customers builds trust and loyalty, contributing to positive customer
relations and repeat business.
7. Innovation and Creativity:

Communication facilitates the sharing of ideas, fostering an environment conducive to innovation
and creativity.
8. Establishing and Achieving Goals:

Communication aligns employees with organizational goals, ensuring that everyone
understands the objectives and works towards achieving them.
9. Feedback Mechanism:
Open communication channels provide a platform for feedback, enabling continuous
improvement and professional development.
10. Facilitates Change Management:

Effective communication helps manage and implement organizational changes by keeping
stakeholders informed about the reasons and benefits of the changes.
11. Building Strong Teams:

Communication is essential for team collaboration, creating a cohesive and well-coordinated
work environment.
12. Cost Reduction:
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Clear communication can help in avoiding errors and misunderstandings that may lead to costly
mistakes, contributing to overall cost reduction.
13. Adaptability to Market Changes:

Communication keeps the organization informed about market trends, allowing it to adapt quickly
to changes and stay competitive.
14. Enhanced Brand Image:

Positive communication, both internally and externally, contributes to a favorable brand image,
attracting customers and partners.
15. Compliance with Regulations:

Communication ensures that employees are aware of and understand regulatory requirements,
reducing the risk of legal issues.
16. Time Management:

Effective communication helps in conveying information efficiently, saving time and promoting
productivity.
Disadvantages:
1. Ambiguity:
Poorly communicated messages can lead to ambiguity and confusion among employees,
potentially affecting work quality and outcomes.
2. Distortion:
Information may get distorted as it passes through various levels of the organizational hierarchy,
leading to inaccurate understanding and decision-making.
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3. Time-Consuming:
Communicating detailed information can be time-consuming, especially in large organizations.
This may result in delays in decision-making and project execution.
4. Costly:
Maintaining communication infrastructure and conducting regular meetings can incur costs
which may strain the organization's resources.
5. Resistance to Change:
Employees may resist communication related to organizational changes if not presented
effectively. This resistance can hinder the successful implementation of new strategies or
processes.
6. Overload:
Too much information can lead to information overload, making it challenging for individuals to
prioritize and focus, leading to decreased productivity and effectiveness.
7. Security Concerns:
Inadequate communication security measures may lead to the leakage of sensitive information.
Compromised security can have serious consequences, including legal and financial
ramifications.
8. Lack of Feedback:
One-way communication without feedback can result in a lack of clarity regarding the reception
of the message. Misinterpretations may go uncorrected, leading to misunderstandings.
9. Selective Perception:
Individuals may selectively perceive and interpret messages based on their own biases and
perspectives. This can lead to miscommunication and a lack of shared understanding.
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10. Cultural and Language Barriers:
Differences in language and culture can impede effective communication, especially in

multinational organizations. Misinterpretations and misunderstandings may arise due to cultural
and linguistic differences.
11. Lack of Personal Interaction:
Reliance on electronic communication methods may reduce face-to-face interactions. Building

strong interpersonal relationships may become challenging, potentially affecting team dynamics.
12. Technology Issues:
Technical glitches or issues with communication tools can disrupt the flow of information. Delays
and disruptions may occur, affecting the timeliness and effectiveness of communication.
Types:
1. Internal Communication:
Internal communication refers to the exchange of information, ideas, and messages within an
organization among its members. It plays a vital role in creating a cohesive and efficient
workplace environment. Effective internal communication ensures that all employees are well-
informed, aligned with organizational goals, and engaged in their work.
Example: Meetings, emails, memos, reports, company intranet, etc.
2. External Communication:
External communication refers to the exchange of information between an organization and
entities outside of the organization. This includes communication with customers, suppliers,
investors, government agencies, the media, and the public. Effective external communication is
crucial for building and maintaining positive relationships, managing the organization's
reputation, and achieving its strategic objectives.
Examples: Emails, letters, press releases, social media, customer service interactions, etc.
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3. Formal Communication:
Formal communication refers to the official, structured, and systematic way information is
transmitted within an organization. This type of communication follows predefined channels,
protocols, and procedures. It is characterized by its formality, adherence to organizational
hierarchy, and reliance on official documentation.
Channels: Official reports, company policies, job descriptions, etc.
4. Informal Communication:
Informal communication refers to the spontaneous, unofficial, and often unplanned exchange of
information that occurs within an organization. It operates outside the formal channels and
structures established by the organization for official communication. This type of communication
is characterized by its flexibility and adaptability, and it is an essential aspect of workplace
dynamics.
Examples: Casual conversations, water-cooler talk, instant messaging, etc.
5. Upward Communication:
Upward communication refers to the flow of information from lower levels of an organizational
hierarchy to higher levels. It is a vital aspect of effective communication within an organization,
allowing employees at lower levels to convey feedback, information, suggestions, and concerns
to their supervisors, managers, or higher-level executives. Upward communication is crucial for
creating an open and transparent organizational culture, promoting employee engagement, and
improving overall organizational performance.
Examples: Provide feedback, Report progress, or express concerns.
6. Downward Communication:
Downward communication refers to the flow of information from higher levels of an
organizational hierarchy to lower levels. It is a formal channel through which superiors, such as
managers and leaders, communicate information, instructions, policies, and expectations to
subordinates. This type of communication is essential for ensuring that employees understand
their roles, responsibilities, and the goals of the organization.
Example: Company policies and procedures, organizational goals, and objectives etc.
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7. Horizontal Communication:
Horizontal communication, also known as lateral communication, refers to the flow of information
between individuals or departments at the same hierarchical level within an organization. Unlike
vertical communication, which involves communication up or down the organizational hierarchy,
horizontal communication occurs between peers, colleagues, or teams who are on the same
level.
Examples: To coordinate activities, share information, and collaborate on projects.
7 C’s of Communication:
1. Clearness:
Clearness in business communication refers to the quality of messages being easily understood,
unambiguous, and free from confusion. It is a crucial element that ensures that the information
transmitted is accurately interpreted by the intended audience.
2. Conciseness:
Conciseness in business communication refers to the practice of conveying information in a
clear, direct, and to-the-point manner, without unnecessary details or wordiness. This principle
is crucial for maintaining the audience's attention, ensuring efficiency, and delivering messages
that are easily understood.
3. Consideration:
Consideration in business communication refers to the practice of being thoughtful and
respectful towards the needs, perspectives, and emotions of the audience. It involves tailoring
your message to make it more relatable and understandable for the recipients. Consideration is
a key component of effective communication, contributing to a positive and respectful
communication environment within a business setting.
4. Concreteness:
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Concreteness in business communication refers to the use of specific facts, details, and tangible
evidence to make messages more vivid, credible, and convincing. It involves providing clear and
specific information rather than using vague or general terms. Concreteness is crucial for
ensuring that the audience can grasp the message with precision and fully understand the
intended meaning.
5. Courtesy:
Courtesy in business communication refers to the use of polite, respectful, and considerate
language and behavior when interacting with others in a professional setting. It is an essential
aspect of effective communication that contributes to positive relationships, a healthy work
environment, and successful collaboration.
6. Completeness:
Completeness in business communication refers to the inclusion of all necessary information in
a message to ensure that the audience has a comprehensive understanding of the topic. It
emphasizes the importance of providing all relevant details to avoid confusion or
misinterpretation.
7. Correctness:
Correctness in business communication refers to the accuracy, precision, and appropriateness
of the information conveyed. It involves ensuring that the content, language, and format of the
message are error-free and align with established standards. Achieving correctness is essential
for building trust, credibility, and professionalism in business communication.
Export- Import Correspondence:
Export and import correspondences refer to the communication and documentation involved in
international trade transactions. These exchanges of information are crucial for ensuring smooth and
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legal trade between countries. Here's an overview of the typical correspondence involved in export and
import processes:
1. Inquiry and Quotation:

• Exporter: The process often begins with an inquiry from a potential buyer. The exporter
responds with a quotation detailing the product, quantity, price, and other terms.
• Importer: The importer reviews the quotation and may negotiate terms with the exporter.
2. Purchase Order:
• Importer: Once the terms are agreed upon, the importer issues a purchase order (PO) to
the exporter, specifying the details of the transaction.
3. Proforma Invoice:
• Exporter: The exporter issues a proforma invoice, which is a preliminary invoice that
outlines the details of the transaction. It serves as a confirmation of the order.
4. Letter of Credit (if applicable):

• Importer: In some cases, the importer may open a letter of credit, a financial document
issued by a bank on behalf of the buyer, ensuring that payment will be made to the
exporter.
5. Shipping and Logistics:

• Exporter: The exporter arranges for the shipment of goods and provides the necessary
documentation, including a commercial invoice, packing list, and a bill of lading or airway
bill.
6. Customs Declaration:
• Exporter and Importer: Both parties may need to complete customs declarations and
other relevant documentation to comply with the regulations of the exporting and
importing countries.
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7. Payment:
• Importer: The importer makes the payment as per the agreed-upon terms. This could be
in advance, through a letter of credit, or other arrangements.
8. Documentary Collection (if applicable):

• Exporter: If a letter of credit is not used, the exporter might use a documentary collection
process, where the bank handles the exchange of documents for payment.
9. Import Clearance:
• Importer: The importer ensures the necessary customs clearance and pays any
applicable import duties and taxes.
10. Delivery and Acceptance:

• Importer: Once the goods arrive, the importer inspects and accepts them. Any
discrepancies or damages are reported to the exporter.
11. Feedback and Future Business:

• Exporter and Importer: Both parties may provide feedback on the transaction. A positive
experience can lead to future business opportunities.
Throughout this process, effective communication is vital to avoid misunderstandings, comply with
regulations, and ensure a successful international trade transaction. It's also important to stay informed
about international trade laws, tariffs, and any other relevant regulations that may impact the export-
import process.
Objectives of Export correspondence:
Export correspondence serves various objectives, all aimed at facilitating and optimizing international
trade transactions. Here are the primary objectives of export correspondence:
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1. Facilitate Communication:
Provide a platform for effective communication between exporters and importers. Clear and
transparent communication helps in conveying information, addressing queries, and building a
mutual understanding.
2. Negotiation and Agreement:

Facilitate negotiations between the exporter and importer. Export correspondence includes
discussions on terms, pricing, quantities, and other essential elements of the trade transaction
until an agreement is reached.
3. Transaction Documentation:
Generate and exchange essential documents related to the export transaction. This includes
proforma invoices, commercial invoices, packing lists, bills of lading, and other documentation
required for customs clearance and legal compliance.
4. Payment Arrangements:
Discuss and establish the terms of payment for the export transaction. This may involve
negotiating payment methods, such as letters of credit, advance payments, or open account
arrangements.
5. Provide Legal Clarity:

Ensure that all communication complies with international trade laws and regulations. Export
correspondence helps in conveying legal obligations, compliance requirements, and ensuring
that both parties adhere to the applicable rules.
6. Logistics and Shipping Coordination:

Coordinate logistics and shipping details. Export correspondence involves discussions on
shipping methods, Incoterms, delivery schedules, and other logistical aspects to ensure the
timely and secure delivery of goods.
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7. Quality Assurance and Specifications:

Clarify product specifications, quality standards, and other relevant details. Export
correspondence helps in conveying the expectations regarding the quality of goods to be
exported.
8. Cultural Understanding:
Foster an understanding of cultural nuances and differences. Export correspondence may

involve considerations for cultural sensitivities to ensure smooth communication and build
positive relationships.
9. Establish and Maintain Relationships:
Build and nurture relationships between the exporter and importer. Establishing a rapport
through export correspondence can lead to long-term partnerships and repeated business
transactions.
10. Risk Mitigation:

Address and mitigate potential risks associated with the export transaction. Export
correspondence helps in identifying and discussing risks related to payment, shipping, regulatory
changes, and other factors.
11. Customer Satisfaction:

Ensure customer satisfaction by addressing queries, providing timely information, and
maintaining a high level of professionalism in export correspondence.
12. Market Intelligence:

Gather information about the target market, customer preferences, and industry trends. Export
correspondence can provide valuable insights that help exporters adapt to market demands and
stay competitive.
13. Feedback and Continuous Improvement:
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Solicit feedback from the importer and use it for continuous improvement. Export
correspondence includes post-transaction evaluations to enhance future business dealings.
14. Compliance with Trade Agreements:

Ensure compliance with any trade agreements, treaties, or international accords that may impact the
export transaction. Export correspondence helps in aligning business practices with established
agreements.
Advantages of Export Correspondence:
Export correspondence, which involves the exchange of information and documentation related to
international trade transactions, offers several advantages for businesses engaged in exporting. Here
are some key advantages:
1. Establishing and Expanding Markets:

Export correspondence allows businesses to explore and enter new markets. Through effective
communication, exporters can identify potential buyers, understand market demands, and build
relationships with international partners.
2. Building Trust and Credibility:

Clear and transparent communication in export correspondence helps build trust between
exporters and importers. This trust is crucial for establishing long-term relationships, as
importers need confidence in the reliability and integrity of the exporters.
3. Negotiation of Favorable Terms:

Through communication in the export process, exporters and importers can negotiate terms that
are mutually beneficial. This includes aspects such as pricing, payment terms, delivery
schedules, and quality standards.
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4. Legal Compliance:
Export correspondence ensures that all legal requirements and regulations are met. Proper
documentation and communication help businesses comply with international trade laws,
customs regulations, and other legal obligations.
5. Risk Mitigation:
Effective communication helps in identifying and addressing potential risks in the export process.
This includes risks related to payment, transportation, customs, and other factors. Clear
communication allows for better risk management and mitigation strategies.
6. Smooth Logistics and Supply Chain Management:
Export correspondence plays a crucial role in coordinating logistics and supply chain activities.
This includes arranging for the transportation of goods, preparing accurate shipping
documentation, and ensuring that the products reach their destination on time and in good
condition.
7. Financial Management:
Through export correspondence, businesses can manage financial aspects such as invoicing,
payment terms, and letters of credit. Clear communication helps in avoiding payment disputes
and ensures that both parties are on the same page regarding financial transactions.
8. Customer Satisfaction:
Good communication contributes to overall customer satisfaction. Timely and accurate
information regarding the status of the order, shipping details, and any potential issues helps
build a positive relationship between exporters and importers.
9. Competitive Advantage:
Businesses that excel in export correspondence gain a competitive advantage. Efficient and
effective communication can set a company apart from competitors, attracting more international
buyers and partners.
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10. Market Intelligence:

Export correspondence provides an opportunity for businesses to gather market intelligence.
Through communication with international partners, exporters can gain insights into market
trends, customer preferences, and potential opportunities for product improvement or expansion.
Essentials of Successful Business Letters:
Writing successful business letters involves clear and effective communication to convey your message
professionally. Here are some essentials to keep in mind when composing business letters:
1. Professional Tone:
Maintain a professional and formal tone throughout the letter. Use polite language and avoid
slang or overly casual expressions.
2. Clarity and Conciseness:

Clearly state the purpose of the letter in the opening paragraph. Keep sentences concise and to
the point. Avoid unnecessary jargon or complex language.
3. Proper Formatting:
Format the letter with a clear and professional structure. Include a formal salutation, an
introduction, the main body, and a closing. Use a readable font and an appropriate font size.
4. Correct Grammar and Spelling:

Check the letter for grammatical errors and spelling mistakes. A well-written letter reflects
positively on your professionalism and attention to detail.
5. Addressing the Recipient Appropriately:
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Use the correct title and address when addressing the recipient. If you're unsure about the
recipient's title, it's better to use a neutral salutation (e.g., "Dear [Company Name]").
6. Personalization:
Personalize the letter by addressing the recipient by name whenever possible. This adds a
human touch and shows that you've taken the time to know your audience.
7. Subject Matter and Relevance:

Clearly state the subject matter of the letter early on. Ensure that the content is relevant to the
recipient and aligns with the purpose of the communication.
8. Logical Flow:
Organize the content in a logical and coherent manner. Present information in a sequence that
is easy for the reader to follow.
9. Appropriate Closing:
Conclude the letter with an appropriate closing, such as "Sincerely" or "Best Regards." Ensure
that the closing matches the formality of the rest of the letter.
10. Contact Information:

Include your contact information in the letter, including your name, job title, company name,
address, phone number, and email address. This makes it easy for the recipient to reach out if
needed.
11. Enclosures and Attachments:

If the letter includes any enclosures or attachments, mention them in the body of the letter and
make sure to include them with the correspondence.
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12. Follow-up Information:

If applicable, provide information about the next steps or any follow-up actions required. This
helps in providing clarity and guiding the recipient on what to do next.
13. Attention to Cultural Sensitivities:

If your letter is intended for an international audience, be mindful of cultural sensitivities and
customs to avoid any misunderstandings.
14. Proofreading:
Before sending the letter, proofread it carefully. Consider asking a colleague or friend to review
it as well. Fresh eyes can catch errors that you might have missed.
Example of an Enquiry Letter:
[Your Name]
[Your Company Name]
[Your Address]
[City, State, Zip Code]
[Email Address]
[Phone Number]
[Date]
[Exporter's Name]
[Exporter's Company Name]
[Exporter's Address]
[City, State, Zip Code]
Dear [Exporter's Name],

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I hope this letter finds you well. My name is [Your Name], and I am the [Your Position] at [Your
Company Name]. I am writing to inquire about the availability and pricing of your [specific product
or products].
Having researched various suppliers in the industry, your company has stood out to us due to
your reputation for providing high-quality products and excellent customer service. We are
particularly interested in [specific details about the product], and we believe that your company
may be able to meet our requirements.
To provide you with more context, we are [briefly describe your company and its operations].
Our company is currently expanding its product line, and after thorough consideration, we are
impressed with the features and specifications of your [specific product]. We would appreciate it
if you could provide us with the following information:
1. Price per unit and any applicable quantity discounts.

2. Minimum order quantity (MOQ) and terms for sample orders.
3. Payment terms and conditions.
4. Lead time for production and delivery to [your location].
5. Details about packaging and shipping options.
6. Any certifications or compliance standards your products adhere to.
Additionally, if you have a product catalog, price list, and any relevant product certifications,
please include them with your response.
We are looking to finalize our supplier selection by [specific date], and your prompt attention to
this inquiry would be greatly appreciated. If you require any further information about our
company or specific details about our requirements, please feel free to contact me at [your email
address] or [your phone number].
Thank you for considering our inquiry. We look forward to the possibility of establishing a
mutually beneficial business relationship.
Sincerely,
[Your Full Name]
[Your Position]
[Your Company Name]
[Your Contact Information]
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Meaning of Special Terms used in Export and Import Business (Incoterms and
Terms of Payment):
TERMS OF DELIVERY I:
INCOTERMS: -
Terminology of various terms commonly used worldwide for delivery and transportation of goods is
grouped into four categories in the INCOTERMS-2000 as under:
(a) “E” – Terms –
Implies Ex-works, where under, the seller only makes the goods available to the buyer at the
seller’s own premises. The responsibility of providing the carrier is that of the buyer.
(b) “F” – Terms - FCA, FAS and FOB are various clauses of “F” terms under which the seller is
called upon to deliver the goods to a carrier appointed by the buyer. The responsibility of
providing the carrier is that of the buyer.
(c) “C” – Terms - CFR, CIF, CPT and CIP are various clauses of “C” terms under which the
seller has to contract for carriage, but without assuming the risk of loss of or damage the goods
or additional costs due to events occurring after shipment and dispatch.
(d) “D” – Terms - DAF, DES, DEQ, DDU and DDP are various clauses of “D” terms under which
the seller has to bear costs and risks needed to bring the goods to the placed of destination.
1. Ex-works (EXW) – “Ex-Works” means that the seller delivers when he places the goods at
the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory,
warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. This term thus
represents the minimum obligation for the seller and the buyer has to bear all costs and risks
involved in taking the goods from the seller’s premises. However, if the parties wish the seller to
be responsible for loading of the goods on departure and to bear the risks and all the costs of
such loading, this should be made clear by adding explicit wording to this effect in the contract
of sale. This term should not be used when the buyer cannot carry out the export formalities
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directly or indirectly. In such circumstances, the FCA terms should be used provided the seller
agrees that he will load at his cost and risk.
2. Free Carrier (FCA) - “Free Carrier” means that the seller delivers the goods, cleared for export
to the carrier nominated by the buyer at the named place. This term may be used irrespective of
the mode of transport including multi-modal transport. “Carrier” means any person who in a
contract of carriage undertakes to perform or to procure the performance of transport by rail,
road, air, sea, inland waterway or by a combination of such modes. If the buyer nominates a
person other than a carrier to receive the goods, the seller is deemed to have fulfilled his
obligation to deliver the goods when they are delivered to that person.
3. Free Alongside Ship (FAS) - “Free Alongside Ship” means that the seller delivers when the
goods are placed alongside the vessel at the named port of shipment. This means that the buyer
has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS
terms require the buyer to clear the goods for export. However, if parties wish the buyer to clear
goods for export this should be made clear by adding explicit wording to this effect in contract of
sale. This term can only be used for sea or inland waterway transport.
4. Free on Board (FOB) - “Free on Board” means that the seller delivers when the goods pass
the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and
risks of loss of or damage to the goods from the point. The FOB terms require the seller to clear
the goods for export. This term can be used only for sea or inland waterway transport. If the
parties do not intend to deliver the goods across the ship’s rail, the FCA terms should be used.
5. Cost and Freight (CFR / C&F) - “Cost and Freight” means that the seller has delivered when
the goods pass the ship’s rail in the port of shipment. The seller must pay the cost and freight
necessary to bring the goods to the named port of destination but the risk of loss of or damages
to the goods or any additional costs due to events occurring after the time of delivery are
transferred from the seller to the buyer. The CFR terms requires the seller to clear the goods for
export. This term can be used only for sea and inland waterway transport.
6. Cost, Insurance and Freight (CIF) – “Cost, Insurance and Freight (CIF) means that the seller
delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the
costs and freight necessary to bring the goods to the named port of destination. In case of CIF
terms, the seller also has to procure marine insurance against the buyer’s risk of loss of or
damage to the goods during the carriage. Consequently, the seller contracts for insurance and
pays the insurance premium. The CIF term requires the seller to clear the goods for export. This
term can be used only for sea and inland waterway transport. If the parties do not intend to
deliver the goods across the ship’s rail the CIP term should be used.
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7. Carriage Paid To (CPT) - “Carriage Paid to (CPT)” means that the seller delivers the goods
to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary
to bring the goods to be named destination. This means that the buyer bears all risks and any
other cost occurring after the goods have been so delivered. He CPT term requires the seller to
clear the goods for export. The term may be used irrespective of the mode of transport including
multi-modal transport.
8. Carriage and Insurance Paid To (CIP) - “Carriage and Insurance Paid To (CIP)” means that
the seller delivers goods to the carrier nominated by him but the seller must in addition pay cost
of carriage necessary to bring goods to be named destination. This means that the buyer bears
all risks and any additional cost occurring after the goods have been so delivered. However in
CIP, the seller also has to procure insurance against the buyer’s risk of loss of or damages to
the goods during the carriage. Consequently, the seller contracts for insurance and pays the
insurance premium. The buyer should note that under the CIP term, the seller is required to
obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater
cover, he would either need to agree as much expressly with the seller or to make his own extra
insurance arrangements. “Carrier” means any person who, in a contract of carriage, undertakes
to perform or to procure the performance of transport by rail, roads, air, sea, inland waterway or
by a combination of such modes. If subsequent carriers are used for the carriage to the agreed
destination, the risk passes when the goods have been delivered to the first carrier. The CIP
requires the seller to clear the goods for export. This term may be used irrespective of the mode
of transport including multi-modal transport.
9. Delivered at Frontier (DAF) – “Delivered at Frontier” means that the seller delivers when the
goods are at the disposal of the buyer on the arriving means of transport not unloaded, cleared
for export, but not cleared for import at the named point and place at the frontier, but before the
customs border of the adjoining country. However, if the parties wish, the seller to be responsible
for the unloading of goods from the arriving means of transport and bear the risks for costs of
unloading, this should be made clear by adding explicit wording to this effect in the contract of
sale. This term should not be used irrespective of the mode of transport when goods are to be
delivered at a land frontier.
10. Delivered Ex-Ship (DES) – “Delivered Ex-Ship” means that the seller fulfils his obligation to
deliver when the goods have been made available to the buyer on board the ship uncleared for
import at the named port of destination. The seller has to bear all the costs land risk involved in
brining the goods to the named port of destination before discharging. If the parties wish, the
seller to bear the costs and risks of discharging the goods, then the DEQ term should be used.
The term can only be used only when the goods are to be delivered by sea or inland waters way
transport on a vessel in the port of destination.
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11. Delivered Ex-Quay (Duty Paid) (DEQ) – “Delivered Ex-Quay (Duty Paid)” means that the seller
fulfils his obligation to deliver when he has made the goods available to the buyer on the quay
(Wharf) at the named port of destination, cleared for importation. The seller has to bear all risks
and costs including duties, taxes and other charges of delivering the goods thereto. This term
should not be used if the seller is unable directly or indirectly to obtain the import license. If the
parties wish the buyer to clear the goods for importation and pay the duty, the words “duty
unpaid” should be used instead for “duty paid”.
II – GENERAL TERMS:
Other terms for delivery and transportation of goods are:
1. Free on Rail / Road (F.O.R on Destination) – In case of FOR on destination the seller delivers
the goods to the carrier nominated by him but the seller in addition pays the cost of carriage
necessary to bring the goods to the named destination which is transporter’s godown nearest to the
buyer in case of road transport & nearest railway station to the buyer in case of transport by rail.
Under this term the buyer should confirm the extent of insurance cover provided by the seller.
Should the buyer wish to have the protection of greater cover, he would either need to agree as
much expressly with the seller or to make his own extra insurance arrangements.
2. Free on Rail / Road (F.O.R on Depatching Station) – In this case the seller delivers the goods
to the nominated carrier (Transporter’s godown in road transport & Railway station in rail mode)
nearest to the seller on freight to pay or freight pre-paid basis as agreed between the buyer & seller.
This means that the buyer bears all risks and any other cost occurring after the goods have been
so delivered.
3. Door Delivery Basis - In this case the seller delivers the goods in the store or other such place
specified by the buyer with all charges towards freight, insurance, clearance etc. duly paid by the
seller such as dispatches by courier service etc.
Terms of Payment:
To succeed in today’s global marketplace and win sales against foreign competitors, exporters must
offer their customers attractive sales terms supported by the appropriate payment methods. Because
getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method
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must be chosen carefully to minimize the payment risk while also accommodating the needs of the
buyer. There are five primary methods of payment for international transactions. During or before
contract negotiations, you should consider which method is mutually desirable for you and your
customer.
Key Points:
• International trade presents a spectrum of risk, which causes uncertainty over the timing of payments
between the exporter (seller) and importer (foreign buyer).
• For exporters, any sale is a gift until payment is received.
• Therefore, exporters want to receive payment as soon as possible, preferably as soon as an order is
placed or before the goods are sent to the importer.
• For importers, any payment is a donation until the goods are received.
• Therefore, importers want to receive the goods as soon as possible but to delay payment as long as
possible, preferably until after the goods are resold to generate enough income to pay the exporter.
• Cash-in-Advance:
With cash-in-advance payment terms, an exporter can avoid credit risk because payment is
received before the ownership of the goods is transferred. For international sales, wire transfers
and credit cards are the most commonly used cash-in-advance options available to exporters.
With the advancement of the Internet, escrow services are becoming another cash-in-advance
option for small export transactions. However, requiring payment in advance is the least
attractive option for the buyer, because it creates unfavorable cash flow. Foreign buyers are also
concerned that the goods may not be sent if payment is made in advance. Thus, exporters who
insist on this payment method as their sole manner of doing business may lose to competitors
who offer more attractive payment terms.
• Letters of Credit:
Letters of credit (LCs) are one of the most secure instruments available to international traders.
An LC is a commitment by a bank on behalf of the buyer that payment will be made to the
exporter, provided that the terms and conditions stated in the LC have been met, as verified
through the presentation of all required documents. The buyer establishes credit and pays his
or her bank to render this service. An LC is useful when reliable credit information about a foreign
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buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s
foreign bank. An LC also protects the buyer since no payment obligation arises until the goods
have been shipped as promised.
• Documentary Collections:
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of
the payment for a sale to its bank (remitting bank), which sends the documents that its buyer
needs to the importer’s bank (collecting bank), with instructions to release the documents to the
buyer for payment. Funds are received from the importer and remitted to the exporter through
the banks involved in the collection in exchange for those documents. D/Cs involve using a draft
that requires the importer to pay the face amount either at sight (document against payment) or
on a specified date (document against acceptance). The collection letter gives instructions that
specify the documents required for the transfer of title to the goods. Although banks do act as
facilitators for their clients, D/Cs offer no verification process and limited recourse in the event
of non-payment. D/Cs are generally less expensive than LCs.
• Open Account:
An open account transaction is a sale where the goods are shipped and delivered before
payment is due, which in international sales is typically in 30, 60 or 90 days. Obviously, this is
one of the most advantageous options to the importer in terms of cash flow and cost, but it is
consequently one of the highest risk options for an exporter. Because of intense competition in
export markets, foreign buyers often press exporters for open account terms since the extension
of credit by the seller to the buyer is more common abroad. Therefore, exporters who are
reluctant to extend credit may lose a sale to their competitors. Exporters can offer competitive
open account terms while substantially mitigating the risk of non-payment by using one or more
of the appropriate trade finance techniques covered later in this Guide. When offering open
account terms, the exporter can seek extra protection using export credit insurance.
• Consignment:
Consignment in international trade is a variation of open account in which payment is sent to the
exporter only after the goods have been sold by the foreign distributor to the end customer. An
international consignment transaction is based on a contractual arrangement in which the foreign
distributor receives, manages, and sells the goods for the exporter who retains title to the goods
until they are sold. Clearly, exporting on consignment is very risky as the exporter is not
guaranteed any payment and its goods are in a foreign country in the hands of an independent
distributor or agent. Consignment helps exporters become more competitive on the basis of
better availability and faster delivery of goods. Selling on consignment can also help exporters
reduce the direct costs of storing and managing inventory. The key to success in exporting on
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consignment is to partner with a reputable and trustworthy foreign distributor or a third-party

logistics provider. Appropriate insurance should be in place to cover consigned goods in transit
or in possession of a foreign distributor as well as to mitigate the risk of non-payment.
Reading, Comprehending and Writing of Market Reports Relating to Export and

Import of Different Goods:
Reading, comprehending, and writing market reports related to the export and import of different goods
involve a combination of research skills, industry knowledge, and effective communication. Here's a
step-by-step guide to help you navigate this process:
Reading and Comprehending Market Reports:

1. Identify the Source:
Start by understanding the source of the market report. Reports can come from government
agencies, industry associations, market research firms, or other reputable sources.
2. Review Executive Summary:
Begin with the executive summary to get a high-level overview of the report's key findings,
trends, and recommendations.
3. Examine Methodology:
Check the methodology section to understand how the data was collected and analyzed. This
helps evaluate the report's reliability.
4. Explore Key Sections:

Focus on sections such as market size, trends, drivers, challenges, and competitive analysis.
Look for information on target markets, consumer behavior, and regulatory factors.
5. Analyze Data and Statistics:
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Pay attention to data and statistics presented in charts, graphs, and tables. Analyze numerical
information to derive insights about market dynamics.
6. Understand Market Trends:

Identify and comprehend current market trends, including emerging opportunities and potential
threats. Note any technological advancements or shifts in consumer preferences.
7. Evaluate Competitor Landscape:

Assess the competitive landscape by understanding the market share, key players, and their
strategies. Look for information on new entrants and market leaders.
8. Consider Regulatory Environment:

Understand the regulatory environment affecting the export and import of goods. This includes
tariffs, trade agreements, and compliance requirements.
Writing Market Reports:

1. Define Objectives:
Clearly define the objectives of your market report. Are you providing an overview, analyzing
trends, or making recommendations for market entry?
2. Structure the Report:

Organize the report into sections, such as executive summary, market overview, trends,
competitive analysis, and recommendations. Each section should flow logically.
3. Craft a Compelling Executive Summary:

Summarize the key findings, insights, and recommendations in the executive summary. This
section should provide a snapshot of the entire report.
4. Provide Context in the Introduction:
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Introduce the market and its relevance. Outline the scope of the report and any methodologies
used for analysis.
5. Detail Market Overview:

Dive into a comprehensive market overview, covering aspects like market size, growth rate, and
segmentation. Include relevant historical data for context.
6. Analyze Trends and Drivers:

Present an analysis of current market trends and drivers influencing the export and import of
goods. Discuss factors impacting demand and supply.
7. Conduct Competitive Analysis:

Evaluate the competitive landscape, highlighting key players, market share, and competitive
strategies. Discuss strengths, weaknesses, opportunities, and threats.
8. Consider Risk Factors:
Address potential risks and challenges faced by businesses involved in export and import.
Include factors like economic instability, geopolitical issues, or regulatory changes.
9. Make Recommendations:
Based on your analysis, provide actionable recommendations for businesses, policymakers, or
stakeholders. This could include market entry strategies, product development ideas, or policy
suggestions.
10. Cite Sources and Data:

Ensure that you provide proper citations for all data and information used in the report. This
enhances the report's credibility.
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11. Edit and Proofread:

Review the report for clarity, coherence, and grammatical correctness. Ensure that the writing is
concise and accessible to a diverse audience.
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Liberalization, Privatization and Globalization
LPG:
♦ Indian economy had experienced major policy changes in early 1990s. The new economic reform,
popularly known as, Liberalization, Privatization and Globalization (LPG model).
♦ It was aimed at making the Indian economy as fastest growing economy and globally competitive.
The series of reforms undertaken with respect to industrial sector, trade as well as financial sector
aimed at making the economy more efficient.
Reasons for Implementing LPG:

♦ Large and growing fiscal imbalances. (Gross fiscal deficit rose to 12.1% of GDP in 1991).
♦ Growing inefficiency in the use of resources.
♦ Low foreign exchange reserves. ($1.2 billion in January 1991)
♦ High inflation rate. (13.87% in year 1990-91)
♦ The low annual growth rate of Indian economy stagnated around 3.5% from 1950s to 1980s, while
per capita income averaged 1.3%.
Impact on India:
• India opened the economy in the early nineties following a major crisis that led by a foreign
exchange crunch that dragged the economy close to defaulting on loans.
• The response was a number of Domestic and external sector policy measures partly prompted by
the immediate needs and partly by the demand of the multilateral organizations.
• The new policy regime radically pushed forward in favor of a more open and market-oriented
economy.
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LIBERALIZATION:
♦ It means the process of opening up of the Indian economy to trade and investment with the rest of
the world.
♦ It means that opening the Door for doing Business to all over the world.
♦ Till 1991 India had a import protection policy wherein trade with the rest of the world was limited to
exports.
♦ Foreign investment was very difficult to come into India due to a bureaucratic framework.
♦ After the start of the economic liberalization, India started getting huge capital inflows and it has
emerged as the 2nd fastest growing country in the world.
Measures Taken for Liberalization:
♦ Freedom for expansion and production to industries.

♦ Increase in the investment limit of the small industries.
♦ Freedom to import the capital goods and raw materials.
♦ Freedom to import technology.
♦ Liberalization of export and import transactions.
♦ Liberalization in taxation policy.
♦ Liberalization in capital markets.
♦ Liberalization in banking sector.
♦ Increase the foreign investment.
♦ Increase the foreign exchange reserve.
♦ Increase in consumption.
♦ Control over price.
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♦ Check on corruption.
♦ Reduction in dependence on external commercial borrowings.
Post Liberalization Change:
1. Tariff and Non-Tariff trade barriers lowered.

2. Industrial license abandoned in many sectors.
3. Private capital permitted in areas reserved for the public sector.
4. Restrictions on Foreign Direct Investment removed.
5. Steps towards Privatization.
6. Food subsidies reduced.
7. The rupee value devalued.
Benefits of Liberalization:

♦ Increase the foreign exchange reserve.
♦ Increase in consumption.
♦ Control over price.
♦ Check on corruption.
♦ Reduction in dependence on external commercial borrowings.
Limitations of Liberalization:
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♦ Increase in unemployment.
♦ Loss to domestic units.
♦ Increase dependence on foreign nations.
♦ Unbalanced development.
♦ Increase the imbalances.
PRIVATIZATION:
♦ Privatization means transfer of ownership and/or management of an enterprise from the public
sector to the private sector.
♦ Privatization is opening up of an industry that has been reserved for public sector to the private
sector.
♦ Privatization means replacing government monopolies with the competitive pressures of the
marketplace to encourage efficiency, quality and innovation in the delivery of goods and services.
Measures Adopted for Privatization:
• Contractions of public sectors.

• Sales shares of public sectors to the private sector.
• Sick public sector industries.
• Memorandum of understanding.
• National renewal fund.
Advantages of Privatization:
• Increase in efficiency.
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• Professional management.
• Increase in competition.
• In line with international trends.
• Reduction in political interference.
• Encourage to new innovations.
• Increase the industrial growth.
• Increase the foreign investment.
• Reduction in public sector.
Limitations of Privatization:
♦ Industrial sickness.
♦ Lack of welfare.
♦ Class struggle.
♦ Increase in inequality.
♦ Opposition by employees.
♦ Political pressure.
♦ Increase in unemployment.
♦ Ignores the weaker sections.
Successful Privatizations in India:

♦ Lagan jute machinery company limited (LJMC) {Gross turnover: pre-privatization= Rs. 6 million
(April-June 2000), post-privatization= Rs. 24 million (July-September 2000)}
♦ Modern food industries limited (MFIL) {Share value went up from Rs. 2138 on 30th Dec.(prior to
sale) to Rs. 3247 on 25th Feb.(post sale).}
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♦ Paradeep Phosphates Limited (PPL) {Net profit: pre sale= Rs. -57.95 Cr., post sale= Rs. 23.96 Cr.}
♦ Bharat aluminum company limited (BALCO)
♦ Hotel Corporation of India limited (HCI)
♦ Hindustan Zinc limited (HZL)
GLOBALIZATION:
♦ It means that opening up of the economy for foreign direct investment by liberalizing the rules and
regulations and by creating favorable socio-economic and political climate for global business.
♦ Opening and planning to expand business throughout the world.
♦ Buying and selling goods and services from/to any countries in the world.
Economic Globalization:
1. Knowledge:
• Increase in networks.
• Decrease in transaction costs.
• The emergence of ‘.com’ economy.
2. Trade:
• The abolishment of customs and duties.
• The increase in time influence of WTO.
• The increase in openness of World economy.
3. Finance:
• The integration of financial markets.
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• The Liberalization of Capital markets.
4. Movement of Labour:
• The increasing asymmetry between Capital and Labour.
• Relatively low mobilization capacity of labour force.
Measures Adopted for Globalization:

♦ Partial convertibility of Indian Rupee.
♦ Foreign trade policy.
♦ Reduction of tariffs.
♦ Export promotion.
♦ Freedom of repatriate.
POSITIVE EFFECT OF GLOBALIZATION:

♦ Increase in foreign trade.
♦ Increase in foreign investment.
♦ Foreign direct investment.
♦ Increase in foreign collaboration.
♦ Increase in foreign exchange reserves.
♦ Expansion of market.
♦ Technological development.
♦ Brand development.
♦ Development of service sectors.
♦ Development of capital market.
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♦ Increase in employment.
♦ Improvement in standard of living.
Negative Effects of Globalization:

♦ Loss of domestic industries.
♦ Unemployment.
♦ Exploitation of labour.
♦ Demonstration effect.
♦ Increase in inequalities.
♦ Dominance of foreign institutions.
Main organizations facilitating Globalization:

Some of the international organizations which facilitate the process of globalization:
• International Monetary Fund (IMF)
• World Bank
• World Trade Organization (WTO)
1. International Monetary Fund (IMF):
• IMF was organized in 1946 and commenced its operation in March 1947. The main
objectives are:
o Elimination or reduction of existing exchange control.
o Establishment and maintenance of currency convertibility with stable exchange
rate.
o Widest extension of multilateral trade and payments.
o Solving of short-term balance of payment problems faced by its member nations.
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Functions of IMF:
1. It functions as a short-term credit institution.
2. It provides machinery for the orderly adjustment of exchange rates.
3. It is a reservoir of the currencies of all the member nations who can borrow the currency of
other nations.
4. It provided machinery for international consultations.
5. It monitors economic and financial development of its members and provides policy advice
aimed at crisis preventions.
World Bank:
The International Bank for Reconstruction and Development (IBRD) more popularly known as World
Bank was formed as a part of the deliberations at Bretton woods in 1945. The World Bank was
floated in order to give loan to member countries, initially for the reconstruction of their (world) war-
ravaged economies, and later for the development of the economies of the poorer member countries.
Objectives of World Bank:
1. Investing in the people, particularly through basic health and education.

2. Focusing on social development.
3. Protecting the environment.
4. Supporting and encouraging private business development.
5. Promoting reforms to create a stable macro-economic environment, conducive to investment
and long-term planning.
Functions of World Bank:

1. To help its member countries in the reconstruction and development of their territories by
facilitating the investment of capital for productive purposes.
2. To encourage private foreign investment and credit by providing guarantee of repayment of the
private investors.
3. To promote the long-term balanced growth of international trade and the maintenance of
equilibrium in balance of payment of its member countries.
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The World Trade Organization (WTO):
WTO came into existence on 1st January 1995. The WTO is a powerful body which broadly aims at
making the whole world a big village where there is free flow of goods and services and there are no
barriers to trade.
Features of WTO:
1. The WTO is the main organ implementing a Multilateral Trade Agreements.
2. The WTO is global in its membership.
3. It is the forum for negotiations among its members.
4. It is a full-fledged international organization in its own right.
5. The WTO has legal personality.
Functions of WTO:
1. The WTO shall facilitate the implementation, administration and operation of world trade
agreements.
2. The WTO shall provide the forum for trade negotiations among its member countries.
3. The WTO shall handle trade disputes.
4. The WTO shall monitor national trade policies.
5. It shall provide technical assistance and training to developing countries.
Marketing Segmentation on a Global Scale:
Marketing segmentation on a global scale involves dividing the broad and diverse global market into
distinct groups of consumers who share similar characteristics, needs, and preferences. This process
allows businesses to tailor their marketing strategies to specific segments, improving the relevance
and effectiveness of their efforts. Here are key considerations and strategies for global marketing
segmentation:
1. Demographic Segmentation:
• Variables: Age, gender, income, education, occupation, family size, and cultural factors.
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• Example: Different age groups may have varying preferences for technology products, and
income levels can influence purchasing power.
2. Geographic Segmentation:
• Variables: Country, region, climate, population density, and time zones.
• Example: Products and marketing messages might need customization based on cultural
differences or regional climates.
3. Psychographic Segmentation:
• Variables: Lifestyle, values, interests, personality traits, and attitudes.
• Example: A luxury brand may target consumers with a high social status and specific lifestyle
preferences.
4. Behavioral Segmentation:
• Variables: Purchase behavior, product usage, brand loyalty, and response to marketing
stimuli.
• Example: Customers who frequently purchase a particular type of product may be targeted
differently than occasional buyers.
5. Cultural Segmentation:
• Variables: Language, religion, values, customs, and social norms.
• Example: Certain products or marketing messages may need adaptation to align with cultural
sensitivities and norms.
6. Global vs. Local Adaptation:

• Standardization: Developing a standardized product and marketing strategy that can be
applied across multiple countries.
• Localization: Adapting products and marketing strategies to meet the specific needs and
preferences of each local market.
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7. Technology and Communication Channels:

• Digital Platforms: Utilize online channels for global reach, considering popular social media,
search engines, and e-commerce platforms in each region.
• Mobile Marketing: Adapt strategies for regions where mobile devices are the primary means
of accessing the internet.
8. Data-Driven Decision Making:

• Leverage data analytics to continuously monitor and analyze consumer behavior, market
trends, and performance metrics across different segments and regions.
9. Cross-Cultural Competence:
• Develop a deep understanding of cultural nuances to avoid misunderstandings or offensive
marketing messages.
10. Global Brand Consistency:

• Maintain a consistent brand image and message while allowing for cultural and regional
adaptations.
11. Legal and Regulatory Compliance:

• Be aware of and comply with diverse legal and regulatory environments across different
countries.
12. Continuous Monitoring and Adaptation:

• Markets and consumer preferences evolve, so regularly reassess and adjust segmentation
strategies accordingly.
Global marketing segmentation is a complex but crucial aspect of reaching diverse audiences
effectively. It requires a balance between standardized global approaches and localized strategies
tailored to specific markets.
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Subject- Global Business Environment and Communication

Business communication is the process of exchanging information within an organization or

Subject- Global Business Environment and Communication

7. Innovation and Creativity:

8. Establishing and Achieving Goals:

10. Facilitates Change Management:

11. Building Strong Teams:

12. Cost Reduction:

Subject- Global Business Environment and Communication

13. Adaptability to Market Changes:

14. Enhanced Brand Image:

15. Compliance with Regulations:

16. Time Management:

Subject- Global Business Environment and Communication

Subject- Global Business Environment and Communication

10. Cultural and Language Barriers:

Differences in language and culture can impede effective communication, especially in

11. Lack of Personal Interaction:

Reliance on electronic communication methods may reduce face-to-face interactions. Building

12. Technology Issues:

Subject- Global Business Environment and Communication

Subject- Global Business Environment and Communication

Subject- Global Business Environment and Communication

Export- Import Correspondence:

Subject- Global Business Environment and Communication

1. Inquiry and Quotation:

4. Letter of Credit (if applicable):

5. Shipping and Logistics:

Subject- Global Business Environment and Communication

8. Documentary Collection (if applicable):

10. Delivery and Acceptance:

11. Feedback and Future Business:

Objectives of Export correspondence:

Subject- Global Business Environment and Communication

2. Negotiation and Agreement:

5. Provide Legal Clarity:

6. Logistics and Shipping Coordination:

Subject- Global Business Environment and Communication

7. Quality Assurance and Specifications:

Foster an understanding of cultural nuances and differences. Export correspondence may

10. Risk Mitigation:

11. Customer Satisfaction:

12. Market Intelligence:

13. Feedback and Continuous Improvement:

Subject- Global Business Environment and Communication

14. Compliance with Trade Agreements:

Advantages of Export Correspondence:

1. Establishing and Expanding Markets:

2. Building Trust and Credibility:

3. Negotiation of Favorable Terms:

Subject- Global Business Environment and Communication

6. Smooth Logistics and Supply Chain Management:

Subject- Global Business Environment and Communication

10. Market Intelligence:

Essentials of Successful Business Letters:

2. Clarity and Conciseness:

4. Correct Grammar and Spelling: