INTERNATIONAL BUSINESS

BY: Sir Noman Ahsan

EMBA- 4th Semester
International Business Operations

1. Exporting & Importing

2. Countertrade
3. Global Production, Outsourcing & Logistics
4. Global Marketing
5. Financial Management in the International Business
1. Exporting & Importing

• Importing and Exporting are means of Foreign Trade. Foreign trade is carried out in goods
and services 
• includes imports, exports, and the balance of foreign trade
• presented separately for goods and for services.
• The total imports, exports, and balance of foreign trade are presented as summaries of goods
and services.
• Exporting refers to the selling of goods and services from the home country to a foreign
nation.
• importing refers to the purchase of foreign products and bringing them into one’s home
country. Further, it is divided in two ways, which are,
i. Direct
ii. Indirect
Advantages of Import and Export

• It is one of the simplest routes of entering into the global trade and import and export
generate huge employment opportunities.
• Requires less investment in terms of time and money when contrasted with other
methods of entering into the global trade.
• Is comparatively less risky when compared with different routes of entering in
international business.
• As no nation can be 100% self-sufficient, import and export are very crucial for the
functioning and growth of that nation.
• Can help Countries to access the best technologies available and best products and
services in the world.
• It gives better control over the trade than setting up a market and the risk is
considerably low.
Limitations of Import and Export

• It includes extra packaging, transportation and protection and insurance costs

which build up the total cost of items.
• Exporting isn’t doable in the event that the foreign nation prohibits imports.
• Domestic organizations which are closer to the client could serve them better
than firms outside their national borders.
• Merchandises are subject to quality standards any low-grade merchandise which
is exported will result in Country reputation and remarks on countries.
• Obtaining licenses and documentation for foreign trade is a difficult and
frustrating task.
• If you are not careful, you can lose grip on the domestic market and existing
customers.
Assignment Question

Question:
Why businesses prefer importing and exporting?
2. Countertrade

• Countertrade, one of the oldest forms of trade, is a government mandate to

pay for goods and services with something other than cash. 
• It is a practice, which requires a seller as a condition of sale, to commit
contractually to reciprocate and undertake certain business initiatives that
compensate and benefit the buyer.
• a goods-for-goods deal is countertrade.
• There are three primary reasons for countertrade:
(1) countertrade provides a trade financing alternative to those countries that
have international debt and liquidity problems,
(2) countertrade relationships may provide LDCs and MNCs with access to new
markets, and
(3) countertrade fits well conceptually with the resurgence of bilateral trade
agreements between governments. The advantages of countertrade cluster
around three subjects: market access, foreign exchange, and pricing.
Types of Countertrade

• Barter- Barter, possibly the simplest of the many types of counter trade, is a onetime direct
and simultaneous exchange of products of equal value (i.e., one product for another). 
• Counter purchase (Parallel Barter) – Counter purchase occurs when there are two contracts
or a set of parallel cash sales agreements, each paid in cash. Unlike barter which is a single
transaction with an exchange price only implied. 
• Compensation Trade (Buyback) – A compensation trade requires a company to provide
machinery, factories, or technology and to buy products made from this machinery over an
agreed-on period.
• Switch Trading – Switch trading involves a triangular rather than bilateral trade agreement.
• Offset – In an offset, a foreign supplier is required to manufacture/assemble the product
locally and/or purchase local components as an exchange for the right to sell its products
locally. 
• Clearing Agreement – A clearing agreement is clearing account barter with no currency
transaction required. 
Assignment Question

Question
What are the Benefits and Drawbacks of countertrade?
3. Global Production, Outsourcing & Logistics

• Production – activities involved in creating a product

• Logistics – collecting, physical transmission of material through the
supply chain, from suppliers to customers
• Link - Production and logistics are closely linked since a firm’s ability
to perform its production activities efficiently depends on a timely
supply of high quality material inputs
• Outsourcing is the business practice of hiring a party outside a
company to perform services and create goods that traditionally were
performed in-house by the company's own employees and staff. Also
for cost cutting .
Where should production be located?

• Firms should locate production so that

• production and logistics can be locally responsive
• production and logistics can respond quickly to shifts in customer
demand
Assignment Question

Question
What kind of factors firm should consider in Global Production,
Outsourcing and Logistics
4. Global Marketing

• Global marketing is defined as the process of adjusting the

marketing strategies of your company to adapt to the conditions of
other countries.
• global marketing is more than selling your product or service
globally
• It is the full process of planning, creating, positioning, and 
promoting your products in a global market.
Benefits of global marketing, 

• Improve the effectiveness of your product or service

• Strong competitive advantage
• Increase consumer awareness of your brand
• Reduce your costs and increase your savings
Assignment Question

Question
Explain the benefits of Global Marketing in your own words at
least 5 benefits?
5. Financial Management in the International
Business

1. Investment decisions – decisions about what to finance

2. Financing decisions – decisions about how to finance those
decisions
3. Money management decisions – decisions about how to manage
the firm’s financial resources most efficiently These decisions are
more complex in international business because of the different
currencies, tax regimes, regulations on capital flows, economic and
political risk, and so on between countries
Assignment Question

Question
Why Money Management decisions are most important in
International Business?
THE END