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This notes is very useful for the students of MBA -III-Semester -Osmania University
INTERNATIONAL BUSINESS NOTES
MBA-III-SEMSTER
OSMANIA UNIVERSITY
PREPARED BY
Syed Valiullah Bakhtiyari
B.Sc MBA !OU" APDM !AIMA" !PhD" !AMU"
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Me)+er $% All I'dia Ma'a(e)e't A##$ciati$'-Ne8 Delhi
International Business: It i# de%i'ed a# the &r$ce## $% e2te'di'( the +u#i'e## acti6itie# %r$) d$)e#tic t$ a'y
%$rei(' c$u'try 8ith a' i'te'ti$' $% tar(eti'( i'ter'ati$'al cu#t$)er# It i# al#$ de%i'ed a# the c$'ducti$' $%
+u#i'e## acti6itie# +y a'y c$)&a'y acr$## the 'ati$'#
It ca' al#$ +e de%i'ed a# the e2&a'#i$' $% +u#i'e## %u'cti$'# t$ 6ari$u# c$u'trie# 8ith a' $+9ecti6e $% %ul%illi'(
the 'eed# a'd 8a't# $% i'ter'ati$'al cu#t$)er#
1
:. Process of Internationalization
• Domestic company :M$#t i'ter'ati$'al c$)&a'ie# ha6e their $ri(i' a# d$)e#tic c$)&a'ie#. The
$rie'tati$' $% a d$)e#tic c$)&a'y e##e'tially i# eth'$ce'tric. A &urely d$)e#tic c$)&a'y $&erate#
d$)e#tically +ecau#e it 'e6er c$'#ider# the alter'ati6e $% ($i'( i'ter'ati$'al. A d$)e#tic c$)&a'y )ay
e2te'd it# &r$duct# t$ %$rei(' )arket# +y e2&$rti'( lice'#i'( a'd %ra'chi#i'(
• International companies are i)&$rter# a'd e2&$rter# they ha6e '$ i'6e#t)e't $ut#ide $% their h$)e
c$u'try.
• Multinational companies ha6e i'6e#t)e't i' $ther c$u'trie# +ut d$ '$t ha6e c$$rdi'ated &r$duct
$%%eri'(# i' each c$u'try. M$re %$cu#ed $' ada&ti'( their &r$duct# a'd #er6ice t$ each i'di6idual l$cal
)arket.
• Global companies ha6e i'6e#ted a'd are &re#e't i' )a'y c$u'trie#. They )arket their &r$duct# thr$u(h
the u#e $% the #a)e c$$rdi'ated i)a(e;+ra'd i' all )arket#. <e'erally $'e c$r&$rate $%%ice that i#
re#&$'#i+le %$r (l$+al #trate(y. E)&ha#i# $' 6$lu)e c$#t )a'a(e)e't a'd e%%icie'cy.
• Transnational companies are )uch )$re c$)&le2 $r(a'i=ati$'#. They ha6e i'6e#ted i' %$rei('
$&erati$'# ha6e a ce'tral c$r&$rate %acility +ut (i6e deci#i$'-)aki'( R>D a'd )arketi'( &$8er# t$
each i'di6idual %$rei(' )arket.
• Multinational Corporation I' a re&$rt $% the I'ter'ati$'al La+$ur Or(a'i#ati$' !ILO" it i# $+#er6ed that
?the e##e'tial $% the MN4 lie# i' the %act that it# )a'a(erial head@uarter# are l$cated i' $'e c$u'try !h$)e
c$u'try" 8hile the e'ter&ri#e carrie# $ut $&erati$'# i' a 'u)+er $% the $ther c$u'trie# !h$#t c$u'trie#".?
2
A ?)ulti'ati$'al c$r&$rati$'? i# al#$ re%erred t$ a# a' i'ter'ati$'al tra'#acti$'al $r (l$+al c$r&$rati$'.
Actually %$r a' e'lar(i'( +u#i'e## %ir) )ulti'ati$'al i# a +e(i''i'( #te& a# it (radually +ec$)e# tra'#'ati$'al
a'd the' tur'# i't$ a (l$+al c$r&$rati$'. 3$r tra'#'ati$'al c$r&$rati$' re&re#e't# a #ta(e 8here i' the
$8'er#hi& a'd c$'tr$l $% the c$'cer'ed $r(a'i=ati$' cr$##e# the 'ati$'al +$u'darie#.
Features of MNCs :
:. MN4# ha6e )a'a(erial head@uarter# i' h$)e c$u'trie# 8hile they carry $ut $&erati$'# i' a 'u)+er $% $ther
!h$#t" c$u'trie#.
/. A lar(e &art $% ca&ital a##et# $% the &are't c$)&a'y i# $8'ed +y the citi=e'# $% the c$)&a'yA# h$)e c$u'try.
B. The a+#$lute )a9$rity $% the )e)+er# $% the B$ard $% Direct$r# are citi=e'# $% the h$)e c$u'try.
1. Deci#i$'# $' 'e8 i'6e#t)e't a'd the l$cal $+9ecti6e# are take' +y the &are't c$)&a'y.
C. MN4# are &red$)i'a'tly lar(e-#i=ed a'd e2erci#e a (reat de(ree $% ec$'$)ic d$)i'a'ce.
.. MN4# c$'tr$l &r$ducti$' acti6ity 8ith lar(e %$rei(' direct i'6e#t)e't i' )$re tha' $'e de6el$&ed a'd
de6el$&i'( c$u'trie#.
D. MN4# are '$t 9u#t &artici&a't# i' e2&$rt trade 8ith$ut %$rei(' i'6e#t)e't#.
Main Drivers of Globalization [International Business
3
Cost !river c$)&a'ie# c$'#ider the 6ari$u# li%e#tyle $% the c$u'try +e%$re c$'#ideri'( the &rice $% the &r$duct
a'd #er6ice# t$ re'dered
Tec"nolo#y !river : i'crea#i'( tech'$l$(y #y#te) tra'#&$rtati$' ad6a'ci'( i' the le6el $% 8$rld trade #y#te)
Government !river: reduci'( trade tari%%# a'd '$' trade tari%%# reduci'( the r$le $% &$litical &$licie#
Competition !river: $r(a'i=ati$' +ec$)i'( a (l$+al ce'ter #hi%t i' $&e' )arket #y#te) Pri6ati=ati$'
Li+erali=ati$'
$pproac"es in International Business
%& 'T(N)C'NT*IC )*I'NT$TI)N:
The eth'$ce'tric $rie'tati$' $% a %ir) c$'#ider# that the &r$duct# )arketi'( #trate(ie# a'd tech'i@ue#
a&&lica+le i' the h$)e )arket are e@ually #$ i' the $6er#ea# )arket a# 8ell. I' #uch a %ir) all %$rei('
)arketi'( $&erati$'# are &la''ed a'd carried $ut %r$) h$)e +a#e 8ith little $r '$ di%%ere'ce i' &r$duct
%$r)ulati$' a'd #&eci%icati$'# &rici'( #trate(y di#tri+uti$' a'd &r$)$ti$' )ea#ure# +et8ee' h$)e a'd
$6er#ea# )arket#. The %ir) (e'erally de&e'd# $' it# %$rei(' a(e't# a'd e2&$rt-i)&$rt )ercha't# %$r it# e2&$rt
#ale#.
+& *'GI)C'NT*IC )*I'NT$TI)N :
I' re(i$ce'tric a&&r$ach the %ir) acce&t# a re(i$'al )arketi'( &$licy c$6eri'( a (r$u& $% c$u'trie# 8hich ha6e
c$)&ara+le )arket characteri#tic#. The $&erati$'al #trate(ie# are %$r)ulated $' the +a#i# $% the e'tire re(i$'
rather tha' i'di6idual c$u'trie#. The &r$ducti$' a'd di#tri+uti$' %acilitie# are created t$ #er6e the 8h$le re(i$'
8ith e%%ecti6e ec$'$)y $' $&erati$' cl$#e c$'tr$l a'd c$-$rdi'ati$'.
,& G')C'NT*IC )*I'NT$TI)N :
I' (e$ce'tric $rie'tati$' the %ir)# acce&t a 8$rld 8ide a&&r$ach t$ )arketi'( a'd it# $&erati$'# +ec$)e
(l$+al. I' (l$+al e'ter&ri#e the )a'a(e)e't e#ta+li#he# )a'u%acturi'( a'd &r$ce##i'( %acilitie# ar$u'd the
8$rld i' $rder t$ #er6e the 6ari$u# re(i$'al a'd 'ati$'al )arket# thr$u(h a c$)&licated +ut 8ell c$-$rdi'ate
#y#te) $% di#tri+uti$' 'et8$rk. There are #i)ilaritie# +et8ee' (e$ce'tric a'd re(i$ce'tric a&&r$ache# i' the
i'ter'ati$'al )arket e2ce&t that the (e$ce'tric a&&r$ach call# %$r a )uch (reater #cale $% $&erati$'.
-& P)./C'NT*IC )P'*$TI)N :
Ehe' a %ir) ad$&t# &$lyce'tric a&&r$ach t$ $6er#ea# )arket# it atte)&t# t$ $r(a'i=e it# i'ter'ati$'al )arketi'(
acti6itie# $' a c$u'try t$ c$u'try +a#i#. Each c$u'try i# treated a# a #e&arate e'tity a'd i'di6idual #trate(ie# are
4
8$rked $ut acc$rdi'(ly. L$cal a##e)+ly $r &r$ducti$' %acilitie# a'd )arketi'( $r(a'i#ati$'# are created %$r
#er6i'( )arket 'eed# i' each c$u'try. P$lyce'tric $rie'tati$' c$uld +e )$#t #uita+le %$r %ir)# #eri$u#ly
c$))itted t$ i'ter'ati$'al )arketi'( a'd ha6e it# re#$urce# %$r i'6e#ti'( a+r$ad %$r %uller a'd l$'(-ter)
&e'etrati$' i't$ ch$#e' )arket#. P$lyce'tric a&&r$ach 8$rk# +etter a)$'( c$u'trie# 8hich ha6e #i('i%ica't
ec$'$)ic &$litical a'd cultural di%%ere'ce# a'd &er%$r)a'ce $% the#e ta#k# are %ree %r$) the &r$+le)# created
&ri)arily +y the e'6ir$')e'tal %act$r#.
T"eories of International Business
%& T"eory of $bsolute $!vanta#e
The Sc$tti#h ec$'$)i#t Ada) S)ith de6el$&ed the trade the$ry $% a+#$lute ad6a'ta(e i'
D.. A c$u'try that
ha# a' a+#$lute ad6a'ta(e &r$duce# (reater $ut&ut $% a ($$d $r #er6ice tha' $ther c$u'trie# u#i'( the #a)e
a)$u't $% re#$urce#. S)ith #tated that tari%%# a'd @u$ta# #h$uld '$t re#trict i'ter'ati$'al tradeF it #h$uld +e
all$8ed t$ %l$8 acc$rdi'( t$ )arket %$rce#. 4$'trary t$ )erca'tili#) S)ith ar(ued that a c$u'try #h$uld
c$'ce'trate $' &r$ducti$' $% ($$d# i' 8hich it h$ld# a' a+#$lute ad6a'ta(e. N$ c$u'try 8$uld the' 'eed t$
&r$duce all the ($$d# it c$'#u)ed. The the$ry $% a+#$lute ad6a'ta(e de#tr$y# the )erca'tili#tic idea that
i'ter'ati$'al trade i# a =er$-#u) (a)e. Acc$rdi'( t$ the a+#$lute ad6a'ta(e the$ry i'ter'ati$'al trade i# a
&$#iti6e-#u) (a)e +ecau#e there are (ai'# %$r +$th c$u'trie# t$ a' e2cha'(e. U'like )erca'tili#) thi# the$ry
)ea#ure# the 'ati$'A# 8ealth +y the li6i'( #ta'dard# $% it# &e$&le a'd '$t +y ($ld a'd #il6er.
There i# a &$te'tial &r$+le) 8ith a+#$lute ad6a'ta(e. I% there i# $'e c$u'try that d$e# '$t ha6e a' a+#$lute
ad6a'ta(e i' the &r$ducti$' $% a'y &r$duct 8ill there #till +e +e'e%it t$ trade a'd 8ill trade e6e' $ccurG The
a'#8er )ay +e %$u'd i' the e2te'#i$' $% a+#$lute ad6a'ta(e the the$ry $% c$)&arati6e ad6a'ta(e.
+& T"eory of Comparative $!vanta#e
The )$#t +a#ic c$'ce&t i' the 8h$le $% i'ter'ati$'al trade the$ry i# the &ri'ci&le $% c$)&arati6e ad6a'ta(e
%ir#t i'tr$duced +y Da6id Ricard$ i' :-. It re)ai'# a )a9$r i'%lue'ce $' )uch i'ter'ati$'al trade &$licy a'd
i# there%$re i)&$rta't i' u'der#ta'di'( the )$der' (l$+al ec$'$)y. The &ri'ci&le $% c$)&arati6e ad6a'ta(e
#tate# that a c$u'try #h$uld #&eciali=e i' &r$duci'( a'd e2&$rti'( th$#e &r$duct# i' 8hich i# ha# a c$)&arati6e
$r relati6e c$#t ad6a'ta(e c$)&ared 8ith $ther c$u'trie# a'd #h$uld i)&$rt th$#e ($$d# i' 8hich it ha# a
c$)&arati6e di#ad6a'ta(e. Out $% #uch #&eciali#ati$' it i# ar(ued 8ill accrue (reater +e'e%it %$r all.
5
I' thi# the$ry there are #e6eral a##u)&ti$'# that li)it the real-8$rld a&&licati$'. The a##u)&ti$' that
c$u'trie# are dri6e' $'ly +y the )a2i)i=ati$' $% &r$ducti$' a'd c$'#u)&ti$' a'd '$t +y i##ue# $ut $% c$'cer'
%$r 8$rker# $r c$'#u)er# i# a )i#take.
,&(ec0sc"er1)"lin T"eory
I' the early :0HH# a' i'ter'ati$'al trade the$ry called %act$r &r$&$rti$'# the$ry e)er(ed +y t8$ S8edi#h
ec$'$)i#t# Eli *eck#cher a'd Bertil Ohli'. Thi# the$ry i# al#$ called the *eck#cher-Ohli' the$ry. The
*eck#cher-Ohli' the$ry #tre##e# that c$u'trie# #h$uld &r$duce a'd e2&$rt ($$d# that re@uire re#$urce# !%act$r#"
that are a+u'da't a'd i)&$rt ($$d# that re@uire re#$urce# i' #h$rt #u&&ly. Thi# the$ry di%%er# %r$) the the$rie#
$% c$)&arati6e ad6a'ta(e a'd a+#$lute ad6a'ta(e #i'ce the#e the$ry %$cu#e# $' the &r$ducti6ity $% the
&r$ducti$' &r$ce## %$r a &articular ($$d. O' the c$'trary the *eck#cher-Ohli' the$ry #tate# that a c$u'try
#h$uld #&eciali#e &r$ducti$' a'd e2&$rt u#i'( the %act$r# that are )$#t a+u'da't a'd thu# the chea&e#t. N$t
&r$duce a# earlier the$rie# #tated the ($$d# it &r$duce# )$#t e%%icie'tly.
The *eck#cher-Ohli' the$ry i# &re%erred t$ the Ricard$ the$ry +y )a'y ec$'$)i#t# +ecau#e it )ake# %e8er
#i)&li%yi'( a##u)&ti$'#. I' :0CB Ea##ily Le$'tie% &u+li#hed a #tudy 8here he te#ted the 6alidity $% the
*eck#cher-Ohli' the$ry. The #tudy #h$8ed that the U.S 8a# )$re a+u'da't i' ca&ital c$)&ared t$ $ther
c$u'trie# there%$re the U.S 8$uld e2&$rt ca&ital- i'te'#i6e ($$d# a'd i)&$rt la+$ur-i'te'#i6e ($$d#. Le$'tie%
%$u'd $ut that the U.SA# e2&$rt 8a# le## ca&ital i'te'#i6e tha' i)&$rt.
-&Pro!uct .ife Cycle T"eory
Ray)$'d Ver'$' de6el$&ed the i'ter'ati$'al &r$duct li%e cycle the$ry i' the :0.H#. The i'ter'ati$'al &r$duct
li%e cycle the$ry #tre##e# that a c$)&a'y 8ill +e(i' t$ e2&$rt it# &r$duct a'd later take $' %$rei(' direct
i'6e#t)e't a# the &r$duct )$6e# thr$u(h it# li%e cycle. E6e'tually a c$u'tryA# e2&$rt +ec$)e# it# i)&$rt.
Alth$u(h the )$del i# de6el$&ed ar$u'd the U.S it ca' +e (e'erali#ed a'd a&&lied t$ a'y $% the de6el$&ed a'd
i''$6ati6e )arket# $% the 8$rld.
The &r$duct li%e cycle the$ry 8a# de6el$&ed duri'( the :0.H# a'd %$cu#ed $' the U.S #i'ce )$#t i''$6ati$'#
ca)e %r$) that )arket. Thi# 8a# a' a&&lica+le the$ry at that ti)e #i'ce the U.S d$)i'ated the 8$rld trade.
T$day the U.S i# '$ l$'(er the $'ly i''$6at$r $% &r$duct# i' the 8$rld. T$day c$)&a'ie# de#i(' 'e8 &r$duct#
a'd )$di%y the) )uch @uicker tha' +e%$re. 4$)&a'ie# are %$rced t$ i'tr$duce the &r$duct# i' )a'y di%%ere't
)arket# at the #a)e ti)e t$ (ai' c$#t +e'e%it# +e%$re it# #ale# decli'e#. The the$ry d$e# '$t e2&lai' trade
&atter'# $% t$day.
6
2&T"eory of Mercantilism
Acc$rdi'( t$ Eild /HHH the trade the$ry that #tate# that 'ati$'# #h$uld accu)ulate %i'a'cial 8ealth u#ually
i' the %$r) $% ($ld +y e'c$ura(i'( e2&$rt# a'd di#c$ura(i'( i)&$rt# i# called )erca'tili#). Acc$rdi'( t$ thi#
the$ry $ther )ea#ure# $% c$u'trie#A 8ell +ei'( #uch a# li6i'( #ta'dard# $r hu)a' de6el$&)e't are irrele6a't.
Mai'ly <reat Britai' 3ra'ce the Netherla'd# P$rtu(al a'd S&ai' u#ed )erca'tili#) duri'( the :CHH# t$ the
lateHH#.
Merca'tili#tic c$u'trie# &racticed the #$-called =er$-#u) (a)eI #ituati$' i' 8hich $'e &artici&a'tA# (ai'#
re#ult $'ly %r$) a'$ther &artici&a'tA# e@ui6ale't l$##e#. The 'et cha'(e i' t$tal 8ealth a)$'( &artici&a't# i#
=er$F the 8ealth i# 9u#t #hi%ted %r$) $'e t$ a'$ther.J 8hich )ea't that 8$rld 8ealth 8a# li)ited a'd that
c$u'trie# $'ly c$uld i'crea#e their #hare at e2&e'#e $% their 'ei(h+$r#. The ec$'$)ic de6el$&)e't 8a#
&re6e'ted 8he' the )erca'tili#tic c$u'trie# &aid the c$l$'ie# little %$r e2&$rt a'd char(ed the) hi(h &rice %$r
i)&$rt. The )ai' &r$+le) 8ith )erca'tili#) i# that all c$u'trie# e'(a(ed i' e2&$rt +ut 8a# re#tricted %r$)
i)&$rt &re6e'ti$' %r$) de6el$&)e't $% i'ter'ati$'al trade
INT'*N$TI)N$ B34IN'44 'N5I*)NM'NT
F)*'IGN 'N5I*)NM'NT:
The h$)e-+a#ed $r the d$)e#tic e2&$rt e2&a'#i$' )ea#ure# are 'ece##arily related t$ the c$'diti$'# &re6aili'(
i' &$##i+le )arket#. A' E2&$rter ha# t$ $6erc$)e 6ari$u# c$'#trai't# a'd ada&t &la'# a'd $&erati$'# t$ #uit
%$rei(' e'6ir$')e'tal c$'diti$'#. The )ai' ele)e't# $% %$rei(' e'6ir$')e't a%%ecti'( )arketi'( acti6itie# $% a
%ir) i' a %$rei(' c$u'try c$'#i#t $% the %$ll$8i'(.
$6 P).ITIC$. DIM'N4I)N:
Nati$'# (reatly di%%er i' their &$litical e'6ir$')e't. <$6t. &$licie# re(ulati$'# a'd c$'tr$l )echa'i#)#
re(ardi'( the c$u'trie# %$rei(' trade a'd c$))ercial relati$'# 8ith $ther c$u'trie# $r (r$u&# $% c$u'trie#. At
lea#t %$ur %act$r# #h$uld +e c$'#idered i' decidi'( 8hether t$ d$ +u#i'e## i' a &articular c$u'try. They are
:. $ttitu!es to7ar!s International Buyin#:
7
S$)e 'ati$'# are 6ery rece&ti6e i'deed e'c$ura(i'( t$ %$rei(' %ir)# a'd #$)e $ther# are h$#tile. 3$r
e.(., Si'(a&$re UAE a'd Me2ic$ are attracti'( %$rei(' i'6e#t)e't# +y $%%eri'( i'6e#t)e't i'ce'ti6e#
re)$6al $% trade +arrier# i'%ra#tructure #er6ice# etc.
/. Political 4tability: A c$u'tryA# %uture a'd #ta+ility i# a'$ther i)&$rta't i##ue. <$6er')e't cha'(e#
ha'd# #$)eti)e# 6i$le'tly. E6e' 8ith$ut a cha'(e a re(i$' )ay decide t$ re#&$'d t$ &$&ular %eeli'(. A
%$rei(' %ir)A# &r$&erty )ay +e #ei=edF $r it# curre'cy h$ldi'(# +l$ckedF $r i)&$rt @u$ta# $r 'e8 dutie#
)ay +e i)&$#ed. Ehe' &$litical #ta+ility i# hi(h $'e )ay ($ %$r direct i'6e#t)e't#. But 8he' i'#ta+ility
i# hi(h %ir)# )ay &re%er t$ e2&$rt rather tha' i'6$l6e i' direct i'6e#t)e't#. Thi# 8ill +ri'( i' %$rei('
e2cha'(e %a#t a'd curre'cy c$'6erti+ility i# al#$ ra&id.
,& Monetary *e#ulations:
Seller# 8a't t$ reali#e &r$%it# i' a curre'cy $% 6alue t$ the). I' +e#t #ituati$'# the I)&$rter &ay# i' the
#ellerA# curre'cy $r i' hard 8$rld curre'cie#. I' the 8$r#t ca#e they ha6e t$ take the )$'ey $ut $% the
h$#t c$u'try i' the %$r) $% relati6ely u')arketa+le &r$duct# that they ca' #ell el#e8here $'ly at a l$##.
Be#ide# curre'cy re#tricti$'# a %luctuati'( e2cha'(e rate al#$ create# hi(h ri#k# %$r the e2&$rter.
-& Government Bureaucracy:
It i# the e2te't t$ 8hich the <$6er')e't i' the h$#t c$u'try ru'# a' e%%icie't #y#te) %$r a##i#ti'( %$rei('
c$)&a'ie#, e%%icie't cu#t$)# ha'dli'( ade@uate )arket i'%$r)ati$' etc. The &r$+le) $% %$rei('
u'certai'ty i# thu# %urther c$)&licated +y a %re@ue'tly i)&$#ed ?alie' #tatu#? thi# i'crea#e# the
di%%iculty $% &r$&erly a##e##i'( a'd %$reca#ti'( the dy'a)ic i'ter'ati$'al +u#i'e##. The &$litical
e'6ir$')e't $%%er# the +e#t e2a)&le $% the alie' #tatu#.
A %$rei(' &$litical e'6ir$')e't ca' +e e2tre)ely criticalF #hi%t# i' <$6er')e't $%te' )ea'# #udde'
cha'(e# i' attitude# that ca' re#ult i' e2&r$&riati$' e2&ul#i$' $r )a9$r re#tricti$'# i' $&erati$'#. The
%act i# that a %$rei(' c$)&a'y i# %$rei(' a'd thu# al8ay# #u+9ect t$ the &$litical 8hi) t$ a (reater de(ree
tha' a d$)e#tic %ir).
C3.T3*$. 'N5I*)NM'NT:
The )a''er i' 8hich &e$&le c$'#u)e their &ri$rity $% 'eed# a'd the 8a't# they atte)&t t$ #ati#%y a'd the
)a''er i' 8hich they #ati#%y are %u'cti$'# $% their culture 8hich )$uld# a'd dictate# their #tyle $% li6i'(. Thi#
culture i# the #u) t$tal $% k'$8led(e +elie% art )$ral# la8# cu#t$)# a'd $ther ca&a+ilitie# ac@uired +y
8
hu)a'# a# )e)+er# $% the #$ciety. Si'ce culture decide# the #tyle $% li6i'( it i# &erti'e't t$ #tudy it e#&ecially
i' e2&$rt )arketi'(. e.(. 8he' a &r$)$ti$'al )e##a(e i# 8ritte' #y)+$l# rec$('i=a+le a'd )ea'i'(%ul t$ the
)arket !the culture" )u#t +e u#ed. Ehe' de#i('i'( a &r$duct the #tyle u#ed a'd $ther related )arketi'(
acti6itie# )u#t +e culturally acce&ta+le.
'C)N)MIC 'N5I*)NM'NT: I' c$'#ideri'( the i'ter'ati$'al )arket each E2&$rter )u#t c$'#ider the
i)&$rti'( c$u'tryA# ec$'$)y. T8$ ec$'$)ic characteri#tic# re%lect the c$u'tryA# attracti6e'e## a# a' e2&$rt
)arket. They are the c$u'tryA# i'du#trial #tructure a'd the c$u'tryA# i'c$)e di#tri+uti$' +y e)&l$y)e't
i'du#triali=ati$' a'd #$ci$ ec$'$)ic 9u#tice#.
.'G$. 'N5I*)NM'NT:
The le(al di)e'#i$' $% i'ter'ati$'al Bu#i'e## e'6ir$')e't i'clude# all la8# a'd re(ulati$'# re(ardi'( &r$duct
#&eci%icati$' a'd #ta'dard# &acka(i'( a'd la+eli'( c$&yri(ht trade)ark &ate't# health a'd #a%ety re(ulati$'#
&articularly i' re#&ect $% %$$d# a'd dru(#. There are al#$ c$'tr$l# i' &r$)$ti$'al )eth$d# &rice c$'tr$l trade
)ar(i' )ark-u& etc. The#e le(al a#&ect# $% )arketi'( a+r$ad ha6e #e6eral i)&licati$'# 8hich a' e2&$rti'(
%ir) 'eed# t$ #tudy cl$#ely.
*e#ional 4trate#y:
I' i'ter'ati$'al +u#i'e## the re(i$'al #trate(y i# e2&lai'ed a# +u#i'e## #trate(y directed i' d$i'( +u#i'e## %$r a
#&eci%ic c$u'try re(i$' i' i'ter'ati$'al +u#i'e## i# $'e 'ati$' lar(e #cale +u#i'e## $&erat$r# 8ill ha6e t$ de#i('
the +u#i'e## #trate(y +a#ed $' each 'ati$' a'd 8hich ulti)ately a%%ect# the i'ter'ati$'al +u#i'e##
4$)&a'ie# ca' #$urce ($$d# tech'$l$(y i'%$r)ati$' a'd ca&ital %r$) ar$u'd the 8$rld +ut +u#i'e## acti6ity
te'd# t$ +e ce'tered i' certai' citie# $r city re(i$'# i' a %e8 &art# $% the 8$rld
Global strate#y
<l$+al #trate(y i# the a+ility $% a' $r(a'i=ati$' t$ a&&ly a re&lica+le a'd #y#te)atic )eth$d$l$(y t$ the u'i@ue
challe'(e# that are %aced +y the $r(a'i=ati$'. A #$u'd (l$+al #trate(y addre##e# @ue#ti$'# #uch a# h$8 t$ +uild
'ece##ary (l$+al &re#e'ce a'd 8hat #h$uld +e the $&ti)al l$cati$'# %$r 6ari$u# 6alue chai' acti6itie#. A'y
c$)&a'y 8hich i)&le)e't# the (l$+al #trate(y 8ill ha6e the %$ll$8i'( a#&ect# a# it# %eature#
9
• Pr$duct i# the #a)e i' all c$u'trie#.
• 4e'trali=ed c$'tr$l - little deci#i$'-)aki'( auth$rity $' the l$cal le6el
• E%%ecti6e 8he' di%%ere'ce# +et8ee' c$u'trie# are #)all
• Ad6a'ta(e#, c$#t c$$rdi'ated acti6itie# %a#ter &r$duct de6el$&)e't
II13nit
T*$D' B$**I'*4
Trade +arrier# )ay +e !i" Tari%% Barrier# a'd !ii" N$' Tari%% Barrier# $r &r$tecti6e +arrier#.
i" T$*IFF B$**I'*4: Tari%% +arrier# ha6e +ee' $'e $% the cla##ical )eth$d# $% re(ulati'( i'ter'ati$'al trade.
Tari%%# )ay +e re%erred t$ a# ta2e# $' the i)&$rt#. It ai)# at re#tricti'( the i'8ard %l$8 $%
($$d# %r$) $ther c$u'trie# t$ &r$tect the c$u'tryA# $8' i'du#trie# +y )aki'( the ($$d# c$#tlier i' that c$u'try.
S$)eti)e# the duty $' a &r$duct +ec$)e# #$ #tee& that it i# '$t 8$rth8hile i)&$rti'( it. I' additi$' the duty #$
i)&$#ed al#$ &r$6ide# a #u+#ta'tial #$urce $% re6e'ue t$ the i)&$rti'( c$u'try. I' I'dia 4u#t$)# duty %$r)# a
#i('i%ica't &art $% the t$tal re6e'ue a'd there%$re i# a' i)&$rta't ele)e't i' the +ud(et. S$)e c$u'trie# u#e
thi# )eth$d $% i)&$#i'( tari%%# a'd 4u#t$)# dutie# t$ +ala'ce it# +ala'ce $% trade. A 'ati$' )ay al#$ u#e thi#
)eth$d t$ i'%lue'ce the &$litical a'd ec$'$)ic &$licie# $% $ther c$u'trie#. It )ay i)&$#e tari%%# $' certai'
i)&$rt# %r$) a &articular c$u'try a# a &r$te#t a(ai'#t tari%%# i)&$#ed +y that c$u'try $' it# ($$d#.
4pecific Duties8 i)&$#ed $' the +a#i# $% &er u'it $% a'y ide'ti%ia+le characteri#tic $% )ercha'di#e #uch a# &er
u'it 6$lu)e 8ei(ht le'(th etc. The duty #chedule# #$ #&eci%ied )u#t #&eci%y the rate $% duty a# 8ell a# the
deter)i'i'( %act$r #uch a# 8ei(ht 'u)+er etc. a'd +a#i# $% arri6i'( at the deter)i'i'( %act$r #uch a# (r$##
8ei(ht 'et 8ei(ht $r tare 8ei(ht.
$! valorem Tari%%# are +a#ed $' the 6alue $% i)&$rt# a'd are char(ed i' the %$r) $% #&eci%ied &erce'ta(e $% the
6alue $% ($$d#. The #chedule #h$uld #&eci%y h$8 the 6alue $% i)&$rted ($$d# 8$uld +e arri6ed at. M$#t $% the
c$u'trie# %$ll$8 the &ractice $% char(i'( tari%%# $' the +a#i# $% 4I3 c$#t $r 3OB c$#t )e'ti$'ed i' the i'6$ice.
A# tari%%# are +a#ed $' the c$#t #$)eti)e# u'ethical &ractice# $% u'der i'6$ici'( are ad$&ted 8here+y 4u#t$)#
re6e'ue i# a%%ected. I' $rder t$ eli)i'ate #uch )al&ractice# c$u'trie# ad$&t a %air 6alue !(i6e' i' the #chedule"
$r the curre't d$)e#tic 6alue $% the ($$d# a# the +a#i# $% c$)&uti'( the dutie#.
10
N)N 1 T$*IFF M'$43*'4 9B$**I'*46
T$ &r$tect the d$)e#tic i'du#trie# a(ai'#t u'%air c$)&etiti$' a'd t$ (i6e the) a %air cha'ce $% #ur6i6al 6ari$u#
c$u'trie# are ad$&ti'( '$'-tari%% )ea#ure#. S$)e $% the#e are ,
:uantity *estrictions8 :uotas an! .icensin# Proce!ures:1
U'der @ua'tity re#tricti$' the )a2i)u) @ua'tity $% di%%ere't c$))$ditie# 8hich 8$uld +e all$8ed t$ +e
i)&$rted $6er a &eri$d $% ti)e %r$) 6ari$u# c$u'trie# i# %i2ed i' ad6a'ce. The @u$ta %i2ed '$r)ally de&e'd# $'
the relati$'# $% the t8$ c$u'trie# a'd the 'eed# $% the i)&$rti'( c$u'try. *ere the <$6t. i# i' a &$#iti$' t$
re#trict the i)&$rt# t$ a de#ired le6el. Ku$ta# are 6ery $%te' c$)+i'ed 8ith lice'#i'( #y#te) t$ re(ulate the %l$8
$% i)&$rt# $6er the @u$ta &eri$d a# al#$ t$ all$cate the) +et8ee' 6ari$u# i)&$rter# a'd #u&&lyi'( c$u'trie#.
Forei#n ';c"an#e *estrictions 1E2cha'(e c$'tr$l )ea#ure# are u#ed 8idely +y a 'u)+er $% de6el$&i'(
c$u'trie# t$ re(ulate i)&$rt#. U'der thi# #y#te) a' i)&$rter ha# t$ e'#ure that ade@uate %$rei(' e2cha'(e i#
a6aila+le %$r i)&$rt# +y (etti'( a cleara'ce %r$) the e2cha'(e c$'tr$l auth$ritie# $% the c$u'try.
Tec"nical *e#ulations 1
A'$ther )ea#ure t$ re(ulate the i)&$rt# i# t$ i)&$#e certai' #ta'dard# $% tech'ical &r$ducti$' tech'ical
#&eci%icati$' etc. The i)&$rted c$))$dity ha# t$ )eet the#e #&eci%icati$'#. Stri'(e't tech'ical re(ulati$'# a'd
#ta'dard# +ey$'d i'ter'ati$'al '$r)# e2&e'#i6e te#ti'( a'd certi%icati$' a'd c$)&licated )arki'( a'd
&acka(i'( re@uire)e't#.
5oluntary ';port *estraint:
The a(ree)e't $' A6$lu'taryA e2&$rt re#trai't i# i)&$#ed $' the e2&$rter u'der the threat $% #a'cti$'# t$ li)it
the e2&$rt $% certai' ($$d# i' the i)&$rti'( c$u'try. Si)ilarly e#ta+li#h)e't $% )i'i)u) i)&$rt &rice# #h$uld
+e #trictly $+#er6ed +y the e2&$rti'( %ir)# i' c$'tract# 8ith the i)&$rter# $% the c$u'try that ha# #et #uch &rice#.
I' ca#e $% reducti$' $% e2&$rt &rice# +el$8 the )i'i)u) &rice le6el the i)&$rti'( c$u'try i)&$#e# a'ti-
du)&i'( duty 8hich c$uld lead t$ 8ithdra8al %r$) the )arket. V$lu'tary e2&$rt re#trai't# )$#tly a%%ect trade
i' te2tile# %$$t8ear dairy &r$duct# car# )achi'e t$$l# etc.
.ocal Content *e<uirement:1
11
A l$cal c$'te't re@uire)e't i# a' a(ree)e't +et8ee' the e2&$rti'( a'd the i)&$rti'( c$u'try that the e2&$rti'(
c$u'try 8ill u#e #$)e a)$u't $r c$'te't $% re#$urce# $% the i)&$rti'( c$u'try i' it# &r$ce## $% &r$ducti$'. I%
the e2&$rti'( c$u'try a(ree# t$ d$ that $'ly the' the i)&$rti'( c$u'try 8ill i)&$rt their ($$d#.
'mbar#o:1 E)+ar($ i# a #&eci%ic ty&e $% @u$ta &r$hi+iti'( trade. Like @u$ta# e)+ar($e# )ay +e i)&$#ed $'
i)&$rt# $r e2&$rt# $% &articular ($$d# re(ardle## $% de#ti'ati$'# i' re#&ect $% certai' ($$d# #u&&lied t$
#&eci%ic c$u'trie# $r i' re#&ect $% all ($$d# #hi&&ed t$ certai' c$u'trie#. Alth$u(h the e)+ar($ i# u#ually
i'tr$duced %$r &$litical &ur&$#e# the c$'#e@ue'ce# i' e##e'ce c$uld +e ec$'$)ic#
Difference bet7een Tariff an! Non1Tariff Barriers
$nti 1 Dumpin#
A'ti du)&i'( i# a 'e8 8ea&$' i' the trade 8ar. A'ti du)&i'( i# $'e &$licy 8hich i# creati'( a '$' tari%%
+arrier hi'deri'( %ree trade.
12
I% a c$)&a'y e2&$rt# a &r$duct at a &rice l$8er tha' the $'e char(ed i' it# h$)e )arket it i# #aid t$ +e
du)&i'(. I% the i)&$rti'( c$)&a'y #ucceed# it# c$u'try 8ill le6y a' a'ti du)&i'( duty $' the &r$duct
e2&$rted +y the I'dia' 4$. t$ hi). Thi# add# t$ the la'ded c$#t $% the &r$duct a'd reduce# the I'dia' e2&$rterA#
c$)&etiti6e'e##.
Tra!e Bloc
A' a(ree)e't +et8ee' #tate# re(i$'# $r c$u'trie# t$ reduce +arrier# t$ trade +et8ee' the &artici&ati'( re(i$'#
Tradi'( +l$c# are a %$r) $% ec$'$)ic i'te(rati$' a'd i'crea#i'(ly #ha&e the &atter' $% 8$rld trade.
'conomic inte#ration i# the u'i%icati$' $% ec$'$)ic &$licie# +et8ee' di%%ere't #tate# thr$u(h the &artial $r %ull
a+$liti$' $% tari%% a'd '$'-tari%% re#tricti$'# $' trade taki'( &lace a)$'( the) &ri$r t$ their i'te(rati$'
The de(ree $% ec$'$)ic i'te(rati$' ca' +e cate($ri=ed i't$ %i6e #ta(e#,
:. Pre%ere'tial tradi'( area
/. 3ree trade area
B. 4u#t$)# u'i$'
1. 4$))$' )arket
C. Ec$'$)ic u'i$'
4ta#es=types = Forms= of economic inte#ration
Preferential Trade Area
Pre%ere'tial Trade Area# !PTA#" e2i#t 8he' c$u'trie# 8ithi' a (e$(ra&hical re(i$' a(ree t$ reduce $r eli)i'ate
tari%% +arrier# $' #elected ($$d# i)&$rted %r$) $ther )e)+er# $% the area. Thi# i# $%te' the %ir#t #)all #te&
t$8ard# the creati$' $% a tradi'( +l$c.
Free Trade Area
3ree Trade Area# !3TA#" are created 8he' t8$ $r )$re c$u'trie# i' a re(i$' a(ree t$ reduce $r eli)i'ate
+arrier# t$ trade $' all ($$d# c$)i'( %r$) $ther )e)+er#.
Customs Union
13
A cu#t$)# u'i$' i'6$l6e# the re)$6al $% tari%% +arrier# +et8ee' )e)+er# &lu# the acce&ta'ce $% a c$))$'
!u'i%ied" e2ter'al tari%% a(ai'#t '$'-)e)+er#. Thi# )ea'# that )e)+er# )ay 'e($tiate a# a #i'(le +l$c 8ith B
rd
&artie# #uch a# 8ith $ther tradi'( +l$c# $r 8ith the ETO
Common Market
A Lc$))$' )arketM i# the #i('i%ica't #te& t$8ard# %ull ec$'$)ic i'te(rati$' a'd $ccur# 8he' )e)+er
c$u'trie# trade %reely i' all ec$'$)ic re#$urce# 7 '$t 9u#t ta'(i+le ($$d#. Thi# )ea'# that all +arrier# t$ trade i'
($$d# #er6ice# ca&ital a'd la+$ur are re)$6ed.
The main advantages for members of trading blocs[this can be written for any trade bloc]
? 3ree trade &ractice#
? Market acce## a'd trade creati$'.
? Trade creati$' a'd trade di6er#i$'
? Ec$'$)ie# $% #cale
? l$8eri'( c$#t# a'd l$8er &rice# %$r c$'#u)er#.
? N$+# creati$' a'd e)&l$y)e't $&&$rtu'itie#
? Pr$tecti$' $% i'di6idual i'tere#t# $% )e)+er c$u'trie#.
N$FT$
N$rth A)erica' 3ree Trade A(ree)e't !NA3TA" e#ta+li#hed a %ree-trade =$'e i' N$rth A)ericaF it 8a# #i('ed i' :00/ +y
4a'ada Me2ic$ a'd the U'ited State# a'd t$$k e%%ect $' Na'. : :001. NA3TA i))ediately li%ted tari%%# $' the )a9$rity
$% ($$d# &r$duced +y the #i('at$ry 'ati$'#. It al#$ call# %$r the (radual eli)i'ati$' $% all trade +arrier# +et8ee' the#e
three c$u'trie#.
Goals of the NAFTA
• t$ reduce +arrier# t$ trade
• t$ i'crea#e c$$&erati$' %$r i)&r$6i'( 8$rki'( c$'diti$'# i' N$rth A)erica
• t$ create a' e2&a'ded a'd #a%e )arket %$r ($$d# a'd #er6ice# &r$duced i' N$rth A)erica
14
• t$ e#ta+li#h clear a'd )utually ad6a'ta(e$u# trade rule#
• t$ hel& de6el$& a'd e2&a'd 8$rld trade a'd &r$6ide a cataly#t t$ +r$ader i'ter'ati$'al c$$&erati$'
N$FT$ structure
Free Trade Commission: Made u& $% )i'i#terial re&re#e'tati6e# %r$) the NA3TA &art'er#.
N$FT$ Coor!inators: 4enior trade de&art)e't $%%icial# de#i('ated +y each c$u'try.
N$FT$ >or0in# Groups an! Committees: O6er BH 8$rki'( (r$u&# a'd c$))ittee# ha6e +ee' e#ta+li#hed t$
%acilitate trade a'd i'6e#t)e't a'd t$ e'#ure the e%%ecti6e i)&le)e'tati$' a'd ad)i'i#trati$' $% NA3TA.
N$FT$ 4ecretariat : Made u& $% a O'ati$'al #ecti$'P %r$) each )e)+er c$u'try. Re#&$'#i+le %$r
ad)i'i#teri'( the di#&ute #ettle)e't Mai'tai'# a tri-'ati$'al 8e+#ite c$'tai'i'( u&-t$-date i'%$r)ati$' $' &a#t
a'd curre't di#&ute#.
Commission for .abor Cooperation , 4reated t$ &r$)$te c$$&erati$' $' la+$r )atter# a)$'( NA3TA
)e)+er# a'd the e%%ecti6e e'%$rce)e't $% d$)e#tic la+$r la8. 888.'aalc.$r(.
Commission for 'nvironmental Cooperation : E#ta+li#hed t$ %urther c$$&erati$' a)$'( NA3TA &art'er# i'
i)&le)e'ti'( the e'6ir$')e'tal #ide acc$rd t$ NA3TA a'd t$ addre## e'6ir$')e'tal i##ue# $%
c$'ti'e'tal c$'cer' 8ith &articular atte'ti$' t$ the e'6ir$')e'tal challe'(e# a'd $&&$rtu'itie#
&re#e'ted +y c$'ti'e't-8ide %ree trade.
'uropean 3nion 9'36
4$)&ri#i'( /- Eur$&ea' c$u'trie# a'd ($6er'i'( c$))$' ec$'$)ic #$cial a'd #ecurity &$licie#. Ori(i'ally
c$'%i'ed t$ Ee#ter' Eur$&e the EU u'dert$$k a r$+u#t e2&a'#i$' i't$ ce'tral a'd ea#ter' Eur$&e i' the early
/:#t ce'tury. The EU 8a# created +y the Maa#tricht Treaty 8hich e'tered i't$ %$rce $' N$6e)+er : :00B.
4tructure of '3
:. The EU 4$u'cil #et# the &$licie# a'd &r$&$#e# 'e8 la8#. The &$litical leader#hi& $r Pre#ide'cy $% the
EU i# held +y a di%%ere't leader e6ery #i2 )$'th#.
/. The Eur$&ea' Parlia)e't de+ate# a'd a&&r$6e# the la8# &r$&$#ed +y the 4$u'cil. It# )e)+er# are
elected e6ery %i6e year#.
15
B. The Eur$&ea' 4$))i##i$' #ta%%# a'd e2ecute# the la8#. N$#Q Ma'uel Barr$#$ i# the Pre#ide't 8h$
#er6e# u'der /- 4$))i##i$'er#.
)b?ectives of '3
• a' area $% %reed$) #ecurity a'd 9u#tice 8ith$ut i'ter'al %r$'tier# F
• a' i'ter'al )arket 8here c$)&etiti$' i# %ree a'd u'di#t$rtedF
• #u#tai'a+le de6el$&)e't +a#ed $' +ala'ced ec$'$)ic (r$8th a'd &rice #ta+ility a hi(hly c$)&etiti6e
#$cial )arket ec$'$)y ai)i'( at %ull e)&l$y)e't a'd #$cial &r$(re## a'd a hi(h le6el $% &r$tecti$'
a'd i)&r$6e)e't $% the @uality $% the e'6ir$')e'tF
• the &r$)$ti$' $% #cie'ti%ic a'd tech'$l$(ical ad6a'ceF
• the c$)+ati'( $% #$cial e2clu#i$' a'd di#cri)i'ati$' a'd the &r$)$ti$' $% #$cial 9u#tice a'd &r$tecti$'
e@uality +et8ee' 8$)e' a'd )e' #$lidarity +et8ee' (e'erati$'# a'd &r$tecti$' $% the ri(ht# $% the
childF the &r$)$ti$' $% ec$'$)ic #$cial a'd territ$rial c$he#i$' a'd #$lidarity a)$'( Me)+er State#.
4out" $sian $ssociation for *e#ional Cooperation !4$$*C"
S$uth A#ia' 'ati$'# 8hich 8a# e#ta+li#hed $' - Dece)+er :0-C 8he' the ($6er')e't $% Ba'(lade#h Bhuta'
I'dia Maldi6e# Ne&al Paki#ta' a'd Sri La'ka %$r)ally ad$&ted it# charter &r$6idi'( %$r the &r$)$ti$' $%
ec$'$)ic a'd #$cial &r$(re## cultural de6el$&)e't 8ithi' the S$uth A#ia re(i$' a'd al#$ %$r %rie'd#hi& a'd c$-
$&erati$' 8ith $ther de6el$&i'( c$u'trie#. It i# dedicated t$ ec$'$)ic tech'$l$(ical #$cial a'd cultural
de6el$&)e't e)&ha#i=i'( c$llecti6e #el%-relia'ce. A%(ha'i#ta' 9$i'ed the $r(a'i#ati$' i' /HHD. Meeti'(# $%
head# $% #tate are u#ually #cheduled a''ually
)b?ectives of 4$$*C
• t$ &r$)$te the 8el%are $% the &e$&le $% S$uth A#ia a'd t$ i)&r$6e their @uality $% li%eF
• t$ accelerate ec$'$)ic (r$8th #$cial &r$(re## a'd cultural de6el$&)e't i' the re(i$' a'd t$ &r$6ide all
i'di6idual# the $&&$rtu'ity t$ li6e i' di('ity a'd t$ reali#e their %ull &$te'tial F
• t$ &r$)$te a'd #tre'(the' #electi6e #el%-relia'ce a)$'( the c$u'trie# $% S$uth A#iaF
• t$ c$'tri+ute t$ )utual tru#t u'der#ta'di'( a'd a&&reciati$' $% $'e a'$therA# &r$+le)#F
16
• t$ &r$)$te acti6e c$lla+$rati$' a'd )utual a##i#ta'ce i' the ec$'$)ic #$cial cultural tech'ical a'd
#cie'ti%ic %ield#F
• t$ #tre'(the' c$-$&erati$' 8ith $ther de6el$&i'( c$u'trie#F
• t$ #tre'(the' c$-$&erati$' a)$'( the)#el6e# i' i'ter'ati$'al %$ru)# $' )atter# $% c$))$' i'tere#tF
a'd
• t$ c$-$&erate 8ith i'ter'ati$'al a'd re(i$'al $r(a'i#ati$'# 8ith #i)ilar ai)# a'd &ur&$#e#.
4$$*C or#anizational structure:
:. SAAR4 4$u'cil, At the t$& there i# the 4$u'cil re&re#e'ted +y the head# $% the ($6er')e't $% the )e)+er
c$u'trie#.
/. 4$u'cil $% Mi'i#ter, It i# t$ a##i#t the c$u'cil. It i# re&re#e'ted +y the %$rei(' )i'i#ter# $% the )e)+er
c$u'trie#.
B. Sta'di'( 4$))ittee, It i# c$)&ri#ed +y the %$rei(' #ecretarie# $% the )e)+er ($6er')e't.
1. Pr$(ra))i'( 4$))ittee, It c$'#i#t $% the #e'i$r $%%icial $% the )e)+er ($6er')e't#.
C. Tech'ical 4$))ittee, It c$'#i#t $% the re&re#e'ted $% the )e)+er 'ati$'#.
..Secretaria, The SAAR4 #ecretariat i# l$cated i' Ne&al.
$4'$N
O' - Au(u#t :0.D %i6e leader# - the 3$rei(' Mi'i#ter# $% I'd$'e#ia Malay#ia the Phili&&i'e# Si'(a&$re a'd
Thaila'd - #at d$8' t$(ether i' the )ai' hall $% the De&art)e't $% 3$rei(' A%%air# +uildi'( i' Ba'(k$k
Thaila'd a'd #i('ed a d$cu)e't. By 6irtue $% that d$cu)e't the A##$ciati$' $% S$uthea#t A#ia' Nati$'#
!ASEAN" 8a# +$r'.
$4'$N 4T*3CT3*'4 $ND M'C($NI4M4
? ASEAN Su))it ASEAN 4$$rdi'ati'( 4$u'cil
? ASEAN 4$))u'ity 4$u'cil# ASEAN Sect$ral Mi'i#terial B$die#
? 4$))ittee $% Per)a'e't Re&re#e'tati6e# Nati$'al Secretariat#
? 4$))ittee# A+r$ad ASEAN 4hair
17
? ASEAN Secretariat The hi(he#t deci#i$'-)aki'( $r(a' $% ASEAN i# the Meeti'( $% the ASEAN *ead# $%
State
P*INCIP.'4 of $4'$N
? Mutual re#&ect %$r the i'de&e'de'ce #$6erei('ty e@uality territ$rial i'te(rity a'd 'ati$'al ide'tity $%
all 'ati$'#F
? The ri(ht $% e6ery State t$ lead it# 'ati$'al e2i#te'ce %ree %r$) e2ter'al i'ter%ere'ce #u+6er#i$' $r
c$erci$'F
? N$'-i'ter%ere'ce i' the i'ter'al a%%air# $% $'e a'$therF
? Settle)e't $% di%%ere'ce# $r di#&ute# +y &eace%ul )a''erF
? Re'u'ciati$' $% the threat $r u#e $% %$rceF a'd
? E%%ecti6e c$$&erati$' a)$'( the)#el6e#
)b?ectives : %&t$ accelerate the ec$'$)ic (r$8th #$cial &r$(re## a'd cultural de6el$&)e't i' the re(i$'
thr$u(h 9$i't e'dea6$r# i' the #&irit $% e@uality a'd &art'er#hi& i' $rder t$ #tre'(the' the %$u'dati$' %$r a
&r$#&er$u# a'd &eace%ul c$))u'ity $% S$uthea#t A#ia' 'ati$'#
B. t$ &r$)$te re(i$'al &eace a'd #ta+ility thr$u(h a+idi'( re#&ect %$r 9u#tice a'd the rule $% la8 i' the
relati$'#hi& a)$'( c$u'trie# i' the re(i$' a'd adhere'ce t$ the &ri'ci&le# $% the U'ited Nati$'#
>orl! Tra!e )r#anization 9> T )6 : L$cati$', <e'e6a S8it=erla'd E#ta+li#hed, : Na'uary :00C 4reated
+y, Uru(uay R$u'd 'e($tiati$'# !:0-.-01" Me)+er#hi&, :C0 c$u'trie# $' / March /H:B Bud(et,
:0D )illi$' S8i## %ra'c# %$r /H:B Secretariat #ta%%, .1H *ead, Direct$r-<e'eral
ETO i# a' $r(a'i=ati$' c$)&ri#i'( $% de6el$&ed de6el$&i'( a'd lea#t de6el$&ed c$u'trie# u'der the UN
U)+rella head@uartered i' <e'e6a. It# ai) i# t$ &r$)$te trade a)$'(#t )e)+er 'ati$'# e#&ecially a%ter
(l$+ali=ati$' $% trade arra'(e aid tech'ically a'd i' $ther %$r)# %$r (r$8th $% trade a)$'(#t )e)+er c$u'trie#
creati'( all &$##i+le %acilitati$' )ea#ure#. Mai' 3u'cti$'# $% ETO T$ %acilitate the i)&le)e'tati$'
ad)i'i#trati$' a'd %urther $&erati$'# $% the a(ree)e't e#ta+li#hi'( the ETO&
Functions:
R Ad)i'i#teri'( ETO trade a(ree)e't#
R 3$ru) %$r trade 'e($tiati$'#
18
R *a'dli'( trade di#&ute#
R M$'it$ri'( 'ati$'al trade &$licie#
R Tech'ical a##i#ta'ce a'd trai'i'( %$r de6el$&i'( c$u'trie#
R 4$$&erati$' 8ith $ther i'ter'ati$'al $r(a'i=ati$'#
Organizational structure
Council for Tra!e in Goo!s , There are :: c$))ittee# u'der the 9uri#dicti$' $% the <$$d# 4$u'cil each 8ith a #&eci%ic
ta#k. All )e)+er# $% the ETO &artici&ate i' the c$))ittee#. The Te2tile# M$'it$ri'( B$dy i# #e&arate %r$) the $ther
c$))ittee# +ut #till u'der the 9uri#dicti$' $% <$$d# 4$u'cil. The +$dy ha# it# $8' chair)a' a'd $'ly :H )e)+er#. The
+$dy al#$ ha# #e6eral (r$u&# relati'( t$ te2tile#.
Council for Tra!e1*elate! $spects of Intellectual Property *i#"ts , I'%$r)ati$' $' i'tellectual &r$&erty i' the ETO
'e8# a'd $%%icial rec$rd# $% the acti6itie# $% the TRIPS 4$u'cil a'd detail# $% the ETOA# 8$rk 8ith $ther i'ter'ati$'al
$r(a'i=ati$'# i' the %ield.
Council for Tra!e in 4ervices, The 4$u'cil %$r Trade i' Ser6ice# $&erate# u'der the (uida'ce $% the <e'eral 4$u'cil a'd
i# re#&$'#i+le %$r $6er#eei'( the %u'cti$'i'( $% the <e'eral A(ree)e't $' Trade i' Ser6ice# !<ATS". It i# $&e' t$ all
ETO )e)+er# a'd ca' create #u+#idiary +$die# a# re@uired.
Tra!e Ne#otiations Committee, The Trade Ne($tiati$'# 4$))ittee !TN4" i# the c$))ittee that deal# 8ith the curre't
trade talk# r$u'd. The chair i# ETOA# direct$r-(e'eral. A# $% Nu'e /H:/ the c$))ittee 8a# ta#ked 8ith the D$ha
De6el$&)e't R$u'd
3nite! Nations Conference on Tra!e an! Development !3NCT$D"
It 8a# e#ta+li#hed i' :0.1 a# a &er)a'e't i'ter($6er')e'tal +$dy. It i# the &ri'ci&al $r(a' $% the U'ited
Nati$'# <e'eral A##e)+ly deali'( 8ith trade i'6e#t)e't a'd de6el$&)e't i##ue#.
The $r(a'i=ati$'A# ($al# are t$ ?)a2i)i=e the trade i'6e#t)e't a'd de6el$&)e't $&&$rtu'itie# $% de6el$&i'(
c$u'trie# a'd a##i#t the) i' their e%%$rt# t$ i'te(rate i't$ the 8$rld ec$'$)y $' a' e@uita+le +a#i#.
The &ri)ary $+9ecti6e $% the UN4TAD i# t$ %$r)ulate &$licie# relati'( t$ all a#&ect# $% de6el$&)e't i'cludi'(
trade aid tra'#&$rt %i'a'ce a'd tech'$l$(y. The c$'%ere'ce $rdi'arily )eet# $'ce i' %$ur year#. The %ir#t
c$'%ere'ce t$$k &lace i' <e'e6a i' :0.1 #ec$'d i' Ne8 Delhi i' :0.-
O'e $% the &ri'ci&al achie6e)e't# $% UN4TAD ha# +ee' t$ c$'cei6e a'd i)&le)e't the <e'erali=ed Sy#te) $%
Pre%ere'ce# !<SP". 4urre'tly UN4TAD ha# :01 )e)+er #tate# a'd i# head@uartered i' <e'e6a S8it=erla'd.
UN4TAD ha# 1HH #ta%% )e)+er# It i# a )e)+er $% the U'ited Nati$'# De6el$&)e't <r$u&
19
)b?ectives an! Functions: !i" T$ &r$)$te i'ter'ati$'al trade +et8ee' de6el$&ed a'd de6el$&i'( c$u'trie#
8ith a 6ie8 t$ accelerate ec$'$)ic de6el$&)e't.
!ii" T$ %$r)ulate &ri'ci&le# a'd &$licie# $' i'ter'ati$'al trade a'd related &r$+le)# $% ec$'$)ic de6el$&)e't.
!iii" T$ )ake &r$&$#al# %$r &utti'( it# &ri'ci&le# a'd &$licie# i't$ e%%ect !i6" T$ 'e($tiate trade a(ree)e't#.
!i6" T$ re6ie8 a'd %acilitate the c$$rdi'ati$' $% acti6itie# $% the $ther U.N. i'#tituti$'# i' the %ield $%
i'ter'ati$'al trade.
!6" T$ %u'cti$' a# a ce'tre %$r a har)$'i$u# trade a'd related d$cu)e't# i' de6el$&)e't &$licie# $%
($6er')e't#
T*IM4 an! T*IP4 : The ETO ad)i'i#ter# the i)&le)e'tati$' $% a #et $% a(ree)e't# 8hich i'clude the
<e'eral A(ree)e't $' Tari%%# a'd Trade $ther a(ree)e't# i' the ($$d# #ect$r !e.(. a(riculture te2tile#
#a'itary a'd &#ych$-#a'itary )ea#ure# Trade Related I'6e#t)e't Mea#ure#-TRIM# a'ti-du)&i'( etc." a'd i'
additi$' a(ree)e't# i' t8$ $ther area# 6i=. trade i' #er6ice# a'd Trade Related I'tellectual Pr$&erty Ri(ht#
!TRIP#" TRIP# deal# 8ith the %$ll$8i'( IPR#
• 4$&yri(ht a'd related ri(ht#F
• Pate't# Trade)ark# <e$(ra&hical i'dicati$'# i'cludi'( a&&ellati$'# $% $ri(i'F
• I'du#trial de#i('# I'te(rated circuit lay$ut-de#i('#F
• Pr$tecti$' $% u'di#cl$#ed i'%$r)ati$' 4$'tr$l $% a'ti-c$)&etiti6e &ractice# i' c$'tractual lice'#e#
• Ter) $% &ate't# /H year# Li)ited c$)&ul#$ry lice'#i'( '$ lice'#e $% ri(ht
• Al)$#t all %ield# $% tech'$l$(y &ate'ta+le. O'ly area c$'clu#i6ely e2cluded %r$) &ate'ta+ility i#
&la't 6arietie#F de+ate re(ardi'( #$)e area# i' a(riculture a'd +i$tech'$l$(y Very li)ited #c$&e %$r
• ($6er')e't# t$ u#e &ate'ted i'6e'ti$'#
T*IM4 : Tra!e *elate! Investment Measures !TRIM#" are rule# that a&&ly t$ the d$)e#tic re(ulati$'# a
c$u'try a&&lie# t$ %$rei(' i'6e#t$r# $%te' a# &art $% a' i'du#trial &$licy. The a(ree)e't 8a# a(reed u&$' +y all
)e)+er# $% the E$rld Trade Or(a'i=ati$'. The a(ree)e't 8a# c$'cluded i' :001 a'd ca)e i't$ %$rce i' :00C
20
?The A(ree)e't $' Trade-Related I'6e#t)e't Mea#ure# TRIM# A(ree)e't $'e $% the Multilateral
A(ree)e't# $' Trade i' <$$d# &r$hi+it# trade-related i'6e#t)e't )ea#ure# #uch a# l$cal c$'te't re@uire)e't#
that are i'c$'#i#te't 8ith +a#ic &r$6i#i$'# $% <ATT :001.
?The <e'eral A(ree)e't $' Trade i' Ser6ice# addre##e# %$rei(' i'6e#t)e't i' #er6ice# a# $'e $% %$ur )$de#
$% #u&&ly $% #er6ice#
3NIT1III
Mo!es of forei#n Mar0et 'ntry
Direct e;port&
The $r(a'i=ati$' &r$duce# their &r$duct i' their h$)e )arket a'd the' #ell# the) t$ cu#t$)er# $6er#ea#
$!vanta#es
• 4$'tr$l $6er #electi$' $% %$rei(' )arket# a'd ch$ice $% %$rei(' re&re#e'tati6e c$)&a'ie#
• <$$d i'%$r)ati$' %eed+ack %r$) tar(et )arket
• Better &r$tecti$' $% trade)ark# &ate't# ($$d8ill a'd $ther i'ta'(i+le &r$&erty
• P$te'tially (reater #ale# tha' 8ith i'direct e2&$rti'(.
Disa!vanta#es
• *i(her #tart-u& c$#t# a'd hi(her ri#k# a# $&&$#ed t$ i'direct e2&$rti'(
• <reater i'%$r)ati$' re@uire)e't#
• L$'(er ti)e-t$-)arket a# $&&$#ed t$ i'direct e2&$rti'(.
IDJ
In!irect e;port
The $r(a'i=ati$'# #ell# their &r$duct t$ a third &arty 8h$ the' #ell# it $' 8ithi' the %$rei(' )arket.
$!vanta#es
• 3a#t )arket acce##
• 4$'ce'trati$' $% re#$urce# %$r &r$ducti$'
21
• Little $r '$ %i'a'cial c$))it)e't. The e2&$rt &art'er u#ually c$6er# )$#t e2&e'#e# a##$ciated 8ith
i'ter'ati$'al #ale#
• The )a'a(e)e't tea) i# '$t di#tracted
• N$ direct ha'dle $% e2&$rt &r$ce##e#.
Disa!vanta#es
• *i(her ri#k tha' 8ith direct e2&$rti'(
• Little $r '$ c$'tr$l $6er di#tri+uti$' #ale# )arketi'( etc. a# $&&$#ed t$ direct e2&$rti'(
• I'a+ility t$ lear' h$8 t$ $&erate $6er#ea#
.icensin#
A'$ther le## ri#ky )arket e'try )eth$d i# lice'#i'(. *ere the Lice'#$r 8ill (ra't a' $r(a'i=ati$' i' the %$rei('
)arket a lice'#e t$ &r$duce the &r$duct u#e the +ra'd 'a)e etc i' retur' that they 8ill recei6e a r$yalty
&ay)e't.
$!vanta#es an! reasons to use an international licensin#
• O+tai' e2tra i'c$)e %$r tech'ical k'$8-h$8 a'd #er6ice#
• Reach 'e8 )arket# '$t acce##i+le +y e2&$rt %r$) e2i#ti'( %acilitie#
• Kuickly e2&a'd 8ith$ut )uch ri#k a'd lar(e ca&ital i'6e#t)e't
• Pa6e the 8ay %$r %uture i'6e#t)e't# i' the )arket
Franc"isin#
3ra'chi#i'( i# a'$ther %$r) $% lice'#i'(. *ere the $r(a'i=ati$' &ut# t$(ether a &acka(e $% the L#ucce##%ulM
i'(redie't# that )ade the) a #ucce## i' their h$)e )arket a'd the' %ra'chi#e thi# &acka(e t$ $6er#ee i'6e#t$r#.
The 3ra'chi#e h$lder )ay hel& $ut +y &r$6idi'( trai'i'( a'd )arketi'( the #er6ice# $r &r$duct. McD$'ald# i# a
&$&ular e2a)&le $% a 3ra'chi#i'( $&ti$' %$r e2&a'di'( i' i'ter'ati$'al )arket#.
$!vanta#es of t"e international franc"isin# mo!e: L$8 &$litical ri#k L$8 c$#t All$8# #i)ulta'e$u#
e2&a'#i$' i't$ di%%ere't re(i$'# $% the 8$rld Eell #elected &art'er# +ri'( %i'a'cial i'6e#t)e't a# 8ell a#
)a'a(erial ca&a+ilitie# t$ the $&erati$'.
Disa!vanta#es of t"e international franc"isin# mo!e:
• 3ra'chi#ee# )ay tur' i't$ %uture c$)&etit$r#
• De)a'd $% %ra'chi#ee# )ay +e #carce 8he' #tarti'( t$ %ra'chi#e a c$)&a'y 8hich ca' lead t$ )aki'(
a(ree)e't# 8ith the 8r$'( ca'didate#
• A 8r$'( %ra'chi#ee )ay rui' the c$)&a'yM# 'a)e a'd re&utati$' i' the )arket
22
Turn0ey pro?ects
A tur'key &r$9ect re%er# t$ a &r$9ect i' 8hich clie't# &ay c$'tract$r# t$ de#i(' a'd c$'#truct 'e8 %acilitie# a'd
trai' &er#$''el. A tur'key &r$9ect i# 8ay %$r a %$rei(' c$)&a'y t$ e2&$rt it# &r$ce## a'd tech'$l$(y t$ $ther
c$u'trie# +y +uildi'( a &la't i' that c$u'try. I'du#trial c$)&a'ie# that #&eciali=e i' c$)&le2 &r$ducti$'
tech'$l$(ie# '$r)ally u#e tur'key &r$9ect# a# a' e'try #trate(y. O'e $% the )a9$r ad6a'ta(e# $% tur'key &r$9ect#
i# the &$##i+ility %$r a c$)&a'y t$ e#ta+li#h a &la't a'd ear' &r$%it# i' a %$rei(' c$u'try e#&ecially i' 8hich
%$rei(' direct i'6e#t)e't $&&$rtu'itie# are li)ited a'd lack $% e2&erti#e i' a #&eci%ic area e2i#t#.
23
4trate#ic alliance
24
A #trate(ic allia'ce i# a ty&e $% c$$&erati6e a(ree)e't# +et8ee' di%%ere't %ir)# #uch a# #hared re#earch %$r)al
9$i't 6e'ture# $r )i'$rity e@uity &artici&ati$'. The )$der' %$r) $% #trate(ic allia'ce# i# +ec$)i'( i'crea#i'(ly
&$&ular a'd ha# three di#ti'(ui#hi'( characteri#tic#,
$!vanta#es
• Tech'$l$(y e2cha'(e
• <l$+al c$)&etiti$'
• I'du#try c$'6er(e'ce
• Ec$'$)ie# $% #cale a'd reducti$' $% ri#k
• Allia'ce a# a' alter'ati6e t$ )er(er
Global strate#ic plannin# process involves t"ese steps
!:" A'aly=i'( e2ter'al e'6ir$')e't +y )ea'# $% SEOT PESTLE a'aly#i#
!/" A'aly=i'( i'ter'al e'6ir$')e't
!B" De%i'i'( the +u#i'e## a'd it# )i##i$' #tate)e't#
!1" Setti'( c$r&$rate $+9ecti6e#
!C" Kua'ti%yi'( ($al#
!." 3$r)ulati'( #trate(ie#
!D" Maki'( tactical &la''i'(
Types of 4trate#ic $lliance
There are %$ur ty&e# $% #trate(ic allia'ce#, 9$i't 6e'ture e@uity #trate(ic allia'ce '$'-e@uity #trate(ic allia'ce
a'd (l$+al #trate(ic allia'ce#.
%& @oint venture i# a #trate(ic allia'ce i' 8hich t8$ $r )$re %ir)# create a le(ally i'de&e'de't c$)&a'y t$
#hare #$)e $% their re#$urce# a'd ca&a+ilitie# t$ de6el$& a c$)&etiti6e ad6a'ta(e.
+& '<uity strate#ic alliance i# a' allia'ce i' 8hich t8$ $r )$re %ir)# $8' di%%ere't &erce'ta(e# $% the
c$)&a'y they ha6e %$r)ed +y c$)+i'i'( #$)e $% their re#$urce# a'd ca&a+ilitie# t$ create a
c$)&etiti6e ad6a'ta(e.
,& Non1e<uity strate#ic alliance i# a' allia'ce i' 8hich t8$ $r )$re %ir)# de6el$& a c$'tractual-
relati$'#hi& t$ #hare #$)e $% their u'i@ue re#$urce# a'd ca&a+ilitie# t$ create a c$)&etiti6e ad6a'ta(e.
-& Global 4trate#ic $lliances 8$rki'( &art'er#hi&# +et8ee' c$)&a'ie# !$%te' )$re tha' t8$" acr$##
'ati$'al +$u'darie# a'd i'crea#i'(ly acr$## i'du#trie# #$)eti)e# %$r)ed +et8ee' c$)&a'y a'd a
%$rei(' ($6er')e't $r a)$'( c$)&a'ie# a'd ($6er')e't#.
25
Cost benefit analysis: CostAbenefit analysis !4BA" #$)eti)e# called benefitAcost analysis !B4A" i# a
#y#te)atic &r$ce## %$r calculati'( a'd c$)&ari'( +e'e%it# a'd c$#t# $% a &r$9ect deci#i$' $r ($6er')e't &$licy
!herea%ter ?&r$9ect?". 4BA ha# t8$ &ur&$#e# Ehether y$u k'$8 it a# a c$#t-+e'e%it a'aly#i# $r a +e'e%it-c$#t
a'aly#i# &er%$r)i'( $'e i# critical t$ a'y &r$9ect. Ehe' y$u &er%$r) a c$#t-+e'e%it a'aly#i# y$u )ake a
c$)&arati6e a##e##)e't $% all the +e'e%it# y$u a'tici&ate %r$) y$ur &r$9ect a'd all the c$#t# t$ i'tr$duce the
&r$9ect &er%$r) it a'd #u&&$rt the cha'(e# re#ulti'( %r$) it.
4$#t-+e'e%it a'aly#e# hel& y$u t$
• Decide 8hether t$ u'dertake a &r$9ect $r decide 8hich $% #e6eral &r$9ect# t$ u'dertake.
• 3ra)e a&&r$&riate &r$9ect $+9ecti6e#.
• De6el$& a&&r$&riate +e%$re a'd a%ter )ea#ure# $% &r$9ect #ucce##.
• Pre&are e#ti)ate# $% the re#$urce# re@uired t$ &er%$r) the &r$9ect 8$rk.
• T$ deter)i'e i% it i# a #$u'd i'6e#t)e't;deci#i$' !9u#ti%icati$';%ea#i+ility"
• T$ &r$6ide a +a#i# %$r c$)&ari'( &r$9ect#. It i'6$l6e# c$)&ari'( the t$tal e2&ected c$#t $% each $&ti$'
a(ai'#t the t$tal e2&ected +e'e%it# t$ #ee 8hether the +e'e%it# $ut8ei(h the c$#t# a'd +y h$8 )uch
I513nit
'lectronic business $r e1business i# the a&&licati$' $% i'%$r)ati$' a'd c$))u'icati$' tech'$l$(ie# I4T i'
#u&&$rt $% all the acti6itie# $% +u#i'e##. 4$))erce c$'#titute# the e2cha'(e $% &r$duct# a'd #er6ice# +et8ee'
+u#i'e##e# (r$u&# a'd i'di6idual# a'd ca' +e #ee' a# $'e $% the e##e'tial acti6itie# $% a'y +u#i'e##. Electr$'ic
c$))erce %$cu#e# $' the u#e $% I4T t$ e'a+le the e2ter'al acti6itie# a'd relati$'#hi&# $% the +u#i'e## 8ith
i'di6idual# (r$u&# a'd $ther +u#i'e##e#. The ter) ?e-+u#i'e##? 8a# c$i'ed +y IBMA# )arketi'( a'd I'ter'et
tea)# i' :00.
E-+u#i'e## i'6$l6e# +u#i'e## &r$ce##e# #&a''i'( the e'tire 6alue chai', electr$'ic &urcha#i'( a'd #u&&ly chai'
)a'a(e)e't &r$ce##i'( $rder# electr$'ically ha'dli'( cu#t$)er #er6ice a'd c$$&erati'( 8ith +u#i'e##
&art'er# E-+u#i'e## cate($rie#,
• +u#i'e##-t$-+u#i'e## !B/B" +u#i'e##-t$-c$'#u)er !B/4"
• +u#i'e##-t$-e)&l$yee !B/E" +u#i'e##-t$-($6er')e't !B/<"
26
• ($6er')e't-t$-+u#i'e##!</B" ($6er')e't-t$-($6er')e't !</<"
• ($6er')e't-t$-citi=e' !</4" c$'#u)er-t$-c$'#u)er !4/4"
• c$'#u)er-t$-+u#i'e## !4/B"
E-+u#i'e## )$del#
• E-#h$&# E-c$))erce E-&r$cure)e't E-)all#
• E-c$lla+$rati$' E-aucti$'# Virtual 4$))u'itie#
Benefits of e1 business
• I'crea#e re6e'ueF E2&a'd 4lie't ca#e Reach 'iche )arket #e()e't#F
• L$8er $&erati'( c$#t#F Better cu#t$)er #er6ice E'ha'ci'( 4$)&a'y i)a(e.
$lternative '1Business strate#ies
Ba#ically the E- Bu#i'e## #trate(ie# are %$r (r$8i'( the +u#i'e## i)&r$6i'( the &r$%it# i' $rder t$ $+tai' the
e2te'ded $+9ecti6e $% e-+u#i'e## the alter'ati6e #trate(ie# #hell +e ad$&ted 8hich are a# %$ll$8#
? E-Ad6erti#i'( - re6e'ue (e'erated %r$) 8e+ #ite hit#
? E-retaili'( -re6e'ue deri6ed %r$) direct I'ter'et #ale#
? E-4ha''el - re6e'ue &r$duced %r$) )ai'te'a'ce $% curre't cha''el i'te(rity
? E-A%%iliate - re6e'ue )ade %r$) &aid )arketi'( allia'ce#
? E-3ra'chi#e - re6e'ue created %r$) auth$ri=ed a(e't#
? E-Su+#cri&ti$' - re6e'ue deri6ed %r$) &ay)e't %$r c$'te't acce##
$lternative e1business strate#ies
'nterprise resource plannin# !'*P" i# +u#i'e## )a'a(e)e't #$%t8areSu#ually a #uite $% i'te(rated
a&&licati$'#Sthat a c$)&a'y u#e# t$ )a'a(e +u#i'e## &r$ce##e# i'cludi'(,
• Pr$duct &la''i'( a'd de6el$&)e't Ma'u%acturi'(
• Marketi'( a'd #ale# I'6e't$ry )a'a(e)e't Shi&&i'(
27
'lectronic !ata interc"an#e !'DI" i# a d$cu)e't #ta'dard 8hich 8he' i)&le)e'ted act# a# c$))$' i'ter%ace
+et8ee' t8$ $r )$re c$)&uter a&&licati$'# i' ter)# $% u'der#ta'di'( the d$cu)e't tra'#)itted. It i#
c$))$'ly u#ed +y +i( c$)&a'ie# %$r e-c$))erce &ur&$#e# #uch a# #e'di'( $rder# t$ 8areh$u#e# $r tracki'(
their $rder. It i# )$re tha' )ere e-)ailF %$r i'#ta'ce $r(a'i=ati$'# )i(ht re&lace +ill# $% ladi'( a'd e6e'
che@ue# 8ith a&&r$&riate EDI )e##a(e#
The e C*M $r electronic customer relations"ip mana#ement e'c$)&a##e# all the 4RM %u'cti$'# 8ith the
u#e $% the 'et e'6ir$')e't i.e. i'tra'et e2tra'et a'd i'ter'et. Electr$'ic 4RM c$'cer'# all %$r)# $% )a'a(i'(
relati$'#hi&# 8ith cu#t$)er# )aki'( u#e $% i'%$r)ati$' tech'$l$(y !IT". e4RM i# e'ter&ri#e# u#i'( IT t$
i'te(rate i'ter'al $r(a'i=ati$' re#$urce# a'd e2ter'al ?)arketi'(? #trate(ie# t$ u'der#ta'd a'd %ul%ill their
cu#t$)er# 'eed#
$utomate! online assistant i# a &r$(ra) that u#e# arti%icial i'telli(e'ce t$ &r$6ide cu#t$)er #er6ice $r $ther
a##i#ta'ce $' a 8e+#ite. Such a' a##i#ta't )ay +a#ically c$'#i#t $% a dial$( #y#te). Aut$)ated $'li'e a##i#ta't#
ha6e the a+ility t$ &r$6ide cu#t$)er #er6ice duri'( /1 h$ur# a day a'd D day# a 8eek
Business relations"ip mana#ement i# a %$r)al a&&r$ach t$ u'der#ta'di'( de%i'i'( a'd #u&&$rti'( a +r$ad
#&ectru) $% i'ter-+u#i'e## acti6itie# related t$ &r$6idi'( a'd c$'#u)i'( k'$8led(e a'd #er6ice# 6ia 'et8$rk#
BRM #eek# t$ &r$6ide a c$)&lete a'd h$li#tic )$del $% +u#i'e## relati$'#hi&#
Customer intelli#ence !4I" i# the &r$ce## $% (atheri'( a'd a'aly=i'( i'%$r)ati$' re(ardi'( cu#t$)er#F their
detail# a'd their acti6itie# i' $rder t$ +uild dee&er a'd )$re e%%ecti6e cu#t$)er relati$'#hi&# a'd i)&r$6e
#trate(ic deci#i$' )aki'(
Business intelli#ence !BI" i# a #et $% the$rie# )eth$d$l$(ie# &r$ce##e# architecture# a'd tech'$l$(ie# that
tra'#%$r) ra8 data i't$ )ea'i'(%ul a'd u#e%ul i'%$r)ati$' %$r +u#i'e## &ur&$#e#. BI ca' ha'dle lar(e a)$u't#
$% i'%$r)ati$' t$ hel& ide'ti%y a'd de6el$& 'e8 $&&$rtu'itie#. Maki'( u#e $% 'e8 $&&$rtu'itie# a'd
i)&le)e'ti'( a' e%%ecti6e #trate(y ca' &r$6ide a c$)&etiti6e )arket ad6a'ta(e a'd l$'(-ter) #ta+ility.
Database mar0etin# i# a %$r) $% direct )arketi'( u#i'( data+a#e# $% cu#t$)er# $r &$te'tial cu#t$)er# t$
(e'erate &er#$'ali=ed c$))u'icati$'# i' $rder t$ &r$)$te a &r$duct $r #er6ice %$r )arketi'( &ur&$#e#. The
)eth$d $% c$))u'icati$' ca' +e a'y addre##a+le )ediu) a# i' direct )arketi'(.
Partner relations"ip mana#ement 9P*M6 i# a #y#te) $% )eth$d$l$(ie# #trate(ie# #$%t8are a'd 8e+-+a#ed
ca&a+ilitie# that hel& a 6e'd$r t$ )a'a(e &art'er relati$'#hi&#. The (e'eral &ur&$#e $% PRM i# t$ e'a+le
6e'd$r# t$ +etter )a'a(e their &art'er# thr$u(h the i'tr$ducti$' $% relia+le #y#te)#
28
4ales intelli#ence !SI" re%er# t$ tech'$l$(ie# a&&licati$'# a'd &ractice# %$r the c$llecti$' i'te(rati$' a'aly#i#
a'd &re#e'tati$' $% i'%$r)ati$' t$ hel& #ale#&e$&le kee& u& t$ date 8ith clie't# &r$#&ect data a'd dri6e
+u#i'e##
Documents for International tra!e
)fficial Documents : O%%icial d$cu)e't# are d$cu)e't# re@uired %$r the &ur&$#e $% $%%icial !re(ulat$ry"
auth$ri=ati$' t$ e2&$rt. O%%icial d$cu)e't# are either #u+)itted t$ the a&&r$&riate auth$rity %$r le(ali=ati$' $r
are i##ued +y a' a&&r$&riate auth$rity. Eith$ut l$cal auth$ri=ati$' !%r$) c$)&ete't N$rda'ia' auth$ritie#" y$u
8ill '$t +e &er)itted t$ #hi& y$ur ($$d# $ut the c$u'try.
? 4u#t$)# $r E2&$rt Declarati$' A' e2&$rt Lice'#e $r Auth$ri=ati$'
? A 8har% a(e $rder !%$r #ea %rei(ht" A &re-#hi&)e't i'#&ecti$' certi%icate
? A certi%icate $% $ri(i' A health certi%icate
Commercial Documents : 4$))ercial i'6$ice Packi'( li#t Be'e%iciary certi%icate Veri%icati$' d$cu)e't#
Transport Documents : Bill $% ladi'( Eay+ill 4$'#i(')e't '$te
Insurance Documents : I'#ura'ce certi%icate a'd I'#ura'ce-&$licy
Certificate of ori#in : A certi%icate $% $ri(i' i# a %$r)al ; $%%icial #tate)e't i##ued +y either a cha)+er $%
c$))erce $r i'du#try.
Bill of la!in# : The +ill $% ladi'( !B;L" i# the traditi$'al tra'#&$rt d$cu)e't %$r #hi&&i'( ($$d# +y $cea'
tra'#&$rt
)t"er !ocuments are usually attac"e! to t"e carrierBs copy of t"e bill of la!in#8 some of t"ese !ocuments
are: 4$&y $% the c$))ercial I'6$ice 4$&y $% the certi%icate $% $ri(i' Packi'( li#t Eei(ht li#t e2&$rti'(
certi%icate.
Global '1Mar0etin# : <l$+al e -Marketi'( i# the u#e $% i'ter'et a# a )edia t$ )arket a'd &r$)$te y$ur
+u#i'e## (l$+ally. I' t$dayA# 8$rld the )$#t c$#t e%%ecti6e )eth$d $% (l$+al +u#i'e## &r$)$ti$' i# e Marketi'(.
$!vanta#es
29
<l$+al Reach Ea#y Marketi'( ec$'$)ical kee& u&dated i'%$r)ati$' )$re a&&eali'( t$ the cu#t$)er#
C"allen#es in '1Mar0etin#
? U'der#ta'di'( cu#t$)er e6$luti$' #$ y$u )u#t I'6e#t ahead $% cu#t$)er 'eed#
? 4harti'( cha'(i'( tech'$l$(y he'ce Match tech'$l$(y ch$ice# t$ c$'#u)er ta#te#
? Eeatheri'( the #t$r) that i# u'der#ta'd the )arket e'6ir$')e't a'd Rea##ure #takeh$lder# 8ith clear
6i#i$' #e'#i+le +u#i'e## )$del a'd &r$%ita+le 6e'ture
? I'te(rati'( $%%li'e > $'li'e acti6itie# +y Ali('i'( $%%li'e > $'li'e +u#i'e## acti6itie#
? Ide'ti%yi'( key le6er# $% c$)&etiti6e ad6a'ta(e a'd Reall$cate re#$urce# a# c$)&etiti6e ad6a'ta(e
le6er# e6$l6e
513nit
<l$+al #trate(ic &la''i'( i# a &r$ce## ad$&ted +y $r(a'i=ati$'# that $&erate i'ter'ati$'ally i' $rder t$ %$r)ulate
a' e%%ecti6e (l$+al #trate(y. <l$+al Strate(ic Pla''i'( i# a &r$ce## $% e6aluati'( the i'ter'al a'd e2ter'al
e'6ir$')e't +y )ulti'ati$'al $r(a'i=ati$'# a'd )ake deci#i$'# a+$ut h$8 they 8ill achie6e their l$'(-ter)
a'd #h$rt-ter) $+9ecti6e#.
#lobal strate#ic plannin# process involves t"ese steps,
!:" A'aly=i'( e2ter'al e'6ir$')e't
!/" A'aly=i'( i'ter'al e'6ir$')e't
!B" De%i'i'( the +u#i'e## a'd it# )i##i$' #tate)e't#
!1" Setti'( c$r&$rate $+9ecti6e#
!C" Kua'ti%yi'( ($al#
!." 3$r)ulati'( #trate(ie#
!D" Maki'( tactical &la'#
Met"o!s of ta0in# strate#y in Global strate#ic plannin#
30
• T$& D$8' &la''i'(
I' thi# the deci#i$' 8ill +e take' at the t$& )a'a(e)e't le6el a'd the #a)e deci#i$' 8ill )$6e# $' t$ all the
le6el# $% auth$ritie# i' the $r(a'i=ati$'
• B$tt$) u& &la''i'(
I' thi# #trate(y the deci#i$' 8$uld #tart %r$) the +$tt$) $r %r$) the l$8er )a'a(e)e't $% the c$)&a'y a'd thi#
8ill +e c$))u'icated u&8ard i' the $r(a'i=ati$'
• Iterati6e &la''i'(
Ad$&ti'( either t$& d$8' $r +$tt$) u& )eth$d c$'ti'u$u#ly u'til a'y i##ue i' the de&art)e't i# %i'ali=ed $r
rec$' ciliated thi# )ea'# i' ca#e there i# a c$'%lict $' a'y i##ue &re6aili'( i' the $r(a'i=ati$' the' u'til the
i##ue i# #ettled d$8' the )eth$d $% &la''i'( 8ill '$t +e cha'(ed
Implementin# strate#y
? Build a' Or(a'i=ati$' Mar#hal re#$urce# !re#$urce# u#ed" I'#titute &$licie# Pur#ue +e#t &ractice#
a'd c$'ti'u$u# i)&r$6e)e't I'%$r)ati$' a'd $&erati'( #y#te)# Tyi'( re8ard# t$ #trate(y a'd ($al#
Intercultural communications
i# a %$r) $% (l$+al c$))u'icati$'. It i# u#ed t$ de#cri+e the 8ide ra'(e $% c$))u'icati$' &r$+le)# that
'aturally a&&ear 8ithi' a' $r(a'i=ati$' )ade u& $% i'di6idual# %r$) di%%ere't reli(i$u# #$cial eth'ic a'd
educati$'al +ack(r$u'd#. I'tercultural c$))u'icati$' i# #$)eti)e# u#ed #y'$'y)$u#ly 8ith cr$##-cultural
c$))u'icati$'. I' thi# #e'#e it #eek# t$ u'der#ta'd h$8 &e$&le %r$) di%%ere't c$u'trie#
a'd culture# act c$))u'icate a'd &ercei6e the 8$rld ar$u'd the). Ma'y &e$&le i' i'tercultural +u#i'e##
c$))u'icati$' ar(ue that culture deter)i'e# h$8 i'di6idual# e'c$de )e##a(e# 8hat )ediu)# they ch$$#e %$r
tra'#)itti'( the) a'd the 8ay )e##a(e# are i'ter&reted. A# a #e&arate '$ti$' it #tudie# #ituati$'# 8here &e$&le
%r$) di%%ere't cultural +ack(r$u'd# interact. A#ide %r$) la'(ua(e i'tercultural c$))u'icati$' %$cu#e# $'
#$cial attri+ute# th$u(ht &atter'# a'd the culture# $% di%%ere't (r$u&# $% &e$&le. It al#$ i'6$l6e# u'der#ta'di'(
the di%%ere't culture# la'(ua(e# a'd cu#t$)# $% &e$&le %r$) $ther c$u'trie#. I'tercultural c$))u'icati$' &lay#
a r$le i' #$cial #cie'ce# #uch a# a'thr$&$l$(y cultural #tudie# li'(ui#tic# &#ych$l$(y a'd c$))u'icati$'
#tudie#. I'tercultural c$))u'icati$' i# al#$ re%erred t$ a# the +a#e %$r i'ter'ati$'al +u#i'e##e#. There are
#e6eral cr$##-cultural #er6ice &r$6ider# ar$u'd 8h$ ca' a##i#t 8ith the de6el$&)e't $% i'tercultural
c$))u'icati$' #kill#. Re#earch i# a )a9$r &art $% the de6el$&)e't $% i'tercultural c$))u'icati$' #kill#.
3act$r# e%%ecti'( $' I'ter cultural 4$))u'icati$'#
31
Improving Intercultural Communication
:. A6$id u#i'( #la'( a'd idi$)# ch$$#i'( 8$rd# that 8ill c$'6ey $'ly the )$#t
#&eci%ic denotative )ea'i'(F
/. li#te' care%ully a'd i% i' d$u+t a#k %$r c$'%ir)ati$' $% u'der#ta'di'( !&articularly i)&$rta't i% l$cal
acce't# a'd &r$'u'ciati$' are a &r$+le)"
B. Rec$('i=e that acce'ti'( a'd i't$'ati$' ca' cau#e )ea'i'( t$ 6ary #i('i%ica'tlyF a'd
1. Re#&ect the l$cal c$))u'icati$' %$r)alitie# a'd #tyle# a'd 8atch %$r a'y cha'(e# i' +$dy
la'(ua(e.
C. I'6e#ti(ate their cultureA# &erce&ti$' $% y$ur culture +y readi'( literature a+$ut y$ur culture thr$u(h
their eye# +e%$re e'teri'( i't$ c$))u'icati$' 8ith the). Thi# 8ill all$8 y$u t$ &re&are y$ur#el% %$r
&r$9ected 6ie8# $% y$ur culture y$u 8ill +e +eari'( a# a 6i#it$r i' their culture.
Overcoming Cultural Communication Barriers
I' $rder t$ i)&r$6e the le6el $% cr$##-cultural c$))u'icati$' i' y$ur 8$rk&lace. U#e the#e #i)&le c$'ce&t# t$
dra)atically +$$#t y$ur cr$##-cultural c$))u'icati$' c$)&ete'cy.
• Practice acti6e li#te'i'(.
• <r$u& i'%$r)ati$' i' L+ite-#i=eM &iece#. That i# I% y$u #t$& t$ thi'k a+$ut it e6e' a #i'(le #e'te'ce i' a
c$'6er#ati$' +et8ee' t8$ %lue't #&eaker# ca' c$'tai' a (reat deal $% i'%$r)ati$'. ThatM# 8hy cr$##-cultural
c$))u'icati$' e2&ert# rec$))e'd li)iti'( the a)$u't $% i'%$r)ati$' y$u try t$ c$'6ey at $'e ti)e. Stick
t$ #i)&le direct i'#tructi$'# a'd e2&la'ati$'# a'd try t$ a6$id c$)&le2 )ulti-&art #e'te'ce#.
• Eatch $ut %$r cultural a##u)&ti$'#.
• Ehe' i' d$u+t $&t %$r %rie'dly %$r)ality.
• Ne6er c$'clude )ea'i'( +a#ed $' y$ur &erce&ti$'
32
• Ne6er u#e +$dy la'(ua(e a'd %acial e2&re##i$'# 8ith$ut k'$8i'( the cultural )ea'i'( etc.
Inter cultural (uman resource mana#ement
The hu)a' re#$urce# )a'a(e)e't i' (l$+al &er#&ecti6e i'6$l6e# )a'y %u'cti$'# a'd the re#&$'#i+ility $% *R
+ec$)e# )$re &r$)i'e't i' (l$+al #ce'ari$ the i'tercultural hu)a' re#$urce# )a'a(e)e't that i# i'ter'ati$'al
hu)a' re#$urce# )a'a(e)e't i# #u&&$#ed t$ &er%$r) the#e acti6itie# )e'ti$'ed +el$8.
:. De6el$&i'( i'ter'ati$'al )arket +a#ed #ta%%i'( &la'# Deali'( 8ith e)&l$yee# i' di%%ere't &art# $% the
8$rld
/. Pla''i'( a (l$+al #trate(y 8hich i# acce&ta+le i)&le)e'ta+le thr$u(h$ut the 8$rld
B. De6el$&i'( i'ter'ati$'al leader#hi& Mer(i'( $r i'te(rati'( 8ith $ther c$)&a'ie# acr$## +$rder#
1. De6el$&i'( )ulticultural tea)# 4reati'( a (l$+al 6i#i$'
i##i$' %$r i'ter'ati$'al i'te(rati$'
C. I)&le)e'ti'( tra'#'ati$'al )a'a(e)e't )atrice# Deali'( 8ith cr$##-cultural c$'%lict
.. 4$'ducti'( )a9$r i'ter'ati$'al 'e($tiati$'# I)&le)e'ti'( )a9$r cultural cha'(e
3seful 7ebsites for MB$ stu!ents
:. htt&,;;888.6alue+a#ed)a'a(e)e't.'et
/. htt&,;;888.@uick)+a.c$)
B. htt&,;;888.)+a'$te#.(uruk&$.c$)
1. htt&,;;888.)+a'$te#8$rld.i'
C. htt&,;;888.c$$la6e'ue#.c$)
.. htt&,;;888.)a'a(e)e't&aradi#e.c$)
D. htt&,;;888.e'$te#.c$)+a
33
-. htt&,;;888.)a'a(e)e't#tudy(uide.c$)
0. htt&,;;888.)a'a(e)e'thea6e'.c$)
:H.htt&,;;888.u'i6er#alteacher&u+licati$'#.c$)+a
::. htt&,;;all)+a#tu%%.+l$(#&$t.i'
:/.888.)+ak'$l.c$)
34
doc_621634528.doc
This notes is very useful for the students of MBA -III-Semester -Osmania University
INTERNATIONAL BUSINESS NOTES
MBA-III-SEMSTER
OSMANIA UNIVERSITY
PREPARED BY
Syed Valiullah Bakhtiyari
B.Sc MBA !OU" APDM !AIMA" !PhD" !AMU"
A##$.Pr$%.De&t $% Bu#i'e## Ma'a(e)e't
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E2-3aculty-Sch$$l $% Bu#i'e## Ma'a(e)e't-Li't$' U'i6er#ity 4$lle(e-U'i6er#ity $% Ea#t L$'d$'-Malay#ia
Me)+er $% All I'dia Ma'a(e)e't A##$ciati$'-Ne8 Delhi
International Business: It i# de%i'ed a# the &r$ce## $% e2te'di'( the +u#i'e## acti6itie# %r$) d$)e#tic t$ a'y
%$rei(' c$u'try 8ith a' i'te'ti$' $% tar(eti'( i'ter'ati$'al cu#t$)er# It i# al#$ de%i'ed a# the c$'ducti$' $%
+u#i'e## acti6itie# +y a'y c$)&a'y acr$## the 'ati$'#
It ca' al#$ +e de%i'ed a# the e2&a'#i$' $% +u#i'e## %u'cti$'# t$ 6ari$u# c$u'trie# 8ith a' $+9ecti6e $% %ul%illi'(
the 'eed# a'd 8a't# $% i'ter'ati$'al cu#t$)er#
1
:. Process of Internationalization
• Domestic company :M$#t i'ter'ati$'al c$)&a'ie# ha6e their $ri(i' a# d$)e#tic c$)&a'ie#. The
$rie'tati$' $% a d$)e#tic c$)&a'y e##e'tially i# eth'$ce'tric. A &urely d$)e#tic c$)&a'y $&erate#
d$)e#tically +ecau#e it 'e6er c$'#ider# the alter'ati6e $% ($i'( i'ter'ati$'al. A d$)e#tic c$)&a'y )ay
e2te'd it# &r$duct# t$ %$rei(' )arket# +y e2&$rti'( lice'#i'( a'd %ra'chi#i'(
• International companies are i)&$rter# a'd e2&$rter# they ha6e '$ i'6e#t)e't $ut#ide $% their h$)e
c$u'try.
• Multinational companies ha6e i'6e#t)e't i' $ther c$u'trie# +ut d$ '$t ha6e c$$rdi'ated &r$duct
$%%eri'(# i' each c$u'try. M$re %$cu#ed $' ada&ti'( their &r$duct# a'd #er6ice t$ each i'di6idual l$cal
)arket.
• Global companies ha6e i'6e#ted a'd are &re#e't i' )a'y c$u'trie#. They )arket their &r$duct# thr$u(h
the u#e $% the #a)e c$$rdi'ated i)a(e;+ra'd i' all )arket#. <e'erally $'e c$r&$rate $%%ice that i#
re#&$'#i+le %$r (l$+al #trate(y. E)&ha#i# $' 6$lu)e c$#t )a'a(e)e't a'd e%%icie'cy.
• Transnational companies are )uch )$re c$)&le2 $r(a'i=ati$'#. They ha6e i'6e#ted i' %$rei('
$&erati$'# ha6e a ce'tral c$r&$rate %acility +ut (i6e deci#i$'-)aki'( R>D a'd )arketi'( &$8er# t$
each i'di6idual %$rei(' )arket.
• Multinational Corporation I' a re&$rt $% the I'ter'ati$'al La+$ur Or(a'i#ati$' !ILO" it i# $+#er6ed that
?the e##e'tial $% the MN4 lie# i' the %act that it# )a'a(erial head@uarter# are l$cated i' $'e c$u'try !h$)e
c$u'try" 8hile the e'ter&ri#e carrie# $ut $&erati$'# i' a 'u)+er $% the $ther c$u'trie# !h$#t c$u'trie#".?
2
A ?)ulti'ati$'al c$r&$rati$'? i# al#$ re%erred t$ a# a' i'ter'ati$'al tra'#acti$'al $r (l$+al c$r&$rati$'.
Actually %$r a' e'lar(i'( +u#i'e## %ir) )ulti'ati$'al i# a +e(i''i'( #te& a# it (radually +ec$)e# tra'#'ati$'al
a'd the' tur'# i't$ a (l$+al c$r&$rati$'. 3$r tra'#'ati$'al c$r&$rati$' re&re#e't# a #ta(e 8here i' the
$8'er#hi& a'd c$'tr$l $% the c$'cer'ed $r(a'i=ati$' cr$##e# the 'ati$'al +$u'darie#.
Features of MNCs :
:. MN4# ha6e )a'a(erial head@uarter# i' h$)e c$u'trie# 8hile they carry $ut $&erati$'# i' a 'u)+er $% $ther
!h$#t" c$u'trie#.
/. A lar(e &art $% ca&ital a##et# $% the &are't c$)&a'y i# $8'ed +y the citi=e'# $% the c$)&a'yA# h$)e c$u'try.
B. The a+#$lute )a9$rity $% the )e)+er# $% the B$ard $% Direct$r# are citi=e'# $% the h$)e c$u'try.
1. Deci#i$'# $' 'e8 i'6e#t)e't a'd the l$cal $+9ecti6e# are take' +y the &are't c$)&a'y.
C. MN4# are &red$)i'a'tly lar(e-#i=ed a'd e2erci#e a (reat de(ree $% ec$'$)ic d$)i'a'ce.
.. MN4# c$'tr$l &r$ducti$' acti6ity 8ith lar(e %$rei(' direct i'6e#t)e't i' )$re tha' $'e de6el$&ed a'd
de6el$&i'( c$u'trie#.
D. MN4# are '$t 9u#t &artici&a't# i' e2&$rt trade 8ith$ut %$rei(' i'6e#t)e't#.
Main Drivers of Globalization [International Business
3
Cost !river c$)&a'ie# c$'#ider the 6ari$u# li%e#tyle $% the c$u'try +e%$re c$'#ideri'( the &rice $% the &r$duct
a'd #er6ice# t$ re'dered
Tec"nolo#y !river : i'crea#i'( tech'$l$(y #y#te) tra'#&$rtati$' ad6a'ci'( i' the le6el $% 8$rld trade #y#te)
Government !river: reduci'( trade tari%%# a'd '$' trade tari%%# reduci'( the r$le $% &$litical &$licie#
Competition !river: $r(a'i=ati$' +ec$)i'( a (l$+al ce'ter #hi%t i' $&e' )arket #y#te) Pri6ati=ati$'
Li+erali=ati$'
$pproac"es in International Business
%& 'T(N)C'NT*IC )*I'NT$TI)N:
The eth'$ce'tric $rie'tati$' $% a %ir) c$'#ider# that the &r$duct# )arketi'( #trate(ie# a'd tech'i@ue#
a&&lica+le i' the h$)e )arket are e@ually #$ i' the $6er#ea# )arket a# 8ell. I' #uch a %ir) all %$rei('
)arketi'( $&erati$'# are &la''ed a'd carried $ut %r$) h$)e +a#e 8ith little $r '$ di%%ere'ce i' &r$duct
%$r)ulati$' a'd #&eci%icati$'# &rici'( #trate(y di#tri+uti$' a'd &r$)$ti$' )ea#ure# +et8ee' h$)e a'd
$6er#ea# )arket#. The %ir) (e'erally de&e'd# $' it# %$rei(' a(e't# a'd e2&$rt-i)&$rt )ercha't# %$r it# e2&$rt
#ale#.
+& *'GI)C'NT*IC )*I'NT$TI)N :
I' re(i$ce'tric a&&r$ach the %ir) acce&t# a re(i$'al )arketi'( &$licy c$6eri'( a (r$u& $% c$u'trie# 8hich ha6e
c$)&ara+le )arket characteri#tic#. The $&erati$'al #trate(ie# are %$r)ulated $' the +a#i# $% the e'tire re(i$'
rather tha' i'di6idual c$u'trie#. The &r$ducti$' a'd di#tri+uti$' %acilitie# are created t$ #er6e the 8h$le re(i$'
8ith e%%ecti6e ec$'$)y $' $&erati$' cl$#e c$'tr$l a'd c$-$rdi'ati$'.
,& G')C'NT*IC )*I'NT$TI)N :
I' (e$ce'tric $rie'tati$' the %ir)# acce&t a 8$rld 8ide a&&r$ach t$ )arketi'( a'd it# $&erati$'# +ec$)e
(l$+al. I' (l$+al e'ter&ri#e the )a'a(e)e't e#ta+li#he# )a'u%acturi'( a'd &r$ce##i'( %acilitie# ar$u'd the
8$rld i' $rder t$ #er6e the 6ari$u# re(i$'al a'd 'ati$'al )arket# thr$u(h a c$)&licated +ut 8ell c$-$rdi'ate
#y#te) $% di#tri+uti$' 'et8$rk. There are #i)ilaritie# +et8ee' (e$ce'tric a'd re(i$ce'tric a&&r$ache# i' the
i'ter'ati$'al )arket e2ce&t that the (e$ce'tric a&&r$ach call# %$r a )uch (reater #cale $% $&erati$'.
-& P)./C'NT*IC )P'*$TI)N :
Ehe' a %ir) ad$&t# &$lyce'tric a&&r$ach t$ $6er#ea# )arket# it atte)&t# t$ $r(a'i=e it# i'ter'ati$'al )arketi'(
acti6itie# $' a c$u'try t$ c$u'try +a#i#. Each c$u'try i# treated a# a #e&arate e'tity a'd i'di6idual #trate(ie# are
4
8$rked $ut acc$rdi'(ly. L$cal a##e)+ly $r &r$ducti$' %acilitie# a'd )arketi'( $r(a'i#ati$'# are created %$r
#er6i'( )arket 'eed# i' each c$u'try. P$lyce'tric $rie'tati$' c$uld +e )$#t #uita+le %$r %ir)# #eri$u#ly
c$))itted t$ i'ter'ati$'al )arketi'( a'd ha6e it# re#$urce# %$r i'6e#ti'( a+r$ad %$r %uller a'd l$'(-ter)
&e'etrati$' i't$ ch$#e' )arket#. P$lyce'tric a&&r$ach 8$rk# +etter a)$'( c$u'trie# 8hich ha6e #i('i%ica't
ec$'$)ic &$litical a'd cultural di%%ere'ce# a'd &er%$r)a'ce $% the#e ta#k# are %ree %r$) the &r$+le)# created
&ri)arily +y the e'6ir$')e'tal %act$r#.
T"eories of International Business
%& T"eory of $bsolute $!vanta#e
The Sc$tti#h ec$'$)i#t Ada) S)ith de6el$&ed the trade the$ry $% a+#$lute ad6a'ta(e i'
D.. A c$u'try thatha# a' a+#$lute ad6a'ta(e &r$duce# (reater $ut&ut $% a ($$d $r #er6ice tha' $ther c$u'trie# u#i'( the #a)e
a)$u't $% re#$urce#. S)ith #tated that tari%%# a'd @u$ta# #h$uld '$t re#trict i'ter'ati$'al tradeF it #h$uld +e
all$8ed t$ %l$8 acc$rdi'( t$ )arket %$rce#. 4$'trary t$ )erca'tili#) S)ith ar(ued that a c$u'try #h$uld
c$'ce'trate $' &r$ducti$' $% ($$d# i' 8hich it h$ld# a' a+#$lute ad6a'ta(e. N$ c$u'try 8$uld the' 'eed t$
&r$duce all the ($$d# it c$'#u)ed. The the$ry $% a+#$lute ad6a'ta(e de#tr$y# the )erca'tili#tic idea that
i'ter'ati$'al trade i# a =er$-#u) (a)e. Acc$rdi'( t$ the a+#$lute ad6a'ta(e the$ry i'ter'ati$'al trade i# a
&$#iti6e-#u) (a)e +ecau#e there are (ai'# %$r +$th c$u'trie# t$ a' e2cha'(e. U'like )erca'tili#) thi# the$ry
)ea#ure# the 'ati$'A# 8ealth +y the li6i'( #ta'dard# $% it# &e$&le a'd '$t +y ($ld a'd #il6er.
There i# a &$te'tial &r$+le) 8ith a+#$lute ad6a'ta(e. I% there i# $'e c$u'try that d$e# '$t ha6e a' a+#$lute
ad6a'ta(e i' the &r$ducti$' $% a'y &r$duct 8ill there #till +e +e'e%it t$ trade a'd 8ill trade e6e' $ccurG The
a'#8er )ay +e %$u'd i' the e2te'#i$' $% a+#$lute ad6a'ta(e the the$ry $% c$)&arati6e ad6a'ta(e.
+& T"eory of Comparative $!vanta#e
The )$#t +a#ic c$'ce&t i' the 8h$le $% i'ter'ati$'al trade the$ry i# the &ri'ci&le $% c$)&arati6e ad6a'ta(e
%ir#t i'tr$duced +y Da6id Ricard$ i' :-
. It re)ai'# a )a9$r i'%lue'ce $' )uch i'ter'ati$'al trade &$licy a'di# there%$re i)&$rta't i' u'der#ta'di'( the )$der' (l$+al ec$'$)y. The &ri'ci&le $% c$)&arati6e ad6a'ta(e
#tate# that a c$u'try #h$uld #&eciali=e i' &r$duci'( a'd e2&$rti'( th$#e &r$duct# i' 8hich i# ha# a c$)&arati6e
$r relati6e c$#t ad6a'ta(e c$)&ared 8ith $ther c$u'trie# a'd #h$uld i)&$rt th$#e ($$d# i' 8hich it ha# a
c$)&arati6e di#ad6a'ta(e. Out $% #uch #&eciali#ati$' it i# ar(ued 8ill accrue (reater +e'e%it %$r all.
5
I' thi# the$ry there are #e6eral a##u)&ti$'# that li)it the real-8$rld a&&licati$'. The a##u)&ti$' that
c$u'trie# are dri6e' $'ly +y the )a2i)i=ati$' $% &r$ducti$' a'd c$'#u)&ti$' a'd '$t +y i##ue# $ut $% c$'cer'
%$r 8$rker# $r c$'#u)er# i# a )i#take.
,&(ec0sc"er1)"lin T"eory
I' the early :0HH# a' i'ter'ati$'al trade the$ry called %act$r &r$&$rti$'# the$ry e)er(ed +y t8$ S8edi#h
ec$'$)i#t# Eli *eck#cher a'd Bertil Ohli'. Thi# the$ry i# al#$ called the *eck#cher-Ohli' the$ry. The
*eck#cher-Ohli' the$ry #tre##e# that c$u'trie# #h$uld &r$duce a'd e2&$rt ($$d# that re@uire re#$urce# !%act$r#"
that are a+u'da't a'd i)&$rt ($$d# that re@uire re#$urce# i' #h$rt #u&&ly. Thi# the$ry di%%er# %r$) the the$rie#
$% c$)&arati6e ad6a'ta(e a'd a+#$lute ad6a'ta(e #i'ce the#e the$ry %$cu#e# $' the &r$ducti6ity $% the
&r$ducti$' &r$ce## %$r a &articular ($$d. O' the c$'trary the *eck#cher-Ohli' the$ry #tate# that a c$u'try
#h$uld #&eciali#e &r$ducti$' a'd e2&$rt u#i'( the %act$r# that are )$#t a+u'da't a'd thu# the chea&e#t. N$t
&r$duce a# earlier the$rie# #tated the ($$d# it &r$duce# )$#t e%%icie'tly.
The *eck#cher-Ohli' the$ry i# &re%erred t$ the Ricard$ the$ry +y )a'y ec$'$)i#t# +ecau#e it )ake# %e8er
#i)&li%yi'( a##u)&ti$'#. I' :0CB Ea##ily Le$'tie% &u+li#hed a #tudy 8here he te#ted the 6alidity $% the
*eck#cher-Ohli' the$ry. The #tudy #h$8ed that the U.S 8a# )$re a+u'da't i' ca&ital c$)&ared t$ $ther
c$u'trie# there%$re the U.S 8$uld e2&$rt ca&ital- i'te'#i6e ($$d# a'd i)&$rt la+$ur-i'te'#i6e ($$d#. Le$'tie%
%$u'd $ut that the U.SA# e2&$rt 8a# le## ca&ital i'te'#i6e tha' i)&$rt.
-&Pro!uct .ife Cycle T"eory
Ray)$'d Ver'$' de6el$&ed the i'ter'ati$'al &r$duct li%e cycle the$ry i' the :0.H#. The i'ter'ati$'al &r$duct
li%e cycle the$ry #tre##e# that a c$)&a'y 8ill +e(i' t$ e2&$rt it# &r$duct a'd later take $' %$rei(' direct
i'6e#t)e't a# the &r$duct )$6e# thr$u(h it# li%e cycle. E6e'tually a c$u'tryA# e2&$rt +ec$)e# it# i)&$rt.
Alth$u(h the )$del i# de6el$&ed ar$u'd the U.S it ca' +e (e'erali#ed a'd a&&lied t$ a'y $% the de6el$&ed a'd
i''$6ati6e )arket# $% the 8$rld.
The &r$duct li%e cycle the$ry 8a# de6el$&ed duri'( the :0.H# a'd %$cu#ed $' the U.S #i'ce )$#t i''$6ati$'#
ca)e %r$) that )arket. Thi# 8a# a' a&&lica+le the$ry at that ti)e #i'ce the U.S d$)i'ated the 8$rld trade.
T$day the U.S i# '$ l$'(er the $'ly i''$6at$r $% &r$duct# i' the 8$rld. T$day c$)&a'ie# de#i(' 'e8 &r$duct#
a'd )$di%y the) )uch @uicker tha' +e%$re. 4$)&a'ie# are %$rced t$ i'tr$duce the &r$duct# i' )a'y di%%ere't
)arket# at the #a)e ti)e t$ (ai' c$#t +e'e%it# +e%$re it# #ale# decli'e#. The the$ry d$e# '$t e2&lai' trade
&atter'# $% t$day.
6
2&T"eory of Mercantilism
Acc$rdi'( t$ Eild /HHH the trade the$ry that #tate# that 'ati$'# #h$uld accu)ulate %i'a'cial 8ealth u#ually
i' the %$r) $% ($ld +y e'c$ura(i'( e2&$rt# a'd di#c$ura(i'( i)&$rt# i# called )erca'tili#). Acc$rdi'( t$ thi#
the$ry $ther )ea#ure# $% c$u'trie#A 8ell +ei'( #uch a# li6i'( #ta'dard# $r hu)a' de6el$&)e't are irrele6a't.
Mai'ly <reat Britai' 3ra'ce the Netherla'd# P$rtu(al a'd S&ai' u#ed )erca'tili#) duri'( the :CHH# t$ the
late
HH#.Merca'tili#tic c$u'trie# &racticed the #$-called =er$-#u) (a)eI #ituati$' i' 8hich $'e &artici&a'tA# (ai'#
re#ult $'ly %r$) a'$ther &artici&a'tA# e@ui6ale't l$##e#. The 'et cha'(e i' t$tal 8ealth a)$'( &artici&a't# i#
=er$F the 8ealth i# 9u#t #hi%ted %r$) $'e t$ a'$ther.J 8hich )ea't that 8$rld 8ealth 8a# li)ited a'd that
c$u'trie# $'ly c$uld i'crea#e their #hare at e2&e'#e $% their 'ei(h+$r#. The ec$'$)ic de6el$&)e't 8a#
&re6e'ted 8he' the )erca'tili#tic c$u'trie# &aid the c$l$'ie# little %$r e2&$rt a'd char(ed the) hi(h &rice %$r
i)&$rt. The )ai' &r$+le) 8ith )erca'tili#) i# that all c$u'trie# e'(a(ed i' e2&$rt +ut 8a# re#tricted %r$)
i)&$rt &re6e'ti$' %r$) de6el$&)e't $% i'ter'ati$'al trade
INT'*N$TI)N$ B34IN'44 'N5I*)NM'NT
F)*'IGN 'N5I*)NM'NT:
The h$)e-+a#ed $r the d$)e#tic e2&$rt e2&a'#i$' )ea#ure# are 'ece##arily related t$ the c$'diti$'# &re6aili'(
i' &$##i+le )arket#. A' E2&$rter ha# t$ $6erc$)e 6ari$u# c$'#trai't# a'd ada&t &la'# a'd $&erati$'# t$ #uit
%$rei(' e'6ir$')e'tal c$'diti$'#. The )ai' ele)e't# $% %$rei(' e'6ir$')e't a%%ecti'( )arketi'( acti6itie# $% a
%ir) i' a %$rei(' c$u'try c$'#i#t $% the %$ll$8i'(.
$6 P).ITIC$. DIM'N4I)N:
Nati$'# (reatly di%%er i' their &$litical e'6ir$')e't. <$6t. &$licie# re(ulati$'# a'd c$'tr$l )echa'i#)#
re(ardi'( the c$u'trie# %$rei(' trade a'd c$))ercial relati$'# 8ith $ther c$u'trie# $r (r$u&# $% c$u'trie#. At
lea#t %$ur %act$r# #h$uld +e c$'#idered i' decidi'( 8hether t$ d$ +u#i'e## i' a &articular c$u'try. They are
:. $ttitu!es to7ar!s International Buyin#:
7
S$)e 'ati$'# are 6ery rece&ti6e i'deed e'c$ura(i'( t$ %$rei(' %ir)# a'd #$)e $ther# are h$#tile. 3$r
e.(., Si'(a&$re UAE a'd Me2ic$ are attracti'( %$rei(' i'6e#t)e't# +y $%%eri'( i'6e#t)e't i'ce'ti6e#
re)$6al $% trade +arrier# i'%ra#tructure #er6ice# etc.
/. Political 4tability: A c$u'tryA# %uture a'd #ta+ility i# a'$ther i)&$rta't i##ue. <$6er')e't cha'(e#
ha'd# #$)eti)e# 6i$le'tly. E6e' 8ith$ut a cha'(e a re(i$' )ay decide t$ re#&$'d t$ &$&ular %eeli'(. A
%$rei(' %ir)A# &r$&erty )ay +e #ei=edF $r it# curre'cy h$ldi'(# +l$ckedF $r i)&$rt @u$ta# $r 'e8 dutie#
)ay +e i)&$#ed. Ehe' &$litical #ta+ility i# hi(h $'e )ay ($ %$r direct i'6e#t)e't#. But 8he' i'#ta+ility
i# hi(h %ir)# )ay &re%er t$ e2&$rt rather tha' i'6$l6e i' direct i'6e#t)e't#. Thi# 8ill +ri'( i' %$rei('
e2cha'(e %a#t a'd curre'cy c$'6erti+ility i# al#$ ra&id.
,& Monetary *e#ulations:
Seller# 8a't t$ reali#e &r$%it# i' a curre'cy $% 6alue t$ the). I' +e#t #ituati$'# the I)&$rter &ay# i' the
#ellerA# curre'cy $r i' hard 8$rld curre'cie#. I' the 8$r#t ca#e they ha6e t$ take the )$'ey $ut $% the
h$#t c$u'try i' the %$r) $% relati6ely u')arketa+le &r$duct# that they ca' #ell el#e8here $'ly at a l$##.
Be#ide# curre'cy re#tricti$'# a %luctuati'( e2cha'(e rate al#$ create# hi(h ri#k# %$r the e2&$rter.
-& Government Bureaucracy:
It i# the e2te't t$ 8hich the <$6er')e't i' the h$#t c$u'try ru'# a' e%%icie't #y#te) %$r a##i#ti'( %$rei('
c$)&a'ie#, e%%icie't cu#t$)# ha'dli'( ade@uate )arket i'%$r)ati$' etc. The &r$+le) $% %$rei('
u'certai'ty i# thu# %urther c$)&licated +y a %re@ue'tly i)&$#ed ?alie' #tatu#? thi# i'crea#e# the
di%%iculty $% &r$&erly a##e##i'( a'd %$reca#ti'( the dy'a)ic i'ter'ati$'al +u#i'e##. The &$litical
e'6ir$')e't $%%er# the +e#t e2a)&le $% the alie' #tatu#.
A %$rei(' &$litical e'6ir$')e't ca' +e e2tre)ely criticalF #hi%t# i' <$6er')e't $%te' )ea'# #udde'
cha'(e# i' attitude# that ca' re#ult i' e2&r$&riati$' e2&ul#i$' $r )a9$r re#tricti$'# i' $&erati$'#. The
%act i# that a %$rei(' c$)&a'y i# %$rei(' a'd thu# al8ay# #u+9ect t$ the &$litical 8hi) t$ a (reater de(ree
tha' a d$)e#tic %ir).
C3.T3*$. 'N5I*)NM'NT:
The )a''er i' 8hich &e$&le c$'#u)e their &ri$rity $% 'eed# a'd the 8a't# they atte)&t t$ #ati#%y a'd the
)a''er i' 8hich they #ati#%y are %u'cti$'# $% their culture 8hich )$uld# a'd dictate# their #tyle $% li6i'(. Thi#
culture i# the #u) t$tal $% k'$8led(e +elie% art )$ral# la8# cu#t$)# a'd $ther ca&a+ilitie# ac@uired +y
8
hu)a'# a# )e)+er# $% the #$ciety. Si'ce culture decide# the #tyle $% li6i'( it i# &erti'e't t$ #tudy it e#&ecially
i' e2&$rt )arketi'(. e.(. 8he' a &r$)$ti$'al )e##a(e i# 8ritte' #y)+$l# rec$('i=a+le a'd )ea'i'(%ul t$ the
)arket !the culture" )u#t +e u#ed. Ehe' de#i('i'( a &r$duct the #tyle u#ed a'd $ther related )arketi'(
acti6itie# )u#t +e culturally acce&ta+le.
'C)N)MIC 'N5I*)NM'NT: I' c$'#ideri'( the i'ter'ati$'al )arket each E2&$rter )u#t c$'#ider the
i)&$rti'( c$u'tryA# ec$'$)y. T8$ ec$'$)ic characteri#tic# re%lect the c$u'tryA# attracti6e'e## a# a' e2&$rt
)arket. They are the c$u'tryA# i'du#trial #tructure a'd the c$u'tryA# i'c$)e di#tri+uti$' +y e)&l$y)e't
i'du#triali=ati$' a'd #$ci$ ec$'$)ic 9u#tice#.
.'G$. 'N5I*)NM'NT:
The le(al di)e'#i$' $% i'ter'ati$'al Bu#i'e## e'6ir$')e't i'clude# all la8# a'd re(ulati$'# re(ardi'( &r$duct
#&eci%icati$' a'd #ta'dard# &acka(i'( a'd la+eli'( c$&yri(ht trade)ark &ate't# health a'd #a%ety re(ulati$'#
&articularly i' re#&ect $% %$$d# a'd dru(#. There are al#$ c$'tr$l# i' &r$)$ti$'al )eth$d# &rice c$'tr$l trade
)ar(i' )ark-u& etc. The#e le(al a#&ect# $% )arketi'( a+r$ad ha6e #e6eral i)&licati$'# 8hich a' e2&$rti'(
%ir) 'eed# t$ #tudy cl$#ely.
*e#ional 4trate#y:
I' i'ter'ati$'al +u#i'e## the re(i$'al #trate(y i# e2&lai'ed a# +u#i'e## #trate(y directed i' d$i'( +u#i'e## %$r a
#&eci%ic c$u'try re(i$' i' i'ter'ati$'al +u#i'e## i# $'e 'ati$' lar(e #cale +u#i'e## $&erat$r# 8ill ha6e t$ de#i('
the +u#i'e## #trate(y +a#ed $' each 'ati$' a'd 8hich ulti)ately a%%ect# the i'ter'ati$'al +u#i'e##
4$)&a'ie# ca' #$urce ($$d# tech'$l$(y i'%$r)ati$' a'd ca&ital %r$) ar$u'd the 8$rld +ut +u#i'e## acti6ity
te'd# t$ +e ce'tered i' certai' citie# $r city re(i$'# i' a %e8 &art# $% the 8$rld
Global strate#y
<l$+al #trate(y i# the a+ility $% a' $r(a'i=ati$' t$ a&&ly a re&lica+le a'd #y#te)atic )eth$d$l$(y t$ the u'i@ue
challe'(e# that are %aced +y the $r(a'i=ati$'. A #$u'd (l$+al #trate(y addre##e# @ue#ti$'# #uch a# h$8 t$ +uild
'ece##ary (l$+al &re#e'ce a'd 8hat #h$uld +e the $&ti)al l$cati$'# %$r 6ari$u# 6alue chai' acti6itie#. A'y
c$)&a'y 8hich i)&le)e't# the (l$+al #trate(y 8ill ha6e the %$ll$8i'( a#&ect# a# it# %eature#
9
• Pr$duct i# the #a)e i' all c$u'trie#.
• 4e'trali=ed c$'tr$l - little deci#i$'-)aki'( auth$rity $' the l$cal le6el
• E%%ecti6e 8he' di%%ere'ce# +et8ee' c$u'trie# are #)all
• Ad6a'ta(e#, c$#t c$$rdi'ated acti6itie# %a#ter &r$duct de6el$&)e't
II13nit
T*$D' B$**I'*4
Trade +arrier# )ay +e !i" Tari%% Barrier# a'd !ii" N$' Tari%% Barrier# $r &r$tecti6e +arrier#.
i" T$*IFF B$**I'*4: Tari%% +arrier# ha6e +ee' $'e $% the cla##ical )eth$d# $% re(ulati'( i'ter'ati$'al trade.
Tari%%# )ay +e re%erred t$ a# ta2e# $' the i)&$rt#. It ai)# at re#tricti'( the i'8ard %l$8 $%
($$d# %r$) $ther c$u'trie# t$ &r$tect the c$u'tryA# $8' i'du#trie# +y )aki'( the ($$d# c$#tlier i' that c$u'try.
S$)eti)e# the duty $' a &r$duct +ec$)e# #$ #tee& that it i# '$t 8$rth8hile i)&$rti'( it. I' additi$' the duty #$
i)&$#ed al#$ &r$6ide# a #u+#ta'tial #$urce $% re6e'ue t$ the i)&$rti'( c$u'try. I' I'dia 4u#t$)# duty %$r)# a
#i('i%ica't &art $% the t$tal re6e'ue a'd there%$re i# a' i)&$rta't ele)e't i' the +ud(et. S$)e c$u'trie# u#e
thi# )eth$d $% i)&$#i'( tari%%# a'd 4u#t$)# dutie# t$ +ala'ce it# +ala'ce $% trade. A 'ati$' )ay al#$ u#e thi#
)eth$d t$ i'%lue'ce the &$litical a'd ec$'$)ic &$licie# $% $ther c$u'trie#. It )ay i)&$#e tari%%# $' certai'
i)&$rt# %r$) a &articular c$u'try a# a &r$te#t a(ai'#t tari%%# i)&$#ed +y that c$u'try $' it# ($$d#.
4pecific Duties8 i)&$#ed $' the +a#i# $% &er u'it $% a'y ide'ti%ia+le characteri#tic $% )ercha'di#e #uch a# &er
u'it 6$lu)e 8ei(ht le'(th etc. The duty #chedule# #$ #&eci%ied )u#t #&eci%y the rate $% duty a# 8ell a# the
deter)i'i'( %act$r #uch a# 8ei(ht 'u)+er etc. a'd +a#i# $% arri6i'( at the deter)i'i'( %act$r #uch a# (r$##
8ei(ht 'et 8ei(ht $r tare 8ei(ht.
$! valorem Tari%%# are +a#ed $' the 6alue $% i)&$rt# a'd are char(ed i' the %$r) $% #&eci%ied &erce'ta(e $% the
6alue $% ($$d#. The #chedule #h$uld #&eci%y h$8 the 6alue $% i)&$rted ($$d# 8$uld +e arri6ed at. M$#t $% the
c$u'trie# %$ll$8 the &ractice $% char(i'( tari%%# $' the +a#i# $% 4I3 c$#t $r 3OB c$#t )e'ti$'ed i' the i'6$ice.
A# tari%%# are +a#ed $' the c$#t #$)eti)e# u'ethical &ractice# $% u'der i'6$ici'( are ad$&ted 8here+y 4u#t$)#
re6e'ue i# a%%ected. I' $rder t$ eli)i'ate #uch )al&ractice# c$u'trie# ad$&t a %air 6alue !(i6e' i' the #chedule"
$r the curre't d$)e#tic 6alue $% the ($$d# a# the +a#i# $% c$)&uti'( the dutie#.
10
N)N 1 T$*IFF M'$43*'4 9B$**I'*46
T$ &r$tect the d$)e#tic i'du#trie# a(ai'#t u'%air c$)&etiti$' a'd t$ (i6e the) a %air cha'ce $% #ur6i6al 6ari$u#
c$u'trie# are ad$&ti'( '$'-tari%% )ea#ure#. S$)e $% the#e are ,
:uantity *estrictions8 :uotas an! .icensin# Proce!ures:1
U'der @ua'tity re#tricti$' the )a2i)u) @ua'tity $% di%%ere't c$))$ditie# 8hich 8$uld +e all$8ed t$ +e
i)&$rted $6er a &eri$d $% ti)e %r$) 6ari$u# c$u'trie# i# %i2ed i' ad6a'ce. The @u$ta %i2ed '$r)ally de&e'd# $'
the relati$'# $% the t8$ c$u'trie# a'd the 'eed# $% the i)&$rti'( c$u'try. *ere the <$6t. i# i' a &$#iti$' t$
re#trict the i)&$rt# t$ a de#ired le6el. Ku$ta# are 6ery $%te' c$)+i'ed 8ith lice'#i'( #y#te) t$ re(ulate the %l$8
$% i)&$rt# $6er the @u$ta &eri$d a# al#$ t$ all$cate the) +et8ee' 6ari$u# i)&$rter# a'd #u&&lyi'( c$u'trie#.
Forei#n ';c"an#e *estrictions 1E2cha'(e c$'tr$l )ea#ure# are u#ed 8idely +y a 'u)+er $% de6el$&i'(
c$u'trie# t$ re(ulate i)&$rt#. U'der thi# #y#te) a' i)&$rter ha# t$ e'#ure that ade@uate %$rei(' e2cha'(e i#
a6aila+le %$r i)&$rt# +y (etti'( a cleara'ce %r$) the e2cha'(e c$'tr$l auth$ritie# $% the c$u'try.
Tec"nical *e#ulations 1
A'$ther )ea#ure t$ re(ulate the i)&$rt# i# t$ i)&$#e certai' #ta'dard# $% tech'ical &r$ducti$' tech'ical
#&eci%icati$' etc. The i)&$rted c$))$dity ha# t$ )eet the#e #&eci%icati$'#. Stri'(e't tech'ical re(ulati$'# a'd
#ta'dard# +ey$'d i'ter'ati$'al '$r)# e2&e'#i6e te#ti'( a'd certi%icati$' a'd c$)&licated )arki'( a'd
&acka(i'( re@uire)e't#.
5oluntary ';port *estraint:
The a(ree)e't $' A6$lu'taryA e2&$rt re#trai't i# i)&$#ed $' the e2&$rter u'der the threat $% #a'cti$'# t$ li)it
the e2&$rt $% certai' ($$d# i' the i)&$rti'( c$u'try. Si)ilarly e#ta+li#h)e't $% )i'i)u) i)&$rt &rice# #h$uld
+e #trictly $+#er6ed +y the e2&$rti'( %ir)# i' c$'tract# 8ith the i)&$rter# $% the c$u'try that ha# #et #uch &rice#.
I' ca#e $% reducti$' $% e2&$rt &rice# +el$8 the )i'i)u) &rice le6el the i)&$rti'( c$u'try i)&$#e# a'ti-
du)&i'( duty 8hich c$uld lead t$ 8ithdra8al %r$) the )arket. V$lu'tary e2&$rt re#trai't# )$#tly a%%ect trade
i' te2tile# %$$t8ear dairy &r$duct# car# )achi'e t$$l# etc.
.ocal Content *e<uirement:1
11
A l$cal c$'te't re@uire)e't i# a' a(ree)e't +et8ee' the e2&$rti'( a'd the i)&$rti'( c$u'try that the e2&$rti'(
c$u'try 8ill u#e #$)e a)$u't $r c$'te't $% re#$urce# $% the i)&$rti'( c$u'try i' it# &r$ce## $% &r$ducti$'. I%
the e2&$rti'( c$u'try a(ree# t$ d$ that $'ly the' the i)&$rti'( c$u'try 8ill i)&$rt their ($$d#.
'mbar#o:1 E)+ar($ i# a #&eci%ic ty&e $% @u$ta &r$hi+iti'( trade. Like @u$ta# e)+ar($e# )ay +e i)&$#ed $'
i)&$rt# $r e2&$rt# $% &articular ($$d# re(ardle## $% de#ti'ati$'# i' re#&ect $% certai' ($$d# #u&&lied t$
#&eci%ic c$u'trie# $r i' re#&ect $% all ($$d# #hi&&ed t$ certai' c$u'trie#. Alth$u(h the e)+ar($ i# u#ually
i'tr$duced %$r &$litical &ur&$#e# the c$'#e@ue'ce# i' e##e'ce c$uld +e ec$'$)ic#
Difference bet7een Tariff an! Non1Tariff Barriers
$nti 1 Dumpin#
A'ti du)&i'( i# a 'e8 8ea&$' i' the trade 8ar. A'ti du)&i'( i# $'e &$licy 8hich i# creati'( a '$' tari%%
+arrier hi'deri'( %ree trade.
12
I% a c$)&a'y e2&$rt# a &r$duct at a &rice l$8er tha' the $'e char(ed i' it# h$)e )arket it i# #aid t$ +e
du)&i'(. I% the i)&$rti'( c$)&a'y #ucceed# it# c$u'try 8ill le6y a' a'ti du)&i'( duty $' the &r$duct
e2&$rted +y the I'dia' 4$. t$ hi). Thi# add# t$ the la'ded c$#t $% the &r$duct a'd reduce# the I'dia' e2&$rterA#
c$)&etiti6e'e##.
Tra!e Bloc
A' a(ree)e't +et8ee' #tate# re(i$'# $r c$u'trie# t$ reduce +arrier# t$ trade +et8ee' the &artici&ati'( re(i$'#
Tradi'( +l$c# are a %$r) $% ec$'$)ic i'te(rati$' a'd i'crea#i'(ly #ha&e the &atter' $% 8$rld trade.
'conomic inte#ration i# the u'i%icati$' $% ec$'$)ic &$licie# +et8ee' di%%ere't #tate# thr$u(h the &artial $r %ull
a+$liti$' $% tari%% a'd '$'-tari%% re#tricti$'# $' trade taki'( &lace a)$'( the) &ri$r t$ their i'te(rati$'
The de(ree $% ec$'$)ic i'te(rati$' ca' +e cate($ri=ed i't$ %i6e #ta(e#,
:. Pre%ere'tial tradi'( area
/. 3ree trade area
B. 4u#t$)# u'i$'
1. 4$))$' )arket
C. Ec$'$)ic u'i$'
4ta#es=types = Forms= of economic inte#ration
Preferential Trade Area
Pre%ere'tial Trade Area# !PTA#" e2i#t 8he' c$u'trie# 8ithi' a (e$(ra&hical re(i$' a(ree t$ reduce $r eli)i'ate
tari%% +arrier# $' #elected ($$d# i)&$rted %r$) $ther )e)+er# $% the area. Thi# i# $%te' the %ir#t #)all #te&
t$8ard# the creati$' $% a tradi'( +l$c.
Free Trade Area
3ree Trade Area# !3TA#" are created 8he' t8$ $r )$re c$u'trie# i' a re(i$' a(ree t$ reduce $r eli)i'ate
+arrier# t$ trade $' all ($$d# c$)i'( %r$) $ther )e)+er#.
Customs Union
13
A cu#t$)# u'i$' i'6$l6e# the re)$6al $% tari%% +arrier# +et8ee' )e)+er# &lu# the acce&ta'ce $% a c$))$'
!u'i%ied" e2ter'al tari%% a(ai'#t '$'-)e)+er#. Thi# )ea'# that )e)+er# )ay 'e($tiate a# a #i'(le +l$c 8ith B
rd
&artie# #uch a# 8ith $ther tradi'( +l$c# $r 8ith the ETO
Common Market
A Lc$))$' )arketM i# the #i('i%ica't #te& t$8ard# %ull ec$'$)ic i'te(rati$' a'd $ccur# 8he' )e)+er
c$u'trie# trade %reely i' all ec$'$)ic re#$urce# 7 '$t 9u#t ta'(i+le ($$d#. Thi# )ea'# that all +arrier# t$ trade i'
($$d# #er6ice# ca&ital a'd la+$ur are re)$6ed.
The main advantages for members of trading blocs[this can be written for any trade bloc]
? 3ree trade &ractice#
? Market acce## a'd trade creati$'.
? Trade creati$' a'd trade di6er#i$'
? Ec$'$)ie# $% #cale
? l$8eri'( c$#t# a'd l$8er &rice# %$r c$'#u)er#.
? N$+# creati$' a'd e)&l$y)e't $&&$rtu'itie#
? Pr$tecti$' $% i'di6idual i'tere#t# $% )e)+er c$u'trie#.
N$FT$
N$rth A)erica' 3ree Trade A(ree)e't !NA3TA" e#ta+li#hed a %ree-trade =$'e i' N$rth A)ericaF it 8a# #i('ed i' :00/ +y
4a'ada Me2ic$ a'd the U'ited State# a'd t$$k e%%ect $' Na'. : :001. NA3TA i))ediately li%ted tari%%# $' the )a9$rity
$% ($$d# &r$duced +y the #i('at$ry 'ati$'#. It al#$ call# %$r the (radual eli)i'ati$' $% all trade +arrier# +et8ee' the#e
three c$u'trie#.
Goals of the NAFTA
• t$ reduce +arrier# t$ trade
• t$ i'crea#e c$$&erati$' %$r i)&r$6i'( 8$rki'( c$'diti$'# i' N$rth A)erica
• t$ create a' e2&a'ded a'd #a%e )arket %$r ($$d# a'd #er6ice# &r$duced i' N$rth A)erica
14
• t$ e#ta+li#h clear a'd )utually ad6a'ta(e$u# trade rule#
• t$ hel& de6el$& a'd e2&a'd 8$rld trade a'd &r$6ide a cataly#t t$ +r$ader i'ter'ati$'al c$$&erati$'
N$FT$ structure
Free Trade Commission: Made u& $% )i'i#terial re&re#e'tati6e# %r$) the NA3TA &art'er#.
N$FT$ Coor!inators: 4enior trade de&art)e't $%%icial# de#i('ated +y each c$u'try.
N$FT$ >or0in# Groups an! Committees: O6er BH 8$rki'( (r$u&# a'd c$))ittee# ha6e +ee' e#ta+li#hed t$
%acilitate trade a'd i'6e#t)e't a'd t$ e'#ure the e%%ecti6e i)&le)e'tati$' a'd ad)i'i#trati$' $% NA3TA.
N$FT$ 4ecretariat : Made u& $% a O'ati$'al #ecti$'P %r$) each )e)+er c$u'try. Re#&$'#i+le %$r
ad)i'i#teri'( the di#&ute #ettle)e't Mai'tai'# a tri-'ati$'al 8e+#ite c$'tai'i'( u&-t$-date i'%$r)ati$' $' &a#t
a'd curre't di#&ute#.
Commission for .abor Cooperation , 4reated t$ &r$)$te c$$&erati$' $' la+$r )atter# a)$'( NA3TA
)e)+er# a'd the e%%ecti6e e'%$rce)e't $% d$)e#tic la+$r la8. 888.'aalc.$r(.
Commission for 'nvironmental Cooperation : E#ta+li#hed t$ %urther c$$&erati$' a)$'( NA3TA &art'er# i'
i)&le)e'ti'( the e'6ir$')e'tal #ide acc$rd t$ NA3TA a'd t$ addre## e'6ir$')e'tal i##ue# $%
c$'ti'e'tal c$'cer' 8ith &articular atte'ti$' t$ the e'6ir$')e'tal challe'(e# a'd $&&$rtu'itie#
&re#e'ted +y c$'ti'e't-8ide %ree trade.
'uropean 3nion 9'36
4$)&ri#i'( /- Eur$&ea' c$u'trie# a'd ($6er'i'( c$))$' ec$'$)ic #$cial a'd #ecurity &$licie#. Ori(i'ally
c$'%i'ed t$ Ee#ter' Eur$&e the EU u'dert$$k a r$+u#t e2&a'#i$' i't$ ce'tral a'd ea#ter' Eur$&e i' the early
/:#t ce'tury. The EU 8a# created +y the Maa#tricht Treaty 8hich e'tered i't$ %$rce $' N$6e)+er : :00B.
4tructure of '3
:. The EU 4$u'cil #et# the &$licie# a'd &r$&$#e# 'e8 la8#. The &$litical leader#hi& $r Pre#ide'cy $% the
EU i# held +y a di%%ere't leader e6ery #i2 )$'th#.
/. The Eur$&ea' Parlia)e't de+ate# a'd a&&r$6e# the la8# &r$&$#ed +y the 4$u'cil. It# )e)+er# are
elected e6ery %i6e year#.
15
B. The Eur$&ea' 4$))i##i$' #ta%%# a'd e2ecute# the la8#. N$#Q Ma'uel Barr$#$ i# the Pre#ide't 8h$
#er6e# u'der /- 4$))i##i$'er#.
)b?ectives of '3
• a' area $% %reed$) #ecurity a'd 9u#tice 8ith$ut i'ter'al %r$'tier# F
• a' i'ter'al )arket 8here c$)&etiti$' i# %ree a'd u'di#t$rtedF
• #u#tai'a+le de6el$&)e't +a#ed $' +ala'ced ec$'$)ic (r$8th a'd &rice #ta+ility a hi(hly c$)&etiti6e
#$cial )arket ec$'$)y ai)i'( at %ull e)&l$y)e't a'd #$cial &r$(re## a'd a hi(h le6el $% &r$tecti$'
a'd i)&r$6e)e't $% the @uality $% the e'6ir$')e'tF
• the &r$)$ti$' $% #cie'ti%ic a'd tech'$l$(ical ad6a'ceF
• the c$)+ati'( $% #$cial e2clu#i$' a'd di#cri)i'ati$' a'd the &r$)$ti$' $% #$cial 9u#tice a'd &r$tecti$'
e@uality +et8ee' 8$)e' a'd )e' #$lidarity +et8ee' (e'erati$'# a'd &r$tecti$' $% the ri(ht# $% the
childF the &r$)$ti$' $% ec$'$)ic #$cial a'd territ$rial c$he#i$' a'd #$lidarity a)$'( Me)+er State#.
4out" $sian $ssociation for *e#ional Cooperation !4$$*C"
S$uth A#ia' 'ati$'# 8hich 8a# e#ta+li#hed $' - Dece)+er :0-C 8he' the ($6er')e't $% Ba'(lade#h Bhuta'
I'dia Maldi6e# Ne&al Paki#ta' a'd Sri La'ka %$r)ally ad$&ted it# charter &r$6idi'( %$r the &r$)$ti$' $%
ec$'$)ic a'd #$cial &r$(re## cultural de6el$&)e't 8ithi' the S$uth A#ia re(i$' a'd al#$ %$r %rie'd#hi& a'd c$-
$&erati$' 8ith $ther de6el$&i'( c$u'trie#. It i# dedicated t$ ec$'$)ic tech'$l$(ical #$cial a'd cultural
de6el$&)e't e)&ha#i=i'( c$llecti6e #el%-relia'ce. A%(ha'i#ta' 9$i'ed the $r(a'i#ati$' i' /HHD. Meeti'(# $%
head# $% #tate are u#ually #cheduled a''ually
)b?ectives of 4$$*C
• t$ &r$)$te the 8el%are $% the &e$&le $% S$uth A#ia a'd t$ i)&r$6e their @uality $% li%eF
• t$ accelerate ec$'$)ic (r$8th #$cial &r$(re## a'd cultural de6el$&)e't i' the re(i$' a'd t$ &r$6ide all
i'di6idual# the $&&$rtu'ity t$ li6e i' di('ity a'd t$ reali#e their %ull &$te'tial F
• t$ &r$)$te a'd #tre'(the' #electi6e #el%-relia'ce a)$'( the c$u'trie# $% S$uth A#iaF
• t$ c$'tri+ute t$ )utual tru#t u'der#ta'di'( a'd a&&reciati$' $% $'e a'$therA# &r$+le)#F
16
• t$ &r$)$te acti6e c$lla+$rati$' a'd )utual a##i#ta'ce i' the ec$'$)ic #$cial cultural tech'ical a'd
#cie'ti%ic %ield#F
• t$ #tre'(the' c$-$&erati$' 8ith $ther de6el$&i'( c$u'trie#F
• t$ #tre'(the' c$-$&erati$' a)$'( the)#el6e# i' i'ter'ati$'al %$ru)# $' )atter# $% c$))$' i'tere#tF
a'd
• t$ c$-$&erate 8ith i'ter'ati$'al a'd re(i$'al $r(a'i#ati$'# 8ith #i)ilar ai)# a'd &ur&$#e#.
4$$*C or#anizational structure:
:. SAAR4 4$u'cil, At the t$& there i# the 4$u'cil re&re#e'ted +y the head# $% the ($6er')e't $% the )e)+er
c$u'trie#.
/. 4$u'cil $% Mi'i#ter, It i# t$ a##i#t the c$u'cil. It i# re&re#e'ted +y the %$rei(' )i'i#ter# $% the )e)+er
c$u'trie#.
B. Sta'di'( 4$))ittee, It i# c$)&ri#ed +y the %$rei(' #ecretarie# $% the )e)+er ($6er')e't.
1. Pr$(ra))i'( 4$))ittee, It c$'#i#t $% the #e'i$r $%%icial $% the )e)+er ($6er')e't#.
C. Tech'ical 4$))ittee, It c$'#i#t $% the re&re#e'ted $% the )e)+er 'ati$'#.
..Secretaria, The SAAR4 #ecretariat i# l$cated i' Ne&al.
$4'$N
O' - Au(u#t :0.D %i6e leader# - the 3$rei(' Mi'i#ter# $% I'd$'e#ia Malay#ia the Phili&&i'e# Si'(a&$re a'd
Thaila'd - #at d$8' t$(ether i' the )ai' hall $% the De&art)e't $% 3$rei(' A%%air# +uildi'( i' Ba'(k$k
Thaila'd a'd #i('ed a d$cu)e't. By 6irtue $% that d$cu)e't the A##$ciati$' $% S$uthea#t A#ia' Nati$'#
!ASEAN" 8a# +$r'.
$4'$N 4T*3CT3*'4 $ND M'C($NI4M4
? ASEAN Su))it ASEAN 4$$rdi'ati'( 4$u'cil
? ASEAN 4$))u'ity 4$u'cil# ASEAN Sect$ral Mi'i#terial B$die#
? 4$))ittee $% Per)a'e't Re&re#e'tati6e# Nati$'al Secretariat#
? 4$))ittee# A+r$ad ASEAN 4hair
17
? ASEAN Secretariat The hi(he#t deci#i$'-)aki'( $r(a' $% ASEAN i# the Meeti'( $% the ASEAN *ead# $%
State
P*INCIP.'4 of $4'$N
? Mutual re#&ect %$r the i'de&e'de'ce #$6erei('ty e@uality territ$rial i'te(rity a'd 'ati$'al ide'tity $%
all 'ati$'#F
? The ri(ht $% e6ery State t$ lead it# 'ati$'al e2i#te'ce %ree %r$) e2ter'al i'ter%ere'ce #u+6er#i$' $r
c$erci$'F
? N$'-i'ter%ere'ce i' the i'ter'al a%%air# $% $'e a'$therF
? Settle)e't $% di%%ere'ce# $r di#&ute# +y &eace%ul )a''erF
? Re'u'ciati$' $% the threat $r u#e $% %$rceF a'd
? E%%ecti6e c$$&erati$' a)$'( the)#el6e#
)b?ectives : %&t$ accelerate the ec$'$)ic (r$8th #$cial &r$(re## a'd cultural de6el$&)e't i' the re(i$'
thr$u(h 9$i't e'dea6$r# i' the #&irit $% e@uality a'd &art'er#hi& i' $rder t$ #tre'(the' the %$u'dati$' %$r a
&r$#&er$u# a'd &eace%ul c$))u'ity $% S$uthea#t A#ia' 'ati$'#
B. t$ &r$)$te re(i$'al &eace a'd #ta+ility thr$u(h a+idi'( re#&ect %$r 9u#tice a'd the rule $% la8 i' the
relati$'#hi& a)$'( c$u'trie# i' the re(i$' a'd adhere'ce t$ the &ri'ci&le# $% the U'ited Nati$'#
>orl! Tra!e )r#anization 9> T )6 : L$cati$', <e'e6a S8it=erla'd E#ta+li#hed, : Na'uary :00C 4reated
+y, Uru(uay R$u'd 'e($tiati$'# !:0-.-01" Me)+er#hi&, :C0 c$u'trie# $' / March /H:B Bud(et,
:0D )illi$' S8i## %ra'c# %$r /H:B Secretariat #ta%%, .1H *ead, Direct$r-<e'eral
ETO i# a' $r(a'i=ati$' c$)&ri#i'( $% de6el$&ed de6el$&i'( a'd lea#t de6el$&ed c$u'trie# u'der the UN
U)+rella head@uartered i' <e'e6a. It# ai) i# t$ &r$)$te trade a)$'(#t )e)+er 'ati$'# e#&ecially a%ter
(l$+ali=ati$' $% trade arra'(e aid tech'ically a'd i' $ther %$r)# %$r (r$8th $% trade a)$'(#t )e)+er c$u'trie#
creati'( all &$##i+le %acilitati$' )ea#ure#. Mai' 3u'cti$'# $% ETO T$ %acilitate the i)&le)e'tati$'
ad)i'i#trati$' a'd %urther $&erati$'# $% the a(ree)e't e#ta+li#hi'( the ETO&
Functions:
R Ad)i'i#teri'( ETO trade a(ree)e't#
R 3$ru) %$r trade 'e($tiati$'#
18
R *a'dli'( trade di#&ute#
R M$'it$ri'( 'ati$'al trade &$licie#
R Tech'ical a##i#ta'ce a'd trai'i'( %$r de6el$&i'( c$u'trie#
R 4$$&erati$' 8ith $ther i'ter'ati$'al $r(a'i=ati$'#
Organizational structure
Council for Tra!e in Goo!s , There are :: c$))ittee# u'der the 9uri#dicti$' $% the <$$d# 4$u'cil each 8ith a #&eci%ic
ta#k. All )e)+er# $% the ETO &artici&ate i' the c$))ittee#. The Te2tile# M$'it$ri'( B$dy i# #e&arate %r$) the $ther
c$))ittee# +ut #till u'der the 9uri#dicti$' $% <$$d# 4$u'cil. The +$dy ha# it# $8' chair)a' a'd $'ly :H )e)+er#. The
+$dy al#$ ha# #e6eral (r$u&# relati'( t$ te2tile#.
Council for Tra!e1*elate! $spects of Intellectual Property *i#"ts , I'%$r)ati$' $' i'tellectual &r$&erty i' the ETO
'e8# a'd $%%icial rec$rd# $% the acti6itie# $% the TRIPS 4$u'cil a'd detail# $% the ETOA# 8$rk 8ith $ther i'ter'ati$'al
$r(a'i=ati$'# i' the %ield.
Council for Tra!e in 4ervices, The 4$u'cil %$r Trade i' Ser6ice# $&erate# u'der the (uida'ce $% the <e'eral 4$u'cil a'd
i# re#&$'#i+le %$r $6er#eei'( the %u'cti$'i'( $% the <e'eral A(ree)e't $' Trade i' Ser6ice# !<ATS". It i# $&e' t$ all
ETO )e)+er# a'd ca' create #u+#idiary +$die# a# re@uired.
Tra!e Ne#otiations Committee, The Trade Ne($tiati$'# 4$))ittee !TN4" i# the c$))ittee that deal# 8ith the curre't
trade talk# r$u'd. The chair i# ETOA# direct$r-(e'eral. A# $% Nu'e /H:/ the c$))ittee 8a# ta#ked 8ith the D$ha
De6el$&)e't R$u'd
3nite! Nations Conference on Tra!e an! Development !3NCT$D"
It 8a# e#ta+li#hed i' :0.1 a# a &er)a'e't i'ter($6er')e'tal +$dy. It i# the &ri'ci&al $r(a' $% the U'ited
Nati$'# <e'eral A##e)+ly deali'( 8ith trade i'6e#t)e't a'd de6el$&)e't i##ue#.
The $r(a'i=ati$'A# ($al# are t$ ?)a2i)i=e the trade i'6e#t)e't a'd de6el$&)e't $&&$rtu'itie# $% de6el$&i'(
c$u'trie# a'd a##i#t the) i' their e%%$rt# t$ i'te(rate i't$ the 8$rld ec$'$)y $' a' e@uita+le +a#i#.
The &ri)ary $+9ecti6e $% the UN4TAD i# t$ %$r)ulate &$licie# relati'( t$ all a#&ect# $% de6el$&)e't i'cludi'(
trade aid tra'#&$rt %i'a'ce a'd tech'$l$(y. The c$'%ere'ce $rdi'arily )eet# $'ce i' %$ur year#. The %ir#t
c$'%ere'ce t$$k &lace i' <e'e6a i' :0.1 #ec$'d i' Ne8 Delhi i' :0.-
O'e $% the &ri'ci&al achie6e)e't# $% UN4TAD ha# +ee' t$ c$'cei6e a'd i)&le)e't the <e'erali=ed Sy#te) $%
Pre%ere'ce# !<SP". 4urre'tly UN4TAD ha# :01 )e)+er #tate# a'd i# head@uartered i' <e'e6a S8it=erla'd.
UN4TAD ha# 1HH #ta%% )e)+er# It i# a )e)+er $% the U'ited Nati$'# De6el$&)e't <r$u&
19
)b?ectives an! Functions: !i" T$ &r$)$te i'ter'ati$'al trade +et8ee' de6el$&ed a'd de6el$&i'( c$u'trie#
8ith a 6ie8 t$ accelerate ec$'$)ic de6el$&)e't.
!ii" T$ %$r)ulate &ri'ci&le# a'd &$licie# $' i'ter'ati$'al trade a'd related &r$+le)# $% ec$'$)ic de6el$&)e't.
!iii" T$ )ake &r$&$#al# %$r &utti'( it# &ri'ci&le# a'd &$licie# i't$ e%%ect !i6" T$ 'e($tiate trade a(ree)e't#.
!i6" T$ re6ie8 a'd %acilitate the c$$rdi'ati$' $% acti6itie# $% the $ther U.N. i'#tituti$'# i' the %ield $%
i'ter'ati$'al trade.
!6" T$ %u'cti$' a# a ce'tre %$r a har)$'i$u# trade a'd related d$cu)e't# i' de6el$&)e't &$licie# $%
($6er')e't#
T*IM4 an! T*IP4 : The ETO ad)i'i#ter# the i)&le)e'tati$' $% a #et $% a(ree)e't# 8hich i'clude the
<e'eral A(ree)e't $' Tari%%# a'd Trade $ther a(ree)e't# i' the ($$d# #ect$r !e.(. a(riculture te2tile#
#a'itary a'd &#ych$-#a'itary )ea#ure# Trade Related I'6e#t)e't Mea#ure#-TRIM# a'ti-du)&i'( etc." a'd i'
additi$' a(ree)e't# i' t8$ $ther area# 6i=. trade i' #er6ice# a'd Trade Related I'tellectual Pr$&erty Ri(ht#
!TRIP#" TRIP# deal# 8ith the %$ll$8i'( IPR#
• 4$&yri(ht a'd related ri(ht#F
• Pate't# Trade)ark# <e$(ra&hical i'dicati$'# i'cludi'( a&&ellati$'# $% $ri(i'F
• I'du#trial de#i('# I'te(rated circuit lay$ut-de#i('#F
• Pr$tecti$' $% u'di#cl$#ed i'%$r)ati$' 4$'tr$l $% a'ti-c$)&etiti6e &ractice# i' c$'tractual lice'#e#
• Ter) $% &ate't# /H year# Li)ited c$)&ul#$ry lice'#i'( '$ lice'#e $% ri(ht
• Al)$#t all %ield# $% tech'$l$(y &ate'ta+le. O'ly area c$'clu#i6ely e2cluded %r$) &ate'ta+ility i#
&la't 6arietie#F de+ate re(ardi'( #$)e area# i' a(riculture a'd +i$tech'$l$(y Very li)ited #c$&e %$r
• ($6er')e't# t$ u#e &ate'ted i'6e'ti$'#
T*IM4 : Tra!e *elate! Investment Measures !TRIM#" are rule# that a&&ly t$ the d$)e#tic re(ulati$'# a
c$u'try a&&lie# t$ %$rei(' i'6e#t$r# $%te' a# &art $% a' i'du#trial &$licy. The a(ree)e't 8a# a(reed u&$' +y all
)e)+er# $% the E$rld Trade Or(a'i=ati$'. The a(ree)e't 8a# c$'cluded i' :001 a'd ca)e i't$ %$rce i' :00C
20
?The A(ree)e't $' Trade-Related I'6e#t)e't Mea#ure# TRIM# A(ree)e't $'e $% the Multilateral
A(ree)e't# $' Trade i' <$$d# &r$hi+it# trade-related i'6e#t)e't )ea#ure# #uch a# l$cal c$'te't re@uire)e't#
that are i'c$'#i#te't 8ith +a#ic &r$6i#i$'# $% <ATT :001.
?The <e'eral A(ree)e't $' Trade i' Ser6ice# addre##e# %$rei(' i'6e#t)e't i' #er6ice# a# $'e $% %$ur )$de#
$% #u&&ly $% #er6ice#
3NIT1III
Mo!es of forei#n Mar0et 'ntry
Direct e;port&
The $r(a'i=ati$' &r$duce# their &r$duct i' their h$)e )arket a'd the' #ell# the) t$ cu#t$)er# $6er#ea#
$!vanta#es
• 4$'tr$l $6er #electi$' $% %$rei(' )arket# a'd ch$ice $% %$rei(' re&re#e'tati6e c$)&a'ie#
• <$$d i'%$r)ati$' %eed+ack %r$) tar(et )arket
• Better &r$tecti$' $% trade)ark# &ate't# ($$d8ill a'd $ther i'ta'(i+le &r$&erty
• P$te'tially (reater #ale# tha' 8ith i'direct e2&$rti'(.
Disa!vanta#es
• *i(her #tart-u& c$#t# a'd hi(her ri#k# a# $&&$#ed t$ i'direct e2&$rti'(
• <reater i'%$r)ati$' re@uire)e't#
• L$'(er ti)e-t$-)arket a# $&&$#ed t$ i'direct e2&$rti'(.
IDJ
In!irect e;port
The $r(a'i=ati$'# #ell# their &r$duct t$ a third &arty 8h$ the' #ell# it $' 8ithi' the %$rei(' )arket.
$!vanta#es
• 3a#t )arket acce##
• 4$'ce'trati$' $% re#$urce# %$r &r$ducti$'
21
• Little $r '$ %i'a'cial c$))it)e't. The e2&$rt &art'er u#ually c$6er# )$#t e2&e'#e# a##$ciated 8ith
i'ter'ati$'al #ale#
• The )a'a(e)e't tea) i# '$t di#tracted
• N$ direct ha'dle $% e2&$rt &r$ce##e#.
Disa!vanta#es
• *i(her ri#k tha' 8ith direct e2&$rti'(
• Little $r '$ c$'tr$l $6er di#tri+uti$' #ale# )arketi'( etc. a# $&&$#ed t$ direct e2&$rti'(
• I'a+ility t$ lear' h$8 t$ $&erate $6er#ea#
.icensin#
A'$ther le## ri#ky )arket e'try )eth$d i# lice'#i'(. *ere the Lice'#$r 8ill (ra't a' $r(a'i=ati$' i' the %$rei('
)arket a lice'#e t$ &r$duce the &r$duct u#e the +ra'd 'a)e etc i' retur' that they 8ill recei6e a r$yalty
&ay)e't.
$!vanta#es an! reasons to use an international licensin#
• O+tai' e2tra i'c$)e %$r tech'ical k'$8-h$8 a'd #er6ice#
• Reach 'e8 )arket# '$t acce##i+le +y e2&$rt %r$) e2i#ti'( %acilitie#
• Kuickly e2&a'd 8ith$ut )uch ri#k a'd lar(e ca&ital i'6e#t)e't
• Pa6e the 8ay %$r %uture i'6e#t)e't# i' the )arket
Franc"isin#
3ra'chi#i'( i# a'$ther %$r) $% lice'#i'(. *ere the $r(a'i=ati$' &ut# t$(ether a &acka(e $% the L#ucce##%ulM
i'(redie't# that )ade the) a #ucce## i' their h$)e )arket a'd the' %ra'chi#e thi# &acka(e t$ $6er#ee i'6e#t$r#.
The 3ra'chi#e h$lder )ay hel& $ut +y &r$6idi'( trai'i'( a'd )arketi'( the #er6ice# $r &r$duct. McD$'ald# i# a
&$&ular e2a)&le $% a 3ra'chi#i'( $&ti$' %$r e2&a'di'( i' i'ter'ati$'al )arket#.
$!vanta#es of t"e international franc"isin# mo!e: L$8 &$litical ri#k L$8 c$#t All$8# #i)ulta'e$u#
e2&a'#i$' i't$ di%%ere't re(i$'# $% the 8$rld Eell #elected &art'er# +ri'( %i'a'cial i'6e#t)e't a# 8ell a#
)a'a(erial ca&a+ilitie# t$ the $&erati$'.
Disa!vanta#es of t"e international franc"isin# mo!e:
• 3ra'chi#ee# )ay tur' i't$ %uture c$)&etit$r#
• De)a'd $% %ra'chi#ee# )ay +e #carce 8he' #tarti'( t$ %ra'chi#e a c$)&a'y 8hich ca' lead t$ )aki'(
a(ree)e't# 8ith the 8r$'( ca'didate#
• A 8r$'( %ra'chi#ee )ay rui' the c$)&a'yM# 'a)e a'd re&utati$' i' the )arket
22
Turn0ey pro?ects
A tur'key &r$9ect re%er# t$ a &r$9ect i' 8hich clie't# &ay c$'tract$r# t$ de#i(' a'd c$'#truct 'e8 %acilitie# a'd
trai' &er#$''el. A tur'key &r$9ect i# 8ay %$r a %$rei(' c$)&a'y t$ e2&$rt it# &r$ce## a'd tech'$l$(y t$ $ther
c$u'trie# +y +uildi'( a &la't i' that c$u'try. I'du#trial c$)&a'ie# that #&eciali=e i' c$)&le2 &r$ducti$'
tech'$l$(ie# '$r)ally u#e tur'key &r$9ect# a# a' e'try #trate(y. O'e $% the )a9$r ad6a'ta(e# $% tur'key &r$9ect#
i# the &$##i+ility %$r a c$)&a'y t$ e#ta+li#h a &la't a'd ear' &r$%it# i' a %$rei(' c$u'try e#&ecially i' 8hich
%$rei(' direct i'6e#t)e't $&&$rtu'itie# are li)ited a'd lack $% e2&erti#e i' a #&eci%ic area e2i#t#.
23
4trate#ic alliance
24
A #trate(ic allia'ce i# a ty&e $% c$$&erati6e a(ree)e't# +et8ee' di%%ere't %ir)# #uch a# #hared re#earch %$r)al
9$i't 6e'ture# $r )i'$rity e@uity &artici&ati$'. The )$der' %$r) $% #trate(ic allia'ce# i# +ec$)i'( i'crea#i'(ly
&$&ular a'd ha# three di#ti'(ui#hi'( characteri#tic#,
$!vanta#es
• Tech'$l$(y e2cha'(e
• <l$+al c$)&etiti$'
• I'du#try c$'6er(e'ce
• Ec$'$)ie# $% #cale a'd reducti$' $% ri#k
• Allia'ce a# a' alter'ati6e t$ )er(er
Global strate#ic plannin# process involves t"ese steps
!:" A'aly=i'( e2ter'al e'6ir$')e't +y )ea'# $% SEOT PESTLE a'aly#i#
!/" A'aly=i'( i'ter'al e'6ir$')e't
!B" De%i'i'( the +u#i'e## a'd it# )i##i$' #tate)e't#
!1" Setti'( c$r&$rate $+9ecti6e#
!C" Kua'ti%yi'( ($al#
!." 3$r)ulati'( #trate(ie#
!D" Maki'( tactical &la''i'(
Types of 4trate#ic $lliance
There are %$ur ty&e# $% #trate(ic allia'ce#, 9$i't 6e'ture e@uity #trate(ic allia'ce '$'-e@uity #trate(ic allia'ce
a'd (l$+al #trate(ic allia'ce#.
%& @oint venture i# a #trate(ic allia'ce i' 8hich t8$ $r )$re %ir)# create a le(ally i'de&e'de't c$)&a'y t$
#hare #$)e $% their re#$urce# a'd ca&a+ilitie# t$ de6el$& a c$)&etiti6e ad6a'ta(e.
+& '<uity strate#ic alliance i# a' allia'ce i' 8hich t8$ $r )$re %ir)# $8' di%%ere't &erce'ta(e# $% the
c$)&a'y they ha6e %$r)ed +y c$)+i'i'( #$)e $% their re#$urce# a'd ca&a+ilitie# t$ create a
c$)&etiti6e ad6a'ta(e.
,& Non1e<uity strate#ic alliance i# a' allia'ce i' 8hich t8$ $r )$re %ir)# de6el$& a c$'tractual-
relati$'#hi& t$ #hare #$)e $% their u'i@ue re#$urce# a'd ca&a+ilitie# t$ create a c$)&etiti6e ad6a'ta(e.
-& Global 4trate#ic $lliances 8$rki'( &art'er#hi&# +et8ee' c$)&a'ie# !$%te' )$re tha' t8$" acr$##
'ati$'al +$u'darie# a'd i'crea#i'(ly acr$## i'du#trie# #$)eti)e# %$r)ed +et8ee' c$)&a'y a'd a
%$rei(' ($6er')e't $r a)$'( c$)&a'ie# a'd ($6er')e't#.
25
Cost benefit analysis: CostAbenefit analysis !4BA" #$)eti)e# called benefitAcost analysis !B4A" i# a
#y#te)atic &r$ce## %$r calculati'( a'd c$)&ari'( +e'e%it# a'd c$#t# $% a &r$9ect deci#i$' $r ($6er')e't &$licy
!herea%ter ?&r$9ect?". 4BA ha# t8$ &ur&$#e# Ehether y$u k'$8 it a# a c$#t-+e'e%it a'aly#i# $r a +e'e%it-c$#t
a'aly#i# &er%$r)i'( $'e i# critical t$ a'y &r$9ect. Ehe' y$u &er%$r) a c$#t-+e'e%it a'aly#i# y$u )ake a
c$)&arati6e a##e##)e't $% all the +e'e%it# y$u a'tici&ate %r$) y$ur &r$9ect a'd all the c$#t# t$ i'tr$duce the
&r$9ect &er%$r) it a'd #u&&$rt the cha'(e# re#ulti'( %r$) it.
4$#t-+e'e%it a'aly#e# hel& y$u t$
• Decide 8hether t$ u'dertake a &r$9ect $r decide 8hich $% #e6eral &r$9ect# t$ u'dertake.
• 3ra)e a&&r$&riate &r$9ect $+9ecti6e#.
• De6el$& a&&r$&riate +e%$re a'd a%ter )ea#ure# $% &r$9ect #ucce##.
• Pre&are e#ti)ate# $% the re#$urce# re@uired t$ &er%$r) the &r$9ect 8$rk.
• T$ deter)i'e i% it i# a #$u'd i'6e#t)e't;deci#i$' !9u#ti%icati$';%ea#i+ility"
• T$ &r$6ide a +a#i# %$r c$)&ari'( &r$9ect#. It i'6$l6e# c$)&ari'( the t$tal e2&ected c$#t $% each $&ti$'
a(ai'#t the t$tal e2&ected +e'e%it# t$ #ee 8hether the +e'e%it# $ut8ei(h the c$#t# a'd +y h$8 )uch
I513nit
'lectronic business $r e1business i# the a&&licati$' $% i'%$r)ati$' a'd c$))u'icati$' tech'$l$(ie# I4T i'
#u&&$rt $% all the acti6itie# $% +u#i'e##. 4$))erce c$'#titute# the e2cha'(e $% &r$duct# a'd #er6ice# +et8ee'
+u#i'e##e# (r$u&# a'd i'di6idual# a'd ca' +e #ee' a# $'e $% the e##e'tial acti6itie# $% a'y +u#i'e##. Electr$'ic
c$))erce %$cu#e# $' the u#e $% I4T t$ e'a+le the e2ter'al acti6itie# a'd relati$'#hi&# $% the +u#i'e## 8ith
i'di6idual# (r$u&# a'd $ther +u#i'e##e#. The ter) ?e-+u#i'e##? 8a# c$i'ed +y IBMA# )arketi'( a'd I'ter'et
tea)# i' :00.
E-+u#i'e## i'6$l6e# +u#i'e## &r$ce##e# #&a''i'( the e'tire 6alue chai', electr$'ic &urcha#i'( a'd #u&&ly chai'
)a'a(e)e't &r$ce##i'( $rder# electr$'ically ha'dli'( cu#t$)er #er6ice a'd c$$&erati'( 8ith +u#i'e##
&art'er# E-+u#i'e## cate($rie#,
• +u#i'e##-t$-+u#i'e## !B/B" +u#i'e##-t$-c$'#u)er !B/4"
• +u#i'e##-t$-e)&l$yee !B/E" +u#i'e##-t$-($6er')e't !B/<"
26
• ($6er')e't-t$-+u#i'e##!</B" ($6er')e't-t$-($6er')e't !</<"
• ($6er')e't-t$-citi=e' !</4" c$'#u)er-t$-c$'#u)er !4/4"
• c$'#u)er-t$-+u#i'e## !4/B"
E-+u#i'e## )$del#
• E-#h$&# E-c$))erce E-&r$cure)e't E-)all#
• E-c$lla+$rati$' E-aucti$'# Virtual 4$))u'itie#
Benefits of e1 business
• I'crea#e re6e'ueF E2&a'd 4lie't ca#e Reach 'iche )arket #e()e't#F
• L$8er $&erati'( c$#t#F Better cu#t$)er #er6ice E'ha'ci'( 4$)&a'y i)a(e.
$lternative '1Business strate#ies
Ba#ically the E- Bu#i'e## #trate(ie# are %$r (r$8i'( the +u#i'e## i)&r$6i'( the &r$%it# i' $rder t$ $+tai' the
e2te'ded $+9ecti6e $% e-+u#i'e## the alter'ati6e #trate(ie# #hell +e ad$&ted 8hich are a# %$ll$8#
? E-Ad6erti#i'( - re6e'ue (e'erated %r$) 8e+ #ite hit#
? E-retaili'( -re6e'ue deri6ed %r$) direct I'ter'et #ale#
? E-4ha''el - re6e'ue &r$duced %r$) )ai'te'a'ce $% curre't cha''el i'te(rity
? E-A%%iliate - re6e'ue )ade %r$) &aid )arketi'( allia'ce#
? E-3ra'chi#e - re6e'ue created %r$) auth$ri=ed a(e't#
? E-Su+#cri&ti$' - re6e'ue deri6ed %r$) &ay)e't %$r c$'te't acce##
$lternative e1business strate#ies
'nterprise resource plannin# !'*P" i# +u#i'e## )a'a(e)e't #$%t8areSu#ually a #uite $% i'te(rated
a&&licati$'#Sthat a c$)&a'y u#e# t$ )a'a(e +u#i'e## &r$ce##e# i'cludi'(,
• Pr$duct &la''i'( a'd de6el$&)e't Ma'u%acturi'(
• Marketi'( a'd #ale# I'6e't$ry )a'a(e)e't Shi&&i'(
27
'lectronic !ata interc"an#e !'DI" i# a d$cu)e't #ta'dard 8hich 8he' i)&le)e'ted act# a# c$))$' i'ter%ace
+et8ee' t8$ $r )$re c$)&uter a&&licati$'# i' ter)# $% u'der#ta'di'( the d$cu)e't tra'#)itted. It i#
c$))$'ly u#ed +y +i( c$)&a'ie# %$r e-c$))erce &ur&$#e# #uch a# #e'di'( $rder# t$ 8areh$u#e# $r tracki'(
their $rder. It i# )$re tha' )ere e-)ailF %$r i'#ta'ce $r(a'i=ati$'# )i(ht re&lace +ill# $% ladi'( a'd e6e'
che@ue# 8ith a&&r$&riate EDI )e##a(e#
The e C*M $r electronic customer relations"ip mana#ement e'c$)&a##e# all the 4RM %u'cti$'# 8ith the
u#e $% the 'et e'6ir$')e't i.e. i'tra'et e2tra'et a'd i'ter'et. Electr$'ic 4RM c$'cer'# all %$r)# $% )a'a(i'(
relati$'#hi&# 8ith cu#t$)er# )aki'( u#e $% i'%$r)ati$' tech'$l$(y !IT". e4RM i# e'ter&ri#e# u#i'( IT t$
i'te(rate i'ter'al $r(a'i=ati$' re#$urce# a'd e2ter'al ?)arketi'(? #trate(ie# t$ u'der#ta'd a'd %ul%ill their
cu#t$)er# 'eed#
$utomate! online assistant i# a &r$(ra) that u#e# arti%icial i'telli(e'ce t$ &r$6ide cu#t$)er #er6ice $r $ther
a##i#ta'ce $' a 8e+#ite. Such a' a##i#ta't )ay +a#ically c$'#i#t $% a dial$( #y#te). Aut$)ated $'li'e a##i#ta't#
ha6e the a+ility t$ &r$6ide cu#t$)er #er6ice duri'( /1 h$ur# a day a'd D day# a 8eek
Business relations"ip mana#ement i# a %$r)al a&&r$ach t$ u'der#ta'di'( de%i'i'( a'd #u&&$rti'( a +r$ad
#&ectru) $% i'ter-+u#i'e## acti6itie# related t$ &r$6idi'( a'd c$'#u)i'( k'$8led(e a'd #er6ice# 6ia 'et8$rk#
BRM #eek# t$ &r$6ide a c$)&lete a'd h$li#tic )$del $% +u#i'e## relati$'#hi&#
Customer intelli#ence !4I" i# the &r$ce## $% (atheri'( a'd a'aly=i'( i'%$r)ati$' re(ardi'( cu#t$)er#F their
detail# a'd their acti6itie# i' $rder t$ +uild dee&er a'd )$re e%%ecti6e cu#t$)er relati$'#hi&# a'd i)&r$6e
#trate(ic deci#i$' )aki'(
Business intelli#ence !BI" i# a #et $% the$rie# )eth$d$l$(ie# &r$ce##e# architecture# a'd tech'$l$(ie# that
tra'#%$r) ra8 data i't$ )ea'i'(%ul a'd u#e%ul i'%$r)ati$' %$r +u#i'e## &ur&$#e#. BI ca' ha'dle lar(e a)$u't#
$% i'%$r)ati$' t$ hel& ide'ti%y a'd de6el$& 'e8 $&&$rtu'itie#. Maki'( u#e $% 'e8 $&&$rtu'itie# a'd
i)&le)e'ti'( a' e%%ecti6e #trate(y ca' &r$6ide a c$)&etiti6e )arket ad6a'ta(e a'd l$'(-ter) #ta+ility.
Database mar0etin# i# a %$r) $% direct )arketi'( u#i'( data+a#e# $% cu#t$)er# $r &$te'tial cu#t$)er# t$
(e'erate &er#$'ali=ed c$))u'icati$'# i' $rder t$ &r$)$te a &r$duct $r #er6ice %$r )arketi'( &ur&$#e#. The
)eth$d $% c$))u'icati$' ca' +e a'y addre##a+le )ediu) a# i' direct )arketi'(.
Partner relations"ip mana#ement 9P*M6 i# a #y#te) $% )eth$d$l$(ie# #trate(ie# #$%t8are a'd 8e+-+a#ed
ca&a+ilitie# that hel& a 6e'd$r t$ )a'a(e &art'er relati$'#hi&#. The (e'eral &ur&$#e $% PRM i# t$ e'a+le
6e'd$r# t$ +etter )a'a(e their &art'er# thr$u(h the i'tr$ducti$' $% relia+le #y#te)#
28
4ales intelli#ence !SI" re%er# t$ tech'$l$(ie# a&&licati$'# a'd &ractice# %$r the c$llecti$' i'te(rati$' a'aly#i#
a'd &re#e'tati$' $% i'%$r)ati$' t$ hel& #ale#&e$&le kee& u& t$ date 8ith clie't# &r$#&ect data a'd dri6e
+u#i'e##
Documents for International tra!e
)fficial Documents : O%%icial d$cu)e't# are d$cu)e't# re@uired %$r the &ur&$#e $% $%%icial !re(ulat$ry"
auth$ri=ati$' t$ e2&$rt. O%%icial d$cu)e't# are either #u+)itted t$ the a&&r$&riate auth$rity %$r le(ali=ati$' $r
are i##ued +y a' a&&r$&riate auth$rity. Eith$ut l$cal auth$ri=ati$' !%r$) c$)&ete't N$rda'ia' auth$ritie#" y$u
8ill '$t +e &er)itted t$ #hi& y$ur ($$d# $ut the c$u'try.
? 4u#t$)# $r E2&$rt Declarati$' A' e2&$rt Lice'#e $r Auth$ri=ati$'
? A 8har% a(e $rder !%$r #ea %rei(ht" A &re-#hi&)e't i'#&ecti$' certi%icate
? A certi%icate $% $ri(i' A health certi%icate
Commercial Documents : 4$))ercial i'6$ice Packi'( li#t Be'e%iciary certi%icate Veri%icati$' d$cu)e't#
Transport Documents : Bill $% ladi'( Eay+ill 4$'#i(')e't '$te
Insurance Documents : I'#ura'ce certi%icate a'd I'#ura'ce-&$licy
Certificate of ori#in : A certi%icate $% $ri(i' i# a %$r)al ; $%%icial #tate)e't i##ued +y either a cha)+er $%
c$))erce $r i'du#try.
Bill of la!in# : The +ill $% ladi'( !B;L" i# the traditi$'al tra'#&$rt d$cu)e't %$r #hi&&i'( ($$d# +y $cea'
tra'#&$rt
)t"er !ocuments are usually attac"e! to t"e carrierBs copy of t"e bill of la!in#8 some of t"ese !ocuments
are: 4$&y $% the c$))ercial I'6$ice 4$&y $% the certi%icate $% $ri(i' Packi'( li#t Eei(ht li#t e2&$rti'(
certi%icate.
Global '1Mar0etin# : <l$+al e -Marketi'( i# the u#e $% i'ter'et a# a )edia t$ )arket a'd &r$)$te y$ur
+u#i'e## (l$+ally. I' t$dayA# 8$rld the )$#t c$#t e%%ecti6e )eth$d $% (l$+al +u#i'e## &r$)$ti$' i# e Marketi'(.
$!vanta#es
29
<l$+al Reach Ea#y Marketi'( ec$'$)ical kee& u&dated i'%$r)ati$' )$re a&&eali'( t$ the cu#t$)er#
C"allen#es in '1Mar0etin#
? U'der#ta'di'( cu#t$)er e6$luti$' #$ y$u )u#t I'6e#t ahead $% cu#t$)er 'eed#
? 4harti'( cha'(i'( tech'$l$(y he'ce Match tech'$l$(y ch$ice# t$ c$'#u)er ta#te#
? Eeatheri'( the #t$r) that i# u'der#ta'd the )arket e'6ir$')e't a'd Rea##ure #takeh$lder# 8ith clear
6i#i$' #e'#i+le +u#i'e## )$del a'd &r$%ita+le 6e'ture
? I'te(rati'( $%%li'e > $'li'e acti6itie# +y Ali('i'( $%%li'e > $'li'e +u#i'e## acti6itie#
? Ide'ti%yi'( key le6er# $% c$)&etiti6e ad6a'ta(e a'd Reall$cate re#$urce# a# c$)&etiti6e ad6a'ta(e
le6er# e6$l6e
513nit
<l$+al #trate(ic &la''i'( i# a &r$ce## ad$&ted +y $r(a'i=ati$'# that $&erate i'ter'ati$'ally i' $rder t$ %$r)ulate
a' e%%ecti6e (l$+al #trate(y. <l$+al Strate(ic Pla''i'( i# a &r$ce## $% e6aluati'( the i'ter'al a'd e2ter'al
e'6ir$')e't +y )ulti'ati$'al $r(a'i=ati$'# a'd )ake deci#i$'# a+$ut h$8 they 8ill achie6e their l$'(-ter)
a'd #h$rt-ter) $+9ecti6e#.
#lobal strate#ic plannin# process involves t"ese steps,
!:" A'aly=i'( e2ter'al e'6ir$')e't
!/" A'aly=i'( i'ter'al e'6ir$')e't
!B" De%i'i'( the +u#i'e## a'd it# )i##i$' #tate)e't#
!1" Setti'( c$r&$rate $+9ecti6e#
!C" Kua'ti%yi'( ($al#
!." 3$r)ulati'( #trate(ie#
!D" Maki'( tactical &la'#
Met"o!s of ta0in# strate#y in Global strate#ic plannin#
30
• T$& D$8' &la''i'(
I' thi# the deci#i$' 8ill +e take' at the t$& )a'a(e)e't le6el a'd the #a)e deci#i$' 8ill )$6e# $' t$ all the
le6el# $% auth$ritie# i' the $r(a'i=ati$'
• B$tt$) u& &la''i'(
I' thi# #trate(y the deci#i$' 8$uld #tart %r$) the +$tt$) $r %r$) the l$8er )a'a(e)e't $% the c$)&a'y a'd thi#
8ill +e c$))u'icated u&8ard i' the $r(a'i=ati$'
• Iterati6e &la''i'(
Ad$&ti'( either t$& d$8' $r +$tt$) u& )eth$d c$'ti'u$u#ly u'til a'y i##ue i' the de&art)e't i# %i'ali=ed $r
rec$' ciliated thi# )ea'# i' ca#e there i# a c$'%lict $' a'y i##ue &re6aili'( i' the $r(a'i=ati$' the' u'til the
i##ue i# #ettled d$8' the )eth$d $% &la''i'( 8ill '$t +e cha'(ed
Implementin# strate#y
? Build a' Or(a'i=ati$' Mar#hal re#$urce# !re#$urce# u#ed" I'#titute &$licie# Pur#ue +e#t &ractice#
a'd c$'ti'u$u# i)&r$6e)e't I'%$r)ati$' a'd $&erati'( #y#te)# Tyi'( re8ard# t$ #trate(y a'd ($al#
Intercultural communications
i# a %$r) $% (l$+al c$))u'icati$'. It i# u#ed t$ de#cri+e the 8ide ra'(e $% c$))u'icati$' &r$+le)# that
'aturally a&&ear 8ithi' a' $r(a'i=ati$' )ade u& $% i'di6idual# %r$) di%%ere't reli(i$u# #$cial eth'ic a'd
educati$'al +ack(r$u'd#. I'tercultural c$))u'icati$' i# #$)eti)e# u#ed #y'$'y)$u#ly 8ith cr$##-cultural
c$))u'icati$'. I' thi# #e'#e it #eek# t$ u'der#ta'd h$8 &e$&le %r$) di%%ere't c$u'trie#
a'd culture# act c$))u'icate a'd &ercei6e the 8$rld ar$u'd the). Ma'y &e$&le i' i'tercultural +u#i'e##
c$))u'icati$' ar(ue that culture deter)i'e# h$8 i'di6idual# e'c$de )e##a(e# 8hat )ediu)# they ch$$#e %$r
tra'#)itti'( the) a'd the 8ay )e##a(e# are i'ter&reted. A# a #e&arate '$ti$' it #tudie# #ituati$'# 8here &e$&le
%r$) di%%ere't cultural +ack(r$u'd# interact. A#ide %r$) la'(ua(e i'tercultural c$))u'icati$' %$cu#e# $'
#$cial attri+ute# th$u(ht &atter'# a'd the culture# $% di%%ere't (r$u&# $% &e$&le. It al#$ i'6$l6e# u'der#ta'di'(
the di%%ere't culture# la'(ua(e# a'd cu#t$)# $% &e$&le %r$) $ther c$u'trie#. I'tercultural c$))u'icati$' &lay#
a r$le i' #$cial #cie'ce# #uch a# a'thr$&$l$(y cultural #tudie# li'(ui#tic# &#ych$l$(y a'd c$))u'icati$'
#tudie#. I'tercultural c$))u'icati$' i# al#$ re%erred t$ a# the +a#e %$r i'ter'ati$'al +u#i'e##e#. There are
#e6eral cr$##-cultural #er6ice &r$6ider# ar$u'd 8h$ ca' a##i#t 8ith the de6el$&)e't $% i'tercultural
c$))u'icati$' #kill#. Re#earch i# a )a9$r &art $% the de6el$&)e't $% i'tercultural c$))u'icati$' #kill#.
3act$r# e%%ecti'( $' I'ter cultural 4$))u'icati$'#
31
Improving Intercultural Communication
:. A6$id u#i'( #la'( a'd idi$)# ch$$#i'( 8$rd# that 8ill c$'6ey $'ly the )$#t
#&eci%ic denotative )ea'i'(F
/. li#te' care%ully a'd i% i' d$u+t a#k %$r c$'%ir)ati$' $% u'der#ta'di'( !&articularly i)&$rta't i% l$cal
acce't# a'd &r$'u'ciati$' are a &r$+le)"
B. Rec$('i=e that acce'ti'( a'd i't$'ati$' ca' cau#e )ea'i'( t$ 6ary #i('i%ica'tlyF a'd
1. Re#&ect the l$cal c$))u'icati$' %$r)alitie# a'd #tyle# a'd 8atch %$r a'y cha'(e# i' +$dy
la'(ua(e.
C. I'6e#ti(ate their cultureA# &erce&ti$' $% y$ur culture +y readi'( literature a+$ut y$ur culture thr$u(h
their eye# +e%$re e'teri'( i't$ c$))u'icati$' 8ith the). Thi# 8ill all$8 y$u t$ &re&are y$ur#el% %$r
&r$9ected 6ie8# $% y$ur culture y$u 8ill +e +eari'( a# a 6i#it$r i' their culture.
Overcoming Cultural Communication Barriers
I' $rder t$ i)&r$6e the le6el $% cr$##-cultural c$))u'icati$' i' y$ur 8$rk&lace. U#e the#e #i)&le c$'ce&t# t$
dra)atically +$$#t y$ur cr$##-cultural c$))u'icati$' c$)&ete'cy.
• Practice acti6e li#te'i'(.
• <r$u& i'%$r)ati$' i' L+ite-#i=eM &iece#. That i# I% y$u #t$& t$ thi'k a+$ut it e6e' a #i'(le #e'te'ce i' a
c$'6er#ati$' +et8ee' t8$ %lue't #&eaker# ca' c$'tai' a (reat deal $% i'%$r)ati$'. ThatM# 8hy cr$##-cultural
c$))u'icati$' e2&ert# rec$))e'd li)iti'( the a)$u't $% i'%$r)ati$' y$u try t$ c$'6ey at $'e ti)e. Stick
t$ #i)&le direct i'#tructi$'# a'd e2&la'ati$'# a'd try t$ a6$id c$)&le2 )ulti-&art #e'te'ce#.
• Eatch $ut %$r cultural a##u)&ti$'#.
• Ehe' i' d$u+t $&t %$r %rie'dly %$r)ality.
• Ne6er c$'clude )ea'i'( +a#ed $' y$ur &erce&ti$'
32
• Ne6er u#e +$dy la'(ua(e a'd %acial e2&re##i$'# 8ith$ut k'$8i'( the cultural )ea'i'( etc.
Inter cultural (uman resource mana#ement
The hu)a' re#$urce# )a'a(e)e't i' (l$+al &er#&ecti6e i'6$l6e# )a'y %u'cti$'# a'd the re#&$'#i+ility $% *R
+ec$)e# )$re &r$)i'e't i' (l$+al #ce'ari$ the i'tercultural hu)a' re#$urce# )a'a(e)e't that i# i'ter'ati$'al
hu)a' re#$urce# )a'a(e)e't i# #u&&$#ed t$ &er%$r) the#e acti6itie# )e'ti$'ed +el$8.
:. De6el$&i'( i'ter'ati$'al )arket +a#ed #ta%%i'( &la'# Deali'( 8ith e)&l$yee# i' di%%ere't &art# $% the
8$rld
/. Pla''i'( a (l$+al #trate(y 8hich i# acce&ta+le i)&le)e'ta+le thr$u(h$ut the 8$rld
B. De6el$&i'( i'ter'ati$'al leader#hi& Mer(i'( $r i'te(rati'( 8ith $ther c$)&a'ie# acr$## +$rder#
1. De6el$&i'( )ulticultural tea)# 4reati'( a (l$+al 6i#i$'
i##i$' %$r i'ter'ati$'al i'te(rati$' C. I)&le)e'ti'( tra'#'ati$'al )a'a(e)e't )atrice# Deali'( 8ith cr$##-cultural c$'%lict
.. 4$'ducti'( )a9$r i'ter'ati$'al 'e($tiati$'# I)&le)e'ti'( )a9$r cultural cha'(e
3seful 7ebsites for MB$ stu!ents
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/. htt&,;;888.@uick)+a.c$)
B. htt&,;;888.)+a'$te#.(uruk&$.c$)
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34
doc_621634528.doc