August 31, 2014
Doing Business in Global Markets and the Effect Technology Has On The Industry
There is no one nation, even with all of todays advanced technology, that can produce all the products its people want or need. Since the beginning of time nations have traded with other nations to get things their people wanted or needed. One reference that comes to mind is the many ships carrying gold, silver and other valuable goods that traveled from Europe to South America to trade their goods for spices.
Exporting simply means selling a foreign country or companies goods and Importing means buying a country or companies goods.
There are 194 countries that make up the ...view middle of the document...
A favorable balance is known as a trade surplus, and unfavorable balance of trade is known as a trade deficit. A trade deficit happens when the value of a country’ exports is less than its imports. In other words a countries goal is to export more goods than it imports. Much like the budget of a household, the goal is not to buy more than you earn.
In supporting free trade, the United States as well as other nations, wants to make certain that global trade is conducted fairly. To ensure everyone has an equal opportunity, countries prohibit unfair practices such as dumping. Dumping means the selling products at a price lower than what is charged in the producing country. This practice is sometimes used to reduce excess product in a foreign markets or to gain a place in a new market.
In 1948, government leaders from 23 nations formed the General Agreement of Tariffs and Trade (GATT), a global forum for reducing trade restrictions on goods, services, ideas, and cultural programs. In the following years many more nations joined GATT. In 1986 the World Trade Organization (WTO) was established and was headquartered in Geneva. It is an independent entity whose purpose is to oversee cross-border trade issues and global business practices. Trade disputes are presented by member nations and a decision made within a year. WTO has not solved all global trade problems but worked and continues to work in helping make all free trade fair.
There are several strategies for reaching Global Markets.
Licensing- which means a firm may decide to compete in a global market by licensing the right to manufacture its product or use its trademark to a foreign company (the licensee) for a fee ( a royalty).
Exporting- in which the U.S. Department of Commerce created Export Assistance Centers (EAC’s). EAC’s provide hands-on exporting assistance and trade-finance support for small and medium-sized businesses that wish to directly export goods and services.
Franchising- which is a contractual agreement whereby someone with a good...