Global Markets: Importing, Exporting, and Trade Balances
Near East University
Faculty Of Economics &
Administrative Sciences
MAN - 101 Introduction To Business
Week
3
Business in Global Markets
Tu
ğberk KAYA
t
ugberk.
kaya@neu.edu.tr
~BUSINESS IN GLOBAL MARKETS~
IMPORTING AND EXPORTING
When local businessman buys foreign goods and services
from other countries to be sold in the local market, it is called
importing. The foreign goods and services purchased by local
businessman are called
imports
.
Exporting occurs when the local business people sell
domestically produced goods and services to foreign
countries. These products which are produced domestically to
be sold to foreign markets are called
exports
.
Exporting
Exporting can be exercised in two ways:
direct
or
indirect
.
Selling the finished product to foreign countries is called
direct exporting
.
While a business person does direct exporting of the final
products, he also does
indirect exporting
of the components
and accessories as the input for the finished product.
Exporting cars to foreign countries would be an example of
direct exporting. On the other hand, components such as
tires, rods, engines, and car seats are indirectly exported
items in car exporting.
Balance Of Trade: Favorable And
Unfavorable
The relationship between a country’s export and import
signifies the said country’s
balance of trade
.
If the country’s export is more than its import, then the
balance of trade represents a favorable situation. This
favorable situation is called
trade surplus
.
Trade deficit
on the other hand, means unbalanced
trade due to the discrepancy between the country’s
imports and exports when the country’s imports are
larger than exports.
Balance of Payments
Balance of Payments
Like the balance of trade, the balance of payment might
also lead to a favorable situation if the incoming money
flows into a country is more than the outgoing money
flow from a nation.
This favorable balance of payments is called
balance of
payment surplus
. The balance of payment deficit is a
result of the outgoing money being more than the
incoming money of a country.
Exchange Rates
Exchange rate is the value of a nation’s local
currency in relation to the currencies of the
other countries.
When the currency changes up and down
continuously in money markets and lead to
currencies to have floating values, it is called
floating exchange rates
.
Stages Of Global Business
Exporting, Importing And Countertrading
Trading between nations commonly starts with the
sole trading of the goods and services that can be
described as
exporting
and
importing
between
nations.
If an opportunity is seen for trade, with the help of
agent or offices in foreign countries, the local
manufactories make it possible for their
commodities to be sold in other countries.
Countertrading
, a bartering (exchange goods or
services without involving money) agreement is also
used in many countries.
Franchising
: Manufacturers or other suppliers may give a local
party, a wholesalers or retailers, in the foreign country the right to
sell their products under their globally registered brand name.
Suppliers and local party make an agreement that specifies the
responsibilities of each side.
The manufacturer or supplier is called
FRANCHISER
and local
party that gets the right to sell the goods in its domestic market is
called the
FRANCHISEE
. The franchiser provides its registered
brand name, building and business operation plans, site selection
help, accounting and management systems and other services to
assist the franchisee.
Foreign Licensing
: Under the contracted licensing agreement, the
manufacturer or supplier allows the local party to use it intellectual
property which may be agreement a local company or manufacturer
gains the right manufacture and sell the goods with the same
manufacturing methods and trademarks of the foreign
seller/manufacturer, in the local territory.
Subcontracting
: The foreign companies hire local companies to
produce, distribute and sell goods & services. Under this contractual
agreement, the subcontractor produces, distributes or sells in the
name of the foreign companies. Many manufacturers use foreign
subcontractors to produce their goods in the subcontractors’
countries since they save on import duties and labor costs.
Overseas Marketing
: The seller, supplier or manufacturer opens
and owns a sales office or division in foreign countries.
Overseas production
: The seller, supplier or manufacturer makes
the production in the overseas countries where they want to sale their
products.
International Joint Ventures
: The companies in different countries
share the risks costs, profits and management responsibilities by
utilizing their resources and capabilities to serve in any one of the
international markets.
International Mergers and Acquisitions
: Companies focusing on
international operations to sell goods and services to the foreign
markets may go international by merging with or acquiring local
companies registered in the countries in which they want to
penetrate.
Merger
is a transaction in which two firms agree to integrate their
operations relatively co-equal basis and create a new identity. On the
other hand, one firm’s buying the control of all shares in another
company and making subsidiary is called
acquisition
.
The Barriers In Global Business
The Barriers In Global Business
Tariffs:
Trade Restrictions:
Political and Legal Barriers:
Physical (local) Barriers:
Social and Cultural Barriers:
References
Ebert, R. J. and Griffin, R. W. (2015)
Business
Essentials
. 10
th
Edn. Harlow: Pearson Education Limited
Kadri Mirze (2002)
Introduction to Business.
Istanbul:
Literatür Publishing.
Any Questions?
t
ugberk.
kaya@neu.edu.tr
Explore the fundamentals of global business, including importing and exporting processes, trade balances, and the significance of balance of payments. Learn about direct and indirect exporting, trade surplus, trade deficit, and exchange rates in the context of international trade.
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Near East University Faculty Of Economics & Administrative Sciences MAN - 101 Introduction To Business Week 3 Business in Global Markets Tu berk KAYA tugberk.kaya@neu.edu.tr
~BUSINESS IN GLOBAL MARKETS~ IMPORTING AND EXPORTING When local businessman buys foreign goods and services from other countries to be sold in the local market, it is called importing. The foreign goods and services purchased by local businessman are called imports. Exporting occurs when the local business people sell domestically produced goods and services to foreign countries. These products which are produced domestically to be sold to foreign markets are called exports.
Exporting Exporting can be exercised in two ways: direct or indirect. Selling the finished product to foreign countries is called direct exporting. While a business person does direct exporting of the final products, he also does indirect exporting of the components and accessories as the input for the finished product. Exporting cars to foreign countries would be an example of direct exporting. On the other hand, components such as tires, rods, engines, and car seats are indirectly exported items in car exporting.
Balance Of Trade: Favorable And Unfavorable The relationship between a country s export and import signifies the said country s balance of trade. If the country s export is more than its import, then the balance of trade represents a favorable situation. This favorable situation is called trade surplus. Trade deficit on the other hand, means unbalanced trade due to the discrepancy between the country s imports and exports when the country s imports are larger than exports.
Balance of Payments Like the balance of trade, the balance of payment might also lead to a favorable situation if the incoming money flows into a country is more than the outgoing money flow from a nation. This favorable balance of payments is called balance of payment surplus. The balance of payment deficit is a result of the outgoing money being more than the incoming money of a country.
Exchange Rates Exchange rate is the value of a nation s local currency in relation to the currencies of the other countries. When the currency changes up and down continuously in money markets and lead to currencies to have floating values, it is called floating exchange rates.
Stages Of Global Business Exporting, Importing And Countertrading Trading between nations commonly starts with the sole trading of the goods and services that can be described as exporting and importing between nations. If an opportunity is seen for trade, with the help of agent or offices in foreign countries, the local manufactories make it possible for their commodities to be sold in other countries. Countertrading, a bartering (exchange goods or services without involving money) agreement is also used in many countries.
Franchising: Manufacturers or other suppliers may give a local party, a wholesalers or retailers, in the foreign country the right to sell their products under their globally registered brand name. Suppliers and local party make an agreement that specifies the responsibilities of each side. The manufacturer or supplier is called FRANCHISER and local party that gets the right to sell the goods in its domestic market is called the FRANCHISEE. The franchiser provides its registered brand name, building and business operation plans, site selection help, accounting and management systems and other services to assist the franchisee.
Foreign Licensing: Under the contracted licensing agreement, the manufacturer or supplier allows the local party to use it intellectual property which may be agreement a local company or manufacturer gains the right manufacture and sell the goods with the same manufacturing methods and trademarks of the foreign seller/manufacturer, in the local territory. Subcontracting: The foreign companies hire local companies to produce, distribute and sell goods & services. Under this contractual agreement, the subcontractor produces, distributes or sells in the name of the foreign companies. Many manufacturers use foreign subcontractors to produce their goods in the subcontractors countries since they save on import duties and labor costs. Overseas Marketing: The seller, supplier or manufacturer opens and owns a sales office or division in foreign countries.
Overseas production: The seller, supplier or manufacturer makes the production in the overseas countries where they want to sale their products. International Joint Ventures: The companies in different countries share the risks costs, profits and management responsibilities by utilizing their resources and capabilities to serve in any one of the international markets. International Mergers and Acquisitions: Companies focusing on international operations to sell goods and services to the foreign markets may go international by merging with or acquiring local companies registered in the countries in which they want to penetrate. Merger is a transaction in which two firms agree to integrate their operations relatively co-equal basis and create a new identity. On the other hand, one firm s buying the control of all shares in another company and making subsidiary is called acquisition.
The Barriers In Global Business Tariffs: Trade Restrictions: Political and Legal Barriers: Physical (local) Barriers: Social and Cultural Barriers:
References Ebert, R. J. and Griffin, R. W. (2015) Business Essentials. 10th Edn. Harlow: Pearson Education Limited Kadri Mirze (2002) Introduction to Business. Istanbul: Literat r Publishing.
Any Questions? tugberk.kaya@neu.edu.tr
