Exporting and Trading info

Trade by Product Category Although figures on global trade by product category are always a few years old before they are compiled and published, we can nevertheless discern some trends. Figure 1.3 shows growing importance of manufactured goods in world trade up to 1972. Since then the categories, although fluctuating from one year to another, have remained fairly stable in relation to each other. The U.S. imports and exports show similar dependence on manufactured products. As shown in Fig. 1.4, the First World countries account for the majority of world exports in every category except fuels. The Second World countries account for a small portion of world trade in all categories. The Third World countries have improved their world export share in chemicals, machinery, and other manufactures during recent years.

Divergent Growth Rates     Economic Level ot Countries  One of the most common-ways of classifying countries is by their level of economic or industrial development. The high- income countries (Western Europe, the United States, Canada, Australia, New Zealand, and Japan) are usually referred to as industrial, developed, or First World countries. The communist countries and those undergoing tran- sition from communism have been known as centrally planned economies (CPEs), non-market economies (NMEs), or Second World countries, regardless of whether they have high or low incomes. One still encounters all these terminologies; however, the terms Second World countries and historically planned economies (HPEs) are presently more descriptive because some former CPEs are in transition from their historic economic systems. Other countries are referred to as developing countries, less-developed countries (LDCs), or Third World countries. One should be aware that there...

INFLUENCES ON TRADE AND INVESTMENT PATTERNS Economic Conditions Changes in worldwide affluence have affected the total value of world trade and investment, the types of products involved, and the proportionate value of international business accounted for by individual countries. Definitive figures on the changes in historic world output are unavailable, but indications are that international trade has remained a fairly constant percentage of gross world product (GWP) over a long period. This does not mean that trade and production will be related in exactly the same way every year. During economic booms, as in much of the 1970s, trade tends to grow more rapidly than production. Conversely, a slow economic growth rate, as in the early 1980s, causes trade to increase more slowly than production. In the late 1980s, trade and production both grew at about the same moderate rate. The reason for this cyclical relationship is that consumers and government policy-makers consider many fore...

THE EXTERNAL ENVIRONMENT Drawing on Other Disciplines The external environment is the aggregate of conditions outside the company that influence the success of its practices. Inasmuch as international business operates within the broad context of the world environment, its managers must have a working knowledge of the basic social sciences, including geography, history, political science, law, economics, and anthropology. A knowledge of geography is important because it helps managers to determine the location, quantity, and quality of the world's resources and their availability for exploitation. The uneven distribution of resources gives rise to the production of different products and services in different parts of the world. In our Star Wars example, these differences led to the filming of some scenes in Tunisia and others in Norway. Geographical barriers such as high mountains, vast deserts, and inhospitable jungles affect communication and distribution channels for com...

Multinational Enterprise    The multinational enterprise, or MNE, has a worldwide approach to for- eign markets and production and an integrated global philosophy encompassing both domestic and overseas operations. The true MNE will usually utilize most of the operating forms that we have discussed. Because of the difficulty of ensuring whether a firm has a "worldwide approach," narrower operational definitions emerge. For example, some might say that a firm must have production facilities in some minimum number of countries or be of a certain size in order to qualify as an MNE. The term multinational corporation, or MNC, is also common in the literature of international business and is often used as a synonym for MNE. We prefer the MNE designation because there are many internationally involved companies, such as accounting partnerships, that do not use a corporate form. Another term sometimes used interchangeably with MNE, especially by the United ...

Merchandise Exports and Imports   Merchandise exports are tangible goods sent out of a country; merchandise imports are tangible goods brought in. Since these goods visibly leave and enter, they are sometimes referred to as visible exports and imports. The terms exports and imports are frequently used in reference only to merchandise exports or imports. In the opening case, the Jedi action figures are merchan- dise exports for Taiwan when they are sent to the United States and merchandise imports for the United States when they arrive. The exporting and importing of goods is the major source of international revenue and expenditure for most countries. Among companies engaged in some form of international business, more are involved in importing and exporting than in any other type of transaction. Importing and/or exporting is usually, but not always, the first type of —foreign operation a firm undertakes. This is because at an early stag...

Case:The Star Wars Trilogy You have probably seen Star Wars, The Empire Strikes Back, or Return of the Jedi. But you might not know that these three films constitute the most successful sequence ever produced. Few films enjoy success when rereleased. Those that have been successful, such as Walt Disney's Pinocchio, are generally rereleased only at seven-year intervals. Yet the 1977 film, Star Wars, was successfully rereleased five times by 1987. The intergalactic aspect of the trilogy is obvious. Less obvious, though, are the international dimensions, right here on planet earth, that contributed to the films' triumphs. The deal to produce Star Wars was international from the start. George Lucas, the American producer, had written short summaries of two films he wished to make. He took his ideas to every studio in Hollywood, and each one turned him down. In desperation, he used his last $2000 to buy a ticket to the Cannes (France) Film Festival, in the hope of gaining some b...