Fundamentals of international trade

What is international trade?
International trade can be defined as either the buying (importing) or selling (exporting) of goods or services on a global basis.

Thanks in great measure to the Internet, many starting businesses can enrich their prospects of success by incorporating IT into their overall business plan. In some cases, a business can be enhanced by incorporating IT marketing to supplement a domestic operation. In other cases, a business can depend solely on international trade. Let’s review some examples:

Exporting
Quality Naturally Foods, Inc., in the City of Industry, California, manufactures prepared bakery mixes for its sister companies Yum Yum Donuts and Winchell Donuts. These and similar mixes are now sold to outlets in Japan. The added volume has reduced costs of production which has benefited all customers.

Amazon.com, the preeminent online marketer (and inspiration for thousands of online entrepreneurs) has a home page toolbar called “International”. Amazon says: “Around the World, wherever you are, get what you want—fast—from our family of Web sites.”

Importing
Good Tables, Inc. of Carson, California, formerly manufactured furniture in its California plant but was losing sales due to cheaper foreign made products. The manufacturing was moved to Mexico in a “maquiladoras” factory.

Funrise, Inc. Woodland Hills, California, has become a world leading marketer of toys. Design, packaging and production are outsourced, primary to vendors in China.

Hollow Corporations
International trade is especially appropriate for the rapidly growing number of “hollow corporations.” Session one of this course refers to a hollow corporation as a business without a factory and with a minimum number of employees in which manufacturing is performed by outside suppliers. A hollow corporation might depend on outside suppliers for virtually all of its products, such as an American toy company importing product from China. Or, it might depend on outside suppliers for selected components in its overall product line, such as The Boeing Company. (Boeing is using Japanese firms for components of the new 787 airliner.)



Is International Trade Appropriate for Small Businesses?

The answer is definitely yes! According to the U.S. Department of Commerce, big companies make up about 4 % of U.S. Exports. Which means that 96% of exporters are small companies. Why is international trade so important to starting small businesses? In some cases the products or services you may wish to market are not available or made in your home country. For example, think about selling cashmere sweaters. You may need to become an importer in order to compete with imported products sold by your competitors.

International trade is enormously beneficial for entrepreneurs and enables producers of goods and services to move beyond the U.S. market of 280 million people to the world market of 6.2 billion. While international trade accounted for 5% of U.S. economic growth in 1950, today it has become an integral part of business, accounting for more than 25% in 2002. For many small companies importing and exporting is becoming an essential cornerstone in achieving success, yet it requires knowledge of business disciplines far beyond the basic do’s and don’ts of operating a domestic business.

Advantages and Disadvantages of International Trade
Advantages to consider:

* Enhance your domestic competitiveness
* Increase sales and profits
* Gain your global market share
* Reduce dependence on existing markets
* Exploit international trade technology
* Extend sales potential of existing products
* Stabilize seasonal market fluctuations
* Enhance potential for expansion of your business
* Sell excess production capacity
* Maintain cost competitiveness in your domestic market

Disadvantages to keep in mind:

* You may need to wait for long-term gains
* Hire staff to launch international trading
* Modify your product or packaging
* Develop new promotional material
* Incur added administrative costs
* Dedicate personnel for traveling
* Wait long for payments
* Apply for additional financing
* Deal with special licenses and regulations

Source: www.myownbusiness.org

Barack Obama wins Nobel Peace Prize

U.S. President Barack Obama was awarded the 2009 Nobel Peace Prize on Friday, the Norwegian Nobel Committee announced.

Obama was awarded the prize for "his extraordinary efforts to strengthen international diplomacy and cooperation between people," news reports from Oslo quoted the committee as saying.

Born in August 1961, Obama is the 44th president of the United States.

U.S. President Barack Obama makes a statement on the economy and the awarding of the 2016 Olympic Games to Rio de Janeiro in the Rose Garden of the White House in Washington, October 2, 2009.(Xinhua/Reuters File Photo)

A graduate of Columbia University and Harvard Law School, he served three terms in the Illinois Senate from 1997 to 2004 and as a U.S. senator from 2005 to 2008.

Obama won the presidential election in November 2008 and was inaugurated in January 2009.

The winners of Nobel Prizes for medicine, physics, chemistry and literature have been announced in the previous days and the economic prize will be announced next Monday.

The Nobel prizes have been awarded annually since 1901 to those who "conferred the greatest benefit on mankind during the preceding year."

The prizes are usually announced in October and are handed out on Dec. 10, the death anniversary of Alfred Nobel, a Swedish industrialist and the inventor of dynamite.

Each prize consists of a medal, a personal diploma and a cash award of 10 million Swedish kronor (about 1.4 million U.S. dollars).

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