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Individuals, companies, and countries
participate in international trade by importing
and exporting goods and services.
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To describe the processes of importing and
exporting
To explain the differences between goods
and services
To identify the steps of the importing and
exporting processes
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International trade opens new markets for
companies from many nations and provides
access to products some people would
otherwise never use.
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What Is International Trade?
International trade can
take place between one
nation and another.
International trade can
also take place within
groups of countries.
international trade
all business activities
conducted between
individuals,
companies, and
governments
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What Is International Trade?
Business Activities in
International Trade
Buying
Paperwork
Selling
Granting Credit
Shipping
Making Payments
Receiving
Servicing Products
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Importing and Exporting
Imports
Needs are met by
imports
Business
Exports
Extra products and
supplies are
exported
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The Nature of International Trade
The WTO stands for the World Trade
Organization.
This is an organization in which many
countries belong to for trade relations.
The EU stands for the European Union.
Many countries also belong to this group
for special trade considerations.
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The Nature of International Trade
Look up on the internet to find benefits of
being a EU Member
Also, look up some restrictions to being a
member of the EU.
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Imports
Imports can come from
foreign companies or
foreign governments and
individuals.
The United States
imports oil and
customer-relations call
centers.
imports
goods and
services that
people in one
country buy from
people in another
country
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Exports
Exports can go to foreign
companies or foreign
governments and
individuals.
The United States
exports agricultural
products, technology,
and financial services.
exports
goods and
services that
people in one
country sell to
people in another
country
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Goods and Services
When a good is
imported or exported, a
method of transportation
must be chosen to
move the item across
national boundaries.
good
a tangible item
that is made,
manufactured, or
grown
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Goods and Services
A company must pay shipping costs in
order to transport goods.
Companies must agree to insure or pay
for damaged or missing goods.
There must be a procedure for returning
goods.
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Goods and Services
Channel of Distribution
Producer
Middleman
Company
Customer
Merchant
Middleman
or
Agent
Middleman
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Services
Selling a service usually
involves convincing the
customer of the benefits
of the particular service.
A service may not
require a middleman.
service
an intangible
benefit or task
provided by a
business to its
customers
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Services
Individual consumers purchase services
such as hospitality and tourism.
Companies purchase services such as
consulting, insurance programs, and
banking and financial services.
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Services
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Goods with Services
Often, a good is sold with a service such
as an extended warranty on a car.
Services are sold with other services such
as flight insurance with an airline ticket.
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Importing Process
1
2
Identify
need
Search for
suppliers
3
Create and
finalize a
purchase
agreement
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5
Receive
goods
Confirm
the
purchase
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Identify Need
An individual customer, a company, or a
government can have a need.
A need can be for a good or a service.
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Search for Suppliers
The Internet makes the search for suppliers
easy because there are so many choices.
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Create and Finalize Purchase
Agreement
A purchase agreement is a contract between
the buyer and the seller.
Items in a Purchase Agreement
Items
Involved
Delivery
method
Exchange
Rate
Price
Due
Date
Who pays
for shipping
Provisions
for damage
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Create and Finalize Purchase
Agreement
International trade documentation refers to
the papers and documents that companies
must send to customers with their products to
legally export or import goods.
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Receive Goods
Goods are usually received at a shipping
dock or a company’s front door.
Goods need to be checked.
As goods pass across national borders,
companies may owe a tax or duty.
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Confirm the Purchase
The importing company confirms the
purchase and makes payment when it agrees
that the terms of the contract have been met.
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Confirm the Purchase
Relate What imported products do
you buy and use? What countries
export those products?
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Exporting Process
1
Assess
Demand
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3
4
5
Identify
potential
customers
and make
sales
contacts
Create and
finalize a
purchase
agreement
Deliver the
goods or
services
Complete
the
transaction
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Assess Demand
The two steps in assessing demand are:
Analyze the export potential for a good or
service.
Assess the company’s ability to follow
through and provide the good or service.
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Identify Customers and Make
Contacts
Ways to identify customers and make
contacts include:
Trade Shows
E-mails
Visits by Salespeople
Teleconferences
Telephone Calls
Internet Solicitations
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Create and Finalize Purchase
Agreement***
Most shipping terms are
FOB.
FOB-loading dock
means the seller will pay
all shipping until goods
reach the loading dock.
FOB
(free on board or
freight on board)
signifies that the
ownership of
merchandise in transit
determines if freight
charges are free
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Create and Finalize Purchase
Agreement
CIF is another term
used in a purchase
agreement.
CIF
(cost, insurance, and
freight) the price
quoted to the buyer,
including cost,
insurance, and freight
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Create and Finalize Purchase
Agreement
C&H is another term
used in a purchase
agreement.
C&H
(cost and freight) the
price quoted to the
buyer, signifying the
buyer pays separately
for insurance
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Deliver Goods and Services
The seller must arrange to transport the
goods to the buyers location.
The seller must comply with all legal and
accounting requirements.
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Deliver Goods and Services
Many goods require a certificate of origin.
A bill of landing (BL) identifies exactly what
is being shipped.
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Complete the Transaction
The transaction is completed when the
buyer and seller agree all terms are met
and payment is made.
Many countries rely on the International
Monetary Fund (IMF) to settle exchange
rate problems.
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Complete the Transaction
The World Bank Group can lend money to
support an international trade relationship.
The International Development Association
(IDA) helps companies in less-developed
nations.
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When in Armenia…
Meeting and Greeting Men greet with a handshake
and may embrace; women hug and kiss each other
once on the left cheek. Maintain eye contact.
Business Etiquette When arranging business, provide
a letter of introduction. Punctuality is not typical.
Business Dress Wear casual but stylish attire. Never
wear tight clothing.
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