International Trade Chap 1 (Part 2)

Front 1

Why does a business expand abroad?

Back 1

1. Increasing turnover and profit

2. Creating new markets

3. Strengthen the business’s reputation in international level

4. Ensuring the sourcing of raw materials

Hint 1

2

Front 2

The law governing international business transactions

Back 2

International Business Law

Front 3

simplest way of doing international business

Back 3

Direct sales done with client abroad

• importation/exportation

Front 4

True or false

A business may decide to produce its product abroad instead of producing these in its home country then exporting to foreign

Back 4

TRUE

Front 5

When a Business decide to license businesses abroad and to allow this foreign business to produce and sell its products.

Back 5

Intellectual Property Rights (IPRs)

Front 6

When a Business decide to license businesses abroad and to allow this foreign business to produce and sell its products.

Back 6

Intellectual Property Rights (IPRs)

Front 7

one of the several effective business activities and creates opportunities internationally to disseminate IPRs.

Back 7

International transfer of IPRs

Front 8

Forms of IPRs transfer:

Back 8

• Licensing of objects of industrial property rights (patents or trademarks)

• licensing of copyright

• technology transfer

• franchising

Front 9

FDI (complete name)

Back 9

Foreign Direct Investment

Front 10

branch, subsidiary, joint venture, setting up 100 percent foreign-owned enterprise, or merger and acquisition

Back 10

Foreign Direct Investment (FDI)

Front 11

international, lending, leasing, employment, foreign portfolio financial transactions( international taxation, international investment)

Back 11

International logistics

Front 12

Subjects/Actors/Players participate in driving international business.

Back 12

• Traders

• International Organization

• States

Front 13

main subjects, who trades (ex. Sales of goods, provision of services, FDI), including both individuals and businesses

Back 13

Traders

Front 14

economic organizations which are legally established, and individuals who trade independently and regularly and get business registration certificate.

Back 14

TRADERS

Front 15

play a considerable role in advancing international business transactions, such as United Nations Commission on International Trade Law (UNCITRAL); United Nations Conference on Trade and Development (UNCTAD); International Chamber of Commerce (ICC)

Back 15

INTERNATIONAL ORGANIZATIONS

Front 16

play a considerable role in advancing international business transactions, such as United Nations Commission on International Trade Law (UNCITRAL); United Nations Conference on Trade and Development (UNCTAD); International Chamber of Commerce (ICC)

Back 16

INTERNATIONAL ORGANIZATIONS

Front 17

UNCITRAL

Back 17

United Nations Commission on International Trade Law

Front 18

UNCTAD

Back 18

United Nations Conference on Trade and Development

Front 19

ICC

Back 19

International Chamber of Commerce

Front 20

formulating model laws which provide legal framework for states to adopt and adapt to suit their own needs

Back 20

UNCITRAL

Front 21

• involve in international business transactions

• special subject but sometimes do not behave as equally as other subjects, since this subject is the beneficiary of ‘jurisdictional immunity’

Back 21

STATES

Front 22

implies that the judges of one state may not pass judgment against a foreign state without the consent of the latter. The states recognized jurisdictional immunity – “an equal has no power over an equal”

Back 22

principle of the equality of states’ sovereignty

Front 23

implies that the judges of one state may not pass judgment against a foreign state without the consent of the latter. The states recognized jurisdictional immunity – “an equal has no power over an equal”

Back 23

principle of the equality of states’ sovereignty

Front 24

concerns the question of the extent to which states, or their agencies or state-owned enterprises, may be sued in the civil courts of other states? And how far there may be execution on property of a foreign state? – theory prevailing was that of ‘absolute’ immunity

Back 24

jurisdictional immunity

Front 25

was supported by the principles of the equality of

states sovereignty and the ‘Act of State’ Doctrine

Back 25

Absolute immunity

Front 26

- – originated from an US Court – this doctrine says that a nation is sovereign within its own borders, and its domestic actions may not be questioned in the courts of another nation

Back 26

Act of State Doctrine

Front 27

found in the Belgian case law

Back 27

restricted immunity

Front 28

could be offered to a foreign state only for its act of sovereignty, not for its acts of private management. It has relevance in only domestic jurisdiction, and none in international jurisdiction

Back 28

jurisdictional immunity

Front 29

True or False

More and more products are in reality ‘Made in the World’, rather than ‘Made in England’, Made inFrance

Back 29

TRUE

Front 30

the harmonization of different understandings of international business transactions, even sometimes appreciate the differences and use these in order to complete successfully in the international market.

Back 30

International Business Law –

Front 31

TRUE OR FALSE

We do not need cultural awareness to enable stronger connection and better collaboration.

It should be natives vs immigrants, or black vs whites, and Mac vs PC.

Back 31

FALSE

We need cultural awareness to enable stronger connection and better collaboration. It cannot be natives vs immigrants, or black vs whites, nor Mac vs PC.

Front 32

includes franchising, Turnkey contracts and contract manufacturing

Back 32

Licensing

Front 33

Where your own organization charges a fee and/or royalty for the use of its technology, brand and/or expertise

Back 33

Licensing

Front 34

involves the organization (franchiser) providing branding, concepts, expertise, and in fact most facets that are needed to operate in an overseas market, to the franchisee. Management tend to control.

Ex. Domino’s Pizza, Coffee Republic, McDonald’s restaurants

Back 34

FRANCHISING

Front 35

major strategies to build large plants.

Include training & development of key employees where skills are sparse

–ex. Toyota’s car plant in Adapazarin, Turkey. They would not own the plant once it is handed over

Back 35

Turnkey contracts

Front 36

Individuals or organizations that are contracted to your business, and market on your behalf in a particular country.

Back 36

Agents

Front 37

Commonly take commission on goods sold.

Represent more than one organization

Low cost, but low control options

Might represent your competitors – beware of conflict of interest

Expensive to recruit, retain and train

Back 37

AGENTS

Front 38

similar to agents, but they take ownership of the goods Incentives to market products and to make profit from them

Back 38

DISTRIBUTORS

Front 39

describes a whole series of different relationships between companies that market internationally Sometimes the relationship are between competitorsNon-equity based agreements i.e. companies remain independent and separate. Examples Shared manufacturing Research and development (R&D) arrangement Distribution alliance – iPhone was initially marketed by O2 in the UK Marketing agreements

Back 39

Strategic alliances (SA)

Front 40

Tend to equity-based i.e. a new company is set up with parties owning a proportion of the new business

Back 40

Joint Ventures

Front 41

Reason why companies set up JV to enter a new international market:

Back 41

- Access to technology, core competencies or management skills

-To gain entry to a foreign market

-Access to distribution channels, manufacturing and R&D (common)

Front 42

Owning an overseas manufacturing plant i.e. the organization invests in plant, machinery and labor in the overseas market – known Foreign Direct Investment (FDI)

Can be a new build, or the company might acquire a current business that has suitable plant, etc.

Back 42

Overseas Manufacture or international sales subsidiary

Front 43

(FDI) stands for

Back 43

Foreign Direct Investment (FDI)

Front 44

it acts more like distributor that is owned by your own company

Back 44

International sales subsidiary

Front 45

eMarketing space

Back 45

Internet

Front 46

Internationalization stages in entering overseas market

Back 46

1. Indirect exporting or licensing 2. Direct exporting via a local distributor

3. Your own foreign presences 4. Home manufacture, and foreign assembly

5. Foreign manufacture

Front 47

your new product uses the existing distribution and logistics of another business

Back 47

Piggybacking

Front 48

act a bolt on export department for your company

Back 48

Export Management Houses (EMHs)

Front 49

groups of small or medium sized organizations that group together to market related, or sometimes unrelated products in international markets

Back 49

Consortia

Front 50

Indirect Exporting examples

Back 50

Piggybacking

Export Management Houses (EMHs) –

Consortia

Trading companies

Front 51

identify if international trade

It comprises all commercial transactions that take place between two or more region, countries and nations beyond their political boundaries.

Back 51

International Business

Front 52

A much narrow set of activities and consist of exports and imports

Back 52

International Business

Front 53

Multinational enterprise (MNE) is a company that has worldwide approach to markets and production or one with operations in more than a country

Back 53

International Business

Front 54

It is the exchange of capital, goods, and services across international borders or territories

Back 54

International Trade

Front 55

Much broader concept and includes international trade, direct foreign production or any other activity across countries conducted by an entity in managing and carrying out its operation

Back 55

International Trade

Front 56

Trading globally gives consumers and countries the opportunity to be exposed to new markers and products

Back 56

International Trade

Front 57

exchange of goods and services between different national markets involving buyers and sellers

Back 57

International Marketing

Front 58

the multinational process of planning and executing the conception, prices, promotions, and distribution of ideal goods and services to create exchanges that satisfy the individual and organizational objective (American Marketing Association International Marketing

Back 58

International Marketing

Front 59

Stages of International Marketing

Back 59

I. No direct foreign MarketingInfrequent Foreign Marketing

II. Regular Foreign Marketing & International

III. Marketing/Multinational marketing

Front 60

study of an international system composed of territorial states which acknowledge no superior authority over matters which they consider of vital interest

Back 60

International relations

Front 61

deals with the nature of the changing relations between states and with non- state actors. It studies the functioning of the international system - the forces, factors and interest, the customs, rules, norms, institutions and organizations from which the theory and history of its development are formed

Back 61

International relations

Front 62

an arrangement in which one company provides services for another company that could also be or usually have been provided in-house.

Back 62

Outsourcing

Front 63

It is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business

Back 63

Outsourcing

Front 64

Identify whether the given is OURSOURCING or OFF SHORING

It refers to contracting work out to an external organization

Back 64

Outsourcing

Front 65

Identify whether the given is OURSOURCING or OFF SHORING

Risks include misaligned interests of clients and vendors, increase reliance on third parties, lack of in-house knowledge of critical (though not necessary core) business operations etc.

Back 65

Outsourcing

Front 66

Identify whether the given is OURSOURCING or OFF SHORING

Usually companies outsource to take advantage of specialized skills, cost efficiencies and labor flexibility

Back 66

Outsourcing

Front 67

Identify whether the given is OURSOURCING or OFF SHORING

It means getting work done in a different country

Back 67

Offshoring

Front 68

Identify whether the given is OURSOURCING or OFF SHORING

It is often criticized for transferring jobs to othercountries. Other risks include geopolitical risk, language differences and poor communication, etc.

Back 68

Offshoring

Front 69

Identify whether the given is OURSOURCING or OFF SHORING

Usually lower costs, better availability of skilled people, and getting work done faster through a global talent pool

Back 69

Offshoring

Front 70

Advantage of Outsourcing:

Back 70

Swiftness & expertise

Concentrating on core process than supporting ones

Risk-sharing

Reduced operational and recruitment costs

Focus on core activities

Cost & efficiency saving

Front 71

Disadvantage of Outsourcing

Back 71

Risk of exposing confidential data Synchronizing the deliverables Hidden costs

Lack of customer focus

Front 72

Advantage of Joint Venture

Back 72

Sufficient resources Ability and experience

Spreading of risk

Other indirect advantages

Front 73

Disadvantage of Joint Venture

Back 73

It take tie and efforts to form the right relationship

The objectives of each partner may differ.

Imbalance in the share of capital, expertise, investment etc., ma cause friction in between the partners

Difference in the culture and style of business lead to poor cooperation

Lack if assuming responsibility by the partners may lead the collapse of business

Lack of communication between the partners may affect business

Front 74

Sources of Domestic Law:

Back 74

1. Legislation

2. Domestic Case Law

3. Other sources of domestic law

Front 75

important source of domestic law concerning the international trade an business law consists in trade law statutes. Ex. US Tariff Act 1930, US Trade Act 1974, US Trade Agreements Act 1979, US Uniform Commecial Code

Back 75

Legislation

Front 76

such as Belgian case of 1878, or the case United City Merchants Ltd. V. Royal Bank of Canada (1983)

Back 76

Domestic Case Law

Front 77

Other sources of domestic law

Back 77

national mercantile customs and usages as well as general principles ‘in foro domestic’.

The principles of due process, proportionality, non-retroactivity. These principles are applied only as a subsidiary source, in the case of the non-application of other legal sources.

Front 78

Limits of Domestic Law in Governing International Trade and Business Transaction

Back 78

International Law

Front 79

Acts of breach of law done by its citizens and performed outside of its territory

Acts done by foreigner and performed abroad injuring national security or other interests of a state

Acts of breach of law performed abroad of which victim is its citizen

Acts of international crime, such as sea piracy, air piracy, slave trade

Back 79

Extra-territoriality of jurisdiction

Front 80

Lex mercatoria

Back 80

(Merchant Law)

Front 81

ICC stands for

Back 81

International Chamber of Commerce

Front 82

international non-governmental organization serving world business. It plays dominant role in ensuring harmonization through the compilation of international mercantile usages for incorporation by those engaged in international business transactions

Back 82

ICC

Front 83

In late ________ International Dairy Agreement & International Bovine Meat Agreement -terminate

Back 83

1997

Front 84

4 Plurilateral Trade Agreements:

Back 84

1. Agreement on Trade in Civil Aircraft

2. Agreement on Government Procurement

3. International Dairy Agreement

4. International Bovine Meat Agreement

5. Information Technology Agreement 1996 – recent