Chapter question a) Explain five (5) different ways in which an organization may be involved in international trade. (60 marks)

CHAPTER 1
QUESTION 1
a) Explain five (5) different ways in which an organization may be involved in international trade. (60 marks)

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  Exporting occurs when a company sells its products overseas directly or through a middleman commonly called an export agent.
  
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  Trading companies buy goods in one country and sell them to buyers in another. Licensing is a trade arrangement in which one company, the licensor, allows another company, the licensee, to use its name, products, brands, trademarks, and production processes in exchange for a fee or royalty.
  
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  Franchising is a form of licensing. Contract manufacturing occurs when a foreign company produces a specified volume of the domestic firm's product to specification and uses the domestic firm's name on the final product.
  
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  Outsourcing involves transferring manufacturing or other tasks to companies in countries where labor and supplies are less expensive.
  
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  Joint ventures allow a company that wants to do business in another country to find a local partner to share the costs and operation of the business, while strategic alliances are partnerships formed to create competitive advantage on a worldwide basis.
  
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  Direct investment involves firms who are willing to invest considerable resources in international business by purchasing overseas business facilities.
  

b) Explain with example the four (4) different international barriers to trade. (40 marks)
The barriers to international trade are: technological barriers, social and cultural barriers, ethical, legal and political barriers, and economic barriers, technological barriers.

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  Economic Barriers
  

When considering doing business abroad, businesspeople need to recognize
that they cannot take for granted that other countries offer the same things as found in their own country.
1) Industrialized nations are economically advanced countries such as the United States, Japan, Great Britain, and Canada.
2) Less-developed countries (LDCs) are less economically advanced than industrialized nations and are characterized by a lower per capita income.
3) LDCs are a huge and growing market for many products, and many companies are realizing the huge profit potential there.
b. A country’s level of development is determined by its infrastructure, the physical facilities that support its economic activities.