Trade Management
description
Transcript of Trade Management
Trade Management
Sourcing & Optimising Strategies Module 8
Global MarketsIntroduction
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
IntroductionInternational Trade Growth
International Trade Milestones
Largest Exporting & Importing Countries
International Trade Drivers
International Trade Theories
The International Business Environment
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Trade Growth
1953 1963 1973 1983 1993 2003 2007
Europe 39.4% 47.8% 50.9% 43.5% 45.4% 45.9% 42.4%
United States 18.8% 14.9% 12.3% 11.2% 12.6% 9.8% 8.5%
Japan 1.5% 3.5% 6.4% 8.0% 9.9% 6.4% 5.2%
China 1.2% 1.3% 1.0% 1.2% 2.5% 5.9% 8.9%
Rest of the World 39.1% 32.5% 29.4% 36.1% 29.6% 32.0% 35%
World Total 84 157 579 1,838 3,677 7,375 13,619
2008 Growth in International Trade and Share of Selected Countries (in current U.S.$ billions)
Source: World Trade Organization
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Trade MilestonesBretton Woods
Conference1944
1945 International
Monetary Fund
1st General Agreement on
Tariffs and Trade 1948
1957Treaty of
Rome
World Trade Organization
1995
1999/2002
Creation of the Euro
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Rank Exporting Country Value Share
EU27 6,038.6 33%
1 China 1,898.4 10.4%2 United States 1,480.4 8.1%3 Germany 1,472.3 8.0%4 Japan 822.6 4.5%5 The Netherlands 661.0 3.6%6 France 596.0 3.2%7 Korea 555.2 3.0%8 Italy 523.1 2.9%9 Russia 522.0 2.9%
10 Belgium 476.6 2.6%11 United Kingdom 473.2 2.6%12 Hong Kong 455.6 2.5%13 Canada 452,4 2.5%14 Singapore 409.5 2.2%
Top fourteen exporters
10,827.0 59.4%
Rest of the World 4,999.3 40.6%Total 18,255.0 100%
Largest Exporting Countries (2011)
Source: World Trade Organization
Brazil = 256.0X 1000000
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Largest Importing Countries (2011)Rank Importing Country Value Share
EU27 6,255.6 33.9%1 United States 2.265.9 12.2%2 China 1,743.5 9.4%3 Germany 1,253.9 6.7%4 Japan 855.0 4.6%5 France 713.9 3.9%6 United Kingdom 637.7 3.5%7 The Netherlands 598.6 3.0%8 Italy 557.5 2.9%9 Korea 524.4 2.8%
10 Hong Kong 510.8 2.7%11 Canada 462.6 2.5%12 India 462.6 2.5%13 Belgium 461.3 2.5%14 Spain 374.3 2.0%
Top fourteen importers
9,348.8 61.2%
Rest of the World 4,895.2 38.8%Total 18,438.0 100%
Source: World Trade Organization
Russia= 323.8Brazil = 236.9
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Trade Drivers• Spread costs over larger number of
units and find low- cost suppliersCost Driver
• Follow competitor to new foreign market or expand market share
Competitive Driver
• Increased uniformity of consumer tastes and preferencesMarket Driver
• Increased access to information and easy access to new customers over the internet
Technology Driver
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Trade Theories
•When a nation can produce a certain good more efficiently than other countries, it will trade for other products
Adam Smith – Absolute Advantage
Theory
•Nations will trade as long as they can produce some goods relatively more efficiently
David Ricardo – Comparative
Advantage Theory•A country will enjoy a comparative advantage if it is naturally endowed with many factors of economic production
Heckscher-Ohlin Factor Endowment
Theory
•During its life cycle, a product will be manufactured in different countries
Raymond Vernon – International Product
Life CycleTheory
• It is critical to have similar firms concentrated in one geographic area
Michael Porter – Cluster Theory
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Smith – Absolute Advantage
Liters of Wine Units of Machinery
France 20,000 2Germany 15,000 3
In this case, we assume both countries are using the same amount of labor in the same time frame. France has an absolute advantage in producing wine and Germany has an absolute advantage in producing machinery.
As a result, France will specialize in making wine and Germany in making machinery. They will then trade with each other.
The absolute advantage theory states that when a nation can produce a certain type of good more efficiently than other countries, it will trade with countries that produce other goods more efficiently.
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Ricardo – Comparative Advantage
The comparative advantage theory states that nations will trade with one another as long as they can produce certain goods relatively more efficiently than one another.
Tons of Wheat Units of Machinery
UK 25 5Brazil 21 3
The UK has an absolute advantage in both machinery and wheat. However, in the UK, the relative price of 1 unit of machinery is 5 tons of wheat, and in Brazil, it is 7 tons of wheat.
The nations will trade: If the UK sells 1 unit of machinery to Brazil for 6 units of wheat, both the UK and Brazil are better off. The UK has a comparative advantage in producing machinery, Brazil in growing wheat.
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Heckscher-Ohlin Factor Endowment
The factor endowment theory holds that a country will enjoy a comparative advantage over other countries if it is naturally endowed with a greater abundance of one of the factors of economic production.
Factors of Economic Production1. Land
2. Labor
3. Capital
4. Entrepreneurship
Country Abundance AdvantageArgentina Grazing Land BeefIndia Educated Labor Call centers
USAEconomic system where entrepreneurship is rewarded
Innovation & development of intellectual property
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Product Life Cycle
Stage 1
• Product is created in developed country, using new technology and serving a market need.
Stage 2
• As sales grow, competitors start to make similar products in other developed countries, responding to local needs.
Stage 3
• Manufacturing of product has become routine and costs need to be reduced, and production moves to developing countries.
The International Product Life Cycle theory explains that, over its life, a product will be manufactured in different types of countries, in stages, generating trade between these countries.
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Product Life Cycle
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Porter – Cluster Theory
The cluster theory argues that competitive clusters form when companies in the same industry, as well as their suppliers, concentrate in one geographic area. When this happens, the companies “feed” on each other’s know-how, pushing them to innovate faster.
They become so efficient and innovative that they become world-class suppliers.
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
Cluster Theory
Cluster Examples:
Silicon Valley, California, U.S. – Information technologySassuolo, Italy – Ceramic tilesLimoges, France – PorcelainGenève, Switzerland – WatchesYiwu, China – Socks & hosieryElkhart, Indiana, U.S. – Recreational Vehicles
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Business Environment
International Business
Marketing
Cultures
Finance
EconomicsTravel
Language Study
Foreign Contacts
Ch. 1: Introduction
International Logistics: The Management of International Trade Operations
© 2011 Cengage Learning. Atomic Dog is a trademark used herein under license. All rights reserved.
International Business Environment
To be successful in international trade management, not only is it important to have an understanding of trade management, but it is also fundamental to understand the international environment.
This can be achieved by learning a foreign language, taking classes in international economics, international finance, inter-cultural communication, and international marketing, but also by traveling frequently, meeting foreign nationals, and making an effort to understand what is happening in foreign countries.