As we all know, global trade is no easy, companies cannot just ship their products to another country and sell it in the foreign market, there are many factors need to be considered and analysis. In my point of view, the factor can be separate into internal and external factors.
✓ It could be strategic because, often governments will forbid foreign companies from selling products to its citizens, so as not to take away sales from local industry.
In the midst of the help from the extremely advanced transportation, modern production methods, rapid industrialization and the increasing facilities of outsourcing of trade and services the international trade organization is increasing and decreasing very fast in the globe. The international trade account has a good distribute of a country’s gross on domestic product. It is in addition one of most important foundations of income designed for the developed as well as to developing country. For the reason that of many country benefits from the international trade approximately every one in the
Capacity is the amount of product or service that a company can get in a productive unit
More and more foreign brands joining the market makes the level of competition is really high.
After reading the first half of the text, I learned about the topics of globalization, economic development, international financial markets, and more. International business is relevant in almost all news articles today. Although I have learned a large measure of information from each chapter, I was mostly interested in chapter five’s topic of international trade which discussed how countries sell, purchase, or exchange goods across national boarders.
Export and FDI (Foreign Direct Investment) increases in the future, globalization reaches higher scope, businesses have to consider these trends (OECD, 2007).
By way of comparison, the level of world GDP rose eight-fold during the same period. As a consequence, the share of international trade in world GDP has risen from 5.5 per cent in 1950 to 20.5 per cent in 2006.” Many factors have helped contribute to this growth and development of world trade. First and most influential is technological change. This advancement has drastically reduced the high costs of transportation and communication, two very critical elements of globalization. In more recent years, jet engines and containerization have helped contribute to the reduction of the cost of previously extremely costly transportation. Thus, the array and volume of goods traded have increased. The coordination of producing goods has always been a difficult task however a transformation in information technology has made it substantially easier to trade and to coordinate this production all over the world. In return, goods are spread easier and much cheaper.
According to (Koch, 2001), market barriers like tariffs, government policies, access to distribution channel, customer loyalty, network effect are some of the many barriers preventing or making it hard for companies to set up a new business in the foreign market. For instance, having customer loyalty in the existing foreign market helps the existing companies to retain their customers and discourage new competitions.
More organizations and countries are beginning to increase their trade with other countries every year.
It is difficult to break through the market if the domestic market have the buy domestic product mentality.
Increase and development of competition. Due to the entry of foreign competitors into the domestic market, local companies have to become more efficient, favouring prices down and increase the quality and performance of their products.
International trade indicates a large part of the economic research of production growth. Market size has grown from exports of a companies’ products. By exporting a company learns about the foreign markets. The company may gain some expertise from feedback they obtain from the buyer. This is called the learning-by-exporting theory.
International trade is an old subject, but it continues to increase its relevance thanks to the intensification of links between countries. In fact, they are now more than ever interconnected through trade in goods and services, through cash flows and investments. These phenomena increase pervasively due to the growing trend toward globalization. Therefore, many theories, which highlight the gains from trade, were created and then developed and some of them are useful to explain the current international trade.