Page 91 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes A joint venture is an organization created by two or more companies or a company and a
foreign government in which each party contributes assets, owns the entity to some degree, and
shares risk. A joint venture allows a company to partner with a firm from another country thus
learning about business practices, cultural differences, etc. This is particularly popular among
manufacturing concerns. For example, Ford Motor Company (U.S.) entered into a joint venture
with the Mazda Company (Japan) and France’s PSA Peugeot Citroen has joined with China’s
Dongfeng Motor Corp.

A strategic alliance is an agreement between potential or actual competitors to achieve common
objectives.

Did u know? Unlike a joint venture they do not actually form a new entity but work
cooperatively while maintaining their independence. It allows participants to share costs
and risks and to take advantages of each other strengths. Because strategic alliances are
built on trust, this type of arrangement should be undertaken with care.
A good example of international strategic alliance is the code sharing done by airlines. For
example, you may purchase a ticket in the U.S. on Delta airlines for a flight to Italy and find
yourself actually on an Alitalia flight carrying a Delta flight number.

Self Assessment

Fill in the blanks:

11. ................................... is the exchange of goods and services between countries.
12. ................................... is the purchasing abroad, either directly from target suppliers or
indirectly through sales agents and distributors.

13. ............................. is the selling abroad, either directly to target customers or indirectly by
retaining foreign sales agents and distributors.

14. ..................... when a country can produce something more cheaply than any other country.
15. ............................ when a country can make certain items more cheaply or better than other
items relative to other countries.
4.6 Summary

This unit focused on the export-marketing task.
An exporter has to look for markets beyond his country’s geographical borders.
An export company essentially has to find foreign buyers for its own products or has to
produce/procure goods as per the requirements of the importer. This means one has to
deal with foreign nationals/companies to be in exports.
Export marketing, can be defined as identifying willing foreign buyers whose needs
could best be met using our products and delivering satisfaction through supply of goods
in their countries complying with formalities of international transactions of both countries.
A framework for approaching the export-marketing task has been proposed. The decision
to export is not an easy one to make.
The idea of making good profits through exports is a sound one but one must also bear in
mind the pitfalls. Once this decision is made, an exporter then needs to undertake a great

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