ibt reviewer

Who is Michael Porter?

Michael Eugene Porter (born May 23, 1947) is an American academic known for his theories on economics, business strategy, and social causes.

Porter's Five Forces include:

Competitive Rivalry, Supplier Power, Buyer Power, Threat of Substitution, and Threat of New Entry.

The purpose of Porter's Five Forces analysis is to help businesses understand the competitive dynamics of their industry and make more informed strategic decisions. The model provides a framework for analyzing the five key factors that determine the competitive intensity and profitability of an industry.

Trade is the concept of exchanging goods and services between two people or entities. International Trade is the concept of exchanging between people or entries in two different countries.

The Different Trade Theories

What Is a Competitive Advantage?

Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.

WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

Location: Geneva, Switzerland

Established: 1 January 1995

Created by: Uruguay Round negotiations (1986-94)

Membership: 164 members representing 98 per cent of world trade Budget: 205 million Swiss francs for 2024 Secretariat staff: 623

Head: Ngozi Okonjo-Iweala (DirectorGeneral) Functions:

• Administering WTO trade agreements

• Forum for trade negotiations

• Handling trade disputes

• Monitoring national trade policies

• Technical assistance and training for developing countries

• Cooperation with other international organizations

WTO stands for lengthy and complex legal context because it covers a wide range of activities.

But in simple term, fundamental principles are being covered in forums because this is a foundation of multilateral trading

WTO is an international organization with the primary purpose is to open trade between countries, which is beneficial to all 

INTERNATIONAL MONETARY FUND

Global Capital Market is the interlinking of various investment exchanges around the world that enable individuals and entities to buy and sell financial securities on an international level.

Capital market is a place where buyers and sellers indulge in trade (buying/selling) of financial securities like bonds, stocks, etc. The trading is undertaken by participants such as individuals and institutions. Capital market trades mostly in long-term securities. The International Monetary Fund is a major financial agency of the United Nations, and an international financial institution funded by 190 member countries, with headquarters in Washington.

The International Monetary Fund (IMF) is an organization of 190 countries, working to foster global monetary cooperation, secure financial

stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The IMF provides broad support to low income countries through policy advice, capacity- building activities, and concessional financial support meaning it is provided at below- market interest rates. Concessional support through the Poverty Reduction and Growth Trust (PRGT) is currently interest free. Purpose:

(Philippines)

1. Promote international money cooperation

2. Foreign exchange stability and orderly arrangements;

3. To foster economic growth and high levels of employment;

4. To provide temporary financial assistance to countries to help ease the balance system. 

International Commercial Terms (INCOTERMS) 

• a series of predefined commercial terms published by the International Chamber of Commerce relating to international commercial law.  

Incoterms may be used for the following:

1. Distribution of Goods

2. Issues involving regulations of transport charges

3. Identifying and defining the place where transfer of merchandise will take place and the transport risk involved in order to justify to owner for support and the chance for damage to goods when shipped to its destination

4. Determining the obligation of both seller and the buyer

5. Identifying the cost relative to the transaction and the one who will shoulder it

6. Identifying the risk involved in the delivery of goods

7. Making international commercial transactions more to adapt to the most contemporary commercial practice.

Terms used:

1. Ex-works (EXW) - is an international trade term that describes when a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs.

2.  Buyer - is to purchase goods or services from suppliers located in different geographical areas on behalf of their company. Their objective is to seek out and negotiate the best products in terms of cost, quality and delivery time.

3. Importer - 

4. Seller - is any individual or entity, such as a broker or hedge fund, that engages in offering any asset or security (stocks, options, commodities, currencies, or others) for purchase.

5. Exporter - 

6. Freight on Board (FOB) – It is a designation which indicated that the liability and ownership of the goods have been transferred from a seller to a buyer. This means that if the goods get damaged or destroyed during the shipping, the seller is not liable.

7. Cost and Freight (CFR) - is an expense associated with cargo transported by sea or inland waterways. If CFR is included in a transaction, the seller must arrange and pay for transporting the cargo to a specified port.

8.  Cost, insurance and Freight (CIF) - It's an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer's order while the cargo is in transit. Set by International Chamber of Commerce

9.Carriage Paid To (CPT) - is an international trade term that means the seller delivers the goods at their expense to a carrier or another person nominated by the seller. The seller assumes all risks, including loss, until the goods are in the care of the nominated party.

10.Carriage and Insurance Paid to (CIP) - signifies that the seller will pay freight and insurance in sending goods to someone chosen by the seller at a mutually agreeable location. The seller must insure the goods being sent for 110% of their contract value.

11.Delivered at Frontier (DAF) - is a term used in international shipping contracts that requires a seller to deliver goods to a border location. 

12.Delivered Ex Quay (DEQ) - was a contract specification where the seller had to deliver the goods to the quay or wharf at the destination port. 

13.Delivered Duty Unpaid (DDU) - is an international trade term indicating that the seller is responsible for ensuring that goods arrive safely at a destination. The buyer is responsible for import duties. Delivered Duty Paid (DDP) - indicates that the seller must cover duties, import clearance, and any taxes.

14.Delivered duty paid (DDP) - is a delivery agreement whereby the seller assumes all of the responsibility, risk, and costs associated with transporting goods until the buyer receives or transfers them at the destination port.

15.Vessel – a large ship or boat used for carrying goods.

INTERNATIONAL MARKETING AND GLOBALIZATION 

International Marketing - is the marketing of products or services outside of your brand's domestic audience. Think of it as a type of international trade. 

By expanding into foreign territories, brands are able to increase their brand awareness, develop a global audience, and of course, grow their business. 

Example   of   product    in    the International Arena 

1.Unilever

2. Nestle

3. Colgate Palmolive, etc. 

The key objective of international marketing is to create a global brand presence while tailoring marketing strategies to each specific region's culture, demographics, and consumer behavior.

 Nature of International Marketing

1. Large Scale Operation

2. Dominance of Multinationals

3. International Restrictions and Trading Blocks

4. Sensitive Character

5. Need for Marketing Research

6. Importance of Advanced Technology 

7. Intense Competition

8. Need    for   Specialized Institutions

9. Need for Long Term Planning

10. Develop   Cultural     Relations and Maintain World Peace

Scope of International Marketing 

1. Exporting 

2. Globalization

3. Partnership

4. Licensing Agreements

5. Consultancy Services

6. International Commerce

7. Importing 

8. Internationalization 

Global Marketing 

-  allows you to sell more products, attract more customers and enlarge your market share in different countries. 

-  Your brand influence will increase. Building a well-known brand's reputation gives you a powerful competitive advantage in local markets of different countries.

5 Types of International Marketing 

International marketing refers to any marketing activity that occurs across borders. 

1. Export

2. Licensing

3. Franchising

4. Joint Venture

5. Foreign Direct Investment

Market seeking reasons are related to opportunities that companies have to sell specialized or unique products in markets that do not normally have access to those products.

What are the motives of International Marketing?

These reasons and motivations for internationalization can be categorized into three main types: market seeking, economic, and strategic. Market seeking reasons are related to opportunities that companies have to sell specialized or unique products in markets that do not normally have access to those products.

Motives/Reasons of International Marketing

1. Profit motive

2. Growth Opportunities

3.Domestic Market constraints

4.Competition

5. Government  Policies and Regulations

Challenges and Scope of International Marketing

-  Cultural differences and norms misunderstanding (e.g languages

etc.)

-  Logistical challenges, like difficulties in coordinating activities in different time zones or shipping.

-   Difficulty in handling diverse laws and regulations across different countries.

Reasons   for  Entering   into International Marketing

1. Product Life cycle

2. Competition

3. Excess Capacity 

4. Geographic Diversification

5.  Increasing the Market size 

Trade - is referred to as a basic economic activity that involves buying and selling different goods and services between two or more parties involved in the transaction.

Developing an International Market

1. Knowledge of the market

2. Knowledge of the product

3. Knowledge of Marketing System

Organization for International Marketing

1. Company objectives and history

2. Government Policies and Influencing the firm’s operations

3. Marketing Operations

4. Decision Making policy and level involved in the decision making

5. Length of chain of command

6. Degree of Control 

7. Degree of Involvement in the marketing functions.

Framework for International Marketing Planning

1. Diagnosis of the situation or situation analysis.

2. Identification of corporate strengths and weaknesses as well as environment opportunities and threats;

3. Definition of objectives

4. Designing an appropriate marketing programmed based on objectives and estimates

5. Deciding on the relevant appropriate for the plan.

International Marketing Early Decision

1. Exporting

2. Indirect Exporting

3. Direct Exporting

4. Licensing

5. Franchising

6. Control Manufacturing

7. Assembly

8. Joint Venture 

9. Strategic Alliance

10. Merger and Acquisition

Factors Affecting Entry Decision

1. Company goals regarding the volume of international business desired, expected geographic coverage and the time span of foreign investment;

2. The size of the company in terms of sales and assets;

3. The company’s product line and the matter of its product;

4. Competition abroad

Companies can enter the Philippines by establishing as a corporation. This means registering a new legal entity with the Securities and Exchange Commission (SEC) in the Philippines. The structure of a corporation is such that the individual assets of the owners are legally separate from those of the company.

Guide for expats starting a business in the Philippines

1. Find out about your desired industry

2. Get your finances in order

3. Choose and register a business name in the Philippines

4. Prepare Legal documents to Run a Business in Philippines

5. Choose an office address

6. Open a bank account and pay the minimum deposit.

Business Registration for a foreigner in the Philippines

Step 1: Choose the business structure

Step 2: Secure an Alien Employment Permit (AEP)

Step 3: Register with the Securities and Exchange Commission (SEC)

Step 4: Obtain Tax Identification Number(TIN)

Step 5: Mayor’s Permit and Business License