THE COMMERCIALIZATION OF THE INTERNATIONAL BUSINESS

LOREN VENERA AVENDAÑO

WENDY GARCIA DIAZ

FUNDACION UNIVERSITARIA TECNOLOGICO

COMFENALCO

FACULTY OF ECONOMIC, ADMINISTRATIVE AND

ACCOUNTING SCIENCES

INTERNATIONAL BUSINESS MANAGEMENT

PROGRAM

SEMESTER 1

SECTION 2

CARTAGENA DE INDIAS
 THE COMMERCIALIZATION OF THE INTERNATIONAL BUSINESS

TEACHING COLLECTIVE

LILIANA MENDOZA RAMOS

AIDA GAMBOA PINO

ROSA BERDUGO DIAZ

EFRAIN LOZANO BARRIOS

ESPIRITU SARMIENTO PARRA

MARINA LLAMAS DURAN

DARLING MIRANDA URIBE

FUNDACION UNIVERSITARIA TECNOLOGICO

COMFENALCO

FACULTY OF ECONOMIC, ADMINISTRATIVE AND

ACCOUNTING SCIENCES

INTERNATIONAL BUSINESS MANAGEMENT PROGRAM

CARTAGENA DE INDIAS
 INTRODUCTION

The present classroom project seeks to undertake first-semester

students about international business relationships at a
professional level; to acquire skills; manage the organization
under management and management. International business is
the study of transactions that take place abroad to meet the
needs of individuals and organizations. These economic
activities are commercial operations, such as the case of
importing or exporting goods and the direct investment of funds
from international companies. The expansive process of
globalization has forced entrepreneurs to train in their
commercial and negotiating capacity with the outside
world. International business involves the management of
foreign investment in the structure of markets that are
established between different nations. Within this framework, it
is essential that the company has full knowledge of the political,
economic, social, cultural, market and risk diversity of the
country with which it establishes business; This form will
determine if this situation affects you or not and if it is
necessary to engage or not the commercial contact. Companies
are interested in participating in international trade or seek to
diversify markets, there is a need to negotiate with foreign
entrepreneurs. Two or more parties participate in an
international negotiation, all seeking to obtain a satisfactory
result. In order to achieve it, conflicts or setbacks that may arise
at the time of negotiation must be resolved; It is not an easy task
because in many occasions some of the parties are not willing to
agree, so it is necessary to plan strategies that help to reach an
agreement.
 JUSTIFICATION

This classroom project we do so in order to make known to all

the teaching team the research done during the first semester
about international business, international trade, and trade
agreements that Colombia has internationally with other
countries
GENERAL PURPOSE

• ESTABLISH THE CONCEPTUAL FOUNDATION OF

INTERNATIONAL BUSINESSES IN THE PROFETIONAL
PROFILE PROFILE

SPECIFIC GOAL

• Establish the differences between foreign trade, international

trade and international business

• Specify the types of risks, both for investment and

commercialization, to which importers and exporters are
exposed in the international trade activity

. • Identify the main international markets with which

Colombia has commercial relations and the products of greatest
exchange

• Differentiate an international, a multinational and a

transnational company with examples

• Indicate the reasons why different types of organizations are

internationalized
 CHAPTER 1

Trade is the socio-economic activity that consists in the

purchase and sale of goods and services whether for own use,
sale or transformation. It is the change or transaction of
something in exchange for something else of equal value.

This activity has also served to extend some cultures, formerly

the barter was made; exchange of one commodity for another,
but with the appearance of the currency a more exact value was
given to the merchandise. The trade involves the acquisition
and transfer of goods, who participates in an act of commerce
can buy the product to make direct use of it, to resell it or to
transform it.

• FOREIGN TRADE
Foreign trade represents the exchange between one country and
another, in terms of goods and services. In order that the
nations involved can meet their market needs both external and
internal.
Foreign trade is about preparing, processing and controlling
documents and authorizations, filling out and reviewing
documents in the import and export processes of goods and
merchandise and classifying merchandise according to its
nature and processing international negotiation terms,
contributing efficiency and competitiveness to the processes of
the companies with emphasis on Free Trade Agreements (FTA).

• INTERNATIONAL TRADE
Its origin is centered on the ideas of mercantilists, who were the
first to attribute great importance to foreign trade.
International trade is governed by the principles of the
profitable economy.
It is the movement that goods and services have throughout the
different countries and their markets. It is done using foreign
currency and is subject to additional regulations established by
the participants in the exchange and the governments of their
countries of origin. When conducting international business
operations, the countries involved benefit from each other by
better positioning their products and entering foreign markets.
• INTERNATIONAL BUSINESS

International Trade is one that is carried out in a cross-border

manner, that is, the exchange of goods and / or services between
two actors (companies, States, producers, people ...) that are
located in different countries. No country or its inhabitants can
produce everything they need within their own territory. This
responds to various reasons, may lack sufficient technical or
technological means or not meet the social, economic or climatic
conditions necessary to manufacture or implement it. For this
reason, International Trade is a necessary, beneficial human
activity and is an important impetus for societies and, therefore,
their citizens. However, if these exchanges are not made in
terms of equity and priority is always given to the interests of a
few, it becomes a factor of impoverishment. This is the case
today: the countries of the South are excluded from the system
of decision-making of the commercial system and, therefore,
often do not obtain any type of benefit from the commercial
exchanges in which they participate.
 CHAPTER 2

Risk is a threat, and it is a fact or anticipation of harm.

Something considered a threat when there is at least one
specific incident in which the threat has materialized.

• Systematic risk: Systematic risk describes the likelihood that

the entire market or economy will experience a recession or
even fail. Any company that operates in the same market is also
exposed to this risk. Common sources of systematic risk include
economic recessions, accidents, wars and natural disasters.

• Non-systematic risk: Non-systematic risk describes the

probability that a particular company or industry fails. Unlike
systematic risk, which is constant for all companies operating in
the same market, non-systematic risk can vary greatly from one
company to another and from one industry to another. Non-
systematic risk derives from the strategic and financial
management of business owners and managers when making
decisions on a daily basis.

• Credit risk: It is the risk to the exporter that the importer

does not pay him, because here in practice there is no possibility
of cash payment. And as we saw there is the commercial risk
itself and the added dimension of country risk. As we already
said in one of the posts mentioned, you can use different risk
reduction / transfer techniques, such as requesting advance
payment, taking out export credit risk insurance, requesting a
bank guarantee through a letter of credit or a letter of
guarantee, sell the credit to a specialized entity.

• The risk of non-delivery of the expected goods: It is the risk to

the importer that can go from the

• The risk of misunderstandings about rights and obligations

Respective: This is very common when faced with operators
who often do not speak the same language or who do not
dominate English in a similar way. This can generate endless
disputes. Hence the importance of very well drafted contracts
and chambers of commerce generally offer standard contracts
to their members. In addition, the use of Incoterms, which are
terms standardized by the Paris-based International Chamber
of Commerce, and that distribute the risks, obligations and
rights between the parties, is strongly recommended.

• Transport risk:
This is one of the most obvious, be it a truck, an airplane, a
maritime and / or fluvial vessel, a train or multimodal transport
(combining several of these). In international trade, the risks of
damaged or stolen goods during transport are much greater.
And not only in the "long distance" part, can it also be during
the "internal" transport by the use of extra-port warehouses
within the country of export or import. For this it is not enough
to choose the carriers well and be very careful with the clauses
of the transport contract, including those related to packaging,
you have to hire insurance.

• Currency risk:
Both exporters and importers are exposed to this risk that
derives from fluctuations in the exchange rate. Sometimes only
one of the two is, but the frequent use of the US dollar. As the
currency of the contract, it often causes both to be exposed. As I
already had the opportunity to explain it, it is recommended to
use exchange hedging products such as forwards or options.
 CHAPTER 3

Over the years the country has carried out a series of regional
and global trade negotiations which are leading Colombian
companies to compete more intensively in numerous markets
around the world and with which they want to achieve a
strengthening of competitiveness national. In 2012, it is
considered the year of the second economic opening for
Colombia, since it was the beginning of the Free Trade
Agreements (FTA) and the beginning to face the new challenges
that globalization would bring. Currently, the country has 25
FTAs, 14 of which are already in force.

Although Colombia has 14 agreements in force, according to

data from the Ministry of Commerce, Industry and Tourism
(MINCIT), during 2013, exports to countries with FTA were led
by the US, with USD18.4 million, that is, 46.5% of the total;
followed by the European Union (EU), with 23.4%; the Andean
Community (CAN), with 8.5%; Venezuela, with 5.7% and
Mercosur, with 5.2%, becoming the main commercial partners.

In the case of imports, for 2013, the MinCIT said that

Colombian international purchases from countries with
agreements accounted for 71.5% of products not produced in
the country. This participation was higher than that of imports
from those States without an agreement, which amounted to
61.5% in that year.

PRINCIPAL BUSINESS PARTNERS THAT COLOMBIA

HAS
According to the MinCIT, despite the fact that external sales
during 2013 to the US, the main commercial partner, fell by
15.5%, between January and July 2014, exports of non-mining
energy products to this US country presented an increase of
10.1% compared to that reported in the same period of the
immediately previous year, while energy mining products
decreased by 38.1%.
BUSINESS IN COURSES:
According to information from the Ministry of Commerce,
Industry and Tourism (MinCIT), Legiscomex.com presents the
countries with which Colombia has agreements signed and in
negotiation.

SIGNED COMMERCIAL AGREEMENTS

Costa Rica
South Korea
Israel
Pacific alliance
Panama

CHAPTER 4

MULTINATIONAL COMPANIES: It is an organization,

institution or industry, dedicated to activities or pursuit of
economic or commercial purposes, to meet the needs of the
plaintiffs' goods or services and thus ensure the continuity of
the structure as well as its necessary investments. Multinational
companies not only sell in foreign countries as it happens with
exporting companies, but they carry out a productive activity in
them, so that they not only sell, but also produce abroad.

INTERNATIONAL COMPANIES: It is one of the most

important agents in the field of economics. Its impact on other
agents and on the countries in which it has a presence
determines, at least in part, the behavior of those agents. The
nature of the international company fitting into a globalized
economy is the starting point to understand the keys to the
international management of the company

TRANSNATIONAL COMPANIES: A Transnational Company

is one that carries out commercial activities at an international
level. It is originally established in one country (Matrix) but
then it is extended to other countries in the world through the
creation of related companies. The transnational company is
 constituted by a parent, an original company that is implanted
in a specific country under local legislation, and other related
companies, which are companies created by direct investment
or related companies in other countries and which are governed
by local laws.

CHAPTER 5

THE INTERNATIONALIZATION OF COMPANIES

Nowadays it is common to hear, almost daily, that internationalization is an

irreversible need for the company. However, it is important to be clear about the
reasons why it is necessary to internationalize. Growing is a basic motive. But another
fundamental reason is that internationalization is a way to gain competitiveness.
Entering that virtuous circle of internationalization-competitiveness is a solid path for
the prosperity of companies and society in general. There are four fundamental
reasons why companies are internationalized:

• - Increase

• - Competitiveness

• - Market diversification

• - Ensure the supply of inputs for its production

We are going to analyze these four aspects in this article.

1. Growth Internationalization: means expanding the company's markets, and

therefore it allows obtaining a higher turnover. This has a number of positive effects
derived from growth, both for the company and for society in general: higher
production, more employment, more investment, more taxes for public finances and,
predictably, if the company acts efficiently, older business benefits In short,
internationalization allows increasing the volume of business of the company and,
indirectly, the income level of the economy as a whole.
2. Competitiveness: Internationalization is a way to increase the competitiveness of
the company. The internationalized company can thus enter a virtuous circle:
internationalization allows it to increase its competitiveness; this gain in
competitiveness makes it easier to increase sales and investments in international
markets, which in turn continues to favor the growth of competitiveness.

3. Diversification: Internationalization allows diversifying markets, and with it risks.

Companies that are not internationalized depend on their domestic market. If this one
suffers a crisis, and this one is prolonged, the companies can suffer serious
consequences, and even the risk of disappearance. Export, for example, saved many
Spanish companies in the "great recession" that began in 2008. And many companies
that had to close their doors as a result of the crisis would have been saved if they had
developed in the past, when the cycle economic was favorable, an export strategy. It is
not hard to imagine that many Spanish companies regretted in the years of that long
crisis not having developed a regular export activity before. In front of them, other
companies knew a long time ago the importance of exporting, as a way to diversify
markets and risks. For many Spanish companies, export has normally been an
activity that was paid attention in times of contraction of the domestic market. When
the Spanish economy slowed down, this type of company was looking for sales in
foreign markets with which to offset the decline in sales in the domestic market. And
when the domestic market recovered, the export, which was treated as a subsidiary
activity, was no longer attended to. The "great recession", however, has been an
extraordinarily deep and lasting crisis. If one walks through the large international
fairs that are held in the main capitals of the world, you will normally find a large
group of Spanish companies participating. They are competitive, efficient companies.
Almost without exception these companies indicate that what kept them in the years
of crisis was the export activity, which in cases can reach 100% of sales.

4. Ensure the supply of inputs for its production : For certain companies, which need
inputs for their productive process that are not produced in the national market,
internationalization is the way to ensure the supply of those goods. In this regard, a
much cited example is that of Chinese companies, which have gone out to
international markets to ensure the supply of raw materials - oil, minerals, food -
which the Chinese economy lacks, at least in the amount that it needs . Many of the
energy companies are obliged to internationalization, to ensure the supply of gas, oil,
for example, if these are not produced in their countries.