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Global Business Environment Week4

Discussion of Argentina, Nationalization of Spanish Oil company Discussion of China World trade Organization o Reduction of Trade barriers o Resolve disputes China has filed a complaint against the WTO South China Dispute Oil, Gas and Fish Chinese Vessels and Philippines o Philippines being backed by the USA Vietnam Political Risks are the biggest by far, People are unpredictable

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Last class What is a supply chain? Everything that happens to a good or service from Raw Material to End User Expansion to the Global Supply Chain, How do we change our understanding to what that Global Supply Chain looks like? o With the Global Supply Chain, we have supply chains that are interdependent, crossing paths around many places in the world. Multinational Transnational o Transnational Practice something called: Integrated Trading. Importing/Exporting. Importing and then exporting. Importing what they need to fulfill their role in the Global Supply Chain. What is the goal of Global Supply Chain Management Optimization Value for Money Value Chain (much bigger than the supply chain) From Idea to End product 0 Moving up the value chain 100 Points towards outsourcing Outsource the things that do not make you money $$ Marketing

o Multinational Working within the local economy. Trade transactions Pipeline between Seller and Buyer, if it were a domestic transaction it would be different depending on the distribution strategy used o Domestic Distribution, transportation.. ETC Once we have the introduction of borders Different things. All partners in the pipeline o Weak-link theory: The chain is only as strong as its weakest link o When the weakest link stops working, everything stops working, everyone suffers o What are all the parties that are involved. If one is not good, the whole thing is not good. Speed to market o Who are the people that touch international trade deals Seller, Buyer Intermediate person (Financing) Bank, WTO Export Credit Agencies Trade Documentation in order to get paid Documentary Collection To make sure the seller is paid Seller does not enter relationship until there is a financier Letter of Credit Distributor and the Agent Agent is the intermediary person Agent is NOT a buyer, he just makes deals, earns money and moves on. Commission. The distributor buys and owns inventory The distributor is at risk. The buyer is the distributor Transporter Partners in the pipeline, partners in success. If the transporter fails, the deals fall apart. Goods are in the persons hand Risk of ownership Transporter is at risk Because he/she is responsible Rules have been agreed upon internationally

Laws are only good as they are enforceable No International Law There is an agreement between sovereign countries to do things a certain way When does ownership change hands? When is the transporter responsible? HAMBERG rules Agreement of when Ownership changes hands, then we have deals. Insurance Losses Marine Insurance Broker Customs Broker FedEx for example is the broker at no-charge between the USA and CANADA. Invisible border. No commercial value. However if it has commercial value, it is different. Determination of Tariffs, Taxes, are the regulations being met? If something is wrong, the pipeline stops until things are resolved. Customs broker who knows about the importing

country. Every time they stop and import, it helps local industry.. ETC. Ensure that all things are done correctly. Agent Before it gets to the buyer. What makes International Trade more costly than Domestic trade? o The Pipeline Chain Transport Insurance Duties Bank Issuance of Documents Packing o Customer Relation Management, or why it makes economic sense to retain a customer rather than rip them off. It costs more to get a new customer, than to retain a customer. Create a sustainable relationship

The ability to continue on without damaging without impact on the future. Future generations ETC (Environmental) Longer Term Commercial Relationship, has to be one based on trust. o By living up to your obligations, and standards and doing this continuously o Can only happen if the pipeline works

Risk Management o Analyze, Identify Identify Risk and the Mitigate it. o We are all surrounded by Risk o Identify it, and then Mitigate it o

Global Business Management Week4


Integrative Trade Importing for exporting. Value Chain Marketing aspect adds a lot of branding items In terms of importance Cost Price Value How does any business ensure that value is greater than price? Brand awareness Customer education Marketing Change through public perception of the value

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Role of Technology Globalization has been through Communication technology Speedy accurate information Before, Written documentation Had to accompany the trade/shipment Telegrams 1876 Only words Fax 1980 Images Personal Computing 1990s Electronic Data Interchange Impact of Rosetta Net

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