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 TRADE BARRIERS

Hassan mohammadlou

Nations have many reasons for limiting international trade. Often these limitations are designed to protect special interests or selective industries. They also may be designed to help reach national goals. International marketers must understand the nature of trade barriers. They also must understand the reasons countries set barriers and how nations negotiate to lower barriers.

One of the arguments for setting barriers to free trade is the infant industry argument. This argument is based on the idea that a developing industry in a country needs time to become globally competitive. Setting productions allows companies to compete without pressure from international competitors. A question that arises is how long the protection should be kept in place. Without competition, it is unlikely that the industry could be globally competitive.

A national security argument also is used as a reason for barriers. This argument is based on the idea that a country does not want to become dependent upon other countries for products. For example, Japan could allow foreign rice to enter its market at low global prices. But it would drive Japanese farmers out of business. Although the land could most likely be used for more economically productive uses, this plan could make Japan dependent on other countries for its main food source, rice.

Another argument for trade barriers is based on the idea that free trade favors rich countries. Large, developed countries often have comparative advantages in many areas. This country can use their advantages to control markets. For example, Canadians have expressed a fear that the United States could dominate the Canadian media markets. The United States has a large media industry, and Canadians can access U.S programming using the internet and satellite technology.

Barriers also are raised to protect  a country’s culture. Japan protects its rice farming in part because of rice’s role in a 2000-year-old cultural heritage.

حسن محمدلو

119

A RICE CULTURE

 

Rice is the main food in Japan, just as bread is the main food in many western cultures. for the Japanese, rice is more than rice. The Japanese word for cooked rice, gohan, is also the word for meal. Rice straw, or wara, has been used for thousands of years to make clothing, mats, and household items. Rice planting is a cultural and religious event.

The United States is very efficient in producing food, including rice. U.S rice farms often cover many square miles. They use highly mechanized planting and harvesting methods.  Japanese rice farms are small. They average only 1.5 acres. Countries such as Thailand and Vietnam have low labor costs. They are major exporters of rice.

Japanese consumers pay up to seven times as much for rice as U.S . consumers do. Japanese consumers pa such a high price because of Japanese government policies. Japan pays almost 2 billion $ a year to support rice farmers. In addition, Japan imposes a 700 percent tariff(tax on imported goods) to increase imported rice prices to the same level as domestic rice prices. Japanese rice growers claim that Japanese rice is superior to all imported rice. The farmers lobby in japan is very powerful in Japanese policies. It is difficult for foreign rice growers to market their products in Japan.

Japan views foreign rice as being inferior, and foreign rice cannot be sold at prices that reflects its true cost of production.

Economic  theory shows that countries gain from free trade. However, governments try justify their reasons for limiting free trade between countries. International agreements have been put in place companies to engage in international marketing to develop, promote, and sell their products based on their competitive advantage. A competitive advantage is something a company does better, faster, or cheaper than other companies do.

 

  THEORY OF COMPARATIVE  ADVANTAGE

Absolute advantage means that a country can produce more units of a product at a lower cost using fewer resources than other countries. For example the United States has an absolute advantage over Japan in rice and cotton production.

This means that the United States can produce much more rice and cotton at a lower cost per unit than Japan. These absolute advantage do not mean that the U.S. should be the sole producer of both products. Japan can have a comparative advantage in producing for one of the products. The law of comparative advantage states that a country should specialize in the production of a product that it can produce relatively better, or more efficiency than other country. For example rice production makes better use of Japan’s resources than cotton production. Cotton production makes better use of the United States resources than rice production. Thus Japan is relatively more efficient than the United States is in producing rice, and the United States is relatively more efficient than Japan is in producing cotton.

An opportunity cost is the value of what is given up in producing one product when another product is produced. The United States can produce both more cotton and rice than Japan, but it has a different opportunity cost tradeoff. For example Japan is more efficient in producing rice over cotton.

 ADAPTED FROM :    KLEINDEL

حسن محمدلو

075

Various levels of commitment to international marketing

 Companies engaging in international marketing have two major strategic considerations. The first is their level of commitment .the second is how much they are willing to change their marketing strategies for new markets.

Companies commit to international marketing at varying levels. The first level is to have no active international marketing strategy. This does not mean that these companies will not sell in international markets. They may receive and respond to an order, but they do not actively seek out international sales.

Surplus driven international marketing occurs when a company has excess inventory that it cannot sell in its home market. This can lead to infrequent efforts to sell its products overseas. The company is not devoting any resources to develop and maintain international sales.

With an international marketing strategy, a company commits and plans to sell to international markets. This strategy can occur at two levels. At the lowest level, a company focuses its marketing strategy on a single international market. With a more committed strategy, a company plans and develops strategies for multiple markets around the world.

The highest level of commitment is a global marketing strategy. With a global marketing strategy a company treats the entire world, including its home country, as potential markets. These companies focus on global market segments, not individual countries. Companies that follow this strategy develop products to serve global markets. For example coca-cola company follows a global marketing strategy. It focuses on using its marketing strategy to serve similar markets around the world. As another example, the chairman of Honda once said that he did not care where Honda had its global headquarters. Today, Honda has more production plants and sales in the United States than in Japan.

Companies that commit to international marketing at lower levels may be unwilling to change their product strategies for foreign markets.

As companies increase their commitment, they are more likely to develop their product that is unique for a new markets.

Companies with global marketing strategies look to develop products that can be sold around the world with variations in strategy to meet unique market demands.

 

ADAPTED   FROM : KLEINDEL

حسن محمدلو

034

                               Global drivers of international marketing

 International marketing is growing in importance for a number of reasons. the world is gettin smaller, not only because of jet travel but also because of advances in technology. The internet now connects customers to businesses around the world. New transportation system make shipping fast and efficient. New market opportunities exist due to the fall of the iron curtain, the opening trade in china, and the economic development of new markets such as south America, Africa, and southeast asia.

Communication technology has shrunk the world more than any other factor. Individuals around the world  are seeing the same movies, television, shows, and internet content. Companies can use these media to send  the same message around the globe.

Transportation system are delivering products much faster and cheaper than in the past. Ships use satellite technology to avoid bad weather. They can cross the pacific ocean from Asia to the united states in ten days.

The strongest driver of international marketing is the opening of new markets around the world. according to world bank data the united states ranks 18^th in the world in personal income. Companies look to these new markets for growth opportunities. If U.S.-based companies do not enter these new markets early, they may not have the opportunity later.

Pursuing global market opportunities can be riskier than selling 9n a local market. This increases the need for developing an international marketing plan. To engage in marketing, all businesses need to create, communicate, and deliver value to customers and manage customer relationships in ways that benefit the organization and its stakeholders.

Businesses that engage in international marketing must understand how marketing activities differ in the cultures they are entering. In addition they must know how customer needs differ and how not to offend in advertising or sales.

Adapted from: KLEINDEL

Hassan  mohammadlou

005

 International marketing basics

       The united states was a winner in more than military terms at the end of world war II.UScompanies were undamaged, and the economy was growing strongly.

The GL Bill made it possible for a record number people to receive college degrees.

Over the last 60 years, countries around the world have recovered economically. The fall of iron curtain in the soviet union and the opening of china for trade are allowing for a truly global marketplace. many countries have modern factories, skilled labor, financial resources and strong marketing programs. Countries are competing with high-quality products and low prices. The global development opens an opportunity for new markets. It is creating intense competition, forcing all companies to operate in a globally competitive environment.

Definition of International marketing:

A series of activities that creates an exchange that satisfies the individual customer across national borders is known as international marketing.

As with domestic marketing this process begins with identifying the customer needs and then planning to meet those needs. International marketing is more complicated because the goods or services customers desire can be different across cultures. In addition marketing activities may need to be adjusted because of geographic  competitive cultural or legal differences.

Companies use a variety strategies to engage in international marketing. This could vary from engaging in importing and exporting to issuing licensing agreements giving foreign companies the right to sell a company’s product for a fee. other strategies may include participating in joint venture with companies  in other countries or using a wholly owned subsidiary, which is an independent company owned by a parent company. Wal-Mart is the world’s largest retailer.

Wal-Mart has attempted to use the same retailing strategy in each of the countries it has entered.

Adapted from: International marketing,kLEINDL.

حسن محمدلو