INTRODUCTION TO

INTERNATIONAL MARKETING &

TRADE
UNIT 1
By:
Dr. ANSHU MALA GAUTAM
 MEANING OF INTERNATIONAL
MARKETING
• International marketing refers to the process of promoting and
selling products or services across national borders.
• It involves planning, producing, placing, and promoting goods or
services in the global marketplace.
• The goal of international marketing is to enable businesses to
expand their reach beyond their domestic market and cater to a
diverse and potentially larger customer base in different countries.
• It refers to the strategy, process and implementation of the
marketing activities in the international market.
 DEFINITION OF INTERNATIONAL
MARKETING
1. By Kramer:
“International Marketing involves business with individuals, firms,
organisations and/or government entities in other countries.”
2. By Subhash C Jain:
“The term International Marketing refers to exchanges across national
boundaries for the satisfaction of human needs and wants.”
 FEATURES OF INTERNATIONAL
MARKETING
1. Large Scale Operations:
• International marketing is always conducted on a large scale.
• It is done on a wholesale basis and, not on a retail basis, to get the
advantages of large scale operations regarding transportation,
handling and warehouse.
2. Global Perspective:
• International marketing requires a global perspective, considering
cultural, economic, and political differences across various countries.
 FEATURES OF INTERNATIONAL
MARKETING
3. International Restrictions:
• In International Marketing, there are various trade restrictions (tariff
and non-tariff), due to the policies followed by different countries.
4. Presence of Trading Blocs:
• Trading Bloc is a group of countries which are geographically close to
each other and have similar trade policies, which, with their mutual
trade cooperation can ensure free flow of goods.
• Eg. OPEC, SAARC.
 FEATURES OF INTERNATIONAL
MARKETING
5. Three-faced Competition:
• In International Marketing, suppliers have to face competition from
three angles.
• They have to face competition from the other suppliers of the
exporting country, from the local producers of the importing
country and from the exporters of competing nations.
6. International Market Research:
• In International Marketing, it is required to know about the
customers, dealers and competitors.
 FEATURES OF INTERNATIONAL
MARKETING
• Thorough market research is essential to understand the target audience,
competition, and market trends in each country. This helps in tailoring
marketing strategies accordingly.
7. Legal Compliance:
• Different countries have varying legal and regulatory frameworks.
International marketers need to comply with local laws and regulations
related to product standards, labeling, and advertising.
8. Logistics & Supply Chain Management:
• Efficient supply chain management is essential to ensure timely delivery of
products across borders.
• This involves dealing with customs, tariffs, and transportation logistics.
 FEATURES OF INTERNATIONAL
MARKETING
9. Risk Management:
• International marketing involves exposure to various risks, including
currency fluctuations, political instability, and cultural
misunderstandings.
• Implementing risk management strategies is crucial.
10. Advanced Technology:
• Leveraging technology is essential for efficient communication,
market research, and managing global operations.
• E-commerce and digital marketing play a significant role in reaching
a global audience.
 NEED & DRIVERS OF INTERNATIONAL
MARKETING
NEED:
1. Market Expansion/Growth:
• Saturation in Domestic Markets: Companies may explore
international markets when their domestic markets become
saturated, and further growth opportunities are limited.
• Increased Revenue Potential: Entering new markets can provide
access to a larger customer base, leading to increased sales and
revenue.
 NEED & DRIVERS OF INTERNATIONAL
MARKETING
2. Competitive Pressure: Global Competition: Businesses may need to
enter international markets to stay competitive as competitors
expand globally and gain market share.
3. Government Policies:
Trade Agreements: Favourable trade agreements and government
policies can encourage businesses to explore international markets by
reducing trade barriers and facilitating cross-border transactions.
4. Economies of Scale:
 NEED & DRIVERS OF INTERNATIONAL
MARKETING
• Expanding into international markets can lead to economies of
scale, reducing per-unit production costs and increasing overall
profitability.
5. Competition:
• Businesses may need to enter international markets to stay
competitive as competitors expand globally and gain market share.
 NEED & DRIVERS OF INTERNATIONAL
MARKETING
DRIVERS:
1. Consumer Demand:
Global Consumer Demand: Some products or services may have global
appeal, and businesses seek to meet the demand of consumers in
different parts of the world.
2. Cheap labour:
• Organisations from developed countries take advantage of cheap
labour in the developing countries to reduce their cost of production.
 NEED & DRIVERS OF INTERNATIONAL
MARKETING
3. Access to Talent:
• Talent Pool: International expansion can provide access to a diverse
and skilled workforce, fostering innovation and competitiveness.
4. Availability of Resources:
• International markets may offer access to resources (both human
and natural) that are not readily available in the domestic market,
allowing for cost-effective production and operations.
 PROCESS OF INTERNATIONAL
MARKETING
1. Market Research:
• Identify potential target markets by conducting thorough market
research.
• Analyse the economic, cultural, legal, and political factors that may
impact the marketing strategy.
2. Market Selection:
• Evaluate and prioritize target markets based on research findings.
• Consider factors such as market size, growth potential, competition,
and regulatory environment.
 PROCESS OF INTERNATIONAL
MARKETING
3. Adaptation of the Marketing Mix (4 P’s):
• Product: Modify products or create new ones to meet the needs and
preferences of the target market.
• Price: Adjust pricing strategies to reflect local economic conditions,
customer expectations, and competitive pricing.
• Place: Develop distribution channels that suit the target market's
infrastructure and logistics.
• Promotion: Design advertising and promotional activities to fit the
cultural and social context of the target market.
 PROCESS OF INTERNATIONAL
MARKETING
4. Legal and Regulatory Compliance:
• Understand and comply with international trade regulations,
import/export laws, and other legal requirements.
• Ensure that marketing practices adhere to local regulations and standards.
5. Distribution & Logistics:
• Establish efficient distribution channels that consider the geographical
and logistical challenges of the target market.
 PROCESS OF INTERNATIONAL
MARKETING
• Manage supply chain and logistics to ensure timely delivery of
products.
6. Promotion and Advertising:
• Use appropriate communication channels and platforms for
advertising and promotions.
• Translate marketing materials accurately to the local language to
ensure clear communication.
7. Relationship Building:
 PROCESS OF INTERNATIONAL
MARKETING
• Build relationships with local partners, distributors, and
stakeholders.
• Networking and collaboration with local businesses can enhance
market entry and sustainability.
8. Monitoring and Evaluation:
• Regularly monitor the performance of marketing strategies in the
international markets.
• Evaluate the effectiveness of marketing campaigns and adjust
strategies based on feedback and market changes.
 PHASES OF INTERNATIONAL
MARKETING
1. Domestic Marketing Orientation (perspective):
• This is the starting point, where a company focuses primarily on its
domestic market.
• The company may not be actively seeking international
opportunities at this stage.
2. Exporting:
• Companies start by exporting their products or services to foreign
markets.
 PHASES OF INTERNATIONAL
MARKETING
• This phase involves minimal commitment and risk, as the company
relies on intermediaries like agents or distributors in the target
country.
3. Market Entry:
• Companies may progress to establishing a more direct presence in
foreign markets, such as through licensing or franchising.
• Joint ventures or strategic alliances with local partners are also
common in this phase.
 PHASES OF INTERNATIONAL
MARKETING
4. Internationalization:
• Companies become more involved in foreign markets and may
establish subsidiaries or branches in target countries.
• The focus is on adapting marketing strategies to the specific needs
and characteristics of each international market.
5. Globalisation:
• In this phase, companies develop a truly global approach, treating
the world as a single, borderless market.
 PHASES OF INTERNATIONAL
MARKETING
• Standardization of products and marketing strategies becomes
more common to achieve economies of scale.
6. Network Development:
• Companies focus on building and maintaining a network of
relationships with stakeholders, including customers, suppliers, and
partners worldwide.
• This phase emphasizes the importance of global collaboration and
partnerships.
 PHASES OF INTERNATIONAL
MARKETING
7. Global Strategic Marketing:
• At this advanced stage, companies develop and implement
comprehensive global marketing strategies that consider economic,
political, cultural, and technological factors on a worldwide scale.
 BENEFITS OF INTERNATIONAL
MARKETING
1. Increased Market Potential:
• Access to a larger customer base: International marketing allows
businesses to tap into new markets and reach a more extensive and
diverse audience, potentially increasing sales and revenue.
2. Enhanced Profit Margins:
• Improved profitability: By optimizing operations and capitalizing on
opportunities in different markets, businesses can achieve higher
profit margins than they might in a single domestic market.
 BENEFITS OF INTERNATIONAL
MARKETING
3. Better Standard of Living:
• International Marketing provides a better standard of living to
people in different countries and raises their welfare by providing
them goods that cannot be produced in their country.
4. Employment Opportunities:
• International Marketing helps in large scale production of goods and
thus, generates employment opportunities in different countries.
5. Optimum Use of Resources:
• International Marketing helps in optimum use of resources .
 BENEFITS OF INTERNATIONAL
MARKETING
6. Quick Industrial Development:
• International Marketing helps in quick industrial development of the
developed and the developing countries.
• The developed countries give aids, capital goods (goods that are
used in producing other goods) and technology to the developing
countries.
• The developing countries supply raw materials and labour to the
developed countries.
 BENEFITS OF INTERNATIONAL
MARKETING
7. Lowers Prices:
• International Marketing decreases the price of goods and services, all over
the world.
8. Technological Development:
• International Marketing helps in technological advancement by coming up
with the latest technologies to help in the large scale production of goods
and also saves time.
9. Research & Development:
• Since International Marketing is extremely competitive, it becomes
essential for every organisation to undertake continuous research and
development in order to beat the competition in the market.
 BENEFITS OF INTERNATIONAL
MARKETING
10. Foreign Exchange Earnings:
• International Marketing helps the countries, especially the
developing countries to earn foreign exchange and thus, strengthen
their economy.
 CHALLENGES OF INTERNATIONAL
MARKETING
1. Cultural Differences:
• Understanding and adapting to different cultures is crucial.
• Cultural differences can significantly impact consumer behavior,
preferences, and purchasing decisions.
• Language barriers may also pose challenges in communication,
advertising, and branding.
2. Market Research Information:
• Obtaining accurate and up-to-date market information can be
difficult in some regions.
 CHALLENGES OF INTERNATIONAL
MARKETING
• Lack of reliable data may lead to inadequate market analysis and
strategic planning.
3. Political and Economic Instability:
• Political instability, changes in government, and economic
fluctuations in foreign markets can pose risks to international
businesses.
• Exchange rate fluctuations and economic crises may affect pricing
strategies and profit margins.
 CHALLENGES OF INTERNATIONAL
MARKETING
4. Distribution Challenges:
• Developing effective distribution channels can be challenging.
Infrastructure, logistics, and transportation issues may arise in
different regions.
• Customs and import/export restrictions can impact the timely
movement of goods.
5. Product Adaptation:
• Products may need to be adapted to meet the specific needs and
preferences of different markets.
 CHALLENGES OF INTERNATIONAL
MARKETING
• This includes packaging, features, and sometimes the entire product
design.
6. Human Resources Management:
• Managing a multicultural team and addressing human resource issues
across different countries can be complex.
• Understanding and respecting cultural differences is essential for
effective team collaboration.
 DIFFERENCE BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
1. Scope and Target Audience:
• Domestic Marketing: Focuses on a single country or a specific
geographic region. The target audience is the local population with
a shared culture, language, and buying behavior.
• International Marketing: Involves marketing products or services
across multiple countries or regions. The target audience is diverse,
with different cultures, languages, and preferences.
 DIFFERENCE BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
2. Cultural and Social Factors:
• Domestic Marketing: Generally deals with a local cultural and social
environment. Marketers understand the local customs, traditions,
and consumer behaviors.
• International Marketing: Requires a deep understanding of various
cultures, customs, and social norms. Cultural differences may
significantly impact marketing strategies and messaging.
 DIFFERENCE BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
3. Legal and Regulatory Environment:
• Domestic Marketing: Operates within the legal and regulatory
framework of a single country. Marketers need to comply with local
laws and regulations.
• International Marketing: Involves navigating diverse legal systems,
trade regulations, and international agreements. Companies must
be aware of and adhere to the laws of each country in which they
operate.
 DIFFERENCE BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
4. Economic Factors:
• Domestic Marketing: Deals with a single currency and economic
system, making financial planning and pricing strategies simpler.
• International Marketing: Involves managing multiple currencies,
exchange rates, and economic conditions, which adds complexity to
financial planning and pricing strategies.
5. Market Research and Data Collection:
 DIFFERENCE BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
• Domestic Marketing: Market research is focused on a single market,
and data collection is generally more straightforward.
• International Marketing: Requires extensive market research across
multiple countries to understand diverse consumer preferences and
market trends.
6. Distribution and Logistics:
• Domestic Marketing: Logistics and distribution channels are usually
well-established within a single country.
 DIFFERENCE BETWEEN DOMESTIC &
INTERNATIONAL MARKETING
• International Marketing: Involves dealing with complex supply
chains, international shipping, customs, and distribution channels,
which may vary significantly from one country to another.
7. Communication and Promotion:
• Domestic Marketing: Communication and promotional strategies
are as per the local language and culture.
• International Marketing: Requires adapting communication and
promotional materials to multiple languages and cultural
differences.
 STAGES OF PRODUCTION
• Designing.
• Planning.
• Procurement (the process of purchasing goods or services)
• Sourcing materials.
• Manufacturing.
• Quality Control.
• Packaging and Shipping.
• Distribution.
 DIFFERENT ORIENTATIONS OF
INTERNATIONAL MARKETING
1. Ethnocentric Orientation (different attitudes towards company’s involvement in the
international marketing process):
• This approach involves considering the home country's values, culture, and business
practices as superior.
• The ethnocentric orientation of a firm considers that the products, marketing
strategies and techniques applicable in the home market are similar to that in the
overseas market.
• Companies using ethnocentric orientation may rely on products and marketing
strategies that are successful in their home country when expanding globally.
• For example, Walmart’s offerings remain the same throughout.
 DIFFERENT ORIENTATIONS OF
INTERNATIONAL MARKETING
2. Polycentric Orientation:
• It is the opposite of Ethnocentric Orientation.
• When a firm adopts to polycentric orientation to overseas markets, it tries
to organize its international marketing activities on a country to country
basis.
• This approach works better among countries that have significant,
economic, political and cultural differences.
• For example, McDonald’s tailoring its offerings to the country of operation
such as Maharaja Mac in India, McItaly in Italy, McLobster in Canada.
 DIFFERENT ORIENTATIONS OF
INTERNATIONAL MARKETING
3. Regio-centric Orientation:
• In regio-centric approach, the firm accepts a regional marketing
policy covering a group of countries which have comparable market
characteristics such as economic, cultural or political similarities and
formulates operational strategies based on region instead of
countries.
• For example, countries like Pakistan, India and Bangladesh are very
similar. They possess a strong regional identity.
 DIFFERENT ORIENTATIONS OF
INTERNATIONAL MARKETING
4. Geo-centric Orientation:
• Geocentric orientation seeks a global perspective, considering the
entire world as a potential market.
• Companies adopting this approach focus on similarities rather than
differences between countries.
• In geocentric orientation, the firms accept a worldwide approach to
marketing and target “global consumers” with similar tastes.
• For example, Apple offers products to a similar kind of consumers
worldwide.
EPRG FRAMEWORK
 EPRG FRAMEWORK
• The EPRG framework was introduced by globalization expert Howard
V. Perlmutter in 1969.
• The EPRG framework describes the various ways businesses decide to
enter and operate in global markets.
• The EPRG framework categorizes four orientations or approaches to
global marketing and staffing: ethnocentric, regio-centric, polycentric,
and geo-centric.
• This framework helps businesses decide how to enter and operate in
global markets.
 EPRG FRAMEWORK
• E stands for Ethnocentric
• P stands for Polycentric
• R stands for Regio-centric
• G stands for Geo-centric
1. Ethnocentric Orientation:
• Ethnocentric approach or home country orientation is the approach
where a company simply markets its product or services
internationally in the same manner as they do domestically.
 EPRG FRAMEWORK
• Companies believe that consumer’s needs and market conditions are
more or less homogeneous (same or of similar kind) in international
markets.
• Companies prefer an ethnocentric approach in order to avoid the
expense of developing new marketing techniques to serve foreign
consumers.
• All functions are planned and carried out from home base only with
little or almost no difference in product formulation or specifications.
 EPRG FRAMEWORK
2. Polycentric Approach:
• In Polycentric approach, companies go for customization for each foreign
market.
• Polycentric orientation involves adapting products, services, and
strategies to the specific needs and preferences of individual foreign
markets.
• They will customize the products according to each country depending
upon the consumers taste or preferences or cultural factors, depending
upon their local marketing conditions and then enter into that market.
• Companies customize the marketing mix to meet the specific needs of each
foreign market.
 EPRG FRAMEWORK
3. Regio-centric Approach:
• In a regio-centric approach, companies target a group of countries having
similar market characteristics, and then enter into the market.
• The regio-centric orientation assumes that countries in the same
geographic region share economic, social, cultural, or political similarities.
• Strategies developed for one country are applied throughout the region.
4. Geo-centric Approach:
• In geocentric approach, a company identifies the needs of consumers
worldwide and then enters into the market with standard products with
standardized marketing mix for all the markets it serves.
ENTERING INTERNATIONAL MARKETS
1. Exporting:
• Exporting is a common international marketing strategy, and it refers
to the practice of shipping goods directly to a foreign country.
• Manufacturers looking to expand their business to other
countries often consider exporting first.
• It has the lowest risk.
• There are 2 types of exporting:
1. Direct Exporting: An organisation sells directly to a customer in
another country.
ENTERING INTERNATIONAL MARKETS
2. Indirect Exporting: An organisation sells to a distributor in the home
country, who further exports to the customers in other countries.
Advantages of Exporting:
• Relatively low-risk entry strategy.
• Requires less investment compared to other international expansion
methods.
• Allows businesses to test foreign markets without significant
commitment.
ENTERING INTERNATIONAL MARKETS
2. Licensing:
• Licensing is a business arrangement in which a firm (licensor) allows
another company (licensee) in a foreign market to use its
intellectual property, such as patents, trademarks, or technology, in
exchange for a fee or royalty.
Advantages:
• Low financial risk for the licensor.
• Quick market entry without significant investment.
ENTERING INTERNATIONAL MARKETS
3. Franchising:
• Franchising is a form of licensing in which a franchisor grants the
franchisee the right to operate a business using the franchisor's
brand, business model, and support services in exchange for fees or
royalties.
Advantages:
• Allows for rapid expansion with lower capital investment by the
franchisor.
• Franchisees bear the financial risk of individual outlets.
• Uses local entrepreneurs' knowledge of the market.
ENTERING INTERNATIONAL MARKETS
4. MERGERS:
• A merger is a business combination where two or more companies
agree to combine their operations and assets to form a new, single
entity.
• It is a strategic business move typically aimed at achieving various
objectives, such as increased market share, enhanced operational
efficiency, cost savings, and improved competitiveness.
• Mergers can take different forms.
ENTERING INTERNATIONAL MARKETS
Examples:
1. Vodafone India and Idea Cellular:
o In 2018, Vodafone India and Idea Cellular merged to form Vodafone
Idea Limited. This merger created one of the largest telecom operators
in India.
2. Kotak Mahindra Bank and ING Vysya Bank:
o In 2015, Kotak Mahindra Bank acquired ING Vysya Bank, leading to the
amalgamation of the two banks. This merger expanded Kotak
Mahindra Bank's presence and customer base.
ENTERING INTERNATIONAL MARKETS
3. HDFC Bank and Centurion Bank of Punjab:
o In 2008, HDFC Bank acquired Centurion Bank of Punjab in a deal
that strengthened HDFC Bank's position in the Indian banking
sector.
4. Sun Pharmaceutical Industries and Ranbaxy Laboratories:
o In 2014, Sun Pharmaceutical Industries acquired Ranbaxy
Laboratories, leading to the amalgamation of two major
pharmaceutical companies in India.
ENTERING INTERNATIONAL MARKETS
TYPES OF MERGERS:
1. Vertical Merger:
• A vertical merger is a union between two companies in the same
industry but at different stages of the production process.
• In other words, a vertical merger is the combination and integration
of two or more companies that are involved in different stages of
the supply chain in the production of goods or services.
•
ENTERING INTERNATIONAL MARKETS
Example:
Company A is a computer manufacturer. Company B is the main
supplier of parts to Company A. Therefore, the two companies are
operating at different stages of the production process. Company A
decides to merge with Company B to improve operational efficiency.
Through this merger, A-B Company can now buy supplies at cost and,
thus, increase the profit margin of its products.
ENTERING INTERNATIONAL MARKETS
Reasons for Vertical Merger:
1. Reduce operating costs
2. Realize higher profits
3. Ensure tighter quality control
4. Better flow and control of information along the supply chain

BACKWARD & FORWARD INTEGRATION:

ENTERING INTERNATIONAL MARKETS
ENTERING INTERNATIONAL MARKETS
A vertical merger integration can integrate backward or forward:
Backward integration involves merging with upstream companies
(such as suppliers and producers).
Consider the diagram above with producers, suppliers, manufacturers,
wholesalers, and retailers.
If Manufacturer A merges with Supplier A, it would be considered
a backward merger – Manufacturer A is integrating with an upstream
company. Backward integration would weaken supplier power.
ENTERING INTERNATIONAL MARKETS
• Forward integration involves merging with downstream companies
(such as distributors or retailers).
• Consider the diagram above with producers, suppliers,
manufacturers, wholesalers, and retailers.
• If Manufacturer A merges with Wholesaler A, it would be considered
a forward merger – Manufacturer A is integrating with a downstream
company. Forward integration would weaken buyer power.
ENTERING INTERNATIONAL MARKETS
2. Horizontal Merger:
• A horizontal merger occurs when companies operating in the same
or similar industry combine together.
• The purpose of a horizontal merger is to more efficiently
utilize economies of scale and increase market power.
Synergy: It is a concept that the combined value and performance of
two companies will be greater than the sum of the separate
individual parts.
ENTERING INTERNATIONAL MARKETS
Example:
Consider a famous horizontal merger: HP (Hewlett-Packard) and
Compaq in 2011. The structure was a stock-for-stock merger with an
exchange ratio of 0.63 HP share per Compaq share, valued at
approximately US$25 billion. The new company would be held 64% by
HP and 36% by Compaq shareholders.
Reasons for Horizontal Merger:
1. Increase market share and reduce competition in the industry
2. Further utilize economies of scale (thus reducing costs)
ENTERING INTERNATIONAL MARKETS
• Increase diversification
• Reduce intense rivalry
• Share skills and resources
Horizontal Merger vs. Vertical Merger
• Though one is often confused with the other, there is a distinct
difference between the two types of mergers.
Vertical merger: Occurs between companies at different stages in the
production process (between companies where one buys or sells
something from or to the company).
ENTERING INTERNATIONAL MARKETS
• Horizontal merger: When companies that sell similar products
merge together.

• The diagram below shows the difference between the two:

ENTERING INTERNATIONAL MARKETS
ENTERING INTERNATIONAL MARKETS
• Assuming Clothing Store A, B, and C are competitors. If Clothing Store
A merges with Clothing Store B or Clothing Store C, it is a horizontal
merger.
• The production process: Textile Producer A → Shirt Manufacturer A →
Clothing Store A. If Clothing Store A merges with Shirt Manufacturer A
or Textile Producer A, it is a vertical merger.
ENTERING INTERNATIONAL MARKETS
3. Conglomerate Merger:
• A conglomerate merger is a merger of two firms that have
completely unrelated business activities.
• These mergers typically occur between firms within different
industries or firms located in different geographical locations.
• Two firms would enter into a conglomerate merger to increase their
market share, diversify their businesses and cross-sell their
products.
• There are two types of conglomerate mergers:
ENTERING INTERNATIONAL MARKETS
1. Pure Conglomerate: where the two firms continue to operate in
their own markets, and have nothing in common.
2. Mixed Conglomerate: involve firms that are looking for product
extensions or market extensions.
• Their businesses do not overlap nor are they competitors of one
another; however, they do believe that there are benefits in joining
their firms.
ENTERING INTERNATIONAL MARKETS
4. Concentric Merger:
• A concentric merger is a merger in which two companies from the
same industry come together to offer an extended range of
products or services to customers.
• The companies are completely unrelated.
• These companies often share similar technology, marketing, and
distribution channels.
• This type of transaction can also be called a ‘congeneric merger’.
ENTERING INTERNATIONAL MARKETS
Reasons:
1. Larger market share
2. Diversification of products/services
3. New customers
4. Financial gain
ENTERING INTERNATIONAL MARKETS
The Largest Concentric Merger in History
• The 2015 merger of Heinz and Kraft valued at around $100 billion, is
thought to be the largest concentric merger in history. The deal
created Kraft-Heinz, a food industry behemoth whose 2019 revenues
were $24.97 billion.
• At the time of the transaction, Kraft was a leading producer of
mayonnaise, salad dressing, cottage cheese, natural cheese and lunch
meat. Heinz, meanwhile, was the world leader in meat sauce, pasta
sauce and frozen appetizers.
ENTERING INTERNATIONAL MARKETS
ACQUISITIONS:
• An acquisition is a transaction wherein one company purchases most or
all of another company's shares to gain control of that company.
• In a business context, acquisitions are a common strategy for companies
to achieve growth, expand their market presence, gain access to new
technologies or resources, and increase their overall competitiveness.
• Acquisitions can take various forms, including the purchase of a company's
assets, stock, or other ownership interests.
• If a firm buys more than 50% of a target company's shares, it effectively
gains control of that company.
ENTERING INTERNATIONAL MARKETS
• The acquiring company, often referred to as the "acquirer" or
"parent company," takes control of the acquired company, known as
the "target" or "acquiree."
REASONS FOR ACQUISITION:
1. Strategic Expansion: Acquiring companies can expand their
geographic reach, enter new markets, or diversify their product or
service offerings.
2. Market Share Growth: Acquisitions can help a company increase its
market share by gaining access to the customer base of the acquired
company.
ENTERING INTERNATIONAL MARKETS
3. Technology Access: Acquiring companies may be interested in
obtaining specific technologies, intellectual property, or research and
development capabilities.
4. Competitive Advantage: Acquiring key competitors can strengthen
a company's competitive position in the market.
Examples:
• Walmart's Acquisition of Flipkart (2018): Walmart, the U.S. retail
giant, acquired a 77% stake in Flipkart, one of India's largest e-
commerce companies, for $16 billion. This acquisition marked
Walmart's significant entry into the Indian e-commerce market.
ENTERING INTERNATIONAL MARKETS
• Facebook's Investment in Jio Platforms (2020): Facebook invested
$5.7 billion in Jio Platforms, a subsidiary of Reliance Industries. This
investment allowed Facebook to collaborate with Jio to create new
digital services for Indian consumers.
• Vodafone-Idea Merger (2018): The merger of Vodafone India and
Idea Cellular created the largest telecom operator in India at that
time. The merged entity is known as Vodafone Idea Limited.
• Reliance Industries' Acquisition of Future Group's Retail Business
(2020): Reliance Retail Ventures Limited, a subsidiary of Reliance
Industries, acquired the retail, wholesale, logistics, and warehousing
businesses of Future Group for around $3.4 billion.
ENTERING INTERNATIONAL MARKETS
TYPES OF ACQUISITIONS:
1. Asset Acquisition:
• In an asset acquisition, the acquiring company purchases specific assets of
the target company.
• A business asset is an item of value owned by a company.
• They can be physical, tangible goods, such as vehicles, real estate,
computers, office furniture, and other fixtures, or intangible items, such
as intellectual property.
2. Stock Acquisition:
 ENTERING INTERNATIONAL MARKETS
• In a stock acquisition (or share acquisition), the acquiring company buys
the majority of the target company's shares, gaining control of the entire
business. This often involves negotiating with the existing shareholders.
3. Merger:
• A merger occurs when two companies agree to combine their operations
and become a single entity.
• Mergers can be categorized into different types, such as horizontal
(between companies in the same industry), vertical (between companies
in different stages of the supply chain), or conglomerate (between
unrelated businesses).
ENTERING INTERNATIONAL MARKETS
4. Horizontal Acquisition:
• This type involves the acquisition of a competitor operating in the
same industry and at the same stage of production.
5. Vertical Acquisition:
• In a vertical acquisition, a company acquires another company in a
different stage of the production or distribution chain.
• This can involve suppliers or distributors.
ENTERING INTERNATIONAL MARKETS
6. Conglomerate Acquisition:
Conglomerate:a company that owns several smaller businesses whose products o
r services are usually very different:
• Conglomerate acquisitions involve the purchase of a company that operates in
an entirely different industry. The acquiring company may seek to diversify its
portfolio or enter new markets.
7. Friendly Acquisition:
• A friendly acquisition occurs when the target company's management and
board of directors are in agreement with the acquisition. The process is usually
cooperative and involves negotiation.
ENTERING INTERNATIONAL MARKETS
8. Hostile Acquisition:
• A type of acquisition where a company (the acquirer) takes control
of another company (the target company) without the approval or
consent of the target company's board of directors.
• In other words, the target company's management is not in favor of
the takeover, hence the term "hostile".
ENTERING INTERNATIONAL MARKETS
JOINT VENTURES (JV):
• A joint venture (JV) refers to a business arrangement where two or
more parties come together to collaborate and pool their resources,
expertise, and capital to achieve a specific business goal or
undertake a particular project.
• A joint venture is a strategic partnership where two or more
companies develop a new entity in order to collaborate on a specific
project or venture.
Examples:
ENTERING INTERNATIONAL MARKETS
• Sony Ericsson (Sony and Ericsson): In 2001, Sony and Ericsson formed a
joint venture to produce mobile phones. The partnership allowed both
companies to combine their expertise in electronics and
telecommunications.
• McDonald's (McDonald's Corporation and local partners): In various
countries, McDonald's operates as a joint venture with local partners. This
allows McDonald's to adapt its menu and business strategies to local
preferences while leveraging the local partner's knowledge of the market.
• Starbucks (Starbucks Corporation and Tata Global Beverages): Starbucks
formed a joint venture with Tata Global Beverages to open Starbucks
outlets in India. This partnership combines Starbucks' coffee expertise with
Tata's knowledge of the Indian market.
ENTERING INTERNATIONAL MARKETS
REASONS FOR JV:
1. To Reduce Costs:
• By using economies of scale, both companies in the JV can leverage their
production at a lower per-unit cost than they would separately.
• This is particularly appropriate with technology advances that are costly to
implement.
• Other cost savings as a result of a JV can include sharing advertising or
labor costs.
Meaning of Economies of Scale: Cost reductions that occur when
companies increase production.
ENTERING INTERNATIONAL MARKETS
2. To Combine Expertise:
• Two companies or parties forming a JV might have different backgrounds,
skill sets, or expertise. When these are combined through a JV, each
company can benefit from the other’s talent.
3. To Enter Foreign Markets:
• Another common use of JVs is to partner with a local business to enter a
foreign market.
• A company that wants to expand its distribution network to new
countries can enter into a JV agreement to supply products to a local
business, thus benefiting from an already existing distribution network.
ENTERING INTERNATIONAL MARKETS
Meaning of Distribution Network:
• It is the flow of goods from a producer or supplier to an end
consumer.
• The network consists of storage facilities, warehouses and
transportation systems that support the movement of goods until
they reach the end consumer.
• The process of ensuring the consumer receives the product from the
manufacturer is done through direct sales or by following a retail
network.
ENTERING INTERNATIONAL MARKETS
TYPES OF JV:
1. Project Based JV:
• A project-based joint venture has two or more parties working on a
specific project.
• This agreement is usually temporary, lasting until the project’s
completion.
Project-based joint ventures can also include:
• Construction companies that form a venture to share the risks and
costs of a large development.
ENTERING INTERNATIONAL MARKETS
• Tech companies that join forces to develop a new product, then go their
separate ways once the product is complete.
2. Functional Based JV:
• A functional-based joint venture is a business relationship where two or
more parties share resources and expertise to support each other’s
operations.
• The partnership is usually ongoing, lasting for as long as both parties find it
beneficial.
• For example, say you own a small bakery. To help increase your reach and
grow your business, you might enter into a functional-based joint venture
with a local coffee shop. They sell your baked goods in their cafe and while
you hawk their coffee beans in your bakery.
ENTERING INTERNATIONAL MARKETS
3. Vertical JV:
• A vertical joint venture takes place between buyers and suppliers.
• A vertical joint venture creates economies of scale and reduces costs
for both parties.
• For example, Honda and LG Energy Solutions partnered to build a
$4.4B battery plant in Ohio in early 2023.
ENTERING INTERNATIONAL MARKETS
4. Horizontal JV:
• A horizontal joint venture occurs between two or more companies
operating in the same industry.
• The goal is to pool resources to gain a competitive edge.
• In the type of JV, the parties that decide to come together are
competitors, selling similar products.
ENTERING INTERNATIONAL MARKETS
STRATEGIC ALLIANCE (SA):
• A strategic alliance refers to a formal agreement between two or
more entities (such as companies or organizations) to collaborate in
a way that provides mutual benefits and achieves common
objectives.
• These alliances are formed to gain a competitive advantage, share
resources, reduce risks, and enhance the overall performance of the
involved parties.
• Strategic alliances can take various forms, including partnerships, joint
ventures, collaborations, and other cooperative arrangements.
ENTERING INTERNATIONAL MARKETS
Examples:
• Apple and IBM (2014): Apple and IBM formed a strategic alliance to
develop enterprise-focused mobile applications for iOS devices. IBM
provided its expertise in data analytics and enterprise solutions, while
Apple contributed its mobile hardware and user interface design.
• Starbucks and Spotify (2015): Starbucks and Spotify entered into a
strategic partnership to integrate the music streaming service into
Starbucks stores and the Starbucks app. This alliance aimed to
enhance the overall customer experience and drive traffic to both
brands.
ENTERING INTERNATIONAL MARKETS
CHARACTERISTICS OF SA:
1. Mutual Benefit: The parties involved in a strategic alliance seek to
derive benefits that contribute to their individual or collective
success. These benefits may include access to new markets, technology
sharing, cost reduction, or improved efficiency.
2. Shared Risks and Rewards: Partners in a strategic alliance typically
share both the risks and rewards associated with the collaboration.
This helps distribute the burden of challenges and ensures that the
parties are invested in the success of the alliance.
ENTERING INTERNATIONAL MARKETS
3. Common Goals and Objectives: Strategic alliances are formed with
a clear set of goals and objectives that the participating entities aim
to achieve together. These goals could be related to market expansion,
product development, innovation, or other strategic initiatives.
 SUBSIDIARY
• A company owned or controlled by another company, which is called
the parent company or holding company.
ENTERING INTERNATIONAL MARKETS
WHOLLY OWNED SUBSIDIARY:
• A wholly owned subsidiary is a company whose entire stock or
shares are owned by another company, referred to as the parent
company.
• In other words, the parent company has full control over the
subsidiary, both in terms of ownership and management.
• A wholly-owned subsidiary is a corporation with 100% shares held by
another corporation, the parent company.
Examples:
ENTERING INTERNATIONAL MARKETS
1. WhatsApp (Facebook Inc.): Facebook acquired WhatsApp, making it a
wholly-owned subsidiary.
2. YouTube (Google/Alphabet Inc.): Google owns YouTube as a wholly-
owned subsidiary.
3. Lexus (Toyota Motor Corporation): Lexus is a wholly-owned subsidiary of
Toyota.
TYPES OF SUBSIDIARIES:
1. Horizontal Subsidiary:
• A subsidiary that operates in the same industry and performs similar
functions as the parent company.
ENTERING INTERNATIONAL MARKETS
2. Vertical Subsidiary:
• A subsidiary that operates at a different stage of the production or
distribution chain compared to the parent company.
• It could be either upstream (closer to raw materials) or downstream
(closer to consumers).
3. Direct Subsidiary:
• A subsidiary that is wholly owned by the parent company without any
intermediate holding companies.
• An intermediate holding is a firm that is both a holding company of
another entity and a subsidiary of a larger corporation.
ENTERING INTERNATIONAL MARKETS
4. Indirect Subsidiary:
• A subsidiary that is owned by another subsidiary of the parent
company, creating a multi-tiered ownership structure.
5. Operating Subsidiary:
• A subsidiary that is actively involved in the day-to-day operations of
the business and contributes to the overall revenue and profitability
of the parent company.
ENTERING INTERNATIONAL MARKETS
6. Non-operating Subsidiary:
• A non-operating subsidiary, in contrast, is a subsidiary that exists on
paper, but does not have any assets or employees of its own and
therefore cannot function independently as a going business
concern.
ENTERING INTERNATIONAL MARKETS
CONTRACT MANUFACTURING:
• Contract manufacturing refers to an arrangement in which a
company or individual, known as the "contract manufacturer,"
produces goods or provides services for another company, often
referred to as the "client" or "brand owner."
• This outsourcing strategy allows the client to focus on other aspects
of its business, such as marketing, sales, and product development,
while the contract manufacturer handles the production process.
• In the context of manufacturing, a contract manufacturing
agreement outlines the terms and conditions under which the
contract manufacturer will produce the goods or provide the
services.
ENTERING INTERNATIONAL MARKETS
• This agreement typically covers aspects such as quality standards,
production quantities, pricing, intellectual property rights, delivery
schedules, and confidentiality.
• Contract manufacturing is prevalent in various industries, including
electronics, pharmaceuticals, food and beverage, automotive, and
more.
• It offers several advantages, such as cost savings, access to
specialized skills and technologies, flexibility in production capacity,
and the ability to focus on core competencies.
ENTERING INTERNATIONAL MARKETS
TURNKEY PROJECTS:
• A turnkey project is one which is designed, developed and equipped with
all facilities by a company under a contract.
• It is handed over to a buyer when it becomes ready to operate business.
• The term "turnkey" refers to the fact that the project is delivered to the
client in a condition where it can be used immediately, as if the client just
needs to "turn the key" to start using it.
• In a turnkey project, the contractor or project team takes full
responsibility for designing, building, and delivering a fully operational
and functional facility or system.
• Example: a contractor building a road, a contractor building houses
 ENTERING INTERNATIONAL MARKETS
• This includes not only the physical construction but also the
procurement of all necessary components, equipment, and systems.
• Turnkey projects are common in various industries, including
construction, engineering, technology, and real estate development.
 GLOBALISATION
• Globalization is a term used to describe how trade and technology
have made the world into a more connected and interdependent
place.
• Globalization is a process of increasing social and economic
integration among countries around the world.
• Globalization refers to the increased interconnectedness and
interdependence of countries through the exchange of goods,
services, information, and ideas.
 GLOBALISATION
REASONS FOR GLOBALISATION:
1. Technological Advancements:
• Advances in technology, particularly in transportation and
communication (such as the internet), have significantly reduced the
cost and time associated with moving goods, services, and
information across borders.
• This has facilitated the rapid expansion of global trade and
communication.
 GLOBALISATION
2. Trade Liberalization:
• Many countries have pursued policies to bring ease of doing
trade/business.
• Organizations like the World Trade Organization (WTO) work to promote
free trade agreements and reduce protectionist measures.
3. Market Access and Expansion:
• Globalization provides businesses with access to larger markets, allowing
them to sell their products and services to a wider audience.
• This access to a larger consumer base can lead to increased sales and
economic growth.
 GLOBALISATION
4. Resource Utilization:
• Globalization allows countries to specialize in the production of goods
and services in which they have a comparative advantage.
• This specialization enables more efficient use of resources, as countries
can focus on what they do best and trade for other goods and services.
5. Innovation and Knowledge Transfer:
• Globalization promotes the flow of ideas, knowledge, and technology
across borders.
• This transfer of innovation and expertise can lead to advancements in
various fields and contribute to the overall progress of societies.
 GLOBALISATION
6. Reduced Poverty:
• Increased economic activity resulting from globalization can
contribute to poverty reduction by creating job opportunities and
improving living standards in developing countries.
ADVANTAGES OF GLOBALISATION:
1. Increased Economic Growth:
• Globalization can contribute to overall economic growth by creating
new markets, fostering competition, and facilitating the flow of
goods, services, and capital across borders.
 GLOBALISATION
2. Access to New Markets:
• Businesses can expand their reach and access new markets around
the world, leading to increased opportunities for growth and profit.
3. Innovation and Technology Transfer:
• Globalization allows for the exchange of ideas, technologies, and
innovations across borders.
• This transfer of knowledge can accelerate technological progress and
lead to improvements in various industries.
 GLOBALISATION
4. Enhanced Productivity:
• Increased competition resulting from globalization can drive
improvements in efficiency and productivity as companies strive to
stay competitive in the global marketplace.
5. Job Creation:
• While there are concerns about job displacement, globalization can
also lead to job creation, particularly in sectors that benefit from
expanded markets and increased demand.
 GLOBALISATION
6. Reduced Prices for Consumers: Access to a global marketplace can
lead to lower prices for consumers as companies seek to remain
competitive and take advantage of lower production costs in different
regions.
7. Access to Resources: Globalization enables countries to access
resources that may be scarce or unavailable domestically. This
includes natural resources, raw materials, and specialized skills.
8. Political Cooperation: Economic interdependence can promote
political cooperation and stability among nations, as countries have a
shared interest in maintaining peaceful relations for the sake of
economic prosperity.
 GLOBALISATION
DISADVANTAGES OF GLOBALISATION:
1. Inequality:
• Income Inequality: Globalization can craete income inequality, both
within and between countries. Wealth tends to concentrate in certain
regions and among certain groups, leaving others marginalized.
• Labor Exploitation: Companies may take advantage of lower labour
standards in some countries, leading to exploitation of workers and poor
working conditions.
 GLOBALISATION
2. Job Displacement:
• Outsourcing: Companies often seek cost savings by outsourcing jobs to
countries with lower labour costs. This can result in job losses in higher-
cost regions, contributing to unemployment and economic instability.
3. Environmental Degradation:
• Resource Exploitation: The pursuit of economic growth in a globalized
world can lead to the overexploitation of natural resources,
deforestation, and environmental degradation.
 GLOBALISATION
4. Health Risks:
• Spread of Diseases: Increased global connectivity facilitates the rapid
spread of diseases, as seen with the global transmission of infectious
diseases like COVID-19.
5. Loss of Local Industries:
• Competition: Local industries may struggle to compete with larger,
more efficient multinational corporations, leading to the decline or
closure of smaller businesses.
 GLOBALISATION
6. Social Disruption:
• Social Unrest: Economic disparities and cultural changes associated
with globalization can contribute to social unrest and political
instability.
 INTERNATIONAL TRADE
• International trade refers to the exchange of goods and services
between countries.
• There is an exchange of goods for goods among nations.
• It could be termed as the basic economic activity or transaction
among different countries of the world.
• International Trade is made up of transactions in goods or exchange
of goods or purchase and sale of goods among nations collectively
called ‘imports’ and ‘exports.’
• Imports are goods consumed in one country which have been
bought from another country.
 INTERNATIONAL TRADE
• Exports are good produced in one country and sold to and consumed in another
country.
• The sum total of imports and exports is called ‘total trade’ and the difference
between exports and imports is called ‘Balance of Trade.’
• Balance of Trade for one country could be of 3 types:

• Balanced Balance Surplus Balance of Trade Deficit Balance of Trade

of Trade
 INTERNATIONAL TRADE
• In ‘Balanced Balance of Trade’ of a country, its total amount of
exports will be just equal to its total amount of imports.
• This happens rarely for a country.
• In ‘Surplus Balance of Trade’ of a country, the total value of exports
will exceed the total value of imports.
• It also called as ‘plus’, ‘positive or favourable balance of trade’ or
‘trade surplus.’
• In ‘Deficit Balance of Trade’ of a country, the total value of imports
will exceed the total value of exports.
 INTERNATIONAL TRADE
• This balance of trade is also known as ‘minus (-), adverse’ or
‘negative balance of trade.’
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
• Trade Barriers refer to the government policies and measures which
obstruct the free flow of goods and services across national borders.
• Trade Barriers are imposed on imports and exports.
• Trade Barriers are restrictions imposed on trading activities in
between different countries.
• Trade Barriers include Tariff barriers (fiscal controls) and Non-Tariff
Barriers (quantitative restrictions).
Quantitative Restrictions: Specific numerical limits on the quantity or
value of goods that can be imported (or exported) during a specific
period.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
OBJECTIVES OF TRADE BARRIERS:
1. To protect home industries from foreign competition
2. To promote new industries and R & D activities
3. To conserve Foreign Exchange Reserves
4. To Maintain Favourable Balance Of Trade & Payments Position
5. To protect national economy from dumping by rich countries with
surplus production
6. To curb conspicuous consumption (example drugs)
7. To encourage the use of domestic production
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
FORMS/TYPES OF TRADE BARRIERS:
1. Export Duties 8. Double-column Tariff
2. Import Duties 9. Triple-column Tariff
3. Transit Duties 10. Revenue Tariff
4. Specific Duties 11. Protective Tariff
5. Ad-Valorem Duties 12. Countervailing Duties
6. Compound Duties 13. Anti-Dumping Duties
7. Single-Column Tariff/Uni-lateral Tariff
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
FORMS/TYPES OF TRADE BARRIERS:
1. On the basis of the Origin and the Destination of the Goods
crossing the National Boundary:
a. Export Duties: these are taxes imposed on a commodity/goods
being sent out of a country.
b. Import Duties: are taxes charged by the customs authority on the
importation of goods into a country.
c. Transit Duties: are taxes levied on commodities/goods passing
through a customs area enroute to another country.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
2. On the Basis of Quantification of the Tariff:
a. Specific Duties: It is a fixed amount of duty collected upon each
unit of the commodity/goods imported. (Example: per mobile
phone).
b. Ad-Valorem Duties: They are collected as a fixed percentage of the
total value of the commodity/goods imported/exported.
c. Compound Duties: When both specific duties and ad-valorem
duties are charged on a commodity/goods, it is termed as
Compound Duties.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
3. On the Basis of Application between Different Countries:
a. Single-column Tariff/Uni-lateral Tariff: It provides a uniform rate of duty
for all like (similar) commodities without making any discrimination
between countries.
b. Double-column Tariff: It discriminates between countries because there
are two rates of duty on some or all commodities.
c. Triple-column Tariff: The multiple column tariff consists of three
different rates of tariff – a general rate, an international rate and a
preferential rate. The general and international tariff rates can be
considered equivalent to the maximum and minimum tariff rates
discussed above. The preferential tariff is generally applied by a subject
country to the products originating from the colonial countries.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
4. On the Basis of Purpose they Serve:
a. Revenue Tariff: The tariff, which is imposed primarily for
generating more revenues for the government is called as the
revenue tariff.
b. Protective Tariff: The tariff may be imposed by the government to
protect the home industries from the cut-throat competition from
the foreign produced goods. A perfect protective tariff is likely to
prohibit completely the import from abroad.
c. Countervailing Duties: It is a specific form of duty that the
government imposes in order to protect the domestic producers
by countering the negative impact of import subsidies.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
d. Anti-Dumping Duties: An anti-dumping duty is a protectionist tariff
that a domestic government imposes on foreign imports that it
believes are priced below fair market value.
• Dumping is a process wherein a company exports a product at a
price that is significantly lower than the price it normally charges in
its home (or its domestic) market.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
ADVANTAGES OF TARFIFF BARRIERS:
1. Protection to home industries
2. Reduce foreign goods consumption
3. Encourage R & D activities
4. Avoid competition
5. Revenue to government
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
NON-TARIFF BARRIERS:
• Non-tariff barriers are trade barriers that restrict the import or
export of goods through means other than tariffs.
TYPES OF NON-TARIFF BARRIERS:
1. Quotas: Quantitative restrictions on the quantity of a specific
product that can be imported or exported.
a. Tariff Quota: these are limited amounts of specific goods that can
be imported during a specified period at reduced or zero rates as
against normal customs duties.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
b. Unilateral Quota: these are quotas set by a country on the import
of a particular commodity without previous consultation or
negotiation.
c. Bilateral Quota: Negotiations are made between the importing
country and the supplier country and the quantity to be imported is
decided.
d. Mixing Quota: It is a regulation that requires domestic producers to
utilise a certain proportion of domestically sourced raw materials
along with the imported parts, to produce finished good domestically.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
2. Import License: A license system allows authorized companies to
import specific commodities that are included in the list of licensed
goods.
• Product licenses can either be a general license or a one-time
license.
• The general license allows the importation and exportation of
permitted goods for a specified period.
• The one-time license allows a specific product importer to import a
specified quantity of the product, and it specifies the cost, country
of origin, and the customs point through which the importation will
be carried out.
 BARRIERS TO TRADE: TARIFF & NON-
TARIFF
3. Embargoes: are total bans of trade on specific commodities and
may be imposed on imports or exports of specific goods that are
supplied to or from specific countries.
4. Customs Regulations: means laws and regulations concerning the.
importation, exportation, transit of goods, or any other customs
procedures, whether. relating to customs duties, taxes or any other
charges collected by the Customs.
5. Foreign Exchange Regulations: The foreign exchange regulations
facilitate the inflow and outflow of funds to and from India.
 TRADING BLOCS: SAARC, ASEAN, NAFTA,
EU, OPEC
TRADING BLOC:
• It is a group of countries which are geographically close to each
other and have similar trade policies, which can with their mutual
cooperation ensure free flow of goods among them.
• Countries which have something in common have formed economic
union for mutual benefit.
• These unions/groups have liberal rules for member countries and a
separate set of rules for non-members.
• These groups form an agreement that can give encouragement to
trade among the group.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
OBJECTIVES OF TRADING BLOCS:
1. To create a favorable economic framework for promotion of cross
border trade among the member countries.
2. To reduce or remove trade barriers among the member countries.
3. To promote free transfer of labour and capital.
4. To bargain effectively with the non-members.
5. To enhance the welfare of the consumers.
6. To promote higher employment in the region.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
SAARC
• Stands for South Asian Association for Regional Cooperation.
• It has 8 members: India, Bangladesh, Pakistan, Nepal, Bhutan, Sri
Lanka, Maldives and Afghanistan.
• It was formed in December 1985.
• It is headquartered in Kathmandu, Nepal.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
OBJECTIVES OF SAARC:
1. To promote the welfare of the people of South Asia and improve their
quality of life.
2. To accelerate the economic growth, social progress, and cultural
development in the region by providing all individuals the opportunity to
live in dignity and realize their full potential.
3. To contribute to mutual trust, understanding and appreciation of one
another’s problems.
4. To strengthen co-operation with other developing countries.
5. To cooperate with international and regional organizations with similar
aims and purposes.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
PRINCIPLES OF SAARC:
1. Sovereign Equality
2. Territorial Integrity
3. Political Independence
4. Non-interference in the internal affairs of the Member States
5. Mutual benefit
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
ASEAN
• Stands for the Association of South-East Asian Nations.
• Was established on 8 August 1967 in Bangkok.
• Has 10 members:
1. Brunei 6. Myanmar (Burma)
2. Cambodia 7. Philippines
3. Indonesia 8. Singapore
4. Laos 9. Thailand
5. Malaysia 10. Vietnam
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
• Headquartered in Jakarta, Indonesia.
OBJECTIVES OF ASEAN:
1. To promote regional peace and stability.
2. To promote economic growth and development.
3. To promote social and cultural development.
4. To protect the interests of South-east Asian Nations.
5. To promote South-east Asian studies.
6. To promote regional integration and connectivity
7. To promote environmental sustainability
 TRADING BLOCS: SAARC, ASEAN, NAFTA,
EU, OPEC
NAFTA
• Stands for the North American Free Trade Agreement.
• It was a trade agreement between Canada, Mexico, and the United
States that came into effect on January 1, 1994.
• NAFTA aimed to eliminate barriers to trade and investment between
the three North American countries, fostering economic integration
and cooperation.
• Headquartered in Mexico City (Mexico), Ottawa (Canada) and
Washington D.C (USA)
• Has 3 members: Canada, Mexico and the USA.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
OBJECTIVES OF NAFTA:
1. To eliminate tariffs and other trade barriers.
2. To promote fair competition.
3. To protect intellectual property rights.
4. To facilitate investments.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
EU
• Stands for European Union.
• It is a supranational political and economic union of 27 member
states that are located primarily in Europe.
• It was established with the aim of fostering economic cooperation
and preventing another devastating war in Europe following World
War II.
• It has 27 member states:
TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
1.Austria 10. France 19. Malta
2.Belgium 11. Germany 20. Netherlands
3.Bulgaria 12. Greece 21. Poland
4.Croatia 13. Hungary 22. Portugal
5.Cyprus 14. Ireland 23. Romania
6.Czech Republic 15. Italy 24. Slovakia
7.Denmark 16. Latvia 25. Slovenia
8.Estonia 17. Lithuania 26. Spain
9.Finland 18. Luxembourg 27. Sweden
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
OBJECTIVES OF EU:
1. To promote peace and stability
2. To promote environmental sustainability
3. To promote economic development
4. To promote human rights and democracy
5. To promote security and defence cooperation
6. To promote innovation and research
7. To promote consumer protection
8. To promote health standards
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
OPEC
• Stands for The Organization of the Petroleum Exporting Countries.
• Is a permanent, intergovernmental Organization, created at the Baghdad
Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi
Arabia and Venezuela.
• Is a cartel of oil-producing countries that aims to manage the production
and pricing of oil in the international market.
• OPEC was founded in 1960 and is headquartered in Vienna, Austria.
• OPEC member countries collectively possess significant reserves of crude
oil, and their production levels have a considerable impact on global oil
prices.
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
• It has 12 member countries:
1. Algeria 9. Republic of the Congo
2. Angola 10. Saudi Arabia
3. Gabon 11. United Arab Emirates
4. Iran 12. Venezuela
5. Iraq
6. Kuwait
7. Libya
8. Nigeria
 TRADING BLOCS: SAARC, ASEAN, NAFTA, EU,
OPEC
OBJECTIVES OF OPEC:
1. Stabilising oil prices
2. Ensuring a fair return on investment
3. Coordinating oil production policies
4. Protecting the interests of oil producing nations
5. Investing in oil industry infrastructure
6. Promoting cooperation and dialogue
7. Supporting sustainable development