Opções estratégicas primárias para competir nos mercados de países estrangeiros

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ESTRATÉGIA GLOBAL.
A estratégia global no nível micro se refere à alocação dos recursos de uma empresa de maneira a aproveitar as oportunidades de lucro fora dos mercados domésticos. Em sua interpretação mais ampla, essa definição engloba atividades como manufatura no exterior, investimento estrangeiro e importação. Este texto, no entanto, considera a estratégia global principalmente no contexto de atividades relacionadas a marketing, como exportação, licenciamento e parceria em países estrangeiros para vender bens e serviços no exterior.
Em geral, as estratégias de marketing global abrangem três áreas básicas de decisão enfrentadas por organizações individuais: (1) se querem ou não se envolver em comércio exterior; (2) que mercados específicos devem ser servidos, incluindo mercados de produtos, geográficos e demográficos; e (3) como participar de mercados escolhidos, incluindo estratégias relacionadas a planejamento de produtos, financiamento, promoção, distribuição e preço.
No nível macro, a estratégia global é usada por regiões, países, parceiros comerciais e outras entidades para alcançar objetivos econômicos amplos relacionados ao comércio exterior e à concorrência. Por exemplo, a maioria dos países impõe uma variedade de tarifas, cotas e outras restrições sobre mercadorias recebidas. Da mesma forma, grupos de nações freqüentemente formam acordos comerciais que excluem outros países ou regiões globais. E as nações ou estados podem se engajar em estratégias, por meio de ferramentas como incentivos fiscais ou promoções patrocinadas pelo governo, destinadas a melhorar a competitividade global ou ajudar as empresas em suas localidades. Todas essas iniciativas de nível macro influenciam a estratégia no nível micro.
Discutidos abaixo estão três teorias básicas do comércio global, os principais benefícios do marketing global, influências que ditam estratégias globais e as quatro abordagens fundamentais para participar de mercados estrangeiros.
DO MERCANTILISMO AO COMÉRCIO LIVRE.
A troca internacional de mercadorias vem sendo conduzida há milhares de anos por meio do comércio voluntário e por meio da conquista militar. No entanto, a era mercantilista européia, que durou de 1500 a 1750, lançou as bases e continua a exercer forte influência sobre a prática moderna do comércio internacional. Foi durante esse período que a filosofia do nacionalismo começou a emergir, diminuindo as rivalidades tribais e regionais e criando estados-nações unificados. O nacionalismo deu origem à visão de que o comércio era parte integrante do interesse nacional e, portanto, deveria ser controlado pelo governo. O comércio exterior era geralmente visto como uma forma de rivalidade semelhante à guerra - uma nação ganhava à custa de outra.
Outra ideologia que caracterizou o mercantilismo foi que a riqueza de uma nação é medida em ouro e prata, o que implicava que mais barras de ouro deveriam entrar no país do que deveria sair. Essa idéia é refletida na moderna teoria do comércio pela noção de que um país está tendo sucesso na arena do comércio global apenas se tiver uma balança comercial favorável ou exportar mais do que importa. O credo contrastante, exemplificado no século XX pelos regimes soviético e nazista, sustentava que um país deveria procurar importar mais bens do que exporta como meio de aumentar a riqueza nacional agregada. Uma diferença crucial entre os dois princípios era que a filosofia mercantilista triunfante é mais acessível a firmas individuais, que buscam maximizar as vendas e assim se beneficiar do aumento das exportações.
Muitas das prescrições específicas do mercantilismo perderam a preferência durante o final do século XVIII e XIX. A crença de que o ouro era a mais pura medida de riqueza, por exemplo, foi desmascarada pelo advento da moderna teoria econômica. A sabedoria da superação sustentava que o dinheiro de uma nação, ou ouro, é menos uma medida de riqueza do que um determinante dos níveis de preço. Por exemplo, a teoria quantitativa postulava que, à medida que a balança comercial de um país melhorasse, seus preços aumentariam. Como resultado, as exportações diminuiriam em volume e as importações subiriam por causa de seu preço comparativamente menor, o que teria um efeito de equilíbrio. Tais teorias contribuíram para o abandono do padrão-ouro pelos Estados Unidos e outras nações durante o século XX.
Um dogma do mercantilismo que o comércio é contraditório por natureza e exige o controle do governo foi em grande parte obliterado pela riqueza das nações de Adam Smith. Esse tratado postulava a mão invisível & # x0022; teoria das forças de mercado, que essencialmente deslocou o mercantilismo. A teoria de Smith pedia a redução do controle governamental do comércio exterior em favor de um clima de comércio menos conflituoso. Além dos paradigmas econômicos em evolução, a estratégia de comércio global foi particularmente impactada pelos eventos de meados do século 20 que efetivamente tornaram os mercados mundiais mais acessíveis aos avanços tecnológicos relacionados a comunicações, transporte, refrigeração e preservativos e fabricação combinada para reduzir muitos barreiras logísticas ao comércio internacional. Os avanços tecnológicos também serviram para minimizar as diferenças culturais e políticas entre os países.
Evidenciando a notável tendência para a cooperação comercial estão os numerosos esforços das nações européias desde a década de 1950 para formar acordos comerciais e estabelecer unidade econômica. Entre eles, a Organização para a Cooperação Econômica Européia (OECE) de 1948, a Comunidade Européia do Carvão e do Aço (CECA) em 1952, a Associação Européia de Livre Comércio (EFTA) em 1960 e, em última instância, a União Européia atual. As principais iniciativas que destacam essa tendência em outras partes do mundo incluem a Organização dos Países Exportadores de Petróleo (OPEP); o Acordo de Livre Comércio da América do Norte (NAFTA); e a Nova Ordem Econômica Internacional (NIEO), um consórcio de 77 países em desenvolvimento. Em um nível geral, o abrangente Acordo Geral sobre Tarifas e Comércio (GATT), revisto em meados da década de 1990, é possivelmente o maior esforço individual para reduzir as tarifas e outras barreiras comerciais políticas remanescentes da era mercantilista.
Como resultado das tendências gerais do comércio, a estratégia global no nível macro tornou-se um elo vital para salvaguardar as economias de escala dos países desenvolvidos e avançar para o progresso econômico de muitas nações subdesenvolvidas durante a segunda metade do século XX. Além disso, essas tendências aumentaram nas décadas de 1970 e 1980 por uma desaceleração simultânea no crescimento do mercado interno dos EUA e o ressurgimento da produção na Europa e no Japão. As implicações globais desses desenvolvimentos para os Estados Unidos e para muitas outras nações industrializadas foram um impacto muito maior das importações e exportações sobre os estilos de vida e os padrões de vida. Além disso, o refinamento dramático e a proliferação das telecomunicações globais e o comércio cada vez mais liberalizado destacam a realidade da economia global. Assim, a estratégia global recebeu maior ênfase nos níveis micro e macro.
De fato, os fluxos de investimento direto estrangeiro (IDE) para os Estados Unidos atingiram um recorde de US $ 189 bilhões em 1998, mais que o dobro do valor de 1994. Da mesma forma, o IDE mundial cresceu rapidamente em meados da década de 1990, crescendo de US $ 226 bilhões. 1994 para US $ 349 bilhões em 1996, um ganho de 54%. Os fluxos para os países em desenvolvimento em 1996 registraram US $ 129 bilhões (37% do IDE mundial), com a China e a América Latina recebendo uma parcela significativa, e as saídas dos países em desenvolvimento ultrapassaram US $ 50 bilhões (15% do total mundial).
TEORIA DO COMÉRCIO GLOBAL.
Existem pelo menos três teorias principais que explicam a dinâmica por trás das estratégias globais em nível macro: clássica, proporção e ciclo de vida do produto. A teoria clássica do comércio internacional baseia-se na noção de vantagem econômica, que sugere que os países naturalmente enfatizam as vendas externas de produtos (e serviços) que podem produzir mais barato ou melhor, todos os outros fatores à parte, uma nação atuando da melhor maneira. O interesse somente exportará produtos que tenha maior vantagem na produção. E, inversamente, só importará bens e serviços que tenha a menor vantagem de se produzir. Os três tipos de vantagens abrangidos pela teoria clássica são absolutos, comparativos e iguais. Essas vantagens são o ímpeto por trás do comércio internacional e das diferenças de preços, e demonstram o papel das taxas de câmbio, conforme definido pela teoria quantitativa.
Uma nação tem uma vantagem absoluta em relação a outro país quando é capaz de produzir um produto a um preço mais baixo ou a um nível de qualidade mais alto. Vantagens absolutas podem ser adquiridas, como habilidades tecnológicas avançadas, ou naturais, como o acesso a recursos naturais. Uma vantagem comparativa existe quando um país tem uma vantagem absoluta sobre um parceiro comercial em muitos produtos, mas as vantagens são comparativamente diferentes. Nesse caso, o país em desvantagem ainda pode se beneficiar (por causa da dinâmica das relações de troca) especializando-se e exportando o (s) produto (s) em que mantém a menor desvantagem. Finalmente, existe uma vantagem igual quando um país tem uma vantagem absoluta em todos os produtos. Neste caso, os países não podem ganhar teoricamente negociando porque as relações de troca cancelariam qualquer ganho econômico.
A segunda teoria do comércio global é a proporção de fatores. Vai além da teoria clássica ao explicar as razões por trás dos preços e custos. Afirma que os níveis de preços diferem entre os países principalmente por causa de fatores relacionados ao fornecimento de recursos naturais. Assim, um país geralmente exportará bens para os quais possui uma quantidade abundante e acessível de insumos e importará bens para os quais os insumos são relativamente inacessíveis. Esta teoria pressupõe níveis relativamente iguais de produção e proezas tecnológicas entre os países concorrentes.
A terceira teoria do comércio, ciclo de vida do produto, ganhou apelo há relativamente pouco tempo. Leva em conta fatores como tecnologia e inovação para explicar as forças do comércio exterior e coloca menos ênfase no papel dos preços e das taxas de câmbio. O ciclo de vida do produto engloba quatro fases. Durante o primeiro, um novo produto é fabricado no país de origem e é parcialmente bem sucedido devido às vantagens locais, como a facilidade de distribuição e comercialização. Durante a segunda fase, o país de origem se beneficia à medida que o produto ganha familiaridade em outros países (apesar das desvantagens competitivas localizadas) devido à sua singularidade. Como resultado, os fabricantes de outros países começam a copiar o produto. A terceira fase é caracterizada pela concorrência, que aumenta à medida que os países com vantagens competitivas, como os baixos custos trabalhistas, começam a exportar o bem ou serviço. Finalmente, o país que originou o produto sucumbe a produtores estrangeiros mais competitivos, que podem canibalizar sua participação no mercado global e doméstico. Por essa altura, o produto é frequentemente considerado uma mercadoria.
BENEFÍCIOS GLOBAIS PRÁTICOS.
Embora as teorias ajudem a fornecer uma estrutura para as causas e a dinâmica do comércio global, a maioria dos países e empresas se engaja em iniciativas globais estratégicas para aproveitar benefícios muito tangíveis. Nações e regiões buscam o comércio global principalmente para capitalizar oportunidades relacionadas à especialização e vantagens, conforme descrito acima. Empresas individuais que se esforçam para expandir globalmente podem fazê-lo por várias razões relacionadas à melhoria dos lucros.
Um benefício primário e óbvio para empresas que vendem produtos em países estrangeiros é o acesso a novos mercados. De fato, quando os mercados de muitos produtos nos Estados Unidos começaram a amadurecer e se saturaram nas décadas de 1970 e 1980, muitos produtores descobriram que poderiam continuar obtendo vendas estáveis ​​e ganhos de lucro por meio de vendas transnacionais. Isso proporcionou alívio não apenas da maturação dos mercados domésticos, mas também da intensificação da concorrência no mercado interno dos EUA na Europa e no Japão. Como os mercados em outros países costumam ser menos maduros e, pelo menos historicamente, menos competitivos, as empresas geralmente conseguem um rápido crescimento de vendas e margens de lucro mais altas. Por exemplo, embora a Coca-Cola tenha recebido menos de 40% de suas receitas de vendas externas no início dos anos 90, quase 60% de seus lucros totais vieram dessas vendas.
Outro ímpeto para as empresas se envolverem em uma estratégia global está relacionado aos ciclos de vida dos produtos. Bens que se tornaram obsoletos nos mercados dos EUA, por exemplo, às vezes podem ser comercializados no exterior com muito sucesso. Ao aumentar o tempo de vida de um produto, a empresa pode reduzir os custos de desenvolvimento de novos produtos e capitalizar as eficiências aprendidas, especialmente no que se refere ao produto relacionado à produção, distribuição e marketing. Da mesma forma, a venda global geralmente oferece vários benefícios fiscais. Muitos países, de fato, se esforçam para atrair negócios estrangeiros oferecendo redução de impostos de importação, de propriedade ou de renda. Além disso, as empresas muitas vezes são capazes de alocar receitas, custos e lucros de maneira a reduzir sua carga tributária geral.
Outro grande benefício de uma abordagem multinacional integrada é a diversificação do risco de mercado. Em outras palavras, uma empresa pode geralmente diminuir sua vulnerabilidade a crises econômicas cíclicas ou distúrbios regionais, estendendo seu alcance geográfico. Por exemplo, empresas que estavam ativas nos Estados Unidos e na Europa Ocidental no final da década de 1980 provavelmente se beneficiaram da defasagem entre a recessão americana e a crise econômica da Comunidade Européia, que chegou ao auge meses depois, quando os Estados Unidos começaram a recuar. sua desaceleração. Além disso, a diversificação geográfica diminui os riscos associados aos ciclos de produtos, a sazonalidade inerente a alguns produtos (como equipamentos de esqui) e o aumento da concorrência em regiões individuais.
Além dos benefícios relacionados ao marketing de bens e serviços, a estratégia global também oferece benefícios relacionados à fabricação no exterior, parcerias com empresas estrangeiras para desenvolver ou comercializar produtos, investimentos estrangeiros, taxas de câmbio de hedging e importação de bens ou serviços para aumentar os esforços domésticos. Por exemplo, as empresas geralmente lucram com a eliminação das forças de trabalho domésticas e transferem suas instalações de produção para áreas que têm custos de mão-de-obra mais baixos, recursos naturais mais baratos, menos regulamentação governamental, acesso mais eficiente aos mercados de exportação vizinhos ou outras vantagens que reforcem a lucratividade. Ou eles podem se beneficiar dos efeitos da diversificação através de investimentos estrangeiros - uma companhia de seguros, por exemplo, poderia potencialmente reduzir seu risco financeiro investindo fundos excedentes no Japão ou na Alemanha.
INFLUÊNCIAS EXTERNAS NO GLOBAL.
Três domínios de influência fora do controle de um país ou organização afetam a determinação da estratégia global nos níveis micro e macro: econômico e competitivo, político e legal e cultural.
ECONÔMICO E COMPETITIVO.
Entre os preceitos mais fundamentais da estratégia global está a concentração de mercado. Empresas e países empenhados em desenvolver uma estratégia global de comércio ou marketing bem-sucedida percebem, mais cedo ou mais tarde, que devem concentrar seus esforços em um pequeno segmento do mercado global. Por exemplo, embora contenham apenas 20% da população mundial, o Japão, a Europa e os Estados Unidos representam 75% da economia global. Além disso, dentro de cada um desses países, a grande maioria da riqueza é controlada por um pequeno segmento de endurecimento da população. Portanto, uma empresa pode se tornar verdadeiramente dominante em escala global, concentrando-se em alguns mercados-chave. Por outro lado, pode facilmente falhar, espalhando seus esforços muito finos regionalmente.
Entre as considerações mais importantes para uma empresa que seleciona regiões a considerar para o comércio é a fase de desenvolvimento econômico de uma região. Além dos riscos políticos e sociais, os países em estágios de industrialização relativamente maduros têm maior probabilidade de oferecer mercados saudáveis ​​para as importações. Eles geralmente têm uma distribuição mais equitativa do poder de compra e são mais receptivos a novos produtos e tecnologias. Além disso, as nações industrial e pós-industrial oferecem outros benefícios importantes, como uma infraestrutura fiscal e monetária estável; Estabilidade da moeda, que reduz os riscos associados à rápida elevação ou queda do valor dos investimentos no país anfitrião; infra-estrutura de comunicação, o que facilita os esforços de marketing; e sistemas de transporte necessários para a distribuição eficiente de bens e serviços.
As influências secundárias ao ambiente econômico incluem forças competitivas que ajudam a ditar a estratégia global. Embora as sociedades industriais normalmente ofereçam melhores oportunidades de marketing global, elas também costumam implicar pressões competitivas mais agudas. Por exemplo, diferentes países podem possuir diferentes níveis de concorrência para vários produtos, desde um país monopolista ou ambiente de produto, que seria inacessível, até a pura concorrência. Uma empresa também pode ser capaz de competir e até se beneficiar de um ambiente mais oligopolista em que algumas grandes empresas dominam o mercado regional.
Outras forças competitivas a serem consideradas incluem a ameaça de novos entrantes no mercado. Se as barreiras à entrada forem baixas e a empresa tiver poucas vantagens, os riscos da concorrência podem ser elevados. O produto ou serviço também é vulnerável se puder ser facilmente substituído por um substituto quando as condições do mercado mudarem. Por exemplo, os compradores podem mudar de cereal em caixa para farinha de aveia para economizar dinheiro durante uma recessão. Igualmente importante é o poder de barganha de compradores e fornecedores no país anfitrião. Se uma empresa está em uma posição de barganha relativamente fraca, particularmente em relação a seus concorrentes, sua lucratividade pode se tornar excessivamente dependente dos canais de fornecimento e distribuição. A competição existente também é uma preocupação, pois marcas e produtos estabelecidos podem causar estragos na lucratividade de um novo concorrente.
INFLUÊNCIAS POLÍTICAS E LEGAIS.
A principal consideração que uma empresa enfrenta ao escolher entrar em um mercado estrangeiro, ou um país que tenta determinar a política comercial, é a estabilidade política e o ambiente legal do país anfitrião. Uma nação do terceiro mundo com uma história de revolta e instabilidade, por exemplo, provavelmente faria uma perspectiva ruim para o comércio. Mesmo uma nação industrializada avançada pode ser uma perspectiva ruim, no entanto, se o seu ambiente legal e político for geralmente hostil a concorrentes estrangeiros.
A maioria dos governos estabelece restrições ou barreiras comerciais à concorrência estrangeira, a maioria destinada a proteger indústrias e empresas nacionais. Esses controles geralmente determinam o nível de atividade da empresa em um mercado externo. Um controle comum são os requisitos de licença, que forçam os importadores (exportadores) a obter uma licença antes de poderem mover o produto para (ou de) um país. Por exemplo, um país pode restringir a exportação de bens considerados como tendo valor militar. Ou, o host pode se recusar a licenciar mercadorias para importação que competem com uma indústria doméstica que está tentando suportar.
Um segundo tipo de controle são tarifas ou impostos sobre importações. As tarifas costumam ser usadas para proteger empresas e indústrias domésticas da concorrência. No entanto, as tarifas também podem ser usadas para garantir que os preços dos bens importados sejam equivalentes aos substitutos nacionais, ou à receita do jogador para o governo. Além disso, as tarifas são frequentemente usadas para penalizar outros países por ações comerciais ou políticas. Os Estados Unidos, por exemplo, podem optar por impor uma tarifa aos caminhões do Japão para puni-la por erguer uma grande tarifa sobre o arroz importado dos Estados Unidos.
Uma cota é simplesmente uma provisão que limita a quantidade de um produto específico que pode ser importado. Como as tarifas, as cotas podem ser estabelecidas por vários motivos. & # x0022; Absoluta & # x0022; as cotas fornecem uma quantidade de importação definida que não pode ser excedida. As cotas tarifárias sujeitam os volumes de importação acima de um nível especificado a tarifas cada vez mais altas. Finalmente, & # x0022; voluntário & # x0022; cotas, ou restrições voluntárias de exportação (VERs), são usadas para proteger empresas nacionais de um determinado concorrente ou em uma situação especial em que uma indústria está tentando recuperar sua capacidade de competir.
Além de licenças, tarifas e cotas, outros mecanismos de controle incluem impostos especiais, como impostos especiais de consumo ou processamento de certos produtos; restrições qualitativas, que especificam padrões mínimos de qualidade ou segurança que devem ser atingidos antes que o país os aceite para importação ou exportação (isso às vezes é feito por razões de saúde e segurança, além de fins econômicos); e controles cambiais, que efetivamente limitam a quantidade de moeda estrangeira que um importador pode obter para pagar os bens comprados, ou que um exportador pode manter para os bens vendidos a outro país.
A maioria dos países também se envolve em atividades promocionais destinadas a promover o câmbio. Essas políticas podem prejudicar os exportadores que competem com produtos subsidiados, ou ajudá-los se o país fizer a promoção. Os dois tipos principais de promoções são comércio e subsídios estatais. O comércio estatal implica envolvimento direto do governo em atividades de compra e venda. Subsídios, como tarifas e cotas, são freqüentemente usados ​​para ajudar uma indústria. Elas incluem benefícios como impostos mais baixos, taxas de transporte mais baixas, manipulação das taxas de câmbio em favor do exportador ou até subsídios governamentais diretos.
INFLUÊNCIAS CULTURAIS.
O terceiro fator externo importante que influencia a macro e microestratégia global é o ambiente cultural e social, incluindo elementos como classe social, estrutura familiar e tomada de decisões, segmentação de mercado e padrões de consumo. Como a compreensão da cultura é tão essencial ao processo de marketing, as empresas que tentam realizar negócios em um país estrangeiro geralmente buscam o conselho de alguém próximo a essa cultura. Ou simplesmente formarão algum tipo de parceria ou acordo legal para ter seu produto ou serviço comercializado por uma empresa local.
Uma das principais preocupações do estrategista global é o nível de cultura material em cada região considerada. Por exemplo, corporações que buscam investir em países com culturas de materiais menos avançadas, particularmente países não ou semi-industrializados, geralmente demandarão linhas de produtos mais limitadas, e terão que lidar com sistemas de distribuição menos sofisticados, propagandas mais simples e uma quantidade maior. de tempo para aceitar um novo produto ou serviço. Da mesma forma, as diferenças de idioma podem representar outra barreira formidável para as multinacionais. Mesmo dentro de um único país diverso, como a Espanha ou a China, vários idiomas ou dialetos afetarão uma estratégia de vendas abrangente.
Outra grande influência cultural é a estética, que se refere aos gostos estilísticos de uma sociedade. Esse elemento é particularmente importante para decisões relacionadas a publicidade, embalagem e design de produtos. Da mesma forma, o nível educacional geral de uma sociedade ditará a sofisticação dos produtos, embalagens e promoções. Mas também pode impactar a estratégia relacionada a canais de fornecimento e distribuição que devem ser providos por moradores locais. Outras influências sociais incluem religião, organização familiar e atitudes do consumidor sobre assumir riscos, ganhos materiais e outros fatores.
Mesmo quando uma empresa se esforça para assimilar sua estratégia geral de vendas em outra cultura, pode resultar em falhas. Entre os percalços mais flagrantes estava a tentativa da General Motors Corp na década de 1970 de comercializar o automóvel Nova no México - a tradução para o espanhol de "nova & # x0022; new & # x0022"; é semelhante a & # x0022; no go. & # x0022; Uma desventura semelhante foi empreendida pela Braniff Airlines quando estava anunciando seus assentos cobertos de couro para os viajantes mexicanos. Slogan promocional do Braniff, & # x0022; Sentando en cuero, & # x0022; traduz-se em & # x0022; sentar-se nu. & # x0022; Um erro menos conspícuo foi o esforço da Pepsodent em comercializar sua pasta de branqueamento de dentes no Sudeste Asiático, onde os dentes pretos ou amarelos são frequentemente considerados símbolos de status.
ESTRATÉGIAS GLOBAIS CORPORATIVAS.
Existem quatro caminhos básicos que as empresas podem adotar para comercializar seus produtos ou serviços globalmente: exportação, acordos contratuais, joint ventures e manufatura. A combinação de rotas que uma empresa escolhe seguir depende das influências internas da indústria e da empresa, bem como dos fatores externos descritos anteriormente. Importantes influências internas da empresa incluem metas corporativas, linhas de produtos, tamanho e solidez financeira, conhecimento e acesso a mercados estrangeiros específicos e vantagens competitivas proprietárias e pontos fortes tecnológicos.
A exportação pode representar um meio relativamente barato e de baixo risco de participar em mercados estrangeiros, porque não é muito difícil de iniciar, desde que os distribuidores locais possam ser encontrados, e pode exigir apenas um investimento mínimo de capital inicial. Também pode ser um empreendimento complexo, dependendo do tipo de exportação em que uma empresa se envolve: indireta ou direta.
A exportação indireta envolve simplesmente a venda de mercadorias para revenda em países estrangeiros e envolve relativamente pouca administração ou estratégia. Um método comum de exportação indireta é a venda de mercadorias no país de origem que o comprador envia e comercializa para um mercado externo. Por exemplo, uma empresa de mineração na África do Sul pode manter um escritório de compras nos Estados Unidos para exportar seu equipamento pesado. Da mesma forma, um revendedor doméstico pode atuar como intermediário, comprando o equipamento e vendendo-o para clientes no exterior. Embora envolva pouco risco ou investimento, esta técnica oferece oportunidades de expansão pelo menos modestas.
Outro meio indireto comum de exportação é a utilização de exportadores intermediários, como empresas de gestão de exportação (EMCs). As EMCs são entidades comerciais especializadas na exportação de mercadorias para fornecedores nacionais, seja por meio de acordos de comissão ou pela compra e revenda dos produtos. As EMCs podem dar a uma empresa um pouco mais de controle sobre seus esforços de marketing global, fornecer acesso instantâneo ao conhecimento sobre mercados estrangeiros e oferecer acesso a canais de distribuição estabelecidos. A EMC pode até mesmo usar o papel timbrado da empresa, servir como proxy nas negociações, processar pedidos e lidar com questões de crédito e troca.
Os exportadores diretos vendem produtos diretamente para empresas ou consumidores em países estrangeiros. Eles desfrutam de maior controle sobre o marketing e a distribuição de seus produtos do que os exportadores indiretos e evitam o custo de pagar uma EMC. No entanto, a empresa geralmente deve coordenar pesquisa, distribuição, marketing, preços, jurídico e outros esforços internos, o que normalmente envolve um compromisso financeiro significativo. Algumas das responsabilidades podem incluir o estabelecimento de uma força de vendas direta, financiamento de clientes e taxas de câmbio de hedging, embalagem e transporte, fornecendo suporte técnico, estabelecendo preços e lidando com impostos, tarifas, cotas e outras restrições.
ACORDOS CONTRATUAIS.
Uma opção ou complemento viável para a exportação é a contratação, por meio da qual uma multinacional chega a um acordo com uma empresa no país anfitrião para lidar com uma ou várias facetas de sua estratégia naquele país ou região. Um tipo comum de contrato é o contrato de fabricação, no qual um fabricante do país anfitrião se compromete a fabricar produtos a critério da empresa multinacional. Esse tipo de acordo é mais vantajoso para empresas cuja vantagem competitiva está no marketing ou na distribuição. É importante ressaltar que ela reduz os custos relacionados ao transporte de mercadorias e às instalações de fabricação de edifícios e reduz efetivamente alguns riscos relacionados a investimentos. Além disso, a fabricação sob contrato pode permitir que a multinacional contorne certas restrições comerciais porque está trazendo dinheiro e empregos para o país anfitrião. A principal desvantagem é que a multinacional freqüentemente perde o controle sobre o processo de produção (ou seja, qualidade), e pode até mesmo se encontrar treinando seu futuro concorrente.
Um segundo contrato de contrato popular é o licenciamento, segundo o qual uma empresa multinacional (o licenciante) concede a uma empresa local (o licenciado) os direitos de marcas, patentes, direitos autorais ou informações proprietárias. Em troca, o licenciado normalmente concorda em produzir e comercializar os produtos do licenciante e pagar ao licenciante uma taxa, que geralmente é baseada no volume de vendas. O principal delineamento entre licenciamento e contratação é que o papel do licenciante é muito maior do que o do contratado. O licenciamento funciona bem para empresas, particularmente as menores, que querem entrar em um mercado de forma rápida e barata e estão tentando evitar as restrições comerciais exigidas pelo governo anfitrião. No entanto, a empresa que concede a licença mantém o controle final e pode revogar a licença se o licenciado não cumprir o seu lado do contrato. Ainda assim, o licenciamento acarreta alguma perda de controle sobre o produto e, muitas vezes, faz com que o licenciado se torne o principal concorrente do licenciante quando o contrato expirar.
Outros tipos de acordos contratuais incluem acordos turnkey, em que uma empresa no país anfitrião concorda em construir uma instalação de fabricação, treinar pessoal e executar execuções iniciais de produção para outra empresa. Da mesma forma, sob acordos de coprodução, um empreiteiro no país anfitrião concorda em construir uma fábrica em troca de parte da produção. Esses acordos são mais comuns nas economias de comando, onde as multinacionais são forçadas a trocar por bens e serviços no país anfitrião. Por fim, os contratos de gestão representam um tipo de exportação de serviços; uma empresa concorda em exportar seus conhecimentos para outro país, para construir e operar um hospital, por exemplo, até que as pessoas locais adquiram a expertise para assumir o controle da operação. Em troca, a empresa recebe uma taxa.
Exemplos de empresas dos EUA que utilizam acordos contratuais incluem fabricantes de tabaco. Como muitos países estrangeiros, especialmente na Europa, mantêm monopólios do tabaco, eles são forçados a licenciar suas marcas para o produtor monopolista. Outro exemplo que demonstra os potenciais prejuízos do licenciamento é a Westinghouse. Na década de 1970, a Westinghouse licenciou a Framatome, uma empresa francesa relativamente insignificante, a usar suas patentes para se dedicar à indústria de energia atômica. Quando o contrato expirou, a Framatome tornou-se a segunda concorrente global mais forte da Westinghouse, utilizando processos desenvolvidos com base nas patentes da Westinghouse.
EMPREENDIMENTO COMUM.
Depois de exportar, joint ventures são o próximo meio mais comum de obter bens em países estrangeiros. Em uma joint venture, uma multinacional se junta a uma empresa em um país anfitrião para compartilhar riscos e capacidades complementares. Embora os acordos contratuais sejam semelhantes aos empreendimentos conjuntos, os últimos diferem na quantidade de insumo e controle que as empresas compartilham. A empresa no país anfitrião pode fornecer acesso importante aos canais locais de distribuição, contratos governamentais e fontes de suprimento. Or, it may bring technological or marketing skills to the table, or serve as a source of capital. Often times, a joint venture allows the multinational to bypass trade restrictions and overcome nationalistic barriers to success in the foreign country.
The primary risk inherent to joint ventures, in additional to normal market risk, is that the interests of both parties might conflict. This usually occurs because the local company is viewing the operation within a local context, while the multinational is looking at the venture as just one element of an overall global program. Discrepancies often arise over how much profit to plow back into the operation, how to handle transfer pricing issues (how much affiliated companies should charge each other for various goods and services), and product and market decisions. In a worst-case scenario, the partnership deteriorates to the point where one or both partners fail to benefit. For this reason, most successful joint ventures have a definite leader that maintains more control, and assumes more risk, in the venture.
An example of a successful joint venture that later soured involved Xerox Corp. In an effort to broaden its global presence, Xerox entered into a 50-50 joint venture in the 1950s with Rank Organization of the United Kingdom. Xerox signed an agreement that essentially gave Rank-Xerox the exclusive rights to manufacture and sell Xerographic machines outside of North America. As time progressed, Xerox outgrew its markets in North America and wanted to sell its machines in other countries. Because it had signed away its valuable rights to conduct business overseas, it was forced to slowly buy back those rights at an estimated cost of $300 million over 20 years.
MANUFACTURING.
The fourth approach to getting goods into foreign markets is through wholly owned manufacturing facilities, a form of foreign direct investment. This route represents the most comprehensive and risky avenue to global trade. It usually entails a large investment and leaves the company much more vulnerable to the whims of the government in the host country. However, it can also provide the biggest payoff and ensure the greatest degree of control over production activities.
Two cardinal options are acquisition and construction. A multinational that acquires existing facilities in the host country benefits from faster access and existing management that is familiar with local supply and distribution channels. On the other hand, building a new production facility is often necessary because the government will not allow a company to sell existing operations or because the multinational cannot find a company willing to sell. Sometimes the host country simply does not possess facilities of the magnitude or sophistication needed by the multinational.
LEITURA ADICIONAL:
Craig, C. Samuel, and Susan P. Douglas. "Developing a Global Marketing Strategy." Chemtech, April 1997, 44-49.
Rosenberg, Jeffrey A. Winning the Global Game. New York: The Free Press, 1998.
Wong Chee, Harold, and Rod Harris. Estratégia Global de Marketing. London: Financial Times Management, 1998.

Primary strategy options for competing in the markets of foreign countries

The legal/political aspect is very important in global marketing. "International law" can be defined as rules and principles that states and nations consider binding upon themselves. This raises two interesting characteristics of international law. The first is that "law" belongs to individual nations and international law only exists to the degree that individual nations are willing to relinquish their rights. The second is the lack of an adequate international judicial and administrative framework or a body of law which would form the basis of a truly comprehensive international legal system.
The international business is also subject to political decrees made by governments both in "home" and "host" países. Home governments can apply pressure not to deal with disapproved parties. These measures may take the refusal to grant an export licence, or withdrawal of export guarantee cover. The host government may take measures like taxation, ownership controls, operating restrictions or expropriation.
The objectives of this chapter are:
& # 183; To give an understanding of the major factors which must be considered in the legal/political environment when planning to market globally.
& # 183; To describe the "Terms of Access" and show the importance of these as vital elements of facilitating trade.
& # 183; To give, in detail, a description of the main elements of the latest GATT Round.
& # 183; To show the importance of legal/political aspects in global marketing.
The chapter begins by looking at the major factors which the marketer must consider in assessing vulnerability to the legal/political environment. It then goes on to describe in detail the major elements of the legal environment and Terms of Access, including both tariff and non tariff barriers. A major section of the chapter is devoted to the main provisions of the new GATT Round (1995) and an assessment of its impact on the global marketer.
All agricultural exports operate within an institutional environment, which is made up of a set of political, social and legal ground rules. These ground rules form the laws of all production, exchange and distribution and give rise to certain expectations and assurances about the actions of others, and give order and stability to the means of doing business. The most important rules in any system are those defining, allocating and enforcing property rights, and rules and conventions defining allowable and non-allowable forms of cooperation and competition (standards, rules of contract, fair trading etc). Well defined and enforced systems regarding property rights are essential. Articulated ownership and rights to use, trade and alter assets is vital to market development, since this assigns to individuals the right to benefits and losses in production and marketing activities.
Rules and conventions specifying entry conditions and boundaries on cooperative and competitive policies also facilitate exchange and coordination. The establishment and enforcement of standards can reduce transaction costs by increasing the available information to buyers and consumers. Standards may include basic weights, measures, quality grades and contract forms. Quality standards may be mandatory or voluntary and minimum or multiple grades. These standards help where trade is at a distance. The EU has a strict set of standards regarding horticultural products for example, including hygiene, quality and certificates of origin.
Licensing also facilitates marketing agencies and producers by reducing transaction costs. This occurs when the criteria for licensing revolves around asset holdings, financial solvency and so on. Performance standards are built in to maintain the licensing agreement.
Increasingly, consumer and trading bodies like the EU are enforcing the disclosure of more and more information. Particularly, these efforts revolve around packaging, labelling and information, for example, pesticides used on horticultural produce. As this trend to disclosure of information grows, along with the phenomenon of product liability, regulations regarding certain tests or inspection of products, handling and processing procedures may be enforced. So may ingredient and nutrition information. This is becoming an increasingly important issue as food products become more complex and varied. One of the problems with this noble effort to inform the consumer is that producers may lose their competitive differentiation advantage through divulging information to competitors.
The EU has gone to extraordinary lengths to inform the consumer, issuing directives on product descriptions and pricing. For example the EU directive on the pricing of cabbages runs to hundreds of pages and, what constitutes "chocolate" and a "sausage" to name but two products, is quite revealing. (see chapter on Product Decisions). The following case proves the point 2 .
The EU is also very strict, as is the USA, on food additives or flavour substitutes. It is particularly so for any substance which may have long term harmful effects. The EU produces "E numbers" standards for product additives and artificial colorants or flavourings.
Most issues in the legal/political environment centre around the following:-
i) "Institutional environment" - made up of political, social and legal ground rules within which the global marketer must operate.
ii) Property rights - patents, trademarks.
iii) Taxation - what taxation schemes will be faced abroad?
iv) Recourse - possibility and length of action with the possibility of image damaging necessitating arbitration.
v) Movement of equity and expropriation threats - often necessitating protocols or the signing of trade frameworking agreements.
Efforts to regulate the international legal system include individual country efforts, like the USA International Trade Commission and the GATT system. The GATT system is a set of norms and procedures which member governments have accepted to create order and predictability in international trade relations.
Case 4.1 When Is Chocolate Not Chocolate?
Sometime this year the European Union will have to decide at what point chocolate stops being chocolate. As defined by a 1973 European Commission directive, chocolate can only contain cocoa butter, cocoa solids, sugar and, in the case of milk chocolate, milk.
But Britain, Ireland and Denmark as well as new EU members Austria Finland and Sweden are exempted from the directive and allow manufacturers to use cocoa-butter equivalents (CBEs) such as palm oil in making chocolate.
Now, as the EU brings its policies into line, it is considering whether to allow up to 5 percent CBEs in chocolate manufacturing.
Chocolate producers stand to profit from relaxed standards, especially if the price of cocoa were to soar.
But the ingredients are less likely to be as much a sticking point as the labelling issue.
"What is to stop the chocolate industry from putting pressure on the EU to allow 10 percent or even complete substitution of cocoa butter and still call the remaining product chocolate?" said Gerrit Ribbink of the Netherlands Development Organisation (SNV) in The Hague. It's misleading to the consumer to use other ingredients and still slick to the name chocolate."
A British consumer spokesman said Britain, which is keen on keeping its current practice of using up to 5 percent CBEs, would oppose new laws that would change labelling standards.
"The UK would say the products are still called chocolate", he said.
For cocoa - producing countries, the packaging issue is secondary to the fear that an increase in the use of CBEs will lead to a drop in the demand for cocoa.
In a statement last October, the 13-nation Cocoa Producers' Alliance, which produces more than 90 percent of the world's cocoa, urged the European Union not to enact the proposals.
SNV estimated that if the EU allowed CBEs in chocolate, demand for cocoa could drop by anywhere between 100 000 and 200 000 tonnes. affecting up to 10 percent of world cocoa production.
What scares producers even more is that American chocolate manufacturers could lobby the US Food and Drug Administration (FDA) to follow the EU's example, and this could cut demand even further.
The three basic principles are:
i) nondiscrimination - each member country must treat the trade of all other member countries equally.
ii) open markets which are encouraged by GATT through a prohibition of all forms of protection except customs tariffs, and.
iii) fair trade which prohibits export subsidies on manufactured products and limits the use of export subsidies on primary products.
None of these principles is fully realized, simply because it is impossible to "police" all sovereign governments and dictate what is or is not tariff or non tariff discriminating. The need to systematically evaluate the legal/political environment cannot be overemphasized. This can be done by reference to the appropriate embassy or government agency or via magazines like "Foreign Affairs" and even by reference to a domestic agency in the host country.
Checks can be made on the legal/political system as to its ideology, nationalism, stability and international relations.
Ideology: A country's ideological leaning may be capitalism, socialism, a mixture or other form. In the last years remarkable changes have been taking place in the ideologies of many countries. The most dramatic example has been the collapse of the communist USSR and Eastern Europe and its replacement with market led policies and ideologies. Similarly, many African countries are abandoning their centrist leanings in favour of market led economies, for example, Zimbabwe and Tanzania.
Nationalism: Much was said about nationalism in the previous section. Whilst, primarily a phenomenon of the developing countries, Yugoslavia has shown it is not entirely so. Nationalism can lead to expropriation of foreign held assets.
Stability: Changes in regime, violence and cultural divisions based on language or other factors can lead to a very uncertain environment in which to conduct business. The current uncertainty in Liberia and Rwanda, the violence of Somalia and Yugoslavia increase the risk and diminish the confidence of doing business in these countries.
International relations: In general international relations have improved over the last twenty years. The development of GATT, NATO and the EU have gone a long way to reduce the element of "foreigness".
Expropriation is an extreme form of political action. It may occur for a number of reasons, including the desire to retain national assets, as a "hostage" situation in international disputes, for example the seizure of Union Carbide's assets after the Bhopal disaster in India. Other government activity, which affects capital investment includes joint venturing insistence and repatriation of funds. "Partnering" remains widespread (inward investment in tandem with a domestic company) as does restrictions on repatriation of funds. In Zimbabwe, for example, HJ Heinz, the multinational food agent, has entered into partnership with Olivine industries. Over time, even if initially the investment is not favourable, the Government may relax its conditions as it sees the benefits.
If expropriation is a real possibility then the investor should seek to minimise risk by:
i) relatively rapid depreciation of assets and repatriation of funds by manipulated transfer prices.
ii) establish a local supply infrastructure so that any adverse action damages the host economy.
iii) raise as much investment capital in the country as possible.
iv) retain control of critical inputs and minimise local stocks of these.
However these measures may increase the risk of expropriation or reduce the potential success of the venture.
Many countries try to reduce perceived risk by promoting inward investment through the provision of tax breaks, free ports, enterprise zones etc., which are not tied as in partnering. The key is to look at what the disadvantages are. If the government mainly wishes to attract the mobile investor, or overcome say poor local skills, one has to assess what would happen if the scheme was withdrawn once the capital had been committed. Similarly if viability depends on incentives rather than real return on investment, the question is, is the venture really worth it?
Assessing political vulnerability.
Political vulnerability should be assessed by using a systematic checklist. Such a checklist should include the following:
& # 183; The firm's own country's relations with other countries.
& # 183; Sensitivity of the product or industry.
& # 183; Size and location of operation - the bigger the more vulnerable.
& # 183; Visibility of firm - is it high profile say via advertising?
& # 183; Host country's political situation.
& # 183; Company behaviour - is it a good corporate citizen?
& # 183; Contribution to host country, for example, employment.
& # 183; Localisation of operations.
Depending on the answers to these checkpoints, the amount of risk, real or perceived, can be assessed and fed into the investment discussion.
Political factors give rise to a number of marketing implications. Estes incluem o seguinte:
& # 183; Is the product ever subject to political debate regarding, say, adequacy of supply, for example, oil?
& # 183; Is the product a critical input for other industries, for example, cement?
& # 183; Is the product socially or politically sensitive, for example, food?
& # 183; Is the product of national defence significance?
& # 183; Is the product taking a disproportional amount of capital repayment?
& # 183; Is the product leading to the locus of control being held outside of the host country?
Again, the answers to these questions will enable the marketer to assess the degree to which the product being marketed has to be priced and resourced, so as to either avoid or reduce the risk of expropriation or other political reactions.
As indicated in the introduction to this section, the international legal framework is somewhat confused. Most controls or regulations revolve around export and import controls, transfer pricing, taxes, regulation of corrupt practices, embargoed nations, antitrust, expropriation and distribution of equity, patents and trademarks. The following touches on a number of these issues and in particular the import/export regulations (terms of access).
To many, the supreme body is the International Court of Justice, situated in The Hague, Holland. Here a number of international disputes may be taken for ultimate adjudication. However, a series of other bodies and legislation exists.
a) FCN (Friendship, Commerce and Navigation) and Tax Treaties primarily US based and concerned with giving protection of trading rights and avoiding double taxation.
b) IMF and GATT already discussed in the previous section and concerned with member nations international trade restrictions and dumping.
c) UNCITRAL (UN) international trade law commission set up with the intent to provide a uniform commercial code for the whole world, particularly international sales and payments, commercial arbitration and shipping legislation. Works with international chambers of commerce and Governments.
d) ISO (International Standards Organisation) often works with ILO, WHO etc. and contains technical committees working on uniform standards.
e) Patents and trademarks there is no such thing as international patent. The most important patent agreement is the International Convention for the Protection of Industrial Property, first signed in 1983 and now honoured by 45 countries. The treaty provides that if a filee files in a signatory country within one year of the first filing, the filee will be afforded the date of the first filing for priority purposes.
A patent cooperation treaty (PCT) and a European Patent Convention are also in effect. The PCT has 39 countries including the USA, Japan and Brazil. The EU convention covers 15 countries and gives patent protection in all 15 if signified in one.
f) Air transport is covered mainly by IATA (International Air Transport Authority), ICAA (International Civil Aviation Authority) and ITU (International Telecommunication Company).
g) Codes of conduct, like those in the OECP, are not technical law but important. Member countries produce guidelines for multinational enterprises covering aspects of general policy, disclosure of information, competition, financing, taxation, employment and industrial relations.
h) Recourse arbitration is an attempt to reduce disputes by consultation. Some of the most widely used are the International Chamber of Commerce, the American Arbitration Association, the London Court of Arbitration and the Liverpool Cotton Exchange.
The implications of international law on marketing operations are legion. The principle ones are as follows:
& # 183; Product decisions - physical, chemical, safety, performance, packaging, labelling, warranty.
& # 183; Pricing decisions - price controls, resale price maintenance, price freezes, value added systems and taxation.
& # 183; Distribution - contracts for agents and distribution, physical distribution, insurance.
& # 183; Promotion - advertising codes of practice, product restriction, sales promotion and,
& # 183; Market research - collection, storage and transmission of data.
Other areas affected are obviously in currency and payments but these will be dealt with in later sections.
One particular area where legal/political effects are felt by international marketers is in the terms of access, so the rest of this section will be given over to a discussion of these. The phrase "terms of access" refers to all the conditions that apply to the importation of goods from a foreign country. The major instruments covered by this phrase include import duties, import restrictions or quotas, foreign exchange regulations and preference arrangements.
Tariff systems provide either a single rate of duty for each item applicable to all countries, or two or more rates, applicable to different countries or groups of countries. Tariffs are usually grouped into two classifications:
Single-column tariff: The single-column tariff is the simplest type of tariff and consists of a schedule of duties in which the rate applies to imports from all countries on the same basis.
Two-column tariff: U nder the two-column tariff, the initial single column of duties is supplemented by a second column of "conventional" duties which show reduced rates agreed through tariff negotiations with other countries. The conventional rates, for example those agreed upon by "convention", are supplied to all countries enjoying MFN (most favoured nation) treatment within the framework of GATT. Under GATT, nations agree to apply their most favourable tariff or lowest tariff rate to all nations who are signatories to GATT, with some substantial exceptions.
A preferential tariff is a reduced tariff rate applied to imports from certain countries. GATT prohibits the use of preferential tariffs with the major exceptions of historical preference schemes, such as the British Commonwealth preferences and similar arrangements that existed before the GATT convention; preference schemes that are part of a formal economic integration treaty, such as free-trade areas or common markets; and the granting of preferential access to industrial country markets to companies based in less-developed countries.
Customs duties are of two different types. They are calculated either as a specific amount per unit or specific duty, or as a percentage of the value of the goods or ad valorem, or as a combination of both of these methods.
Ad valorem duties: This duty is expressed as a percentage of the value of goods. The definition of customs value varies from country to country. Therefore an exporter is well advised to secure information about the valuation practices applied to his product in the country of destination. A uniform basis for the valuation of goods for customs purposes was elaborated by the Customs Cooperation Council in Brussels and was adopted in 1953. In countries adhering to the Brussels convention on customs valuation, the customs value is landed CIF cost at the port of entry. This cost should reflect the arm's-length price of the goods at the time the duty becomes payable. Major trading nations that are not members of the Brussels convention on customs valuation are the USA and Canada, which use FOB costs as the basis of valuation, and Japan, which uses CIF value.
Specific duties: These duties are expressed as a specific amount of currency per unit of weight, volume, length or number of other units of measurements; for example, fifty US cents per pound, one dollar per pair, twenty-five cents per square yard. Specific duties are usually expressed in the currency of the importing country, but there are exceptions, particularly in countries that have experienced sustained inflation. In the Chilean tariff, rates are given in gold pesos and, therefore, must be multiplied by an established conversion factor to obtain the corresponding amount of escudos.
Alternative duties: In this case both ad valorem and specific duties are set out in the custom tariff for a given product. Normally, the applicable rate is the one that yields the higher amount of duty, although there are cases where the lower is specified.
Compound or mixed duties: These duties provide for specific plus ad valorem rates to be levied on the same articles.
Anti-dumping dunes: The term dumping refers to the sale of a product at a price lower than that normally charged in a domestic market or country of origin. To offset the impact of dumping, most countries have introduced legislation providing for the imposition of antidumping duties if injury is caused to domestic producers. Such duties take the form of special additional import charges designed to cover the difference between the export price and the "normal" price, which usually refers to the price paid by consumers in the exporting countries. Anti-dumping duties are almost invariably applied to articles that are produced in the importing country.
Other import charges.
Variable import levies: Several countries, including Sweden and the European Union, apply a system of variable import levies to their imports of various agricultural products. The objective of these levies is to raise the price of imported products to the domestic price level.
Temporary import surcharges: Temporary surcharges have been introduced from time to time by certain countries, such as the UK and the USA, to provide additional protection for local industry and, in particular, in response to balance of payments deficits.
Compensatory import taxes: In theory these taxes correspond with various international taxes, such as value-added taxes and sales taxes. Such "border tax adjustments" must not, according to GATT, amount to additional protection for domestic producers or to a subsidy for exports. In practice, one of the major tax inequities today is the fact that manufacturers in value-added tax (VAT) countries do not pay a value added tax on sales to non-VAT countries such as the USA while USA manufacturers who pay income taxes in the USA must also pay VAT taxes on sales in VAT countries. For example, EU imposition of a tax on imported horticultural products.
Adaptation to meet local requirements: The impact of adaptation to conform to local safety and other requirements can be crippling. For example, a Jaguar car made in the UK and sold in Japan would be three times its UK value. An alternative approach to the Japanese market would be to begin with the Japanese customer to identify the customer's wants and needs and to design a product for that market or to adapt the design to a world design that would fit the needs and wants in both the domestic and the Japanese markets. The implementation of such a program would involve major marketing investments by the Jaguar Motor Company in establishing distribution, advertising and promotion, training and developing organisations to market the car in Japan. It would also involve significant expenditures in designing the car to appeal to the needs of the Japanese customer.
The Kennedy Round and the General Agreement on Tariffs and Trade (GATT)
A major development of the 1960s was a series of agreements negotiated in the 1963-67 period, popularly known as the "Kennedy Round". During these negotiations, tariff concessions on nonagricultural products by the four largest industrial participants - the USA, the UK, Japan, and the EEC - averaged slightly more than 35 percent and covered about $20 billion of trade. On agricultural products, excluding grains, the average reduction by the major industrial countries amounted to about 20 percent and affected about one-half of the dutiable imports. Tariff reductions under the agreement took place in five equal instalments. The first was concluded on January 1, 1968 and the last on January 1, 1972. Over 60 thousand items were involved, representing approximately $40 billion in world trade annually.
At the conclusion of the Kennedy Round negotiations, tariffs on dutiable nonagricultural products averaged 9.9 percent in the USA, 8.6 percent in the EEC, 10.8 percent in the UK and 10.7 percent in Japan.
A second "Tokyo Round" of trade negotiations was undertaken by the 97 nation GATT in the 1970s. The target in these negotiations, which were still under way in 1979, was to achieve another 35 percent tariff reduction.
The latest GATT round, the so called Uruguay Round, was long held up over subsidy wranglings between the EU and the USA. However in early 1994, an agreement was concluded, but is yet to be ratified by all signatories.
When the European Union and the USA agreed to bury their differences (primarily over subsidies and trade in television and films) on Tuesday 14 December 1992, the way was cleared for the signing of the eighth General Agreement on Tariffs and Trade (GATT) in April 1994 in Morocco, only two days before the deadline. Whilst only 20 countries took part in the first round signed in Geneva in 1947, the current round boasts 116 participants. After failing to meet two deadlines in 1990 and 1991, many thought the Uruguay round would never be concluded. However, completion of the North American Free Trade Agreement (NAFTA) and the hints of the development of a similar trading block in the Asian-Pacific Region (APEC), helped focus the minds of the negotiators.
The principal aim in the early days of GATT was to cut tariffs and to this end average tariffs have fallen from almost 40% to 4.7% and now it will be as little as 3% if the Uruguay round succeeds. GATT has, over the years, gradually gone into other areas. The Kennedy Round introduced rules against dumping exports, the Tokyo Round made it harder for countries to manipulate technical standards, import licences and customs regulations in order to keep imports out. GATT basically stands to defuse trade tension between countries and smaller countries enjoy better access to larger countries' markets through GATT than they could if they had negotiated by themselves.
The new package, which covers ten times the value of the previous seven GATT Rounds put together, touches on more than four billion Sterling Pounds worth of International Trade, nearly twenty times the size of UK's annual budget. Economists reckon that the Uruguay Round will add about $270 billion to world income within a decade and boost global trade by more than 12%. The deal also creates a powerful international bureaucracy, the World Trade Organisation (WTO) to police world trade and act as a bulwark against a return to the economic protectionism which proceeded war in the 1930s. But not all countries will gain. Africa will be a net loser, with Nigeria down by $1,0 billion. Other fears are that Africa will lose out on agricultural prices but textiles will get a boast.
The proposed effects are shown in figure 4.1 6.
Largest number of world's 500 biggest global companies, and biggest services exporter ($2 billion benefit). Aerospace computer software, agriculture ($9.3 billion) and textile ($21.6 billion) sectors will also benefit. Total gain: $36 billion a year by 2002.
Set to gain from liberalisation in high tech goods, agriculture ($22 billion), manufacturing. Loses $0.5 billion through textile liberalisation. Total gain $27 billion a year by 2002.
Gain $3.3 through farm liberalisation, $1.8 billion in textiles, $1.1 billion in services. $7.1 billion overall gain.
World's biggest exporting block. Agriculture to see income increase of $30 billion, textiles ($27.2 billion), services ($7 billion), manufacturing ($7.6 billion) all set to gain-but prospects differ in each country. Total gain: $61.3 billion a year by 2002.
5. Eastern Europe.
Textile services sectors likely to benefit. Former Soviet Union set to gain by some $13 billion from liberalisation of services. Total gain: $37 billion a year by 2002.
6. Australia/New Zealand.
Large gains from liberalisation of agriculture ($1.0 billion), textile ($1.1 billion). Total gain $2 billion a year by 2002.
Set to gain $37 billion a year by 2002.
Set to gain $4.6 billion a year by 2002.
9. Africa (excluding Egypt and Libya)
The continent as a whole is set to lose $2.6 billion, with Nigeria alone down $1.0 billion. Morocco, Algeria and Tunisia together lose $0.6 billion, and South Africa loses $0.4 billion.
10. South America.
Set to gain $8.0 billion, with Brazil on its own up $3.4 billion.
The estimates take no account of social costs arising from the structural adjustment of economies in the wake of trade liberalisation, especially on Africa and the Far East.
The main provisions of the 450 pages long document covering 28 separate agreements are according to "The Economist" (December 1993) 1 ; do seguinte modo:
& # 183; For the first time, a written set of rules to cover trade in services. A framework would exist for the liberalisation, not only of the $900 billion worth of services that cross borders, but also the $3 trillion worth of services that are provided domestically around the world - insurance, for example. The modest progress sought in this round would supply a platform for more liberalisation on future rounds.
& # 183; Protect all kinds of intellectual property, including patents, copyright and trademarks. That would be good for developed countries, which can collect higher royalties; but some of the developing countries might lose.
& # 183; Phase out over ten years of bilateral quotas which make up the multifibre arrangement for textiles and clothing. Tariffs will be cut. Developing countries should benefit.
& # 183; Forge a comprehensive agreement in GATT's biggest exception, farm trade. The details are unresolved, but the principles are clear: replace quotas with tariffs; and cut subsidies, especially export subsidies.
& # 183; Cut tariffs by at least a third. Tariffs imposed by the big economies on some important items will be eliminated altogether. Special attention has been given to a few very high tariffs and to helping developing countries by cutting tariffs on tropical products,
& # 183; Try to reform the rules against subsidies.
& # 183; Try to curb the misuse of rules on dumping. This will be difficult to enforce.
& # 183; Try to prevent the uses of voluntary export restraints-a sort of import quota which is operated by an exporter under pressure from an importing country. This is almost impossible.
& # 183; Tidy up rules on shipment, including inspection, customs, import licensing, technical standards and rules of origin.
& # 183; Phase out trade-related investment measures, such as the requirement that foreign investors buy supplies locally.
& # 183; Build on earlier agreements in government procurement and civil aircraft.
& # 183; Speed up the arbitration of disputes between GATT members. Countries will also find it harder to dissent from judgements.
& # 183; Clarify raft of GATT rules.
& # 183; Transform GATT from a provisional agreement (it was never ratified by America) into a full institution called the World Trade Organisation.
The cost of not agreeing a round will have been enormous. Suggestions are that it would cost the world economy some extra $213 - 274 billion each year and worst of all, lead to a gradual erosion of the open trade mechanism. Protectionism would once more raise its head and the whole multilateral trading system would eventually seize up and fall apart.
Whilst the multinationals in computers and electronics etc are definitely likely to gain most, for developing countries the principle effects are likely to be in farm products, textiles and in the effect of services and intellectual property provision. Whilst opening up the world's shopping malls for agriculture products, developing countries are likely to face fierce competition, often from each other, and so will have to operate at greater volumes with lower prices. What is sure is that tariffs will replace quotas, and subsidies, particularly export, will be cut. China and India may be the principle benefactors in textile products due to lower unit cost production structures. Imported products like drugs, film, box and television programmes are likely to be more expensive as manufacturers begin to apply the fine detail of the GATT services and intellectual property claims.
In January 1995, 81 countries and territories, including the United States, European Union and Canada, representing over 90% of international trade became founder members of the World Trade Organisation (WTO), which will absorb the 48 year old GATT over the duration of 1995. The new trade treaty came into force on 1 January 1995. In fact, Japan was the first country to ratify the agreement on 30 December 1994. It is expected that 50 more nations will eventually ratify the treaty and altogether some 155 states including Hong Kong and Macau will eventually sign up. Significantly, China is not included as it failed to convince the "big four" (USA, EU, Japan and Canada) that it had opened up its economy enough. The WTO will administer the new trade treaty and take its place along side the World Bank and the International Monetary Fund as the "third pillar" of the post World War II economic system.
With the success of the Uruguay Round tariff negotiations, attention has naturally turned to the remaining non-tariff obstacles to trade. A non-tariff trade barrier is defined by economists as any measure, public or private, that causes internationally traded goods and services to be allocated in such a way as to reduce potential real-world income. Potential real-world income is the attainable level when resources are allocated in the most economically efficient manner. To the businessman a non-tariff barrier is any measure, other than tariffs, that provides a barrier or obstacle to the sale of his products in a foreign market. The major non-tariff trade barriers are as follows:
Quotas and trade control: These are specific limits and controls. The trade distortion of a quota is even more severe than a tariff because once the quota has been filled, the price mechanism is not allowed to operate. The good is simply unavailable at any price. "State trading" refers to the practice of monopolising trade in certain commodities. In communist countries all commodities are monopolised, but there are many examples of non-communist government monopolies: the Swedish government controls the import of all alcoholic beverages and tobacco products, and the French government controls all imports of coal.
Discriminatory government and private procurement policies: These are the rules and regulations that discriminate against foreign supplies and are commonly referred to as "Buy British" or "Buy American" policies.
Restrictive customs procedures.
The rules and regulations for classifying and valuing commodities as a basis for levying import duties can be administered in a way that makes compliance difficult and expensive.
Selective monetary controls and discriminatory exchange rate policies.
Discriminatory exchange rate policies distort trade in much the same way as selective import duties and export subsidies. Selective monetary policies are definite barriers to trade. For example, many countries from time to time require importers to place on deposit at no interest an amount equal to the value of imported goods. These regulations in effect raise the price of foreign goods by the cost of money for the term of the required deposit.
Restrictive administrative and technical regulations.
These include anti-dumping regulations, size regulations and safety and health regulations. Some of these regulations are intended to keep out foreign foods while others are directed towards legitimate domestic objectives. For example, the safety and pollution regulations being developed in the United States for automobiles are motivated almost entirely by legitimate concerns about highway safety and pollution. However, an effect of the regulations, particularly on smaller foreign manufacturers, has been to make it so expensive to comply with US safety requirements that they have withdrawn from the market.
In 1969 GATT published a 276 page report listing non-tariff barriers to trade. This report, which listed such obscure items as an Italian sanitary tax on foreign snake poison, is already out of date.
Packaging or pesticide regulations often erect a hurdle for exports, but not insurmountably so. The EU has strict hygiene requirements for imports of horticultural produce for Africa which require strict observance. Producers of restrictive administrative regulations are incredibly creative in establishing barriers to trade. This can be seen in the following case 3:
Case 4.2. Mexican Tomatoes.
In 1969, the US Department Of Agriculture put a set of minimum size restrictions on all tomatoes sold in the US market. The regulations provided that mature green tomatoes (those that ripen after they are picked) could not be sold unless they measured more than 2-9/32" in diameter. Vine ripened tomatoes were required to measure at least 2-17/32" in diameter. Mexican tomato farmers were outraged because the regulations barred almost 50 percent of their crop from the US market. Florida growers contended that the regulations were not discriminatory because they applied to both the Mexican and the US crops. But the Mexicans pointed out that the regulations were more lenient on green than ripened tomatoes. Green tomatoes accounted for approximately 85 percent of the Florida tomato crop and only 10 percent of the Mexican crop. While US consumers saw prices rise as much as 30 percent, Mexican tomato framers were enraged while they watched tons of their tomatoes being fed to cattle or simply rotting in heaps along the highway. Rod Batiz, president of the 20 thousand member Confederation of Agriculture Association, was quoted in the "Wall Street Journal" as saying, "The whole of Mexico feels stabbed in the back".
The example illustrates how difficult it is to deal with non-tariff barriers to trade. The Mexicans could protest the decisions of the US Department of Agriculture, but the Florida growers who were competing with the Mexican growers, in effect, wrote their own regulations. They maintained that the regulations worked for the benefit of everyone: growers on both sides of the border and the consumer. A strong case could be made for the harm done by these regulations to Mexican growers and US consumers, but the mechanism for hearing this case did not really exist. The Mexican growers could influence this decision by pressuring the US government through diplomatic channels, or try to appeal directly to consumers and thereby influence legislative and administrative action in government.
An important test of a ruling or regulation is whether it has a greater impact on foreign producers. If this is the case, and there is no apparent social benefit for consumers, the ruling is a non-tariff barrier.
Before World War II specific duties were widely used and the tariffs of many countries, particularly those in Europe and Latin America, were extremely complex. Since the war the trend has been toward the conversion to ad valorem duties. Tariff administration has been simplified by the adoption by a large number of countries of the Brussels nomenclature (BTN). This nomenclature was worked out by an international committee of experts under the sponsorship of the Customs Cooperation Council, which in 1955 produced a convention that entered into force in 1959. The rules of this convention are now being applied by most GATT countries. Approximately two-thirds of all world trade is now conducted under tariffs based on the BTN system. It is significant, however, that among major trading nations neither the USA nor Canada uses the BTN.
The BTN groups articles mainly according to the material from which they are made. For less-developed countries, it is both easy to use and applicable to the goods they produce. An additional advantage of the BTN is its widespread use. A common basis for the classification of goods facilitates comparison of duties applied by different countries and simplifies international tariff negotiations.
In spite of the progress made in simplifying tariff procedures, the task of administrating a tariff presents an enormous problem. Even a tariff schedule of several thousand items cannot clearly describe every product that enters into international trade. The constant flow of new products and new materials used in manufacturing processes introduces new problems. Often, two or more alternative classifications must be considered in assessing the rate on a particular article depending upon how it is used or its component material. The classification of a product can make a substantial difference in the duty applied. There are two important implications of this fact for export marketers. The first is that exporters should seek the most favourable classification for their products in order to minimise the duty levied in the importing country. The second is that the difficulties of classification raise serious questions about the accuracy of data on international trade patterns. When using international trade data, it is important to bear in mind the enormous problems posed by classification and recognize that the numbers in trade reports may often reflect hasty and arbitrary classifications that distort the true picture of the trade flow. Evidence of the inaccuracy of grade classification practices is provided by frequent failure of import and export figures of the same commodity to reconcile between two countries. Some clever marketers seek to get their products reclassified in order to get a lower tariff structure.
The emergence of Japan in the 1970s and 80s, coupled with more trade between developing countries, harmed the balance of payments of the Western economies. Coupled with oil shocks and debt crises, attitudes to trade changed somewhat in the 1980s. In effect free trade was reversed. The Industry and Development Global Report (1988/89) made a series of observations showing that whilst expansion of demand was there, it was patchy and therefore in some sectors excess occurred. Coupled with schemes like the CAP of the EU (Common Agricultural Policy of the European Union) which produced "mountains" of butter, sugar, etc., this excess led to downward pressure on prices which newly emerging nations may be better equipped to deal with if raw materials are banned in country. The growth of economic unions like the EU which are limited multilateral organisations have undermined the strength of GATT agreements but only in so far as non-tariff barriers are concerned. Such non-tariff barriers may merely be devices to soften up foreign rivals and force them into regulatory voluntary restrictions on trade.
The main non-tariff barriers of recent times have been countervailing duty and anti-dumping. Protectionist measures like these can reduce global opportunities in direct ways (imposition of quotas, Health and Safety Standards, etc.), affect the attractiveness of marketing offers to intermediaries by affecting market price (tariffs), volume (voluntary restraints) and uncertainty ("proved" dumping cases) or they reduce opportunities by affecting the attractiveness of your offer to end users (cancelling out price advantages). Anti-dumping is the worst form of protection because anti-dumping creates uncertainty for producers and intermediaries, one needs not be "guilty" to be penalized for it. Anyone entering the industry after a charge of dumping against it will face the highest rate of levy. They can be fined and therefore be driven away and as a result consumers will suffer.
In order to circumvent protection, options include avoiding certain commodities or industries, teaming up with local contacts, producing from inside the market or self regulation.
The legal/political system is a minefield, with few international standards or regulations to fall back on. Thankfully, for many agricultural products and agribusinesses like timber, fish, livestock and so on, the rules are fairly well defined. However, change can occur very quickly. The imposition of a transport levy by the South Africans affected Zimbabwe's drought relief programme costs, and the increase of duties by 40% by the same country are hitting Zimbabwe's clothing exports there very hard. Zimbabwe and Botswana, who enjoy large beef quotas with the EU, can be affected overnight by a ban. On a number of occasions the EU has imposed a ban on beef exports from Zimbabwe because of a so called "foot and mouth" outbreak in Zimbabwe, Although minor in scale, its consequences can be major for the industry. Marketers are beholden to always keep a constant watch on changes which are and could occur in the legal/political environment.
Probably, the most important "Environmental variables" are the political and legal aspects. Laws regarding property rights and regulations regarding permissable and non permissable forms of cooperation and competition are possibly the greatest challenge facing multinational marketers when attempting to cross international boundaries.
Individual country policies, terms of access, tariff and non tariff barriers, and rules and regulations regarding standards of quality, quantity and so on, are so vital that often expert help is required to deal with them.
The new GATT Round, operational from 1995 and effected by the newly constituted World Trade Organisation, is one of the most far reaching trade agreements to date and proposes to boost world trade considerably over the next decade.
Terms of access.
1. Why is it important for Government to have a regulatory framework?
2. Describe the major tariff/duties and non tariff barriers which can be used in international trade as barriers to entry. Dar exemplos.
3. Taking any piece of legislation or example of your choice show how this has been used in either furthering or hindering international agricultural marketing.
4. For any product or service of your choice, in country, show how the main provisions of the new GATT agreement (1995) will affect its trade internationally.
1. Important to have a regulatory framework for the following reasons.
a) Framework states the political, social and legal ground rules for doing business between and within countries.
b) The framework gives:
i) the basis for all production, exchange and distribution activities.
ii) gives rise to expectations and assurances about the actions of others and.
iii) gives order and stability to the means of doing business.
The most important rules are these:
a) Defining, allocating and enforcing property rights.
b) Establishing rules and conventions defining allowable and non allowable forms of cooperation and coordination (standards, rules of conduct, fair trading etc).
2. Tariff barriers/duties (terms of access)
a) Tariffs - single column, two column, preferential.
b) Duties - ad valorem, specific, alternative, compound, anti-dumping.
c) Import charges - variable, temporary, compensatory.
Non tariff barriers.
a) Quota and trade controls.
b) Discriminatory Government and private procurement policies.
c) Restrictive customs procedures.
d) Selective monetary control and discriminatory exchange rate policies.
e) Restrictive administrative and technical regulations.
3. Students may be free to select any tariff on non tariff example or any other form. An excellent example would be the regulatory framework imposed by the EU on the import of horticultural produce from developing countries. These include hygiene standards, (phyto sanitary requirements), quality and size standards, certificates of origin, packaging standards.
Exercise 4.1 Algodon International 1.
It was November 4, the first week of LATINA's major export season of raw cotton (see Annex 1). Mr. Pablo Funtanet, partner and principal trader in the firm looked pensively out the 7th floor window of the Stock Exchange Building of Latina where the firm's office were located. He had just returned from a cotton trading seminar in Geneva, and wondered how he could apply some new ideas he had learned. This was the first private trading season for his firm since the government's new policy of deregulation on 1 July 1988, in which the firm could serve customers for its own account. Trading positions had to be taken and risks calculated. He knew that the first free trading season was also the time to establish a respectable market share against Latina's competitors as well as against cotton suppliers outside Latina. Latina's principal shipping months corresponded with those of India, Turkey, the United States (California and Arizona) and Pakistan which tended to flood the market at times.
Cotton prices had shown a downward trend for over 12 months. They had peaked at $0.86 a pound in mid 1987 but had since fallen. Today's average spot price was $0.55 a pound. (See Annex 2). What marketing strategies should be considered.
Thanks to remarkable increases in yields since a major crop failure in 1986/87, Latina has established itself as one of the growing producers in the region. The country produced just over 8 million bales of 480 pounds each in 1987/88 with a forecast for 1988/89 of 11.2 million bales. (See Annex 3).
At the same time new strains and the installations of lint-cleaners have resulted in improvement in both staple and grade. The increase in production has been the result of an increase in sowing area as well as improvement in availability of fertilizers and pesticides and in farming techniques. With the increase in production, the domestic consumption also increased substantially from 5.6 million bales in 1985 to 6.2 million in 1988. The increase in local consumption is due to vigorous expansion of textile spinning sector. Most available new lint crop in 1988/89 is rapidly being taken up by the domestic mills and stocks are not being accumulated. An active demand for longer cotton reflects the short supply of certain cotton qualities during the month of November 1988.
But despite a substantial increase in domestic consumption, the country continued to produce more cotton than the local market could absorb. The task of exporting the surpluses to foreign markets increased therefore each year. The total exportable surplus during the year 1987/88 was 4 million bales, all of which was exported.
(Case prepared by ITC/UNCTAD/GATT Training Manual on Cotton Trading Operation Geneva 1989)
Latina benefits from extended planting and harvesting periods, which are due to a great variety in climate and distances from the various growing years.
Some cotton is harvested as early as October and as late as January with this production mainly moving to domestic mills.
Most of the cotton in Latina is fully irrigated. Yields in such areas are around 2 bales per acre and more. Rain grown or semi-irrigated areas yield less.
Latina normally produces high grade crop with staple length of 1.1/16" to 1.3/32". In the Southern area cotton of 1.5/32" and 1.3/16" staple is grown.
The bulk of Latina cotton is still hand-picked but machine-picking is on the increase. All cotton is saw-ginned.
On 28 January 1963, the government of Latina passed a decree centralizing all cotton marketing. The government from that date on assumed the responsibility of all the export marketing of cotton for which purpose the Cotton Export Corporation of Latina (i. e. "the Corporation") was created.
The nationalization of the cotton sector had affected the private sector seriously as its activity was drastically scaled down. Cotton were only allowed to act as export agents for the Corporation rather than acting as merchants which required much more trading skills. The nationalization policy was a serious blow to the private sector, especially for those merchants, like Algodon International, which over the years had concentrated on exporting.
Since 1 July 1988, the government has de-regulated the cotton export sector, allowing private enterprises to export raw cotton side by side with the Corporation. However, the de-control has been done with the re-introduction of the Minimum Export Price and Compulsory Contract Registration. The State Bank of Latina announces daily the minimum export price of the base cotton on FOB basis. The bank, in order to calculate the base price, uses world averages of the previous day. Export sales are only allowed to be consummated on the prevailing minimum export price of that day. The minimum export price policy has been re-introduced in order to ensure that no one can export Latina cotton below the prevalent world level.
The company was founded in 1959 and has been primarily involved with the trading of cotton. Before the de-regulation of the cotton export, Algodon International defined its mission as that of export selling for the Corporation since there was no other way of doing business. The company would take a standard commission, and profit and growth of the company was limited. Quite often, the business was simple and it merely resulted "in order taking and execution" on behalf of the Corporation. In order to boost profits the company entered the business of "resident buying". Algodon International would buy on behalf of foreign customers the type of cotton they desired. Instead of earning a commission through a selling service, paid by the Corporation, the company switched and earned through the provision of buying services. Being a resident buyer provided the company with some additional autonomy and flexibility.
More importantly, the knowledge gained in residence buying had given the company an added experience of knowing the requirements of cotton end-users, i. e., spinners, more precisely. Resident buying forced the company also to pay close attention to the crop developments in Latina. Foreign customers wanted to stay informed about the availability of the Latina quantity and quality of cotton in order to be able to buy correctly.
Besides providing its foreign clientele with information about the Latina cotton situation, a growing demand has occurred in recent years to inform them on the world market developments, including the interpretation of New York cotton figures. The firm would provide customers with opinion on cotton quality and quantity availability, appropriate buying price levels, negotiations of prices, future trend prices, and on shipment periods. If, for instance Algodon International would recommend to buy a lot of Indian cotton, it would equally charge a commission, as if it were a Latina transaction. If commissions were charged on foreign cotton, the firm would act more as a consultant than as a buying agent.
Since 1 July 1988, Algodon International has again redefined its business mission and is now acting as an export merchant. The international merchandising of cotton provides much more opportunity to increase profits than the previous commission based roles of export or buying agents. By acting as a merchant, the firm buys for its own account and can price its cotton at what the market will bear, as long as the price is above government set minimum price. Never knowing what price movements are going to be, Algodon International has to consider hedging operations combined with option trading.
The risk of a merchant is one of being the owner of the cotton with all the responsibilities of storing, transporting, financing and most of all, understanding the international cotton trade.
Problem areas for Algodon International in its trading operations.
Algodon International as a private trader is facing a number of problems. Some of them are temporary which could be phased out in due course, but some are likely to remain for some time. The major problems can be summarised as follows.
a) Lack of experienced personnel.
Since the export trade of raw cotton has been centralized in one organisation for more than 15 years, the development process of professional staff has been sharply reduced. Experienced personnel in the cotton business such as professionals who understand the trading in futures and options as well as marketing, documentation and transportation, are not adequately available. Market penetration and Algodon International's competitive positioning will be severely handicapped due to the lack of knowledge people. Since no training institute in international trade exists in Latina, no immediate remedy to this problem can be envisaged.
Before de-regulation of the cotton export sector, the commercial banks were financing the Corporation against government guarantees without hesitancy. All credit requirements were met without any consideration of probability, collateral security or financial structure of the organization. The end result has been that the banks have also neglected to train professional staff who understand the international cotton business.
The cotton business climate since 1 July 1988, has introduced, through the presence of the private sector, a large degree of risk which has to be assessed before it can extend credit. Instead, the banks require collateral security or pledges the stock. The difficulty of obtaining credit for the cotton traders, especially for the small and medium size firms, has not been an exception for Algodon International. Large amounts of credit are required for cotton operations. Sometimes Algodon International is able to provide collateral through equitable security or by pledging cotton stock.
c) Problems of non-performance of cotton importers.
Increasingly, unscrupulous foreign buyers have not respected agreed upon contracts by failing to perform when lower spot prices offered them large savings. It is a problem which can cause considerable losses for cotton exporters. Non-performers of contracts have to be explained to the State Bank of Latina where the contract was filed. The bank can keep the exporter responsible for non-performance if the problem reoccurs. The exporter can resort to the Liverpool Cotton Exchange for technical arbitration but in some countries the implementation of the arbitration settlement has been disappointing.
d) The minimum export price policy.
The introduction by the State Bank of Latina of the minimum export policy seriously limits price competition against foreign traders. Although the minimum price is established on the basis of world parity, it will be difficult to penetrate new market segments. The daily price announced by the central bank is based on the previous day's averages. As the price trend has been downwards since mid-1988, "yesterday's" average tends to lag with "today's" downward price trends. Further, the objective of new merchant-entrants in the cotton trade is build up "market share" during the first years of operation. As potentially new customers tend to be slow to change supply sources, a competitive strategy would be to apply penetration pricing by cutting one's profit margin and set a price below the competitor's price level. With the State Bank imposed pricing policy it would be difficult for Algodon International to build new clientele through the applying of a penetration pricing policy.
Formulating a marketing strategy.
Mr. Funtanet realized that the formulation of a marketing strategy for his firm was one of his utmost priorities. Already some growing areas had started to ship and as a merchant he had to take a stock position or sell short. The following elements had to be considered: market target, channel mix, stock position, pricing and promotion strategies.
Market target and channel mix.
Mr Funtanet realized that he could buy cotton for different customers who may have different objectives for using the cotton. His most logical target would be the spinner. When his firm operated as a resident buying agent, a network of spinners had been developed and his firm had become informed about the specific criteria each customer looked for. Customer profiles had been developed and computerized.
One disadvantage of buying for the spinners was the shrinkage of the market size of the number of spinners. In Europe, Japan and the USA, the textile industry was going through a concentration and the number of spinners was declining every month. Most of the clients Algodon International served as a resident buyer were in fact the smaller spinners who are most in need of commercial intelligence.
The bigger spinners, where the future is concentrated, were served by the international merchants located in places such as New York, London or Geneva. If Algodon International would target international merchants as its future clientele, price competition rather than non-price competition would be the firm's pricing policy. The international merchant buys primarily on price and very little loyalty can be gained. Its profits objectives would have to be more modest as its mark-up would have to be halved. Only through merchandising large volumes could his firm maintain its profit objectives,
A quantitative sales forecast should be the basis of judging his inventory requirements for the next shipping season. Various factors played a role in deciding on his purchasing needs. The most indicative index would be his past sales performance as a cotton merchant. Being a newcomer in the trade he decided that as an objective he must sell at least last years' export volume of 130,000 bales of 480 lbs each, when his firm operated as a resident buyer. As a resident buyer, however, his risk was very limited, as he merely executed orders. The spinner made the decisions. As a merchant, he would be fully exposed to all forces in the market place, including competition, changing demand and weather. Political changes were very likely through new allocation criteria brought about through the Multi-Fibre Agreement. His greatest concern was his financial position. How much credit would his bank provide him? His bales position would have to be either "long" or "short", depending on the credit availability. He figured that he could finance 25 per cent of his sales objective on his own. He could match his own resources with another 25 per cent with credit. As a newcomer in the trade he felt that ample credit availability to his customers would be a competitive requirement. With the provision of credit to his clientele his working capital turnover would most likely be on the low side and not exceed four. The remaining questions pertained to his customer's delivery requirements. The exporting season ran from August through January and on average he could anticipate to deliver 16 per cent of his sales forecast each month. In order to guarantee availability of cotton to his foreign customers Mr. Funtanet realized that he had to "cover" his requirement. How much should he buy on the spot and how much for future delivery? Further, should he hedge and what advantages would there be in combining hedging with options trading? He started reading the November 3 cotton supply outlook (see Annex 4) to increase his understanding of future market conditions.
The minimum export price for 1988/89 crop lint was set by the State Bank on 4 November 1988 at $0.4750 per lb FOB, and that for 1987/88 crop remnants at $0.4525. The respective values a week ago were $0.4825 and $0.46.
Mr. Funtanet noticed that CIF prices in Europe had increased over last week and over last month but were still almost $0.20 below last year's (see Annex 5). Polyester prices had all increased over last year's with China (Taiwan Province) quoting, due to its recent re-evaluation, $0.73 a pound compared to $0.525 a year ago (see Annex 6). New York future prices in November showed a slight decrease compared with the quotations listed in the month of October. When reflecting on the above statistics and calculating a pricing strategy, his eye caught an opinion about the state of the textile market abroad (see annex 7) and the futures and options closing for the day (see annexes 8 and 9).
Mr. Funtanet realized that if his firm continued to serve the spinners, he had to expand his customer mix and try to gain acceptance from some large spinning mills. The "missionary" type of selling activities would result in promoting his firm as a reliable future supplier. He wondered if using sales agents would be appropriate for the initial sales push. Cultivating new customers required a lot of time without sales guarantee. Sales agents might be more appropriate as "order takers", after initial confidence had been established. Using his own salesmen would require extensive training as very few knowledgeable commercial cotton people were left in Latina. If he utilized agents in the early stages, he wondered how difficult it would be to terminate an agent agreement after some time.
Instead of using the "sales push", he also wondered if he could substitute a "sales pull" strategy of trade advertising during the take-off period of his firm. This would give him time to train his sales people and switch to a push-pull strategy after the first trading cycle. He realized a lot depended on the future cotton market conditions and the competitiveness of the services his firm could deliver.
a) In what business is Algodon International?
b) What are Algodon International's operational objectives for implementing the mission during the next fiscal year?
c) What political, economic, competitive, social, technological, demographic and ecological changes are taking place in the international cotton market, which would affect the mission and objectives of Algodon International?
d) What are the strengths and weaknesses of Algodon International to implement its mission and objectives under changing market conditions?
e) What is the conflict between Algodon International's combined mission and objectives and the conclusions reached in the environmental analysis and the company's audit?
f) What strategic solutions are most appropriate for Algodon International to solve the principle problem?
g) What actions must be considered in order to implement the strategic plan?
1. "The Economist", 4th December 1993.
2. "Business Herald", (Zimbabwe) January 19, 1995, pp 25.
3. Keegan, W. J. "Global Marketing Management." Prentice Hall International Edition, 1989.
4. Smith, P. "International Marketing." University of Hall MBA notes, 1990.
5. Terpstra, V. "International Marketing", 4th ed. The Dryden Press, 1987.
6. "The Guardian", 15 December, 1993 pp 12.

The effect of IAS/IFRS adoption on earnings management (smoothing): A closer look at competing explanations ☆
Prior research provides mixed evidence on whether the transition to IAS/IFRS deters or contributes to greater earnings management (smoothing). The dominant explanation for the conflicting results is self-selection. Early voluntary adopters had incentives to increase the transparency of their reporting in order to attract outside capital, while those firms that waited until IFRS adoption became mandatory in EU countries lacked incentives for transparent reporting leading to increases in earnings management (smoothing) after IFRS adoption. We maintain that the IFRS standards that went into effect in 2005 provide greater flexibility of accounting choices because of vague criteria, overt and covert options, and subjective estimates. This greater flexibility coupled with the lack of clear guidance on how to implement these new standards has led to greater earnings management (smoothing). Consistent with this view, we find an increase in earnings management (smoothing) from pre-2005 to post-2005 for firms in countries that allowed early IAS/IFRS adoption, as well as for firms in countries that did not allow early IFRS adoption. We find no evidence of changes in incentives that can explain these results.
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Vedran Capkun gratefully acknowledges financial support from HEC Paris and Foundation HEC , Investissements d’Avenir (ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047). Vedran Capkun is a member of the CNRS unit GREGHEC, UMR 2959.

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Primary strategy options for competing in the markets of foreign countries

Pentagon Unveils Strategy for Military Confrontation With Russia and China.
By Bill Van Auken.
January 22, 2018 " Information Clearing House " - The Trump administration’s defense secretary, former Marine Corps Gen. James Mattis, rolled out a new National Defense Strategy Friday that signals open preparations by US imperialism for direct military confrontation with nuclear-armed Russia and China.
Speaking at Johns Hopkins University in Maryland, Mattis made clear that the strategy, the first such document to be issued by the Pentagon in roughly a decade, represented an historic shift from the ostensible justification for US global militarism for nearly two decades: the so-called war on terrorism.
“Great power competition—not terrorism—is now the primary focus of US national security,” Mattis said in his speech, which accompanied the release of an 11-page declassified document outlining the National Defense Strategy in broad terms. A lengthier classified version was submitted to the US Congress, which includes the Pentagon’s detailed proposals for a massive increase in military spending.
Much of the document’s language echoed terms used in the National Security Strategy document unveiled last month in a fascistic speech delivered by President Donald Trump. Mattis insisted that the US was facing “growing threat from revisionist powers as different as China and Russia, nations that seek to create a world consistent with their authoritarian models.”
The defense strategy goes on to accuse China of seeking “Indo-Pacific regional hegemony in the near-term and displacement of the United States to achieve global preeminence in the future.”
Russia, it charges, is attempting to achieve “veto authority over nations on its periphery in terms of their governmental, economic, and diplomatic decisions, to shatter the North Atlantic Treaty Organization and change European and Middle East security and economic structures to its favor.”
“China is a strategic competitor using predatory economics to intimidate its neighbors while militarizing features in the South China Sea,” it states. “Russia has violated the borders of nearby nations and pursues veto power over the economic, diplomatic, and security decisions of its neighbors.”
In what appeared to be a threat directed against both Russia and China, Mattis warned, “If you challenge us, it will be your longest and worst day.”
Both Moscow and Beijing issued statements condemning the US defense strategy. A Chinese spokesman denounced the document as a return to a “Cold War mentality.” Russia’s Foreign Minister Sergei Lavrov, meanwhile, told a United Nations press conference: “It is regrettable that instead of having a normal dialog, instead of using the basis of international law, the US is indeed striving to prove their leadership through such confrontational strategies and concepts.” A government spokesman in Moscow characterized the document as “imperialistic.”
Like the National Security Strategy released last month, the defense strategy also singles out North Korea and Iran as “rogue regimes,” charging them with destabilizing regions through their “pursuit of nuclear weapons or sponsorship of terrorism.” It accuses Tehran of “competing with its neighbors, asserting an arc of influence and instability while vying for regional hegemony.”
The document calls for the preparation for war across what it describes as “three key regions”: the Indo-Pacific, Europe, and the Middle East. The document also makes brief references to Latin America and Africa, asserting the necessity of US imperialism striving for hegemony on both continents. It makes clear that these continents are arenas for the global “great power” struggle that forms the core of the strategy, asserting that a key aim in Africa is to “limit the malign influence of non-African powers.”
What emerges clearly from the Pentagon document is a vision of US imperialism besieged on all sides and in mortal danger of losing global dominance. It reflects the thinking among the cabal of retired and active-duty generals that dominate the Trump administration’s foreign policy that the past 16 years of unending wars in the Middle East and Central Asia have failed to further US strategic interests, creating a series of debacles, while grinding down the US military.
“Today, we are emerging from a period of strategic atrophy, aware that our competitive military advantage has been eroding,” the document states. “We are facing increased global disorder, characterized by decline in the long-standing rules-based international order—creating a security environment more complex and volatile than any we have experienced in recent memory. Inter-state strategic competition, not terrorism, is now the primary concern in U. S. national security.”
The Pentagon’s aim, according to the defense strategy, is to ensure that the US remains “the preeminent military power in the world” able to “ensure the balance of power remains in our favor,” “advance an international order that is most conducive to our security and prosperity” and “preserve access to markets.”
Never Miss Another Story.
The thrust of the document is a demand for a vast buildup of the American war machine, which already spends more than the next eight countries combined, including nearly triple the military spending of China and roughly eight times the amount spent by Russia.
A failure to implement the huge military spending increases that the Pentagon is demanding—the Trump White House has called for a $54 billion increase in the military budget, while Congressional leaders have suggested an even bigger hike—will result “in decreasing U. S. global influence, eroding cohesion among allies and partners, and reduced access to markets that will contribute to a decline in our prosperity and standard of living,” the declassified summary of the defense strategy warns.
Despite having siphoned trillions of dollars out of the US economy to pay for the past 16 years of war, Mattis and the defense strategy present the American military as an institution that has been virtually starved of resources, unable to meet “readiness, procurement, and modernization requirements.”
The overriding objective in terms of modernization is the buildup of the US “nuclear triad”—Washington’s array of intercontinental ballistic missiles, submarine-launched ballistic missiles and strategic bombers, capable of destroying life on the planet many times over.
The document said the Pentagon will seek to upgrade all aspects of its nuclear war-fighting apparatus, “including nuclear command, control, and communications, and supporting infrastructure.” It added that “Modernization of the nuclear force includes developing options to counter competitors’ coercive strategies, predicated on the threatened use of nuclear or strategic non-nuclear attacks.” In other words, the US military is prepared to launch a nuclear war in response to a conventional or cyberattack.
Tellingly, the Pentagon document uses the words “lethal” and “lethality” 15 times to describe the aims of Mattis and his fellow generals in regard to their proposed military buildup. Clearly, what is being prepared is a level of mass killing far beyond the bloodbaths carried out in Iraq, Afghanistan, Libya, Syria, Yemen and elsewhere.
In Mattis’s speech there was a strong element of resentment toward the civilian government and its constitutional control over the military. He described US troops being compelled to “stoically carry a ‘success at any cost’ attitude, as they worked tirelessly to accomplish the mission with inadequate and misaligned resources simply because the Congress could not maintain regular order.”
Mattis warned that the war plans outlined in the document will require “sustained investment by the American people,” noting that “past generations” had been compelled to make “harsher sacrifices.”
These new “sacrifices” will take the form of savage cuts to essential social services, including the gutting of Social Security, Medicare and Medicaid, with the transfer of resources to the military, the arms industry and the financial oligarchy.
The National Defense Strategy released Friday constitutes a grave warning to working people in the US and throughout the world. Driven by the crisis of their system, America’s capitalist ruling class and its military are preparing for a world war fought with nuclear weapons.
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