BASES OF INTERNATIONAL MARKETING CHAPTER 2

BASES OF
INTERNATIONAL
MARKETING
CHAPTER 2

Chapter 2 discusses:
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The economic benefits of trade
The reasons companies export and import The development of exporting and internationalization within the firm
The growing impact of concerns regarding social responsibility

POTENTIAL BENEFITS
FROM EXPORT
MARKETING
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Overall benefits in the form of increased overall consumer welfare
Exports provide money to finance imports Trade has impact on consumption and production for individual countries

IMPACT OF IMPORTS
Wide choice available to consumers 

Access to technological advancements (Direct, license and FDI)

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Lower cost to consumers

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Supply in domestic market may not be enough to meet the demand Necessary to import certain goods
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IMPORTANT TO CONSIDER THE
IMPACT OF IMPORTS ON THE
DOMESTIC ECONOMY

IMPACT OF EXPORTS
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High volume can help achieve economies of scale
Lower prices to the domestic consumers 

Effects of recession may be avoided – (business cycles differ in each country)
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Positive effect on the balance of payments – offsets the effect of imports IMPORTANT TO CONSIDER THE
EFFECT OF EXPORTS ON THE
DOMESTIC ECONOMY

INTERNATIONAL TRADE
THEORIES

What determines the nature and amount of goods that any country buys or sells in the international market?

CLASSICAL THEORY OF
INTERNATIONAL TRADE
Countries tend to specialize in those products in which they have an advantage, mainly lower cost of production. 

Export items that it can make more cheaply as compared to other countries

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Import items that it can get more cheaply from abroad

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Absolute advantage where country A produces one product more cheaply and country B produces another more cheaply.
Comparative advantage where country A produces both products more cheaply, and country B produces one of them at a much greater cost and the other at only a little greater cost.
No advantage (or equal advantage) where the ratio of production costs of the