Section One Modes of International Business
●Minimize Risk To minimize swings in sales and profits, companies may seek out foreign markets to take advantage of business cycle--recessions and expansions--differences among countries．
Section One Modes of International Business
An aucΒιβλιοθήκη ion is a public sale in which products are sold through a formal bidding process． It has three formats：English auction，Dutch auction，and sealed-bid auction． Given different auction formats, the same auction item is likely to yield different sales proceeds for the seller．
Section One Modes of International Business
Definition: International business is all commercial transactions -- private and governmental--between two or more countries． Private companies undertake such transactions for profit; governments may or may not do the same in their transactions.
Section One Modes of International Business
Direct Exporting ● A fair or trade show is an exhibition for promotion and sale of products． There are two main types of trade shows．One is a horizontal fair in which a wide variety of commodities are displayed．It is often large in scope and rich in content. The other is a vertical fair that exhibits industry-specific products． Computer Trade Show and Textile Exhibition are examples of specialty fairs．
Section One Modes of International Business
● Tenders and biddings are widely used in international contracting projects and procurement programs by government agencies，large companies. There are three basic forms：negotiated bidding，competitive bidding，and twostage bidding．
Chapter 1
Introduction to International Trade Practices
Learning Objectives
After completing this chapter, students should ensure their understanding of the following: different modes of international business a background knowledge of the international trading environment the general procedures of export transaction with letter of credit payment parties involved in an import-export transaction
Section One Modes of International Business
1.1 Merchandise Exports and Imports Merchandise exports are tangible products-goods--sent out of a country；merchandise imports are goods brought into a country． These goods can be seen leaving and entering a country，they are also called visible exports and imports．The terms exports and imports in this book apply to merchandise, not to a service．
Chapter Structure




Section One Modes of International Business Section Two International Trading Environment Section Three General Procedures of an Import-Export Transaction Section Four Introducing the Parties to an Import-Export Transaction
Section One Modes of International Business
● A consignment sales agreement is a type of agency contract． An exporter forms a principal-agent relationship with an export agent or consignee．When an exporter ships on consignment，the title of cargo remains with the exporter，but the cargo will be placed under the agent’s custody, and the exporter agrees to wait for payment until the goods are sold.
Section One Modes of International Business
Indirect Exporting
● Exclusive Sales : An exporter and an exclusive
sales distributor establish a principal-principal relationship in the sense that the exporter is the seller，and the distributor is the buyer． Under exclusive sales, the exporter confers the rights of a certain product or a type of products to a party in an area within a specified period of time．The exporter and the distributor usually sign an exclusive sales agreement．
Section One Modes of International Business
● Agency: In international trade，an exporter confers overseas agents the right to sell exporting goods on his behalf． By acting within the scope of their authority, agents are entitled to receive commission for their service， and all the expenses and losses will be borne by the exporter．
Section One Modes of International Business
1.2 Service Exports and Imports Service exports and imports generate non-product international earnings． The company or individual receiving payment is making a service export. The company or individual paying is making a service import. Service exports and imports take many forms
Section One Modes of International Business
Why Companies Engage in International Business? ●Expand Sales Higher sales mean higher profits，assuming that each unit sold has the same markup． So increased sales are a major motive for a company’s expansion into international business. Many of the world’s largest companies derive over half their sales from outside their home countries．