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CH 21] Business 101 21-7

Table 21.2 The Top U.S. Exporters
21
Export Sales
Firm (in billions)
1. ExxonMobile (oil, gas) $302.6
2. Apple (Computer Hardware) $320.4
3. Ford Motor (cars / trucks) $264.2
4. Chevron (oil, gas) $237.4
5. General Motors (cars / trucks) $228.0
6. Phizer ( Pharmaceuticals ) $167.5
7. Johnson & Johnson (medical equip & supplies) $155.0
8. Intel (semiconductors) $147.7
9. Proctor & Gamble (Household / Personal care) $124.4
10. Cisco Systems (communications equipment) $90.4

export manufactured items (aircraft parts and accessories), food products (grain,
soybeans, and wheat), raw agricultural products (cotton), and some natural resources
(coal). By contrast, countries with abundant low-cost labor often specialize in products
that require a significant amount of labor, such as shoes and clothing being produced
in China and Mexico.

The Self-Sufficiency Considerations
While free trade and specialization of products in which countries have a
comparative advantage can lead to higher levels of goods produced worldwide, some
countries prefer to be self-sufficient and avoid specialization. Most former communist
countries have followed this pattern at one time or another. Other countries only seek
self-sufficiency in commodities they regard as strategic to their long-run development,
such as energy in the United States.
In most cases, countries that seek to be self-sufficient do so for reasons of military
preparedness, or fear of economic reprisal from other countries. They see non-
economic advantages as being more important to the national welfare than the
economic advantages of specialization. Israel and South Africa are two countries that
try to be self-sufficient with regard to many national defense items. In other cases, a
country may devote its resources to a product it does not produce efficiently in order to
become an important producer in the future. Israel is a leader in the engineering design
of self-defense systems along with its ally the United States. The United States has a
greater production capacity, as such Israel benefits in trade with cooperative
engineering and production trading.

Levels of International Business Involvement
International business involvement is an evolving process for many firms. For
example, a small company might start exporting on a limited scale, then expand its
overseas efforts as management gains experience and confidence in its ability to
operate effectively internationally, and meet production quotas.
Four levels of involvement in world business are: direct and indirect exporting,
foreign licensing, overseas marketing, and international production. As a firm
becomes more active internationally, both the risks and the degree of control over
marketing increase.
Direct and Indirect Exporting
Selling U.S. made goods abroad is exporting. Many companies engage in indirect
exporting, often without realizing it, when their products are part of another good that
is exported. Electronic components and fresh frozen chickens are a common example.
When a firm commits to seeking export business, it engages in direct exporting, the
most common form of international business. The company must devote both capital
and managerial resources to this effort. Frequently, a firm will coordinate its export
operation with an in-house "export manager," or may hire an exporting company
specializing in export promotion. Table 21.2 shows the top ten U.S. exporters.

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