Page 196 - Bus101FlipBook

21-8 International Trade [CH 21

Goodyear Tire & Rubber
Company managers are global
thinkers. A new corporate flag
showing a Goodyear "G" floating
in a stylized globe symbolizes the
firm's determination to be
globally competitive in
productivity, quality, uniformity,
product cost, and value. The
"World Class Competitor" flag is
awarded to the employees of
manufacturing plants in
recognition of their ability to
make products that meet and beat
both U.S. and foreign
competition. The Lawton,
Oklahoma, plant was the first to
earn the award. In this photo,
Lawton employees watch as the
flag is raised in honor of their
reaching globally competitive
status.

Foreign Licensing
A one-ounce jar of "Ai Fang" facial cream sells for the equivalent of an average
day's pay in China. It is produced by a local Chinese firm under license from Avon.
Avon provides raw materials, plant equipment, and production assistance in exchange
for 7.5 percent of the profits.
The China-Avon agreement is an example of foreign licensing. Companies often
select this approach because of high shipping costs, tariff barriers and other trade

restrictions, or restrictions on foreign investment. For example, many U.S. firms
license their technologies to Japanese companies because Japan has often made it
difficult or impossible for American corporations to invest there. China has looked for
US investment in production facilities to take advantage of China’s vast natural

resources and labor.

Overseas Marketing
Foreign marketing is controlled directly by the parent company, even though the
goods and services may come from a variety of sources, such as domestic plants,

licensees, or subcontractors. When a firm becomes involved in overseas marketing, a
foreign sales office is established. For example, Square D, a Palatine, Illinois,
electronics manufacturer, uses overseas sales offices in countries, such as the
Netherlands, where it does not have manufacturing facilities. Milwaukee-based Belaris

Machinery Inc., another sales organization, markets Soviet-made Belaris Tractors
through a network of 120 U.S. dealers.

International Production
joint venture Total international business involvement occurs when a company produces as well
Sharing of a foreign as markets its products abroad. A firm enters foreign markets in this way either by
operation's costs, risks, and
management with a foreign starting a subsidiary or acquiring an existing firm in the country where it is expanding.
firm or government. Square D set up subsidiaries in Canada and other countries, while acquiring a going
concern in Germany. Sometimes a company may enter into a joint venture with a

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