მაკას კონსპექტი - სრული

ისტორია, თეორიები და ფორმები

1. Why do people trade? – people trade and not nations, trade makes people better off, people
trade because it is cheaper, no trade will take place until both parties believe they benefit,
trade exceeds the capability of individual.
2. Reasons for expanding business internationally – seeking growth opportunities, taking
advantage of new opportunities, diversifying customer base or supplier base, accessing new
technology or resources, hedging against risks associated with domestic markets.
3. History of trading – everything started with the silk road. Silk road was not a real road or a
real silk. It was a network of goods that were set u in a series of entrepots. The importance of
silk seemed far less than of chariots, horses and gunpowder, but it left the most lasting
money.
4. Theories of international trade – there are six main theories in international trade:
Mercantilism in 16th century, Absolute advantage adam smith 18th century, Comparative
Advantage – 19th century, Product life cycle Theory – 20th century, Porter’s Cluster theory
20th century and New Trade theory 21st century.
5. Mercantilism in 16th century – Mercantilism was an economic system of trade that spanned
the 16th century to the 18th century. Mercantilism was based on the principle that the
world’s wealth was static,, and consequently, governments had to regulate trade to build their
wealth and national power. Mercantilism was a from of economic nationalism that sought to
increase the prosperity and power of nation through restrictive trade practices. Its goal was to
increase the supply of state’s gold and silver with exports rather than to deplete it through
imports. It also sought to support the domestic employment. The gold and silver were the
currency of trade. Theory also says that you should have trade surplus. Main things:
Maximize exports through subsidies and minimize imports through tariffs and quotas.
6. Absolute advantage 18th century – Absolute advantage is the ability of an individual,
companu, region or country to produce a greater quantuty of a good or service with the same
quantuty of inputs per unit of time, or to produce the same quantity of a good or service per
unit of time using lesser quantity of inputs that the competitors. The concept of this theory
was developed by the 18th century economist Adam Smith to show how countries can gain
from trade by specializing in producing and exporting the goods that they can produce more
effeciently that other countries. Countries with the absolute advantage can decide to
 specialize in producing and selling a specific good or service and use the generated funds to
purchase goods and sevices from the countries. Main Idea: Produce only goods where you are
the most efficient, trade for those where you are not efficient.
7. Theory of Comparative Advantage 19th century – Comparative Advantage is an economic
theory created by british economist David Ricardo in the 19th century. It argues that
countries can benefit from trading with each other by focusing on making the things they are
best at making, while buying the things they are not as good at making from the other
countries. This theory is based on the idea that every country has different cost structure and
opportunity costs. By focusing on ther strenghts they can produce more efficiently. The
research demonstrated that even if one country can make everything more efficiently than
another country, international trade is still beneficial. Main Things: Efficiency of resource
utilazation leads to more productivity, Should import even the country is more efficient in
the product’s production than country from which it is buying, Makes better use of resources.
8. The Heckscher – Ohlin’s theory – This theory is based on the following assumptions:
Countries are endowed with the different factors of production such as labour, land and
capital. Factors of production are mobile within a country but not between countries. Goods
are produced using different combinations of factors of production.
9. Product life-Cycle Theory 20th century – Product life cycle theory was developed by the
Raymond Venon in the 20th century. The theory originating in the field of marketing, stated
that the product life cycle has three distinct stages: 1. New product, 2. Maturing product and
3. Standardized product. The theory assumed that production of the new product will occur
completely in the home country of its innovation. In the 20th century this useful theory to
explain the manufacturing success of the US. Main Things: As products mature, both location
of sales and optimal production changes, Affects the direction and flow of imports and
exports. In the long term, the life cycles of the product are getting shorter.
10. Cluster Theory 20th century – Clusters are groups of connected companies and institutions
located in a specific area. They include different linked industries and other important
entities for the competition. This involves suppliers of specific inputs like components,
machinary, servicies and etc, as well as providers of specialized infrastructure. Clusters often
expand to include channels and customers downstream and manufacturers of complementary
products and related industries laterally. Additionally, many clusters have govermental and
other institutions such as universities, standards – setting agencies, think tanks, vocational
training providers and trade associations. These institutions offer specialized trainning,
education, information, research and technical support. This theory was developed by the
Porter in the 20the century and it states that concentrating industries in specific regions
 creates several advantages. For one, greater economic activity occyrs when many firms cluster
in one area.
11. New Trade theory 21th century – The new trade theory refers to modern economic theory
that explains international trade based on ecomonics od scale, network effects and first mover
advantage. It helps decpher the main reason behind globalization and intensive trading
between similar economies. In addition, it paves the way for the government’s role in the
industrialization of a country. New trade theory suggests that the ability of firms to gain
economies of scale can have important implications for international trade. Without trade
nations might not be able to produce those products where economies of scale are important
with trade, markets are large anough to support the production neccessary to achieve
economies of scale. So, trade is muttualli beneficial because it allows for the specialization of
production, the realization of scale economies, and the production of greater varietu of
products at lower prices.
12. International Business – International trade is exchange of capital, goods and servicies across
international borders or territories. It is exchange of goods and servicies among nations in the
world.
13. International Trade – Trading Globally gives consumers and countries the opportunity to be
exposed to goods and servicies not available in their own countries. Almost every kind of
product can be found on the international market. Servicies are also traded, lide tourims,
banking and etc. A product that is sold to the global market is an export and a poduct that is
bought from the global market is an import.. Imports and exports are accounted for in a
country’s currents account in the balance of payment.

საერთაშორისო ბაზრის ფორმები

1. There are couple of forms of international business – Imports, Exports, Licensing,
Franchising, Outsourcing and Offshoring, Joint Ventures, Multinational Companies, Foreign
Direct Investment and Strategic Alliance.
2. Imports and Exports – The simplest and the most commonly used method, imports and
exports, can be seen as foundation of international business. Imports are an inflow of goods
into the markets of the home country for consumption. Un contrast, export means selling
goods to foreign countries. In short, import means inflow, whereas export means outflow of
goods in any form.
3. Licensing – Is one of the easiest ways to expand a business internationally. When a company
has a standardized product with the ownership rights, it can use licensing to distribute and
sell the products in the international market. Licenses come in many forms, some of which
are patent, copyright, trademark and etc. Products such as books and movies are usually
distributed internationally through licensing agreements.
4. Franchising – A very effective method to expand a business nationally and internationally,
franchising is similar to licensing. In this, a parent company gives the right to another
company to conduct business using the parent company’s name/brand and products. The
parent company becomes the franchiser and the receiving company becomes the franchisee.
5. Outsourcing – Outsourcing means giving out contacts to interested parties for certain
business processes, for example, giving out accounting functions to an international firm. This
is usually effective when the cost of conducting these processes is comparatively much
cheaper in some other country than in the home country.
6. Offshoring – Offshoring is similar to outsourcing in the sense that a function is moved away
from the home country. However, it is different in the sense that the facility is physically
moved to another country, but the managements stays with the company itself. For example,
Apple inc. is conducting its manufacturing functions in China. However, it is entirely
controlled by Apple Inc.
7. Joint Ventures – A joint venture is a contract between two parties. One is an international
company, while another company is local to where the business has to be conducted. Both
parties contribute to the equity and management of the company. As a result, both share the
profit as well. These parties can mutually decide the percentage of equity and profit sharing.
8. Strategic Partnerships – These types of ventures and partnerships come into existence when
both parties have something to offer. For example, the local company may have the brand
name and network within the country, while the international company may have advanced
technology. A classic example of a joint venture is the Tata Jaguar collaboration in India.
Sometimes there are government restrictions on international companies against 100% equity
in certain areas such a defense. In such cases, international companies can take the benefit
from the new market through a joint venture.
9. Multinational Companies – As the name suggests, multinational companies are companies
that are conducting business in multiple countries. They actually set up the whole business in
multiple countries. Some such examples are Amazon, Citigroup, Coca – Cola, etc. These
companies have independent operations in each country and each country has its own set
offices, employees, etc. In fact, even the products and marketing campaigns are customized as
per local needs.
10. Foreign Direct Investment – Foreign Direct Investment is an investment made by an
individual or a company located in one country to the business interest located in another
foreign country. In this, the investing company usually commits more than capital; they share
management, technology, processes, etc., with the company they have invested in. FDI can
take many forms such as a subsidiary company, associate company, joint ventures, merger,
etc.
11. There are couple of factors to consider before starting international business operations:
Geographical, Social, Legal, Behavioral and economic. To consider all these factors we use
PESTLE analysis.
12. Emerging Directions od business: Pharmaceutival research and development, specialty food,
beverage and nutritional supplements to the dietry needs of older individuals, fitness and
wellness, real estate, senior-friendly housing and retirement communities, technology for
seniors improving the quality of life, travel and leisure, senior care servicies, healthcare and
medical services.
13. Changing Market Behavior: Personalized Experiences: such as customized products and
exclusive services, Education Services: Tutoring, private schools, and enrichment programs,
Pediatric healthcare, nutrition products, and wellness services for children, Children's
Products and Services: high-end toys, designer clothing for children, and unique experiences
for families, Financial Services: financial planning services, investment products, and
retirement planning, Insurance Providers: Products that address healthcare costs, long-term
care, and inheritance planning, Elderly Care Services: As the elderly population increases,
there is a growing demand for services and products catering to their needs.
14. Methodology – doing business – starting a business, construction permits, registering
property, getting electricity, getting credit, protecting minority investors, paying taxes,
trading across borders, enforcing contracts and resolving insolvency.
15. Logistic Performance Index – Efficiency of the border control agencies and customs, Quality
of trade and transport – related infrastructure, Ease of arranging competitively priced
shipments, Competence and quality of logistics services, Ability to track and trace
consignments, Timelines.
16. There are some international trading blocs such as EU, NAFTA (north American free trade
agreement), EAEU (Eurasian economic union), DCFTA (deep and comprehensive free trade
areas).
17. Countries are devided in two piecies base on the culture: Low context, such as tend to prefer
direct verbal interaction and High context, such as tend to prefer indirect verbal interaction.
18. Foreign invetment can be split into direct and indirect investments: direct investments are
when companies make physical investments and purchase in buildings, factories, machanies,
 and other equipments outside of theur home country. Indirect invetmets are when companies
or financial institutions purchase positions or stakes in companies on foreign stock exchange.
Most investments are made within and by the world’s most industrialized economies. Annual
foreign invetments by the countries with top 20 economies exceeded 950 Bilion. 20% of the
jobs depend on DFI.
19. Gross Domestic Product (GDP) – GDP is a monetary measure of the market value of all the
final goods and services producted and rendered in specific time period by a country or
countries. GDP is more often used by the government of a single country to measure its
economic health. Due to its complex and subjective nature, this is measre is often revised
before being cosodered a reliable indicator. GDP= Private Consumption+gross private
investment+government invetsment+government spending+(exports-imports). GDP=C+I+G+
(X-M).

რეგულაციები, ბარიერები და WTO

1. International Trade Barriers – Language, Environmental regulations, Distance, Religion,
Currency, Culture, Politic. Tariff Barriers and Nontariff Barriers. The three major barriers to
international trade are natural barriers, such as distance and language; tariff barriers or taxes
on imported goods; and nontariff barriers. The nontariff barriers to trade include import
quotas, embargoes, buy national regulations and exchange controls. The main argument
against tariffs is that they discourage free trade and keep the principle of comparative
advatage from woring efficiently. The main argument for using tariffs is that they help
protect domestic companies, industries and workers. In the absence of trade the domestic
price is determined by the equilibrium between domestic supply and demand. Once a
country opens up to trade, the price of an item becomes the world price. The world price us
determined by world supply and demand.
2. Goverment Policies – Policy, laws and rules affect trade and investment. Governments have
several options available to them as a way to maintain control to conducting international
business. Government use a number of arguments for imposing trade barriers; this include:
protection of domestic employment, protection of domestic customers, infant industries and
national security.
 Trade barriers
Tariffs
1. Tariffs are used to restrict imports by increasing the price of goods and services purchased
from overseas and making them less attractive to consumers.
2. Tariffs can have unintended side effects. They can make domestic industries less efficient by
reducing competition. Theu can hurt domestic consumers, since lack of competition tends to
push up prices. They can generate tensions by favoring certain industries over others, as well
as ertain regions over others: tariffs designed to benefit manufacturers in cities may hurt
consimers in rural areas, who do not benefit from the policy and are likely to pay more for
manufactures goods. Finally, an attempt to pressure a rival country using tariffs can devolve
into an unproductive cycle of retaliation, known as a trade war.
3. There are couple of tariffs and taxes: Import taxes, Export Taxes, Excise Tax and VAT value
added tax.
4. Import and Export taxes may be a charge per unit, such as per barrel of oil or per new xar. It
may be a percentage of the value of the goods or it may be a combination. No matter how it is
assessed, any tariff makes imported goods more costly, so they are less able to compete with
domestic products.

dumping
1. Dumping is a term used not only the context of international trade. It is the export by a
country or company of a product at a price that is lower in the foreign importing market than
the price charged in the exporter’s domestic market.
2. The exporting country may offer the producer a subsidy to counterbalance the losses incurred
when the products are sold at a price below the costs associated with production. A
disadvantage of trade dumping is that it ca be costly over time because producers may be
subsidized to compensate for the lower price of the good.
3. Dumping is a legal under WTO rules unless foreign country can reliably show the negative
effect of te exporting firm on its domestic producers.

Quota

1. A quota is a government imposed trade restriction that limits the number, or monetary value,
of goods that can be imported or exported during a particular period.
2. Absolute quotas provide a definitive restriction on the quantity of a particular good that may
be imported into the US although this level of restriction is not always is use. Tariff-rate
 quotas allow a certain quantity of particular good to be brought into the country at a reduced
duty rate. Once the tariff-rate quota is met, all subsequent goods brought in are charged at a
higher rate.

Nontariff Barriers
1. There are couple of well know nontariff barriers such as: Standard product, Embargo,
Restrictions of controlling certain industries, Dumping and Quota.
2. An embargo is a government order that restricts commerce or Exchange ith specified country
or the Exchange of specific goods. An embargo is usually created as a result of unfavorable
political or economic circumstances between nations.
3. A strategic embargo prevents the Exchange of military goods with a country. A trade
embargo restricts anyone from exporting to the target naton. Because many nations rely on
global trade, an embargo is a powerfl tool can influence a nation economicaly and politically.
A trade embargo can have serious negative consequences on the affected nation’s economy.

International Tradng Blocs

1. A trade bloc is a type of intergovernmental agreement, often part of a regional
intergovernmental organization, where barriers to trade are reduced or eliminated among the
participating states.
2. International Trading blocs are: EU, NAFTA and EAEU.
3. WTO can: cut living costs and raise living standards, setlle disputes and reduce trade tensions,
stimulate economic growth and employment, cut the cost of doing business internationally,
ecourage good governance, help countries develop, give the weak a stronger voice, support
the environment and health...
4. The World Customs Organization – WCO – Established in 1952 as the customs co-operation
council is an independent intergovernmental body whose mission is to enhance the
effectiveness and efficiency of customs administrations.
5. Today the WCO represents 182 customs administrations across the globe that collectively
process approcimately 98% of world trade. As the global center of customs expertise, the
WCO is the only international organization with competence in customs matters and can
rightly call itself the voice of the international customs community.
6. WCO created HS codesc which are harmonized system codes. The Harmonized System (HS)
is an internationally standardized system of names and numbers to classify traded products. It
was developed and is maintained by the World Customs Organization (WCO). The system is
used by more than 200 countries and economies as a basis for their customs tariffs and for the
 collection of international trade statistics. The Harmonized System (HS) is a global system
that assigns six-digit codes to products for customs and trade purposes. These codes help
classify goods consistently worldwide, making trade easier. Customs officials use HS codes to
determine tariffs and restrictions for imports and exports. Additionally, businesses and
governments use HS codes to track global trade trends, aiding economic analysis and policy
decisions. The system is regularly updated to reflect changes in technology and trade patterns,
overseen by the World Customs Organization's Harmonized System Committee.

კონტრაქტებზე და ინკოტერმებზე
1. In international trade, contracts are crucial as they set out the terms of the deal between
parties from different countries. They clarify details like price, quantity, delivery, and
payment, reducing misunderstandings. Contracts also help manage risks, like currency
changes or delays, by assigning responsibilities. If disputes arise, contracts provide a legal
framework for resolution, ensuring fairness. Overall, contracts promote trust and ensure
everyone follows the rules when trading internationally.
2. Critical contract clauses – The preferred method is to have written and signed agreements
entered into by authorized parties that demonstrate offer, acceptance and consideration.
Business transaction can be conducted without a written contract but should be supported by
documentation that demonstrates: offer acceptance and consideration.
3. Who wins a contract draft? - In a contract negotiation, there isn't necessarily a winner or
loser; rather, the goal is to reach a mutually beneficial agreement that satisfies the interests of
both parties involved. Each party may have specific objectives and priorities they want to
achieve through the contract. Success in contract drafting often involves compromise and
finding common ground where both parties feel their needs are met. Ultimately, a well-
drafted contract should reflect the shared interests and goals of all parties, promoting a
positive and sustainable business relationship.
4. Non-court methods, also known as alternative dispute resolution (ADR) methods, are
approaches used to resolve disputes outside of traditional court proceedings. Some common
non-court methods include: Negotiation, Mediation, Arbitration, Concilliation and Expert
Determination.
5. Applicable law - refers to the legal principles or rules that govern a particular contract or
situation. In international transactions, determining the applicable law can be complex due to
the involvement of multiple legal systems. Parties may specify in their contract which
 jurisdiction's laws will govern their agreement, or they may rely on default legal principles
established by international conventions or treaties.
6. Authorized parties - typically refer to individuals or entities who have the legal authority to
act on behalf of a party in a contract or transaction. This authority may be expressly granted
in writing, implied by the party's position or relationship with the entity, or conferred by
law. Authorized parties are empowered to negotiate, enter into, and enforce contracts on
behalf of their organization or principal. It's important to clearly identify authorized parties
in contracts to ensure that they have the legal capacity to bind their organization or principal
to the terms of the agreement.
7. Mediation – Mediation is another non-court method which is flexible, coluntary and
condidential. An independent mediator helps both parties to work towars a negotiated
settlement if possible. A neutral third party, the mediator, assists the disputing parties in
reaching a voluntary settlement by facilitating communication and exploring potential
solutions.
8. Litigation – Litigation is the court Method of resolving an dispute where judge decides the
case.
9. Arbitration – It is a non-court method where an independent arbiotrator uis appointed by the
parties to make a decision which is usually confidential and binding. Parties present their case
to a neutral arbitrator or panel, who makes a binding decision based on the evidence and
arguments presented. Arbitration is often less formal and faster than traditional court
litigation.
10. "Incoterms" stands for International Commercial Terms, which are a set of standardized terms
published by the International Chamber of Commerce (ICC) that define the responsibilities,
risks, and costs associated with the transportation and delivery of goods in international trade.
Incoterms specify who is responsible for tasks such as loading, transportation, insurance,
customs clearance, and the transfer of risk from the seller to the buyer. Incoterms, created by
the International Chamber of Commerce (ICC), started in 1923 to clarify commercial trade
terms. Over the years, they have evolved to improve clarity and address changes in
transportation and trade practices. Major revisions occurred in 1936, 1953, 1967, 1974, 1980,
1990, 2000, 2010, and the latest in 2020, reflecting the contemporary trade landscape.
11. Incoterms, short for International Commercial Terms, provide standardized rules for
international trade. They outline responsibilities, costs, and risks for sellers and buyers in
various transportation modes. Incoterms are not laws but are widely used globally to avoid
misunderstandings in trade contracts. Incoterms are divided into groups based on
transportation modes and responsibilities. Group 1 includes terms for any transportation
mode, like EXW (Ex Works) and DDP (Delivered Duty Paid). Group 2 focuses on water
 transport, including terms like FOB (Free On Board) and CIF (Cost Insurance Freight). Each
term specifies different levels of seller and buyer responsibilities.
12. The "transfer of risk" refers to the point in the shipping process at which the responsibility for
loss or damage to the goods shifts from the seller to the buyer. This transfer of risk is closely
tied to the Incoterms used in the contract. For example, in Incoterms such as EXW (Ex
Works) or FCA (Free Carrier), the risk transfers to the buyer when the goods are made
available for pickup by the carrier at the seller's premises. In contrast, in Incoterms such as
CIF (Cost, Insurance, and Freight) or DDP (Delivered Duty Paid), the risk transfers to the
buyer once the goods are delivered to a specified destination.
13. In the international sales contract it is obligatory to include: Dates of the contracts, Product
description(color, wight, ingredients, shape...), Payment methods, Shipment Methods and
Delivery methods, Description of the goods(price, packaging, quantyty) Penalties for lateness,
Cargo insurance, Replacement policy, Cencelation policy, Termination policy of contract,
Mode of transport.
14. To trade internationally easier it is crucial to prepare the proper documents in the possitive
time. There are variation of the documents: Export/Import declaration, Commercial invoice,
Package list, Certificate of origin, Certificate of Analysis, Phyto-sanitary certificate,
Veterinary certificate, Health certificate, Pre shipment inspection certificate, Cargo insurance
policy, Weight certificate.
15. Force Majeure – An event that no human foresight could anticipate or which, if anticipated is
too strong to be controlled. Depending on the legal system, such an event may relieve a party
of an obligation to perform a contract.
16. Reverse Logistics - Reverse logistics involves managing the return and handling of products
after they have been sold or delivered. This includes tasks like processing customer returns,
repairing damaged items, recycling materials, and disposing of unwanted products. The goal is
to efficiently handle the flow of goods back through the supply chain while minimizing waste
and maximizing value. Reverse logistics helps companies save costs, improve customer
satisfaction, and meet environmental regulations by ensuring that returned or unsold
products are managed responsibly. Reasons for revers Logistics are: Returns, Refurbishing,
Remanufacturing, Warranty claims, Reuse of packaging, Unsold goods, End-of-life, Delivery
failure, Repairs and maintenance, Recycling.
17. Transportation and Risk Transfer - In international trade, the transfer of risk from seller to
buyer happens at specific points. For example, in EXW, the buyer takes on most
responsibilities, including loading and transport. In CIF, the seller arranges and pays for
insurance and freight to the destination port, but the buyer bears the risk once the goods are
on board the ship.
18. Carrier Liabilities - Carrier liabilities vary by transportation mode and conventions. For land
transport under the CMR Convention, the liability is around $12.36 per kilogram. Air
transport under the Montreal Convention sets it at $25.23 per kilogram. Maritime transport
has different rules, such as the Hague-Visby rules, which have specific limits per package or
weight.
19. Special Drawing Rights (SDR) - The Special Drawing Rights (SDR) is an international reserve
asset created by the International Monetary Fund (IMF). Its value is based on a basket of
major currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British
pound. As of now, 1 SDR is equivalent to about $1.33 USD.
20. Group E and F Terms - Group E includes EXW, where the seller makes goods available at
their premises, and the buyer handles all transport. Group F terms, like FCA (Free Carrier),
mean the seller delivers goods to a carrier chosen by the buyer, who then takes on the main
transport responsibilities and costs.
21. Group C Terms - In Group C terms like CFR (Cost and Freight) and CIF, the seller arranges
and pays for transport to the destination but does not assume the risk once the goods are
shipped. These terms are buyer-friendly because the buyer handles risks during transit.
22. Group D Terms - Group D terms, such as DAP (Delivered At Place) and DDP, are "arrival
contracts" where the seller is responsible for delivering goods to the destination and often
includes unloading and customs duties. These terms are considered buyer-friendly because
the seller manages most of the shipping process and associated risks.

ფინანსების განხრა
1. Financing International Trade Cycle - Financing the international trade cycle involves
various payment terms to balance the needs of sellers and buyers. Sellers prefer to be paid
before shipping goods, while buyers prefer to pay upon receiving goods. Common payment
terms include Cash in Advance (CIA), Letter of Credit (LC), Open Account, and
Consignment. For example, a company in Germany selling machinery to a buyer in Brazil
might use an LC to ensure they receive payment once the machinery is shipped and all
documents are verified.
2. Terms of Payment - Terms of payment define how and when buyers pay sellers. Key options
include CIA, where payment is made before shipment; LC, providing a bank guarantee for
payment; Open Account, where payment is made after delivery; and Consignment, where
payment is made after the goods are sold by the distributor. For instance, an exporter in Japan
 selling electronics to a distributor in the USA might use an open account if they have a long-
standing relationship, trusting that payment will be made within 60 days after delivery.
3. Letter of Credit (LC) - A Letter of Credit is a secure payment method in international trade,
issued by a bank at the request of the buyer. It guarantees payment to the seller upon
submission of specific documents. This method reduces risks for both parties, as the bank
ensures that terms and conditions are met before releasing funds. For example, a textile
manufacturer in India selling fabrics to a retailer in Italy might use an LC to ensure they get
paid once they present the shipping documents to their bank.
4. Parties Involved in LC - Several parties are involved in an LC transaction: the Applicant
(buyer), who requests the LC; the Beneficiary (seller), who receives payment; the Issuing
Bank, which issues the LC; the Advising Bank, which authenticates it; and the Confirming
Bank, which adds its guarantee. Insurers and carriers also play roles, ensuring goods are
covered and safely transported. For example, a coffee exporter in Colombia might work with
an advising bank in the USA to ensure their LC is valid and authenticated before shipping to a
buyer in New York.
5. Types of Documentary Credits - Documentary credits can be revocable or irrevocable. A
revocable credit can be canceled or changed without notifying the beneficiary. An
irrevocable credit cannot be altered without the agreement of all parties. Confirmed credits
involve an additional bank guarantee, offering more security, while unconfirmed credits rely
solely on the issuing bank's guarantee. For example, a food exporter in Spain might use an
irrevocable and confirmed LC when selling to a new customer in China to ensure payment
security.
6. Stages in LC Performance - The performance of an LC involves several stages: opening the
LC, mailing it to the beneficiary's bank, examining the LC by the exporter, making necessary
amendments, confirming the LC, shipping the goods, collecting and presenting documents,
examining documents by the issuing bank, handling discrepancies, and settling payment.
Each stage ensures compliance with agreed terms. For instance, a pharmaceutical company in
Canada exporting to Australia would follow these stages to ensure all documentation is
correct and payment is received after the goods are shipped.
7. General Documents Under LC - Key documents in an LC transaction include the Commercial
Invoice, Packing List, Bill of Lading, Certificate of Origin, Inspection Certificate, Bill of
Exchange, and Insurance Documents. These documents provide proof of shipment, origin,
inspection, and insurance, ensuring that all conditions of the LC are met for payment to be
processed. For example, an automobile parts supplier in South Korea shipping to a buyer in
Mexico would prepare these documents to comply with the terms of the LC and receive
payment.
8. Additional Information - The global expansion of trade has increased the use of LCs due to
the varying political, social, and economic conditions in different countries. LCs offer a secure
payment method, reducing the risk of non-payment and fraud. They are crucial in managing
the complexities of international trade, ensuring that transactions are completed smoothly
and securely. For instance, a technology company in the USA exporting software to a client in
Russia might use an LC to mitigate risks associated with economic sanctions and political
instability.

SCM/LOGISTICS
1. SCM – Development - Supply chain management (SCM) involves overseeing and managing
the flow of goods, information, and finances from the origin to the end user. For example, a
company producing smartphones needs to manage suppliers providing components,
manufacturers assembling the devices, and logistics companies delivering the finished
products to retailers. Effective SCM can reduce costs, improve efficiency, and enhance
customer satisfaction.
2. Globalization and International Business - Globalization has increased international trade and
the interconnectedness of economies. Companies can now source materials from one country,
manufacture in another, and sell products worldwide. For example, Nike designs its shoes in
the USA, manufactures them in Vietnam and China, and sells them globally. This global
approach helps companies access new markets, reduce costs, and increase their
competitiveness by taking advantage of different countries' strengths.
3. Logistics and Supply Chain Management - Logistics ensures the right product reaches the
right customer at the right time, place, and cost. Efficient logistics are critical for customer
satisfaction and competitive advantage. For example, a logistics company must ensure timely
delivery of medical supplies to hospitals, maintaining the right conditions to preserve product
quality. Effective logistics management helps companies meet customer expectations and gain
a competitive edge.
4. SCM - Competitive Advantage - SCM provides competitive advantages through cost
leadership and differentiation. Identifying activities that reduce costs or offer unique value
helps companies stand out. For instance, a retailer like Walmart uses efficient SCM to keep
prices low, while Apple differentiates itself through innovative product design and quality.
SCM strategies help companies enhance their market position and achieve long-term success.
5. Role of Logistics - Logistics plays a significant role in economic development, accounting for a
substantial portion of GDP. Efficient logistics reduce costs and improve service quality. For
example, in the USA, logistics account for about 8.5% of GDP, highlighting its importance in
the economy. Advanced logistics systems support various industries, from manufacturing to
retail, contributing to economic growth and development.
6. Supply Chain Management (SCM) Development - Supply Chain Management (SCM)
encompasses the end-to-end coordination and management of product flows from raw
materials to final customer delivery. It integrates various activities such as procurement,
production, distribution, and logistics, aiming to enhance efficiency, reduce costs, and ensure
timely delivery. Effective SCM relies on technology for tracking and optimizing operations,
and it often involves strategic partnerships with suppliers and logistics providers. For
instance, companies use Enterprise Resource Planning (ERP) systems to synchronize supply
chain activities, enabling real-time data sharing and decision-making.
7. Directional Imbalance - Directional imbalance occurs when there is a significant disparity in
the volume of trade moving in one direction compared to the opposite direction. This often
leads to inefficiencies and higher costs as transport vehicles return empty or partially loaded.
For example, the shipping industry frequently faces this issue, with containers full of goods
traveling from China to the US but returning empty due to lower demand for US exports.
Companies combat this by optimizing routes, consolidating shipments, and sometimes
offering discounts on return trips to encourage balanced trade flows.
8. Sourcing: In-House or Outsource - Deciding whether to keep operations in-house or
outsource them is a critical strategic choice for businesses. In-house sourcing allows for
greater control over quality and processes but may involve higher costs. Outsourcing can
reduce operational costs and leverage specialized expertise but introduces risks like quality
control issues and dependency on third-party suppliers. For instance, a tech company might
outsource manufacturing to reduce costs and focus on its core competencies like R&D and
marketing. However, careful management of the outsourcing relationship is crucial to
mitigate risks such as communication barriers and cultural differences.
9. Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) - An
Original Equipment Manufacturer (OEM) produces components or products that are used in
another company’s final products. This arrangement allows companies to leverage specialized
manufacturing capabilities and focus on their core business. For example, auto companies
often use OEMs to supply parts like engines and electronics. An Original Design
Manufacturer (ODM) not only manufactures products but also designs them, which the
purchasing company then rebrands and sells. This is common in the consumer electronics
industry, where companies like Apple use ODMs to design and produce their devices.
10. Value-Added Reseller (VAR) and Virtual Firms - Value-Added Resellers (VARs) enhance
existing products by adding features or services before reselling them. This model benefits
both the original manufacturers and end customers by providing customized solutions. For
example, a VAR might take a basic software product, add custom modules, and offer it as a
specialized industry solution. Virtual firms operate with minimal physical infrastructure by
outsourcing most of their operations. They rely on a network of partners and suppliers,
enabling them to be highly flexible and responsive. An example is a virtual retailer that
manages an online storefront while outsourcing manufacturing, warehousing, and shipping.
11. Benefits and Risks of Outsourcing - Outsourcing offers several benefits such as cost savings,
access to global talent, and improved focus on core business activities. It allows companies to
leverage specialized skills and technologies that they may not possess internally. For example,
outsourcing IT services can provide access to the latest technology and expertise without the
need for in-house development. However, outsourcing also carries risks, including potential
loss of control over quality, increased complexity in coordination, and risks related to data
security. A well-known risk is the "process is broken" issue, where outsourcing poorly
managed processes can exacerbate existing problems.
12. Offshoring - Offshoring involves relocating business processes or production to another
country to benefit from lower labor costs, tax advantages, and other economic incentives.
This strategy can significantly reduce operational expenses but also comes with challenges
such as cultural differences, language barriers, and logistical complexities. For instance, many
manufacturing jobs have been offshored to countries like China and India, where production
costs are lower. Companies must carefully consider factors like political stability,
infrastructure quality, and regulatory environment when selecting offshore locations to
ensure long-term viability and success.
13. Evolution of Production - Production methods have evolved significantly over time. Initially,
craft production focused on highly skilled labor producing customized goods in small
quantities. The industrial revolution introduced mass production, characterized by large-scale
production of standardized products using assembly lines, as seen in Ford's Model T
manufacturing. In recent years, mass customization has emerged, combining the efficiency of
mass production with the flexibility to customize products to individual customer
preferences. Companies like Dell and Nike use mass customization to offer tailored products
while maintaining efficient production processes, balancing personalization with cost-
effectiveness.
14. Supply Chain Strategies - Supply chain strategies vary depending on the business model and
market demands. Lean strategies focus on efficiency, cost reduction, and minimizing waste,
suitable for industries with stable demand and standardized products. In contrast, agile
 strategies emphasize flexibility and responsiveness, ideal for markets with volatile demand
and high product variety, such as fashion. Combining both, the leagile strategy balances
efficiency and responsiveness, catering to different product segments within the same supply
chain. For example, a company might use lean strategies for its staple products and agile
strategies for its seasonal items, optimizing the supply chain for diverse needs.
15. The Bullwhip Effect - The bullwhip effect describes how small fluctuations in consumer
demand can lead to increasingly larger variations in orders placed up the supply chain. This
phenomenon often results in inefficiencies, higher costs, and excess inventory. It typically
occurs due to factors like lack of communication, long lead times, and order batching. For
example, a slight increase in demand for a product at the retail level can lead to
disproportionately large orders placed with manufacturers, causing overproduction and excess
inventory. Companies can mitigate this effect by improving information sharing, reducing
lead times, and implementing demand forecasting techniques.
16. Emphasis on Inventory Reduction - Reducing inventory levels is crucial for minimizing costs
and improving operational efficiency. Techniques like just-in-time (JIT) inventory, where
materials and products are produced or acquired only as needed, help reduce storage costs and
minimize waste. Companies such as Toyota have successfully implemented JIT to maintain
lean inventory levels and enhance production efficiency. Additionally, adopting inventory
management technologies like automated replenishment systems and real-time tracking can
further optimize inventory levels, ensuring that stock is available when needed without
overstocking, thus balancing supply with demand effectively.
17. Total Quality Management (TQM) - Total Quality Management (TQM) is an approach
focused on continuous improvement in all aspects of an organization to enhance quality and
customer satisfaction. It involves systematic efforts to improve processes, products, and
services by involving all employees. Techniques such as Six Sigma and Kaizen are often used
to identify and eliminate defects and inefficiencies. In the automotive industry, companies
like Toyota have adopted TQM to ensure high-quality production and customer satisfaction,
leading to competitive advantages and strong brand loyalty.
18. Understanding and effectively managing these elements of international trade and SCM are
vital for businesses to remain competitive in the global market. Adopting the right strategies
and practices can lead to significant cost savings, enhanced efficiency, and greater flexibility
in meeting market demands.
 ტრანსპორტირება
1. Supply Chain Management (SCM) Development - Supply Chain Management (SCM) involves
the comprehensive management of goods and services flow, from raw material sourcing to the
final delivery of products to consumers. SCM integrates procurement, production,
distribution, and logistics to optimize operations and improve customer satisfaction. The main
objectives are to reduce costs, increase efficiency, and ensure timely delivery of products. For
example, Toyota uses its Toyota Production System (TPS) to coordinate with suppliers and
production facilities, focusing on continuous improvement and lean manufacturing principles
to produce high-quality vehicles efficiently.
2. Transportation - Transportation is a crucial part of SCM, involving the movement of goods
from suppliers to manufacturers, from manufacturers to retailers, and from retailers to
consumers. It includes inbound logistics (bringing raw materials to production sites),
outbound logistics (delivering finished products to customers), and reverse logistics (handling
returns and recycling). Effective transportation ensures products are delivered at the right
time (time utility) and place (place utility). Companies like Amazon use advanced tracking
systems and a combination of road, air, and sometimes rail transport to ensure timely and
efficient delivery, enhancing customer satisfaction and operational efficiency.
3. Logistic Service Providers (LSP) - Logistic Service Providers (LSP) offer various logistics
services, including transportation, warehousing, and distribution. They encompass carriers
(trucking companies, airlines, maritime lines), freight forwarders, third-party logistics
providers (3PL), and fulfillment centers. These providers help businesses manage logistics
operations more efficiently and cost-effectively. For example, DHL offers comprehensive
logistics solutions, including international shipping, warehousing, and supply chain
management, enabling businesses to expand their reach and improve logistics operations by
leveraging DHL's global network.
4. Modes of Transportation - Various transportation modes are used in SCM, each with unique
advantages and disadvantages. Road transport (trucks) is highly flexible and ideal for short to
medium distances, while rail is cost-effective for long distances and heavy, bulky shipments
but slower. Air transport is the fastest for long distances, suitable for high-value, low-weight
goods but expensive. Maritime transport is cost-effective for heavy, bulky, low-value goods
over long distances but slow. Pipelines are used for transporting liquids and gases with low
maintenance once established. Intermodal transportation combines multiple modes,
optimizing efficiency by using rail for long distances and trucks for local delivery, exemplified
by UPS's efficient delivery system.
5. Warehousing - Warehousing involves storing goods at various stages of the supply chain,
enabling faster deliveries and better customer service. Warehouses can be public or private,
each offering distinct benefits. Public warehouses provide flexibility and lower costs but may
offer less control, while private warehouses offer more control but require higher investment.
Activities in warehousing include cross-docking, product mixing, and transportation
consolidation. For example, Amazon's fulfillment centers use automated storage and retrieval
systems (AS/RS), where robots retrieve items from shelves and bring them to packing
stations, significantly increasing efficiency and reducing order fulfillment time.
6. Risk Pooling and Warehouse Location - Risk pooling manages inventory across multiple
locations to balance supply and demand variability, reducing the risk of stockouts and excess
inventory. The location of warehouses is critical for minimizing transportation costs and
ensuring quick delivery to customers. Strategic warehouse location should consider proximity
to suppliers, customers, transportation networks, and labor availability. For example,
Walmart places its distribution centers close to major markets to ensure efficient distribution
and quick replenishment of stores. Additionally, Target uses regional distribution centers to
centralize inventory, respond quickly to demand changes, and maintain lower overall
inventory levels, reducing costs and improving service levels.