Countertrade

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Countertrade Despite political and economic reforms in many developing countries, countertrade promises to be a significant tool for consummating international transactions. It is unlikely that these countries will find all the foreign exchange they need to finance their restructuring programs. Thus, international managers need to develop a countertrade plan within their overall international marketing plan. A method to identify and take advantage of countertrade opportunities also needs to be developed. There are many facets to establishing a countertrade strategy. One of the perplexing problems is that countertrade takes so many forms. Despite the potential confusion, the clear evidence that countertrade arrangements are growing means that they can be more innovative. Managers can develop new types of countertrade arrangements to fit the particular deal being negotiated. Any previously developed typology should not constrain the executor of countertrade. 2.0 DEFINITION - WHAT IS COUNTERTRADE? Countertrade is the sale that encompasses more than an exchange of goods and services or ideas for money. In international market, counter trade transactions "are those transactions which have as a basic characteristic a linkage, legal or otherwise between exports and imports of goods and/or services in addition to , or in place of financial settlements" Historically, countertrade was mainly conducted in the form of barter, which is a direct exchange of goods of approximately equal value between parties, with no money involved. (At the time when there was no common medium of exchange) However, over time, money emerged and became the common and convenient medium of exchange. Countertrade transactions have always risen when ec... ... middle of paper ... ...n, the development of intermediary skills may offer profitable opportunities for small businesses and entrepreneurs. Bibliography: 1. Raj Aggarwal, "International Business Through Barter and Countertrade," Long Range Planning, June 1989, 75-81. 2. "Current activities of International Organizations in the filed of Barter and Barter-like transactions," Reports of Secretary General, United Nations, General Assembly, 1984 , 4. 3. Jean-Francois Hennart and Erin Anderson, "Countertrade and the Minimization of Transaction Costs: An emperical Examination," The Journal of Law, Economics and Organization, September 2, 1993, 290-313. 4. Christopher M. Korth, "The Promotion of Exports with barter," in Export Promotion, ed. M. Czinkota (New York: Praeger, 1983), 42. 5. Michael R. Czinkota, Ikka A Ronkainen and Michael H. Moffett "International Business"

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