THE INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA) AND ITS ROLE IN INTERNATIONAL BUSINESS.

1) CONCEPT:

TRANSPORT:"Take or carry (people or goods) from one place to another by means of a vehicle, aircraft, or ship"*
ASSOCIATION:"An organization of persons having a common interest"** 
PRIORITY:"The fact or condition of being regarded or treated as more importan"***
SAFETY:"The condition of being safe from undergoing or causing hurt, injury, or loss "****

2) QUESTION:What is the IATA, and which are its functions in international business?
ANSWER:On its website The International Air Transport Association (IATA), is defined as:  "IATA is an international trade body, created over 60 years ago by a group of airlines. Today, IATA Represents Some 230 airlines - the Worlds Leading passenger and cargo airlines Among Them - comprising 93% of Scheduled international air traffic. The organization Also Represents, Lead and Serve the airline industry in general. IATA has Developed That the commercial standards built a global industry. IATASA mission is to Represent, lead and serve the airline industry."*****

As we can see the IATA represents over 90% of airlines worldwide, which indicates that its influence in international air transport is very important. Accordingly we can say that the companies when sending or receiving goods by air, must have clearly about all regulations on all aspects of security, that this institution imposes.

Safety in air transport is very important for people and goods, thanks to  IATA, all companies engaged in international operations can be confident and trust  that exist  a global regulator, that is working for their comfort and security.

In addition to the safety of persons and goods, the IATA too provides benefits to all parties involved and this is clearly stated in its website:

“For the benefit for all parties involved:

• For consumers, IATA simplifies the travel and shipping processes, while keeping costs down. Passengers can make one telephone call to reserve a ticket, pay in one currency and then use the ticket on several airlines in several countries.

• IATA allows airlines to operate safely, securely, efficiently and economically under clearly defined rules.

• IATA serves as an intermediary between airlines and passenger as well as cargo agents via neutrally applied agency service standards and centralized financial systems.

• A large network of industry suppliers and service providers gathered by IATA provides solid expertise to airlines in a variety of industry solutions.

• For governments, IATA seeks to ensure they are well informed about the complexities of the aviation industry to ensure better, long-term decisions.”******

As good regulator,  the  IATA  involves all parties in all its operations, in this way consumers, airlines, industry suppliers, service providers, and governments can enjoy of many benefits. All this make that there is  harmony in all air transport operations.

As we saw, the IATA through all its functions, day after day makes that international business become more efficient and safer, by the other hand, this organization is working very hard in the process of implement in all airlines worldwide better practices, in order to protect the environment.

In conclusion, the IATA along its 60-year of trajectory  has worked for improving and refining all air operations in the world, which means an excelent point for international business

 3) POINT OF VIEW: When Companies decide to enter other countries to do international business, they should evaluate all factors that in some way or another affect their operations.

Until now we have focused on the analysis of many variables that can affect international business, but we have not realized that there are organizations such as IATA, which indirectly make more smoothly the processes of transport in international business.

At this point I think that is very important to highlight two aspects that under my point of view, nowadays are the top issues discussed and analyzed by the IATA : safety and environmental protection.
By one hand when I talk about security, I think that is worth recalling a memorable date for international aviation security, that date is September 11, 2001 when in the United States, a group of terrorists kidnaped some planes, in order to make the attacks to the twin towers and the World Trade Center in New York and to  the Pentagon in Washington, these attacks  killed thousands of people.

Since September 11, 2001, IATA and other international organizations have been concerned with improving aviation safety, which led to the creation and enforcement of strict safety standards in commercial and cargo aviation, something that viewed under an objective point  of view, favored  companies and the protection of their goods.

By the other hand, the IATA has joined to the global fight against environmental pollution, this aspect seems very important because the world and the natural resources are in crisis, because the man with its consumerism is destroying the planet. In a news release on  September 17 the IATA called to the  governments to support airlines in their measures against climate change, this confirming that this institution is committed to protect the environment. "Specifically, the objectives of the airlines against climate change focus on annual improvement of 1.5% efficiency by 2020, limiting growth in carbon emissions over the next decade, and cuts to half the total amount of emissions in 2050 compared to figures of 2005"*******
From an environmental point of view, I think that the IATA whit its regulations,  can achieve very positive things in order to reduce the pollution, which promotes and ensures the healthy existence of future generations.

In conclusion, I think that we as managers of companies, must be very analytical with everything around us and everything that could affect our business, I too want to highlight the importance of IATA in processes of air transport and in a particular case in  the processes of international business.

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*Oxford Dictionaries.(2010).Transport.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1300010#m_en_us1300010

**Merrian Webster Dictionary.(2010). Association.[Online]:

http://www.merriam-webster.com/dictionary/association

***Oxford Dictionaries.(2010).Priority.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1280797#m_en_us1280797

****Merrian Webster Dictionary.(2010). Safety.[Online]:

http://www.merriam-webster.com/dictionary/safety?show=0&t=1285647737

***** IATA.(2010).[Online]: http://www.iata.org/about/Pages/index.aspx   

******IATA.(2010).[Online]: http://www.iata.org/about/Pages/mission.aspx 

*******Finanzas.com.La IATA pide a los gobiernos que apoyen a las aerolíneas en sus medidas contra el cambio climático[Online]:http://www.finanzas.com/noticias/economia/2010-09-17/346746_iata-pide-gobiernos-apoyen-aerolineas.html

-Image 1: Getty Images.Businessmen waiting at an airport lounge.(2010).Available at: 

http://www.gettyimages.com/detail/102349945/photosindia

-Image 2:Mexalitours.Logo IATA.(2010).Available at:

 http://www.mexalitours.com.mx/Logo%20iata.gif

ENTRY MODES IN INTERNATIONAL BUSINESS

1) CONCEPT:

LICENSE:"A permit from an authority to own or use something, do a particular thing , or carry on a trade"*
LICENSING AGREEMENT:"Under a licensing agreement, company (the licensor) grants rights to intangible property to another company (the licensee) to use in a specified geographic area for a specified period. In exchange, the licensee ordinarily pays a royalty to thr licensor"**

FRANCHISING:"It is a specialized form of licensing in which the franchisor not only sells an indepent franchisee the use of the intangible property (usually trademark) essential to the franchisee's business but also operationally assists the business on a continuing basis, such as through sales promotion and training. In many cases, the franchisor provides supplies"*** 

TURNKEY OPERATIONS:"Turnkey operations are a type of collaborative arrangement in which one company contracts another to build complete, ready-to-operate facilities"****

INVESTMENT:"The action or process of investing money for profit or material result"*****

2) QUESTION:Which are the types of entry modes in International business?

ANSWER: When a company decides to enter in business in a foreign country, we can say that basically there are three modes to enter these markets, at this point is important to remenber that a company decides to expand its operations in order to expand sales, to acquire better resources, and to minimize all types of risks.
According with Daniels, the most important Entry modes are: direct or indirect EXPORT; LICENSING under the figures of Franchising, Management contract, and Turnkey Operations; and the last entry mode is INVESTMENT under the figures of portfolio and foreign direct investment (FDI).

      

Daniels says exactly that "Entry mode depends on ownership advantages of the company, location advantages of the market, and internalization advantages that result from integrating transactions within the company. Companies that have lower levels of ownership advantages either do not enter foreign markets or use low-risk strategies such as exporting."******
Through exporting, the companies may expand sales, take minimal risks in comparison with FDI, and implement the use of economies of scale in production. With licensing, companies can specialize in its primary competencies  and learn from other companies, the risk taken in this mode is higher than the risk taken in exporting. To conclude, investment is the most risky entry mode, but profitability is also the greatest compared with  the export and licensing modes.

3) POINT OF VIEW: Any company that wants to internationalize their operations, must do  a series of political, economic, financial, monetary and cultural analysis, in order to  know whether a country is good to expand and implement actions and operations of the company  in order to increase profitability and create value.

One of the most important strategic decisions in the process of internationalization is the choice of form of entry to any country, as I said earlier, there are many alternatives that involve different degrees of investment risk level, market integration, and control over the distribution chain

I think that besides all the above external variables, that companies must study and analyze, also it should look at a number of internal variables, where each company must choose the most appropriate entry form.

In my opinion between the internal variables that the company should consider are: general business goals, objectives of the internationalization of the company, type of products or services that will be offered, economic performance, human and management capacity, level of internationalization of the company, and finally the knowledge of foreign markets.

To conclude, once the company has evaluated all these variables, it must make the best decision based on improving economic and financial performance, which allows the company to get a good consolidation worldwide exporting their goods, invest directly or indirectly, by licensing to other companies in the same industry or other different industries, companies have been able to focus their efforts in the entry mode that represents a competitive advantage,these  companies become in the best companies worldwide in terms of profitability and competitiveness.

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*Oxford Dictionaries.(2010).License.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1263289#m_en_us1263289.006
**Daniels, John D (2004). International Business:Environments and operations.Chapter 14: Direct Investment and Collaborative Strategies.p 497
***Daniels, John D (2004). International Business:Environments and operations.Chapter 14: Direct Investment and Collaborative Strategies.p 498
****Daniels, John D (2004). International Business:Environments and operations.Chapter 14: Direct Investment and Collaborative Strategies.p 500
 *****Oxford Dictionaries.(2010).Investment.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1258911#m_en_us1258911
******Daniels, John D (2004). International Business:Environments and operations.Chapter 13: Export and Import Strategies.p 457

-Image 1: Getty Images.Business Network.(2010).Available at: http://www.gettyimages.com/detail/56503961/Stock-Illustration-Source
-Image 2 Taken and adapted from: Daniels, John D (2004). International Business:Environments and operations.Chapter 13 & 14. p 451-517.

INCOTERMS IN INTERNATIONAL BUSINESS

1) CONCEPT:

TERMS:"Conditions under which an action may be undertaken or agreement reached; stipulated or    agreed-upon requirements"*

COMMERCE:"The exchange or buying and selling of commodities on a large scale involving transportation from place to place "**

CHAMBER OF COMMERCE:"An association of businesspeople to promote commercial and industrial interests in the community"***

CUSTOMS:"The official department that administers and collects the duties levied by a government on imported goods"****

2) QUESTION:What are the functions of INCOTERMS in International Business?

ANSWER:Incoterms are a set of rules commonly used in International Business. They seek to avoid or reduce conflicts between the parties (Exporters-Sellers and Importers-Buyers).

The effect of Incoterms is limited with the scope of the rights and obligations of the buyer and seller respect with the delivery of goods sold which are only tangible assets, because the services do not enter in this classification.

According with all aspects raised by the International Chamber of Commerce*****, I will mention all the major functions performed by the Incoterms. These terms define in particular: the transfer of costs and expenses, the transfer of risks and the place where deliver the goods. All above mentioned mean that the sellers know exactly when and where they should bear the costs and expenses of delivery; the buyers know exactly at what time and in which place, they should bear the risks of losing goods during the delivery; and finally these Incoterms specify the exact place where the seller must deposit the merchandise.

At this point is important to mention that according with the need to adapt Incoterms rules to contemporary commercial practice, the International Chamber of Commerce has modified some times these rules from  1936 to 2000. This year the International Chamber of Commerce, is planning to launch in mid-September  the new version Incoterms 2010 and come into effect on 1 January 2011.

In the official website of the International Chamber of Commerce says: "The latest revision of the Incoterms rules reflects major developments and changes throughout the last decade, such as the increased importance of cargo security and the deletion of the former US shipment and delivery terms.

In this version the rules have reduced from 13 to 11. 

The 11 Incoterms rules are:

EXW: Ex Works

FCA: Free Carrier

CPT: Carriage Paid To

CIP: Carriage And Insurance Paid To

DAT Delivered At Terminal

DAP: Delivered At Place

DDP: Delivered Duty Paid

FAS: Free Alongside Ship

FOB: Free On Board

CFR: Cost And Freight

CIF: Cost, Insurance and Freight

In addition to the 11 rules, Incoterms2010 includes:

•extensive guidance notes and illustrative graphics to help users efficiently choose the right rule for each transaction

•new classification to help choose the most suitable rule in relation to the mode of transport

•advice for the use of electronic procedures

•updates on security-related information requirements•advice for the use of the Incoterms 2010 rules in domestic trade."******
To conclude this point is important to remenber that international contracts, is a daily reality for many companies around worldwide. Most of the times, these operations are operations successfully and without any complications, but sometimes, things do not go as expected. Doing a deeply  analysis of this situation, I came to the conclusion that companies must follow 5 basic steps to avoid legal and economic problems, these steps are:
1) To have a writing contract: This serves as proof that an agreement has been made, and serves as reference to identify which parts of the obligations have been met, and how to comply with these parts.
2) Product Description: Specify the characteristics of the goods to be bought or sold, because complaints may arise, and these will be made by confronting the goods with their description.
3) Choice of Incoterms and form of payment: Companies must choose the best incoterm and form of payment for both buyer and seller. It is highly advisable to choose the correct Incoterms, and above all, that mention of which terms are concerned.
4) Inspection of goods: It is advisable to inspect the goods to ensure they arrive in perfect condition at their final destination, it is often advisable to take photographs.
5) Establish the form of solution of potential disputes: In case of arise legal problems companies should specify how to solve it and this can be done through the courts or international arbitration

3) POINT OF VIEW: In my opinion, the Incoterms are the backbone of International Trade. A good knowledge and use of Incoterms allows companies to reduce costs, gives them more bargaining power, allows them to manage and to reduce risks and helps them to define the strategy and action in the process of sale and buy worldwide.

I find very important that the International Chamber of Commerce makes revisions constantly to Incoterms because, as I mentioned before, all these terms should be reviewed, analyzed and adapted to contemporary business practices, because is very important adapting to new realities of International trade, for that reason we have the Incoterms 2010, which in my opinion are one of the most successful revisions of Incoterms in a long time.

The (ICC) International Chamber of Commerce has reviewed every ten years each one of the latest versions of Incoterms. Following this good work, the ICC this year will offer us a new version of Incoterms, which come into force in 2011

I think that the International Chamber of Commerce in addition to reviewing and publishing, should explain to companies the proper use of these terms and rules. What I mean is the following: not only it must explain what is an Incoterm, but how companies should use and what are the recommendations of use depending of the type of business to be conducted

All this is because every day around the world companies misuse these terms, to give clear examples many times we can find companies that closed contracts under a FOB term and the merchandise is shipped by air, another example is when companies make a negotiation under the EXW term and the seller loads the goods into the truck.

Finally I think that for the better understanding of Incoterms 2010, International Chamber of Commerce, should say the ideas and motives that led it to introduce this new version of Incoterms 2010, in order to obtain a more global and strategic vision of how to use them.

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*Oxford Dictionaries.(2010).Terms.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1297843#m_en_us1297843
**Merrian Webster Dictionary.(2010).Commerce.[Online]:
http://www.merriam-webster.com/dictionary/commerce
***Merrian Webster Dictionary.(2010).Chamber of Commerce.[Online]:
http://www.merriam-webster.com/dictionary/chamber%20of%20commerce
****Oxford Dictionaries.(2010).Customs.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1237847#m_en_us1237847
*****Iccwbo.(2010).[Online]: www.iccwbo.org/Incoterms/index.html?id=34848
******Iccwbo.(2010).[Online]: http://www.iccwbo.org/Incoterms_history/






-Image 1: Getty Images.Shipping containers stacked on quayside.(2010).Available at: http://www.gettyimages.com/detail/85393687/Photographers-Choice
-Image 2:Iccwbo, Incoterms 2010.Covers.(2010).Available at: http://www.iccwbo.org/Incoterms_history/

MARKET INTELLIGENCE IN INTERNATIONAL BUSINESS

1) CONCEPT:

INTELLIGENCE:"The ability to apply knowledge to manipulate one's environment or to think abstractly as measured by objective criteria"*

RESEARCH:"The systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions"**

MARKET:"A regular gathering of people for the purchase and sale of provisions, livestock, and other commodities"***

MARKET RESEARCH:"Research into the size, location, and makeup of a product market"****

2) QUESTION:What is the difference between Market intelligence and Marketing research and, why is important to make market intelligence in International Business?

ANSWER: The process of market intelligence is very important for any company that wants to expand the sale of their products and services worldwide.

The first thing that I should say is that Market Intelligence is not the same as Marketing Research, and this is explained very well by Ed Crowley, in his article Market intelligence versus marketing research: "Market research is a well-defined discipline with a long history of application in the business world. It takes many different forms, and its ultimate goal is to enhance a firm’s understanding of the market and customer, but it is not market intelligence. While Market intelligence is a much broader term that can be defined as an ongoing, holistic knowledge of all aspects of the marketplace".*****

Although that market intelligence is not the same that marketing research, the first must take, analyze, adapt and implement important information that provides the marketing research.

The first thing that a company must make when it decides to export to other countries and to other markets is a market intelligence, because with this the company can determine if the market that it wants to penetrate is right, after made this first step the company must start to analyze the business environment and with this all risks related to political, legal, cultural and economic factors.

In order to explain properly this last image, I will quote again Mr. Ed Crowley, who makes a very clear and simple explanation about this pyramid: "Market intelligence yields an ongoing and comprehensive understanding of the market. Each of the four knowledge areas - competitor intelligence, product intelligence, market understanding, customer insight- interacts to form a complete understanding of the market. Each competitor’s strategies will impact their product actions, the overall trends of market growth and segment interaction will impact the strategies, and underlying all of this, the customer’s behaviors and attitudes will ultimately drive the market dynamics in terms of growth rates and product acceptance. This integration of all four knowledge areas is the ultimate deliverable for market intelligence. Marketing research is a critical and significant source of information. However, it does not encompass all of the information areas which are covered by market intelligence. The scope of information covered is one of the key differences between marketing research and market intelligence."******

As we saw there are differences between these two concepts, and both provide important information to any organization which wants to operate in foreign countries. The Market Intelligence is very important because day after day makes that companies are in constantly learning, it means that companies have to design, to develop and to implement good strategies, that will seek survival in the market and customer satisfaction.

3) POINT OF VIEW: As own-discipline of strategic management of enterprises, which corresponds to senior management, ie managers and administrators, market intelligence allows, through a constant flow of information, knowing more deeply the market and performance of the company in this market.

Thus market intelligence involves abilities: to add value to existing pricing systems with analysis of trends and prospects in the future; to explain through a clear language the sense of market data; to build local capacities to make sound decisions based on market information and to promote links between opportunities, credit, technical assistance and marketing.

Given that we live in the information age and that we need to know about opportunities for products and services of the companies in the foreign market, we as managers have on hand many aids and tools that allow us to analyze deeply the markets that we want to achieve, these aids and tools are provided by institutions such as PROEXPORT, BANCOLDEX, FIDUCOLDEX, AND THE MINISTERY OF TRADE, INDUSTRY AND TOURISM, which help us to create development strategies in order to plan and prepare better the product and service through a trained staff .

To conclude I want to say that with globalization, the competition is getting stronger and for this reason is completely necessary to know very well the target market of our products and services in order to prevent failures and to encourage the success and profitability. All this can be achieved through a good market intelligence!!!___________________________________________________________
*Merrian Webster Dictionary.(2010).Intelligence.[Online]:
http://www.merriam-webster.com/dictionary/intelligence
**Oxford Dictionaries.(2010).Research.[Online]: http://oxforddictionaries.com/view/entry/m_en_us1284427#m_en_us1284427
***Oxford Dictionaries.(2010).Market.[Online]: http://www.oxforddictionaries.com/view/entry/m_en_us1266136#m_en_us1266136
****Merrian Webster Dictionary.(2010).Market Research.[Online]:
http://www.merriam-webster.com/dictionary/research?show=3&t=1283905306
*****Crowley, Ed.(2010).Market intelligence versus marketing research.On: Quirks's Marketing Research Review.[Online]: http://www.quirks.com/articles/a2004/20041209.aspx?searchID=40935096
******Crowley, Ed.(2010).Market intelligence versus marketing research.On: Quirks's Marketing Research Review.[Online]: http://www.quirks.com/articles/a2004/20041209.aspx?searchID=40935096



-Image 1: Getty Images.Globe blotched with blue pin needles.(2010).Available at: http://www.gettyimages.com/detail/86196623/Photodisc
-Image 2: Getty Images.Shapes orbiting head.(2010).Available at: http://www.gettyimages.com/detail/76092061/Stock-Illustration-Source
-Image 3: Quirks's Marketing Research Review.Market Intelligence.(2010).Available at:
http://www.quirks.com/articles/a2004/20041209.aspx?searchID=40935096