CLOSING CASE: A Little Electronic Magic at Alibaba.com
Electronic commerce is changing the way companies around the world do business. The
Internet has opened up a whole new era of business opportunities, making virtual
information, on any product from virtually any market accessible readily and
inexpensively. Alibaba.com is a Web site that facilitates transactions between importers
and exporters around the world. Other Web sites that have created similar online
marketplaces include www.koreatradeworld.com focused on products from South Korea,
www.trade-India.com for Indian products, and www.bizeurope.com for Europe. These
electronic trading venues have changed the mechanics of importing and exporting and
opened up tremendous opportunities, especially for smaller enterprises. The impact has
been especially dramatic for small Chinese manufacturers, who now have ready access to
a global market for their products.
1. Identify a product you would like to import. Visit www.alibaba.com, go to the
advanced search field, and enter it. Select required criteria and click on “Search.”
Review the list of companies that qualify. Find a suitable seller. Analyze this process for
ease, usefulness, and potential value.
List, in separate columns, the benefits and costs of using sites like Alibaba to trade
internationally. What does your analysis say to companies like SpinCent (our
opening case) as they think about their export strategy?
3. Visit www.alibaba.com and www.europages.com. Compare and contrast these Web
Do you think most trade between countries and companies might eventually take
place through sites like Alibaba.com? If so, does that influence your interest in
importing and exporting?
5. How transparent do sites like Alibaba.com make the import-export transaction?
Would you still worry about fraud?
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
ADDITIONAL EXERCISES: Export and Import Strategies
Exercise 13.1. Research has shown that although the largest firms in the world also
tend to be the world’s largest exporters, export intensity is not positively correlated
with the size of a firm. Begin a discussion by exploring the reasons for this. Then,
discuss the levels of export intensity they would expect to find with respect to a
variety of industries. Be sure to explain their reasoning and compare differences
across industries.
Exercise 13.2. A major barrier to international trade activities is the issue of trust.
Even when importers and exporters are known to each other, there is a high degree of
risk associated with international trade transactions, i.e., exporters want to be sure
they’ll be paid and importers want to be sure they receive the full value of an order.
Discuss the reasons letters of credit and the various forms of a draft help both
importers and exporters overcome this challenge. Under what conditions might each
instrument be preferred?
Exercise 13.3. Assign each team of students a given product and foreign country
market. Then have the students (or teams) consult the USA National Trade Data
Bank to collect information useful in developing a strategy for exporting the specific
product to the designated country market. Discuss the information you find and its
relevance to exporting in class. Be sure to compare information across products and
Exercise 13.4. Each team should choose a product to import to the TURKEY from a
foreign country market. Are there regulations regarding their chosen product that
they would have to be aware of before importing? Look up the tariff for the product.
In the USA, tariffs can be found on the United States International Trade
Commission Web site (www.usitc.gov).
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall