WF SEM II Objective 1.05

Explain international trade
considerations for sport/event
Exchange rates: the value of one currency for the purpose
of conversion to another
 Example:
 Dollar( United States) to
 Euro(Austria, Belgium, Cyprus, Estonia, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg,
Malta, the Netherlands, Portugal, Slovakia, Slovenia,
and Spain) to
 Pound (Great Britain, Egypt, Lebanon, Sudan and
Exchange rates have a direct effect on the power of a
team's payroll
As businesses of the world continue to expand to
global dimensions, the question of international
currency dynamics becomes increasingly important.
Research has shown that the success of sports teams
around the world is directly related to their
purchasing power in the international talent market.
The higher the value of the teams’ home currency =
the more purchasing power the team has meaning
that based on prior research, the team will be more
 Financial
Institutions -an institution that
provides financial services for its clients or
members (Bank)
 Financial
institutions are important in the
exchange rate process when doing
international sport marketing.
Trade restrictions are regulations, policies and actions that limit
trade among nations.
 Example: Trade restrictions are barriers that a nation imposes, which
hinders a sporting-goods manufacturer's ability to do business in other
Types of trade restrictions include tariffs, quotas, and embargoes.
 Tariffs: taxes placed on imported goods
 Quotas: limit the quantity of goods that move into or out of the
 Licenses: permits that a nation grants to businesses that want to
import or export goods. Some nations limit the number of licenses
they grant.
 Embargoes: A policy that suspends all import-export trade with
another country.
Suppose the sporting-goods manufacturer
wants to sell baseball gloves to a business in
another country that has a very high tariff
(tax) on sporting-goods.
 If the tariff is too high, the costs (taxes) may
exceed the benefits (e.g., profits) of selling
the baseball gloves to businesses in the other
 Distributor:
An agent who sells directly for a
supplier and maintains an inventory of the
supplier’s products.
A foreign distributor buys the manufacturer’s
product for resale to middlemen or final buyers.
He has more functions than an agent (maintaining
inventories providing after-sales services) and assumes
the ownership risk.
He obtains a profit margin on resale of the product
 Your
company wants to sell its products in
foreign markets.
Increased sales mean increased revenues, which
should translate into increased profits.
In order to accomplish this goal, you must first
establish distribution channels in foreign
 In
addition to domestic restrictions,
international businesses must deal with a
range of additional government rules
regulating international trade.
 Tariffs, import quotas and prohibition issues
are all facts of life for importers.
 The restrictions could cause barriers and
negative impacts to international sport
 Methods
of communication vary among
 Personal style concerns the way a negotiator
talks to others, uses titles, dresses, speaks,
and interacts with other persons.
It has been observed, for example, that
Germans have a more formal style than
A negotiator with a formal style insists on addressing
counterparts by their titles, avoids personal
anecdotes, and refrains from questions touching on
the private or family life of members of the other
negotiating team.
A negotiator with an informal style tries to start the
discussion on a first-name basis, quickly seeks to
develop a personal, friendly relationship with the
other team, and may take off his jacket and roll up his
sleeves when deal making begins in earnest.
 Various
cultural attitudes towards time.
Germans are always punctual, Latins are
habitually late, Japanese negotiate slowly, and
Americans are quick to make a deal.
 Emotionalisms
are different.
Latin Americans show their emotions at the
negotiating table, while the Japanese and many
other Asians hide their feelings
Cultural factors influence the form of the written agreement
that the parties make.
 Americans prefer very detailed contracts that attempt to
anticipate all possible circumstances and eventualities
 Chinese, prefer a contract in the form of general principles
rather than detailed rules.
Risk taking differs.
Team organization: One leader or group consensus?
 Culture is one important factor that affects how executives
organize themselves to negotiate a deal