International Trade Organization essay

In the contemporary business environment, the development of international cooperation and trade are of the paramount importance because the effectiveness of such cooperation can, to a significant extent, define the extent to which the development of business can be successful. In this respect, it should be said that the cooperation between companies based in developed and developing countries is particularly prospective because companies operating in developing countries can benefit from low costs of labor force, while companies based in developed countries can count for the stable demand on products, which are considered to be essential. In this respect, computers and computer accessories are particularly attracting for modern business oriented on the trade between developing and develop countries. To put it more precisely, many companies operating in developing countries develop their manufacturing facilities to produce computers, accessories, input devices and other products. In such a context, the market of developed countries is particularly attracting for such companies since they cannot maintain as high sales rates in developing countries as companies operating in developed countries do. At the same time, to enter a market of a developed country, the company needs to develop a network through which it could distribute its products.

However, today, the formation of such a network is costly and needs substantial investments. This is why many companies use alternative approach to the distribution of their products in developed countries. In fact, they use local companies, which have well-developed networks and loyal customers. In such a context, the close cooperation between such companies becomes an essential condition of their successful marketing performance.

Obviously, the development of international trade stimulates many companies to develop their partnership with foreign companies worldwide. In this respect, it is possible to refer to the Bluechip Computer AG, the company based in Germany, which is focused on the distribution of computer input devices. In actuality, the company has a well-developed network through which it distributes and sales computer input devices in Germany (Bluechip Computer AG, 2008). The company is mainly oriented on the local, German market, though, taking into consideration a close economic integration of European countries, the company have a significant potential for the further growth and market extension in other European countries, such as France, Austria, Netherlands and others. Nevertheless, it is rather a future perspective of the company, while, at the moment, the company operates in German market.

In fact, it is important to underline that the company has a stable position in the market because the demand on computer input devices in Germany is constant and it is not susceptible to rapid changes, though a remarkable feature of the local market is a strong trend of local customers to innovations. What is meant here is the fact that local customers prefer buying products which are new and which are based on the use of new technology because such products open new opportunities for users and, therefore, are more attracting to customers.

Taking into consideration a stable demand on computer input devices, the Bluechip Computer AG faces a problem of the supply of products. Obviously, the company operates in Germany where computer and IT industries are well-developed. Consequently, the company can rely on local suppliers. However, today, many German companies tend to focus on the production of highly technological hardware as well as software, instead of focusing on the production of input devices solely. In such a situation, the company faces a problem of the supply of computer input devices which can be sold at affordable price and which could meet basic demands of customers. Partially, the company can meet the demand of local customers on highly technological input devices by means of local customers, but the rest of computer input devices the company is more likely to import from developing countries, such as Taiwan, where computer manufacturing industry is quite developed and local companies can supply computer input devices at low price and of a sufficient quality. In such a way, the Bluechip Computer AG is simply forced to import computer input devices en mass because local suppliers cannot fully meet the demand of customers of the company, while the price of devices produced in Germany or the EU is consistently higher compared to the price of the same devices in developed countries.

In such a situation, the company needs to find a reliable business partner in a developing country, such as Taiwan, which is one of the largest producers of computer input devices in the Asia Pacific region. In this respect, it is possible to refer to the Cool Sources Co., Ltd. The company is based in Taiwan and it is one of the leading computer manufacturing companies in the country. To put it more precisely, the Cool Sources Co., Ltd. produces not only computers, but also a lot of other electronic products. The main products of the company are consumer electronic and computers, PC peripherals products, including digital MP3 players, touch screen MP4 players, flash PMPs, hard disk portable multimedia players, Bluetooth MP3 sunglass, Bluetooth MP3/MP4 watch, notebooks, laptops, computer accessories, computer desktops, computer speakers and headphones, multimedia wireless keyboards and mouses sets, mice, mini optical mouses, etc. Among all these products, multimedia wireless keyboards and mouses sets, mice, mini optical mouses are particularly interesting to the Bluechip Computer AG because these input devices are very popular in Germany.

On analyzing the potential of the Cool Sources Co., Ltd. as a potential supplier of computer input devices to the Bluechip Computer AG, it should be said that such cooperation could be highly beneficial for both companies. On the one hand, the Cool Sources Co., Ltd. can expand its presence in international market due to entering German market, from which the company can start its European expansion, while, on the other hand, the Bluechip Computer AG can get computer input devices from the Taiwanese company, which can be supplied regularly and, what is more, the price of these products is consistently lower compared to the similar products produced in the EU, while the quality of these products meets international standards since the company has got an international standards approvals ”“ CE, FCC, RoHS, ISO 9001-2000 approvals (Cool Sources Co., 2008). Moreover, the Cool Sources Co., Ltd. can supply a wide range of products, such as computers and accessories, which can be sold within the Bluechip Computer AG’s network along with traditional computer input devices which constitute the core products sold by the company.

At the same time, it is obvious that in order to develop a stable supply both companies need to ensure that computer input devices are produced in time, of the high quality and, what is more, these devices need to be delivered in time from Taiwan to Germany. Obviously, the distance between the manufacturer and the distributor is enormous and it is quite difficult to cover the huge distance in a short period of time to supply products produced by the Cool Sources Co., Ltd. to the distributor, the Bluechip Computer AG. At this point, it is important to underline that ineffective logistics can undermine the positive effects of low costs of products imported by the Bluechip Computer AG, while problems with delivery of products to Germany can deteriorate the marketing performance of the company consistently because such problems deteriorate the public image of the company and, therefore, decrease customers’ loyalty as well as decreases profits of the company, if it has nothing to sell because of supply problems.

In this respect, it should be said that the participation of Germany and Taiwan in international trade agreements facilitates consistently the trade between the two countries that means that the import of computer input devices by the Bluechip Computer AG can surmount existing fiscal barriers, which can have minimal affect on the price of products. In such a context, the transportation and logistics costs become crucial for the company and profitability of import of computer input devices from Taiwan.

In order to maintain a stable and reliable supply chain, the Bluechip Computer AG should assess the potential of the Cool Sources Co., Ltd. concerning the production of computer input devices. At the moment, the latter does not have problems with the production of computer input devices since the company has a 15 year experience of operations in national and international markets (Cool Sources Co., 2008). In addition, the company has production facilities and resources to increase the production to meet new demands in case the Bluechip Computer signs contract for the supply of computer input devices to Germany. Consequently, the Bluechip Computer AG can rely on the production potential of its Taiwanese partner. Moreover, the Cool Sources Co., Ltd. has international standards approvals, which ensure the high quality of products manufactured by the company that solves the problem of quality, which is of the paramount importance for the Bluechip Computer AG since the company operates in Germany, where quality standards are traditionally very high.

Thus, the major challenges the company will need to solve is the problem of transportation of computer input devices and its delivery to Germany and distribution though the company’s network. At this point, it is necessary to define the main direction in the development of the transportation strategy. What is meant here is the fact that it is necessary to define the legal basis for the transportation and the means of transportation. Physically, there are two possible ways of the delivery of computer input devices from Taiwan to Germany: either by air or by sea. On comparing both ways, it should be said that the transportation of computer input devices by sea seems to be ineffective compared to transportation by air. To put it more precisely, the transportation of computer input devices by sea is absolutely ineffective because it takes too much time that means that potential cost savings due to the lower cost of transportation by sea can be annihilated by the longer time spent on the transportation. In contrast, the transportation by air is consistently more effective because, firstly, it is time saving, secondly, it is reliable, and, finally, the costs of transportation by air can be covered by benefits due to the speed of transportation. In this respect, it is important to underline that due to the high speed of transportation by air, the Bluechip Computer AG can benefit from the higher capital turnover. What is meant here is the fact that the company can sell a larger number of products delivered by air and, therefore, the company will get higher revenues compared to the lower volume of sales, if the company prefers to transport computer input devices by sea.

At the same time, it is necessary to underline the importance of the legal basis for the supply of computer input devices from Taiwan to Germany. Obviously, the trade between the Cool Sources Co., Ltd. and the Bluechip Computer AG should be based on the contract between both companies. However, this is an essential part of international trade between companies. What is more important is the minimization of bureaucratic pressure in the process of delivery of computer input devices. In fact, ideally, free trade agreement between Germany and Taiwan could simplify consistently the import and delivery of computer input devices from Taiwan to Germany. However, the countries do not have such a free trade agreement, but the Bluechip Computer AG can minimize the costs of transportation and bureaucratic pressure, caused by legal formalities related to the transportation of products from one country to another. The minimization of costs and saving timing can occur on the condition that the Bluechip Computer AG will deliver computer input devices directly to Germany from Taiwan. In this respect, it is possible to recommend using services of the DHL which provides delivery services worldwide. The DHL is Germany based company which actively develops its business in Asia. Therefore, the Bleuchip Computer AG can use its delivery services, especially taking into consideration the reliability of the DHL since the company insures time-definite international delivery.

Alternatively, it is possible to recommend developing a more complicated delivery system, which can be effective if the Bluechip Computer AG develops a long-run cooperation with the Cool Sources Co., Ltd. For instance, the Bluechip Computer AG can create its subsidiary in Taiwan, which buys computer input devices at the Cool Sources Co., Ltd. After that the subsidiary can transport these devices to Germany to the mother-company. Obviously, such a system of transportation can facilitate consistently legal aspects of the process of delivery of computer input devices because it will be an internal transfer of products from one unit of the company to another that does not actually involve any fiscal issues and does not raise as much legal barriers as the direct sales of products by the Cool Sources Co., Ltd to the Bluechip Computer AG.

Thus, taking into account all above mentioned, it is possible to conclude that the development of international trade can be highly beneficial for companies operating in developed and developing countries. In such a context, the cooperation between the Bluechip Computer AG and the Cool Sources Co., Ltd can be profitable for both companies.

At the same time, the Bluechip Computer AG can face problems related to the transportation of products from Taiwan to Germany, which can be solved if the company follows the aforementioned recommendations.