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Essay / Research Paper Abstract
Countertrade is becoming increasingly popular. This 5 page paper consider show it is being used in order to manage and minimise risk, especially in international trade and how it is used in terms of global financing. The bibliography cites 9 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEglobalcounter.rtf
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Unformatted sample text from the term paper:
small local trades to international deals. By looking at what is meant by countertrade and how it is seen the way the model can be used to finance global operations
and to manage risk can be appreciated. Countertrade isa practice that is increasing and is a general term meaning any kind of trade where there is a reciprocal agreement
of others goods or services rather than typical cash or financing deals. There are many types of countertrade, including barter, buyback, offset, tolling and switching trade and may be used
to try and gain a competitive advantage (Thompson, 2005). The real level of countertrade is unknown, estimates indicate that of world trade 10%
- 15% may be made up of countertrade (UK Trade and Investment, 2003), other estimates place these as high as 50% in some areas (Healy, 2001), there is little doubt
it is a high level, but the difficulty in estimating it is hindered by the confidential nature if many of the deals (Forker, 1996). The benefit of countertrade
is the way it may be used to create value in a transaction. A well known example of countertrade tool place between PepsiCo and the Soviet Union, PepsiCo supplied
the country with the drink syrup and received Vodka in return. The country did not have the financial reserves to buy the goods in the traditional way, but had a
commodity that was valuable. PepsiCo then sold the Vodka under a new brand name, both parties were happy (Healy, 2001). There are also other examples that demonstrate the way
that these transaction may create value and can be used to demonstrate the differences that may result between this and traditional trade. Media Resources International (MRI) is a company that
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