FITT CITP cheat sheet

Comparative advantage: a country gains from trade by specializing where its opportunity cost of production is lower, even if it is absolutely less efficient in everything.

Balance of payments identity: current account + capital/financial account + statistical discrepancy = 0; a persistent current account deficit is financed by net capital inflows or reserve drawdown.

Trade-to-GDP ratio = (exports + imports) / GDP; values above 100% indicate heavy re-export or processing activity (e.g., Singapore, Vietnam).

Regional integration ladder, lowest to highest: free trade area, customs union, common market, economic union, political union; a customs union adds a common external tariff to an FTA.

Trade creation shifts consumption from a high-cost domestic producer to a lower-cost partner; trade diversion shifts it from a low-cost non-member to a higher-cost partner because of the preference.

GDP per capita at purchasing power parity is the standard comparator for market potential; nominal GDP measures absolute market size in US dollars.

WTO core principles: most-favoured-nation treatment, national treatment, tariff binding, and transparency; MFN requires extending the best tariff given to any member to all members.

Globalization drivers: falling transport and communication costs, containerization, trade liberalization, and offshoring of labour-intensive stages; deglobalization pressures arise from tariffs, sanctions, and supply-chain resilience policy.

Screening funnel: macro country screen (size, growth, stability, access) → industry screen (demand, competition, regulation) → company-fit screen (capability, cost, risk) → shortlist of 3-5 markets.

Market potential estimate = target segment population × penetration rate × average annual spend per buyer; validate with import statistics (mirror data) before committing.

Entry modes by control and risk, ascending: indirect export, direct export/agent, distributor, licensing, franchising, joint venture, wholly owned subsidiary (greenfield or acquisition).

Exporting suits low-commitment, high-uncertainty markets; a wholly owned subsidiary suits high sales potential, high tariff/logistics barriers, and strong IP protection needs.

Licensing yields royalty income with low capital but risks creating a future competitor and losing quality control; franchising adds a service-standard and brand-protection obligation.

Joint venture is preferred where local ownership rules or government approvals require a domestic partner; specify governance, deadlock resolution, and exit clauses in the JV agreement.

Secondary data sources: national statistics offices, UN Comtrade, WTO, World Bank, IMF, OECD, and industry associations; primary research is required when secondary data is outdated or too aggregated.

Market attractiveness scoring uses weighted criteria (size, growth, competitive intensity, tariff level, regulatory ease, cultural distance) and must be sensitivity-tested by changing weights.

Standardization vs adaptation: standardize where consumer needs and regulation converge, adapt where language, climate, measurement units, religion, or law differ; the 4Ps may be adapted independently.

Product adaptation drivers: mandatory (safety, labelling, electrical standards), cultural (taste, colour, symbolism), and economic (income level, pack size, price points).

Pricing methods: cost-plus, market-based, and skimming vs penetration; export price build-up includes ex-works cost, freight, insurance, duty, distributor margin, VAT, and currency buffer.

Distribution channel length raises end-user price at each markup; grey-market risk rises when the price gap across markets exceeds the cost of arbitrage.

Promotion adaptation: language translation must be back-translated; imagery, humour, and taboos are culture-specific; direct comparative advertising is restricted in many jurisdictions.

Country-of-origin effect can be a premium or a penalty; it can be mitigated by local manufacturing, local brand names, or endorsement by a trusted local partner.

B2B sales cycle in export markets is longer; key account management requires local-language contracts, Incoterms clarity, and service-level commitments.

Digital channels: local search engines and social platforms dominate by country; e-commerce entry requires local payment methods, returns policy, and consumer-protection compliance.

Total landed cost = ex-works price + inland transport + export clearance + main carriage + insurance + import duty and taxes + port/handling + last-mile delivery + inventory carrying cost.

Incoterms 2020 risk and cost transfer: EXW at seller's premises; FCA on handover to carrier; FOB when goods are on board at origin port; CIF risk transfers on board but seller pays freight and insurance to destination; DAP at named destination ready for unloading; DDP duty paid.

Container types: 20ft (~33 cbm, ~28 t payload), 40ft (~67 cbm), 40ft high cube (~76 cbm); chargeable weight for air freight = max(gross kg, volume cbm × 167).

Mode selection: sea for high volume/low value density, air for high value density and urgency, rail for Asia-Europe landbridge, road for regional and last-mile.

Inventory metrics: safety stock = z × σ_demand × √lead time; order quantity via EOQ = √(2DS/H); service level maps to z (90% ≈ 1.28, 95% ≈ 1.65, 99% ≈ 2.33).

Incoterms do not cover title transfer, payment terms, or governing law; those must be set in the sales contract separately.

Supply-chain risk tools: dual sourcing, nearshoring, buffer stock at strategic points, supplier audits, and visibility platforms tracking shipment milestones.

Customs brokers, freight forwarders, and 3PLs have distinct roles: forwarders arrange transport, brokers file declarations, 3PLs operate warehousing and fulfilment.

HS classification: 6-digit code is internationally harmonized; countries extend to 8 or 10 digits; classification determines duty rate, FTA eligibility, and licensing requirements.

Customs value for ad valorem duty is normally transaction value (price actually paid or payable), adjusted for assists, royalties, and selling commissions; freight and insurance are added under CIF-based valuation countries.

Duty payable = customs value × tariff rate; VAT/GST is then applied to (customs value + duty + freight/insurance where applicable).

Rules of origin: wholly obtained or substantial transformation (tariff-shift, value-added percentage, or specific process); a valid origin claim needs a certificate of origin or self-declaration per the FTA.

Tariff-rate quotas apply a lower in-quota rate up to a volume threshold and a higher over-quota rate above it.

Trade remedies: anti-dumping duty (sales below normal value), countervailing duty (foreign subsidy), and safeguard (surge causing serious injury); each follows a separate investigation procedure.

Export controls and sanctions screening: check denied-party lists (e.g., OFAC SDN, EU consolidated list, UN list) before shipment; dual-use goods may need an export licence.

Record-keeping: customs entries, invoices, origin evidence, and licences must be retained for the statutory period (commonly 3-7 years) and produced on audit.

Payment risk ladder for the exporter, safest to riskiest: advance payment, letter of credit, documentary collection (D/P, D/A), open account, consignment.

Documentary letter of credit: issuing bank substitutes its credit for the buyer's; exporter must present compliant documents within the credit's expiry and presentation period; discrepancies allow the bank to refuse.

UCP 600 governs LCs; key rules: banks deal in documents not goods, strict compliance, 21-day default presentation period if none stated, and examination within 5 banking days.

Documentary collection: D/P releases documents against payment; D/A releases against acceptance of a time draft, so the seller carries buyer default risk.

Export credit insurance and factoring/forfaiting transfer or cover non-payment risk; forfaiting discounts medium-term receivables without recourse.

Foreign exchange exposure types: transaction (specific receivable/payable), translation (consolidating foreign subsidiary accounts), and economic (long-run competitiveness).

Hedging instruments: forward contract locks a rate; futures are standardized and margined; options give a right but not obligation for a premium; a natural hedge matches receivables and payables in the same currency.

Countertrade forms: barter, buyback, offset, and counterpurchase; used when currency convertibility or buyer credit is limited.

CISG applies to international sales of goods between parties in contracting states unless excluded; it covers formation and remedies but not validity, title, or product liability.

Offer and acceptance under CISG: a reply with material changes (price, quantity, quality, delivery, liability) is a counter-offer; the mirror-image rule applies with limited exceptions.

Choice of law and forum: specify governing law, jurisdiction, and arbitration seat; arbitration awards are enforceable across New York Convention states more readily than foreign court judgments.

Force majeure requires an unforeseeable, irresistible event outside the party's control; hardship clauses address changed circumstances that make performance excessively burdensome.

Liquidated damages and penalty clauses: civil-law systems may reduce penalties; common-law systems enforce genuine pre-estimates of loss.

Intellectual property: register trademarks and patents in each target market; the Madrid System allows multi-country trademark filing via one application.

Anti-bribery law: the US FCPA and UK Bribery Act reach conduct abroad; facilitation payments are permitted under FCPA but not under the UK Bribery Act.

Agency and distribution agreements: an agent acts in the principal's name for commission; a distributor buys and resells for its own account; termination and indemnity rules vary by jurisdiction.

Hofstede dimensions: power distance, individualism vs collectivism, masculinity vs femininity, uncertainty avoidance, long-term orientation, indulgence vs restraint; compare profiles, not stereotypes of individuals.

Trompenaars dimensions include universalism vs particularism (rules vs relationships) and specific vs diffuse (separation of work and personal life).

High-context cultures (e.g., Japan, Arab states) rely on implicit meaning and relationship; low-context cultures (e.g., Germany, US) rely on explicit written communication.

Monochronic cultures treat time linearly and schedule-driven; polychronic cultures treat time flexibly and prioritize relationships over timetable.

Negotiation stages: preparation, relationship building, exchange of information, persuasion, concession, and agreement; in relationship-first cultures, do not rush to the commercial terms.

Concession strategy: trade concessions for reciprocal value, make smaller and slower concessions as the end approaches, and avoid unilateral giving.

Communication: use back-translation for written material, avoid idioms and humour in formal documents, and confirm understanding in writing after verbal agreement.

Team composition: include a local-language speaker and a technical expert; decision-making authority may sit at headquarters, so confirm who can actually sign.

Country risk components: political (expropriation, war, sanctions), transfer (currency inconvertibility), and sovereign default; assessed via export credit agency ratings and political risk insurers.

Credit risk tools: credit reports, trade references, letters of credit, credit insurance, and payment terms matched to buyer history.

Compliance risk: sanctions, export controls, anti-money-laundering, and anti-bribery; a third-party due-diligence file should be retained for every agent and distributor.

Ethical sourcing: codes of conduct, supplier audits, conflict-minerals due diligence, and forced-labour import bans (e.g., US UFLPA) create legal exposure, not just reputational risk.

Business-continuity planning: identify single points of failure, maintain alternate suppliers and routes, and test recovery time objectives.

ESG reporting frameworks (GRI, SASB, TCFD) increasingly appear in buyer requirements; carbon border adjustment mechanisms add a cost to high-embedded-carbon imports.

Fraud red flags in trade: unusual payment routing, over/under-invoicing, phantom shipments, and mismatched HS codes versus goods description.

Whistleblower and ethics programmes: confidential reporting channel, non-retaliation policy, and documented investigation procedure.

Strategic planning cycle: environmental scan (PESTLE, Porter's Five Forces) → SWOT → objectives (SMART) → strategy selection → implementation → control and review.

Ansoff matrix: market penetration, product development, market development, diversification; international expansion is typically market development.

Porter's generic strategies: cost leadership, differentiation, focus; a stuck-in-the-middle position erodes margin in global competition.

Market entry decision matrix weighs market attractiveness against firm capability and risk tolerance; score options (export, licence, JV, subsidiary) against the same criteria.

Trade management operating model: centralize compliance and tariff classification, decentralize customer-facing sales, and set clear RACI between HQ and country teams.

KPIs: export revenue growth, gross margin after landed cost, order-to-delivery cycle time, on-time-in-full rate, customs clearance time, and compliance incident count.

Scenario planning: build base, upside, and downside cases around tariff changes, FX shifts, and freight-rate volatility; define trigger points for action.

Post-entry review: measure against the original business case at defined milestones (e.g., 12 and 24 months) and document go/no-go or expansion decisions.