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This 20 page Study Guide was uploaded by Javier Villa on Monday December 8, 2014. The Study Guide belongs to BUL at Florida International University taught by Manuel Dieguez in Summer2014. Since its upload, it has received 111 views. For similar materials see 4320 in Accounting at Florida International University.
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Date Created: 12/08/14
Chapter 1 0 International Marketing is defined as the performance of business activities designed to plan price promote and direct the ow of a company s goods and services to consumers or users in more than one nation for a profit 0 Firms must adapt to uncontrollable environment of international marketing by adjusting the marketing mix Product Price Promotion and Distribution 0 Adaptation vs Standardization gt Product Adaptation Modifying a product to re ects characteristics of a market gt Product Standardization Developing the same product for multiple countries 0 SRC SelfReference Criterion Is an unconscious reference to one s own cultural values experiences and knowledge as a basis for decisions 0 Ethnocentrism Refers to the notion that one s own culture or company knows best how to do things 0 Balance of Payments gt When countries trade there are financial transactions among businesses or consumers of different nations gt Money constantly ows into and out of a country gt The system of accounts that records a nation s international financial transactions is called its balance of payments BP gt It records all financial transactions between a country s firms and residents and the rest of the world usually over a year gt The BP is maintained on a doubleentry bookkeeping system 0 Protectionism Measure to shield a country s markets from intrusion by foreign competition and imports Arguments for protectionism include 1 Increase of business size maintain employment and reduce unemployment Retaliation and bargaining Protection of the home market Need to keep money at home Encouragement of capital accumulation Maintenance of the standard of living and real wages Conservation of natural resources Protection of an infant industry Industrialization of a lowwage nation 10 National defense 0 Tariffs Barriers gt Tend to increase 1 In ationary pressures 2 Special interests privileges 3 Government control and political considerations in economic matters 4 The number of tariffs they beget via reciprocity gt Tend to weaken 9 U 39gtquot gt Violence and Terrorism gt Cyber terrorism How to reduce Political Risk Joint Ventures Expanding the investment base Licensing Planned Domestication Political Payoffs Bases of Legal System gt Common Law Derived from English law and found in England the United VVVVV States Canada and other countries once under English in uence gt Civil or Code Law Derived from Roman law and found in Germany Japan France Brazil Mexico Venezuela etc Most prevalent in the world gt Islamic Law Derived from the interpretation of the Koran and found in Pakistan Iran Saudi Arabia and other Islamic states The Shari ah Dumping Selling at prices below the products normal value in export the market Antidumping Laws Laws which prohibit below cost sales of imported goods in local markets Common Law Is tradition past practices and legal precedents set by the courts through interpretations of statues legal legislations and past rulings Code Law Is based on an all inclusive system written rules Divided in three codes 1 Commercial code 2 Civil code 3 Criminal code Islamic Law It encompasses religious duties and obligations and patterns of social and economic behavior for all individuals The World Court at The Hague and the International Court of Justice resolve intemational disputes between sovereign nations of the world rather than between private citizens International disputes can be resolved by gt Conciliation Meditation is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences gt Arbitration Procedures calls for the parties involved to select a disinterested and informed party or parties as referee to determine the merits of the case and make a judgment that both parties agree to honor gt Litigation Deals with filing a lawsuit to settle commercial disputes Patent Protects an invention of a scientific or technical nature Foreign Corrupt Practices Act FCPA Makes it illegal for companies to pay bribes to foreign officials candidates or political parties Stiff penalties can be assessed against company officials found guilty of paying a bribe Standalone Attractiveness of countryregion is based on gt Market Potential gt Accessibility gt Customer response gt Competitive Situation gt Political financial economic risk Synergy with other businesses in countryregion is based on gt Sharing activities with other company businesses gt Using upstream capacity raw material production gt Using downstream capacity final assembly or distribution gt Having proximity to other markets Contractual Agreement Are longterm nonequity associations between a company and another in a foreign market Contractual agreement includes 1 Licensing A means of establishing a foothold in foreign markets without large capital outlays is licensing of patents rights trademark rights and the rights to use technological 2 Franchising In licensing the franchisor provides a standard package of products systems and management services and the franchisee provides market knowledge capital and personal involvement in management 3 Intemational Joint Ventures Are established separate legal entities They are partnerships between legally incorporated entities such as companies chartered organizations or governments and not between individuals Consortia Are similar to joint ventures and could be classified as such except for two unique characteristics 1 They typically involve a large number of participants 2 They frequently operate in a country or market in which none of the participants is currently active Strategic International Alliance SIA Is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective EXTRA gt What is the economic outlook of Japan In the future Japan is not predicted to grow that much because of their lack of natural resources that with time have becoming increasingly valuable for economic growth and because of their population ratio Most of Japan s population is older gt Why is intemational trade growing International trade has increased over the past years because it has become easier to do Some Reasons ease of communication price of phone call has decreased technological advancement such as the internet have helped many DISTRIBUTION AND PRODUCT 0 Global Channels Functions VVVVVVV Collect analyze and transmit information Initiate and maintain contacts with supply chain members Receive process and execute orders Arrange shipping insurance and delivery Take and transfer title to goods Make the sale Service customers 0 Value Chain Management Supplier A Assemnihllting Eillipilil i ll B T T39IeIamsufac39turinsg anti Sales Supiplzier N W 39 I istrihutinen C enter 3 fIJl Ip liver K T illper T C 1sseII1hIh1g 7 I pp let 1511713 nufa cturing and S ales Enuntr3 Cuuntrjr Eslarket Eiiarket A E 0 Channel Structure How to structure the distribution channels is the most important long term marketing mix decision a firm may make Channel structures are designed to manage multidirectional horizontal and vertical connections in gt gt gt Physical movement of goods and services Transactional titles ows Information communications ows 0 International Transportation Issues gt gt gt gt Transportation Infrastructure roads rail lines airports seaports pipelines Availability of transportation modes overland shipping ocean shipping air shipping Choice of modes transit time predictability cost noneconomic factors Noneconomic factors government involvement etc 0 International Inventory Issues gt gt gt Inventory carrying costs can be up to 25 of the value of an inventory JustInTime policies minimize inventory volume by making it available when needed does not arrive until it is needed or sold Inventories assist in the movement of products Factors in deciding on the level of inventory maintain 1 Order cycle time 2 Desired level of customer service 3 Use of inventory as a strategic tool 2 Domestic Indirect Domestic wholesalers EMCs ETCs Complementary marketers The Distributor Agreement Typical terms include gt gt gt gt gt Contract Duration Typically short periods initially Geographic and customer boundaries Well defined territories and channels Compensation Methods for determining payment amounts and how and in what currency payment is to be made Products and conditions of sale Products to be sold terms and conditions of sales Means of communications between parties Channel Adjustment and Termination gt gt Typical reasons for channel adjustment 1 Growth and changes in the international marketer s distribution approach may eliminate a channel 2 Con ict of interest and a lack interest or performance by the intermediary may require a channel modification Termination conditions are the most important considerations in the distribution agreement and must be spelled out clearly Motivating Channel Member gt gt gt Offer training Provide promotional displays Participate in cooperative advertising Controlling Channel Member gt gt gt gt Develop performance criteria Evaluate performance against criteria Take corrective actions if needed Design system for timely attention to channel performance Brokers do not take title of the goods do not take ownership The reason of existence of the middleman is to have an overall reduction in the total number of transactions Quality gt Quality can be defined in two dimensions 1 Marketperceived quality 2 Performance quality Quality is associated with customers satisfaction Quality is also measured in many industries by objective third parties such as JD Power and Associates Customer satisfaction indexes developed are now being used to measure satisfaction across a wide variety of consumer products and services Quality and Global Standards Global Brands Positioning Product Brand Strategic Alternatives Brand Different Same Local Mamket Segment Unw rsal Unique oca Tralnssnastioinaul Dift e139ent Umjf n P Nilre P IIKEA Product Posltmnmg Adapted Volvo iLevi s Same N39lultinational Global Standardization Developing same product for multiple countries gt Premise Consumes share some common values beliefs and consumption patterns gt Advantages Economies of scale and scope price competitiveness uniform image Product Adaptation Modifying product to re ect characteristics of a market gt Premise Consumers are not the same gt Advantages Improved fit between product and consumer expanded penetration Mandatory Product Adaption gt Governmental regulations gt Technological considerations voltage infrastructure gt Culture imperatives Is it acceptable to consumers gt Measurement standards volume length weight quantity The Global Product Launch Introducing the product into countries in three or more regions within a narrow timeframe gt Successful launches require 1 Involvement of country managers 2 Prelaunch attention to localization and translation requirements 3 Increased education and support of the sales channel gt Benefits of global launch 1 Showcases the product 2 Removes old models at once 3 Captures new product s higher margins GLOBAL PRICING External Market Factors gt Government in uences and constraints 1 Import controls 2 Price controls gt Trade Barriers 1 Quotas 0 Parallel Imports Also called Gray Marketing buying low price countries selling in high price countries gt Causes 1 Marketbased pricing 2 Exchange rate uctuations 3 Demand gt Distributor Tactics 1 Narrow price differential 2 Improve aftersale services 3 Differentiate product 4 Increase gifts 5 Seek help from manufacturer gt Importer s Tactics 1 Set up own service center 2 Import products that do not require servicing 3 Increase gifts 0 Transfer Pricing Objectives gt Reduction of Taxes gt Management of cash ows gt Minimization of foreign exchange risks gt Competitiveness in the international marketplace gt Reduction of tariff IMPORT AND EXPORT 0 FSC Foreign Sales Corporation An opportunity for entrepreneurs in other countries to partner with foreign companies wishing to export to their country since the FSC must have at least one foreign director Tax incentive for U S Exporters 15 32 Tax exclusion on export income gt Restrictions 1 Main Office must be located in qualifying foreign country 2 Must be incorporated 3 Must have one foreign director 0 Bonded Warehouse Allows goods to be warehoused without the assessment of duties Exempt from customs duties and fees while in the warehouse gt Duty rate owned is duty rate in effect when goods are withdrawn from the warehouse gt Goods may remain in the warehouse for 5 years from the date of import gt Bond is usually 2x normal duties and fees gt Cost is not regulated Determined by negotiations between the Bonded Warehouse and the Importer 0 FTZ Free Trade Zone In the U S and in 75 Foreign Countries gt Bond with Intemal Compliance Plan can expedite refund to approximately 30 days Letter of Credit Is an agreement between two banks the importer bank and the exporter bank The terms of sales are specified in the letter of credit When documentation proving that the terms of sale has been met the money is transferred between the banks The buyer usually assumes the majority of the LC costs There are numerous types of LC and various conditions that can be imposed Types of Letter of Credit 1 Revocable LC The terms of sale allow for changes to the LC or the cancellation of the LC Advantage to the BUYER 2 Irrevocable LC Payment or terms cannot be changed or canceled without the consent of all parties Advantage to SELLER 3 Confirmed LC The buyer s bank has been reviewed and is acceptable to the seller s bank In addition the money s availability has been confirmed by both banks In the importer bank Last payment will be made immediately upon the receipt of the appropriate documents Bill of Lading or Inspection Certificate 4 Back to Back LC Two letters of credit are used in conjunction an LC between the seller the middleman and the buyer is used that is known the Master LC and an LC between the supplier and the middleman is used that is known as the Backing LC The supplier must conform both LCs in order to be paid The middleman must complete the Master LC in order to be paid Advising vs Confirmation Advising banks take reasonable care to verify LC authenticity Advising banks only pay after they have been paid The advising bank does not assume financial risk Confirmation of a LC obligates the bank to pay immediately upon the receipt of the conforming documents from the supplierexporter The conforming bank must pay even before it has received funds from the issuing bank Documentary Collection The exporter s bank collects payment due against delivery of documents The exporter s bank acting as an agent for the seller exporter present documents to the buyer s importer bank Neither bank is obligated to automatically pay under these transaction terms The payment is made if the buyer is willing and able However documentary collection offers more security than an open account gt Advantages 1 Simple and inexpensive 2 Usually a faster receipt of payment than an open account 3 Seller retains title and the merchandise is not pickedup until paymentacceptance is made gt Disadvantages The buyer can refuse to pay for any reason If this happens the seller can 1 Find another buyer 2 Pay for retum transportation Compare and contrast the association transfer form of advertising form with the drama form of advertising 9 points What is a Jobber in the distribution channel How is it different than a warehouse distributor 7 points
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