UCLA Internationl Marketing 5 20-09


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UCLA Internationl Marketing 5 20-09

  1. 1. International Marketing Global Trading
  2. 2. What is Non-Cash Trading? <ul><li>Defined as companies trading goods and services without the use of currency or cash </li></ul><ul><ul><li>This market is segmented: </li></ul></ul><ul><ul><ul><li>Barter - Small businesses with average trade of $450 – non-geographic or local items- printing, oil change, dentist, restaurant </li></ul></ul></ul><ul><ul><ul><li>Large Corporate Trade – Includes F1000 and G2000, with average trade of $1-20 million- global commodities- coal, computers, steel, equipment- even diapers and alcohol </li></ul></ul></ul>
  3. 3. The Market <ul><li>$1.2 trillion of global commerce is traded on a non-cash basis (U.S. Department of Commerce and World Trade Organization) </li></ul><ul><li>Worlwide totals exceed $7 Trillion </li></ul><ul><li>Types of Trades </li></ul><ul><li>Company-to-Company </li></ul><ul><li>Company to Country </li></ul><ul><li>Country-to-Country </li></ul>
  4. 4. Examples of Large Corporate Non-Cash Trades <ul><li>IBM traded $40 million of goods and services in return for Olympic sponsorship </li></ul><ul><li>CBS traded $62 million of advertising for an equity position in Sportsline.com </li></ul><ul><li>IBM Mexico traded 2,600 computers valued at $1.7 million for 120 Volkswagens and other services </li></ul><ul><li>Sumitomo trades $1.2 billion of goods and services with 40,000 other businesses </li></ul><ul><li>Caterpillar trades heavy equipment for raw materials </li></ul>
  5. 5. Facilitation vs. Finalization “ In today's B2B environment, buyers and sellers meet online, but frequently go offline to complete the transaction.” eONE Global: Payments DNA White Paper 80% of the Process 20% of the Value Aggregation Value Exchange Cycle Final payment, settlement & collection occurs offline EXIT Communication Negotiation Transaction 20% of the Process 80% of the Value Payment Settlement Collection
  6. 6. Reasons companies trade instead of using cash In countries with weak or fluctuating currencies – trade may be the best way to acquire needed goods and services ALL Conserve cash ALL New distribution channel Airlines, Hotels, Broadband, Media, Energy, Services Sell irrecoverable/perishable inventory Manufacturing, Warehousing Fill idle capacity Manufacturing/Finished Goods Move unsold inventory INDUSTRIES REASON
  7. 7. Which Type of Companies Trade? <ul><li>Industries that have a history of non-cash trading include, among others, airlines, hotels, media, real estate, broadband, manufacturing </li></ul><ul><li>65 percent of the Fortune 500 participate in non-cash trade </li></ul>
  8. 8. Anatomy of a Simple Trade Tracking & Reporting Tracking & Reporting Sales Procurement Sales Procurement CFO IBM $40 Million of Computers CFO Olympics $40 Million of Sponsorship Ads Phone Fax Email
  9. 9. Which distribution channel would you choose? <ul><li>Institute of Management & Administration (IOMA) recently found that “removing excess, obsolete and slow-moving inventory” is the #1 most challenging task by a 2:1 margin </li></ul><ul><li>Current economic data suggest building inventories </li></ul>Retail $10MM of computers (100% of current value) Wholesale $5MM (50% of value) International $2MM (20% of value) Liquidation $1MM (10% of value) Trade for $10MM of Volkswagens (100% of current value) OR Trading offers an alternative distribution channel at higher value and conserves cash
  10. 10. Types of Corporate Trade <ul><li>Locate a trading partner </li></ul><ul><li>Agree on mutual need </li></ul><ul><li>Agree on equal value </li></ul><ul><li>Consummate trade </li></ul><ul><li>Track trade </li></ul><ul><li>Report trade </li></ul>The Process 1 to 1 $5MM computers for energy Direct Trade
  11. 11. Types of Corporate Trade <ul><li>Locate multiple trading partners </li></ul><ul><li>Agree on mutual need for each trade </li></ul><ul><li>Agree on equal value for each trade </li></ul><ul><li>Consummate each trade </li></ul><ul><li>Track each trade </li></ul><ul><li>Report each trade </li></ul>The Process 1 to Many $20MM computers for Multiple Items Multiple-Direct Trades
  12. 12. Types of Corporate Trade <ul><li>Locate initial trading partner </li></ul><ul><li>Agree on mutual need </li></ul><ul><li>Agree on equal value </li></ul><ul><li>Consummate trade </li></ul><ul><li>Take possession of excess goods </li></ul><ul><li>Track initial trade </li></ul><ul><li>Report initial trade </li></ul><ul><li>Find partners to trade off excess goods </li></ul>* Energy company is faced with Multi-Direct Trading situations (with goods/services that he did not produce, but now owns) The Process Multi-Party Trade Energy Company only needs $10MM of computers- thus take $30MM of product and trades for other goods
  13. 13. Value Proposition <ul><li>E fficiency+ L iquidity+ T rust = V ALUE </li></ul><ul><li>Efficiency ~ Quicker opportunity to move goods or services. Move large quantities at once. </li></ul><ul><li>Liquidity ~ Provides access to multiple trading partners and new distribution channels or outlets. </li></ul><ul><li>Trust ~ Trading among known or trusted partners. Decreases credit risk. </li></ul>ELT=V
  14. 14. How does trading affect International Marketing? <ul><li>Foreign Relations between Companies and Countries </li></ul><ul><li>Impact on Taxes and Currencies </li></ul><ul><li>Multi-lateral trade negotiations </li></ul><ul><li>Publicity and Public Relations </li></ul><ul><li>Financial Impact- Revenue/Taxes </li></ul><ul><li>Other? </li></ul>
  15. 15. Technique for Marketing Yourself <ul><li>Identify who or what your goal is. Whom are you trying to sell to or influence </li></ul><ul><li>Isolate faces. Industries, Companies, People </li></ul><ul><li>Use for Marketing, Sales, Referrals, Networking, or Job Search </li></ul>
  16. 16. “ Tornado Technique” <ul><li>The basis for everything </li></ul><ul><ul><li>What you do- high level (realize most people don’t care or don’t understand) </li></ul></ul><ul><ul><li>Who do you do it for (types of industries, companies, etc.) </li></ul></ul><ul><ul><li>Names of current clients or companies </li></ul></ul><ul><ul><li>Ask for the order- who are you trying to get to- be specific </li></ul></ul>
  17. 17. “ Tornado Technique” <ul><li>Job Search </li></ul><ul><ul><li>I am interested in International Marketing. </li></ul></ul><ul><ul><li>In particular I like industries such as-Banking, Financing, Manufacturing, Other?___ </li></ul></ul><ul><ul><li>Think of companies like X, Y, Z. Or companies that work with____ </li></ul></ul><ul><ul><li>Directly, I am looking for introductions to Chief Marketing Officers or people in the marketing department. </li></ul></ul><ul><ul><li>Do you know anyone in Marketing? </li></ul></ul>
  18. 18. Questions? <ul><li>Contact Information </li></ul><ul><li>[email_address] </li></ul>