International Marketing Textiles and Garments

These slides are not necessarily be an original work rather these are a compilation of different

Prepared By : Mazadul Hasan sheshir
ID: 2010000400008
13th
Batch (session 2009-2013)
Department : Wet Processing Technology
Email: mazadulhasan@yahoo.com
Blog : www. Textilelab.blogspot.com
(visit)
Southeast University
Department Of Textile Engineering
I/A 251,252 Tejgaon Dhaka Bangladesh
Prepared By :

Total Textile Process at a Glance

Decide on
Export
Implement
Commitment to Export
Analyze
Internal Factors
-Product
-Resources
External Factors
-Market Environment
-Competitive Profile
International Market Involvement
Market Identification & targeting
Entry mode selection
Marketing Mix
*Product *Price *Distribution *Promotion
Organize
Department
Subsidiary
Jt. Venture
Export House
Allocate Resources
*Product
*Arrange Resources
Review
Modify
Set new target
Set Targets
Process of International Marketing

WHY COMPANIES GO INTERNATIONAL?
Two Factors:
1. Pull factors
2. Push Factors
Pull factors: Proactive reasons – forces of attraction – pulls the business to
foreign markets – profit, growth etc.
Push factors: Reactive reasons – compulsion of domestic market prompts
companies to internationalize – saturation etc.
Profit Motive:
•International business – profitable than domestic market – investment in low
cost locations.

Why Should a Firm
Enter International
Markets?
Growth
Profitability
Economies of
scale
Spreading Risk
Access to
Imported inputs
Uniqueness of
Product or
services
Marketing
Opportunities
Due to life
Cycle
Spreading
R & D
Cost
Competition in
Domestic
market
Govt. Policies &
Regulations
Spin - off
benefits
Strategic
Vision

Wholly Owned Subsidiary
Contractual Entry Investment Entry
Joint Venture
Marketing Entry
Export Entry
Indirect Direct
Export Houses Agents
Commission Agent Exporters Agent Abroad
-Assembly
-Contract Manufacturing
-Licensing
-Franchising
-Co-production agreement
-Management contract
Major Minor 50:50
Acquisition Establishing own unit
Market Entry Methods

The Concept of International Market Entry
• An institutional mechanism by which a firm makes its products and services
available to consumers in overseas markets
• Franklin Roots defines the market entry strategy as a comprehensive plan
which sets forth the objectives, goals, resources and policies that guide a
company’s international business operations for achieving sustainable growth in
world markets.
• Once a firm has decided to establish itself in global market—it becomes
necessary that the Company studies and analyzes the various options available
to enter the international markets and select the most suitable one.
• This decision is to be taken with utmost care—Not only is the financial resources
in stake but the extent to which the company‘s marketing strategy can be
employed in the new market also depends on this decision.
• Mode of entry varies from low -risk ,low-control modes with minimum resource
commitment eg. indirect exports to high-risk, high control modes with a higher
level of commitment by establishing its own manufacturing facilities in foreign
markets (subsidiaries).

Production in Home Country Production in Foreign Country
Exports Providing Offshore
Services
Contractual Mode Investment Mode
Indirect Direct
Overseas
Assembly or
Mixing
Joint Venture Wholly
Owned
Foreign
Subsidiaries
International
Licensing
International
Franchising
Turnkey
Projects
Management
Contract
International
Strategic
Alliance
Contract
Manufacturing
Distribution
Access
Technology
Alliance
Production
Alliance
B & T BOT BOO
Alternative Entry Modes

Production in Home Country
Export Entry
•A firm has two basic options for carrying out export
operation.
--Market contacted through a domestically located
intermediary—an approach called Indirect Exporting
--Market can be reached through an intermediary located in
foreign market--an approach termed as Direct Exporting

Direct Exports
A firm’s product is directly sold to importers-Sole distributor
Foreign country based intermediaries--Agents
Company owned Sales Offices
Indirect Export
--When firms do not have much exposure and has limited resources –
Indirect Exports
•Indirect exports occur
-Selling to a domestic broker/ foreign buying agent in home
country
-Exporting through merchant intermediary-export house

Contractual Entry
Production in foreign country
Licensing :
• A company assigns the right to a patent (which protects a product, technology or
process) or a trademark( which protects a product name) to another company for a
royalty
• Licenser gives technology, manufacturing right, brand and also marketing right
(unlike contract Manufacturing)
• Licensee gains marketing right- Exclusive basis or Unrestricted basis
• Variety of time period 5 to 15 years
• Licensee makes all capital investments
• Licensing agreements subject to negotiation –vary from Co. to Co. and industries to
industries

International Franchising
• A special form of licensing in which a home company (Franchiser) makes a total
programme of operation available to an overseas company (Franchisee)
• It includes the brand name, logo, products and method of operation
• Mc. Donald’s, KFC, Burger King, Holiday INN, Hertz, Carrefour, Benetton, Coca Cola
(trade mark, recipe, and advertising)-independent bottlers around the world
• It is a transfer of the entire system from one country to another

Licensing Franchising
Royalty Management Fees
Products are major source of concern Covers all aspects of business
including goodwill, trade marks,
IPR etc
15-20 years 5/10 Years – renewable
Licensing tends to be self selecting. They
are often established businesses and can
demonstrate that they are in a strong
position to operate the license in question.
A licensee can often pass a license to an
associate with little or no reference back to
the original licensor.
The franchisee is selected by the
franchiser. Even replacement is
controlled by franchiser.
Difference between Licensing and Franchising

Licensing Franchising
Concerned with specific existing
products and technologies
Franchisor passes to the
franchisee the benefits of on-
going research programs
There is no goodwill attached to the
licensing as it is totally retained by
licensor
Although franchisor does retain
the goodwill, the franchisee picks
up an element of localized
goodwill
Licensee enjoys substantial measure
of fee negotiation
Standard fee structure. Any
variation will cause confusion
Lesser control Exerts higher control

Overseas Turnkey Projects
• Companies utilize technical expertise to enter international markets
• Types of Turnkey Projects
- Build and Transfer (Conceptualizes, designs, builds, testing and transfer the
project to the owner
- Build/Operate and transfer (BOT) (Build the project and manage for
the contracted period before transferring to the foreign owner)
- Build, operate, own (BOO) (Firm buys the project, once it has been built)
International Management Contracts
•Company provides its technical and managerial expertise for a specific
duration to an overseas firm.
• Low risk, low cost mode of entry.
• Earn foreign exchange and optimally utilize its skilled manpower

Strategic Alliance
• Refers to the relationship between two or more firms that cooperate with
each other to achieve common goals but do not form a separate company.
• Firms focus on their core competencies
• Difference between strategic alliance and joint venture
- In Joint Venture two partners contribute a fixed amount of resources and the
venture develops on its own
Joint Venture
Parent Company X
Parent Company Y
Company Z
(Joint Venture)
-In strategic alliance each partner brings a particular skill or resource – usually they
are complementary and by joining forces each expects to profit from the other’s
experience-No equity participation
Company X
Strategic Alliance
Contractual
Agreement
Company Y

Contract Manufacturing
• An international firm arranges to have its products manufactured by an
offshore local company on contractual basis
• Local manufacturers responsibility is only production
• Marketing responsibility is on Parent company
• No legal bindings – change contracted manufacturers to improve quality and
cost effectiveness
• A number of global companies outsource manufacturing activities to low cost
locations.
• Globalization of business technologies and increasing pressure on
international firms to be globally competitive in costs, product offering,
speed to bring new products – driving force of international contract
manufacturing
• Economic development of a number of countries depend on contract
manufacturing like China, Korea, Mexico, Thailand, Taiwan, Now Indonesia,
Vietnam and India
• Nike shoe – entirely manufactures through contractual basis

Local Manufacturing
A common and widely practiced form of entry is local production of company’s products.
Types:
•Overseas Assembling
• Joint Venture
• Wholly Owned Subsidiaries
Reasons for Local Production
•Local cost, market size, tariffs, laws and political consideration may affect a
choice to manufacture locally
• Sometimes cost cutting rather than market entry – International firms
establish plants in Taiwan, Malaysia, Vietnam, China – little intention to enter
the market – export to third country

Wholly- owned subsidiary
•Tata Tea entered into JV with Tetley group, UK in 1994,acquired Tetley in 2000
•Asian paints has 27 manufacturing plants in 24 countries
•Aditya Birla Group has wholly owned manufacturing base in south east Asia
Establishing local operation to gain new business
An aggressive strategy – a strong commitment in international operation –
often the only way to convince clients to switch suppliers
 Important strategy in industrial market – service and reliability of supply
main factors in the choice of suppliers
Establishing Foreign production to defend existing business
 Changing economic or political factors necessitate such a move
E.g. Japanese car manufacturers, that had been subject to an import limitations
of assembled cars, from USA imported from Japan, began to build factories in USA
to protect their market.
 In 1982 Honda became the first Japanese manufacturer to set up production in
USA

Assembly
• A firm locates a portion of the manufacturing process in the foreign
country
• Assembling consist of the last stage of the manufacturing and depends
on a ready supply of components or manufactured parts to be shipped
from another country
• Involves heavy use of labor rather than expensive investment of capital
outlets
• In order to save in shipping costs and high import tariffs and counter
non tariff barriers and take advantage of cheap labour cos exports
components in CKD condition and assembles them overseas e.g
Mahindra &Mahindra, has entered Kenya by assembling operation
• Tata motors assembling operations with Nita Company Ltd in
Bangladesh for commercial vehicles
• Japanese automobile cos have entered European market by
assembling to overcome import barriers
• Sometimes Cos may use some of the local resources

Joint Venture
Under a joint venture arrangement a foreign company invites an outside partner
to share stock ownership in the new unit –minority or majority or 50:50share
Reasons for JV
• By bringing in new partner , company share the risk for a new venture
• JV partner may have important skills or contacts of value to the firm
• Local firm has good contacts with the government and represents local
business interests
• Provide greater control over production and marketing functions
During 1960-70 Japanese market was viewed as a difficult environment—govt
regulations—JV
Mc Donald’s entered Japan in 1971 through JV with Fujita &Co
Mc Donald’s in India through JV
Examples:

Wholly -owned foreign subsidiaries
In order to have complete control and ownership of international operations, a
firm opts for foreign direct investment to own foreign operations.
Benefits
 Develops a foreign market with growth potential by way of product
differentiation and competitive response
 Helps in overcoming import barriers-high tariffs, quota
 Gets benefits of incentives provided by host countries
 Helps a firm to spread risks over various markets
 Take advantage of lower cost of production in host countries—raw
material. labor
 Avoids conflicts with overseas partners
Limitations:
 Need substantial financial and other operational resources
 Need substantial international exposure before establishing WOS.

Ways of establishing WOS
 Acquisition
 Greenfield operation
Acquisition
• A company can acquire a foreign company and all its resources in a foreign
market
• Acquisition provides speedy access to the resources of a foreign company
such as skilled man power , the company’s product and brand and its
distribution channels
Green field operation
• The firm creates the production and marketing facilities on its own from
scratch
• Green field operations preferred under following situations
 Smaller firms with limited resources
 Have the option of selecting own location on the basis of their own screening
criteria.

Supply Chain Management
1
2
3
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1
2
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1
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InitialSupplier
Tier3rd
tonsupplier
Consumerorendcustomers
Tier3toncustomer
Tier 1
Suppliers
Tier 1
Customer
Tier 2
Customers
Focal
Firm
Tier 3 to
Initial
suppliers
Tier 2
Suppliers
Tier 3
Customers

• Boxes (Material Flow)
• Bytes (Information Flow)&
• Bucks (Financial Flow)
3B’s of Supply Chain Network

Approaches of Supply Chain
VOLUME
AGILE
LEAN

LEAGILE
PREDICTABLE UNPREDICTABLE
SHORTLEADTIME
LONGLEADTIME
LEAGILE
POSTPONEMENT
AGILE
QUICK
RESPONSE
LEAN
CONTINIOUS
REPLENISHMENT
LEAN
PLAN &
EXECUTE

Hybrid Approach (LEAGILE) Of SC
CustomerSupplier
Buy-to-order
Make-to-order
Assemble-to-order
Make-to-stock
Ship-to-stock
Lean Supply Chain Agile Supply Chain

Perceived Customer Value
Value
QUALITY SERVICE
COST LEAD TIME
X
X
•Meeting Customer requirement
•Elimination of wastage
•Continuous improvement
•Customer Support
• Product Service
• Flexibility to meet
customer demand & market
change
•Design & Engineering
• Conversion & Distribution
• Inventory
•Materials
• Time to Market
•Order entry to Del.
• Response to market forces
• Lead time

THE VALUE CHAIN
•Insource /
outsource?
•Manage
variety,
quality
& costs
•Brand
Development
&
Management
•Market
development
•Distributor
liaison
•Product &
service
liability
•Product &
service
specification
•Infrastucture
supoort
Value
Delivery

LOGISTICS
SUPPLY
CAHIN
STRATEGY SUPPLY
CHAIN
OPERATIONS
SUPPLY
CHAIN
PLANNING
SC
ENTERPRISE
APPLICATION
PRODUCT
LIFECYCLE MGT.
PROCUREMENT
SUPPLY CHAIN
MANAGEMENTLOGISTICS

LOGISTICS- THE KEY SUCCESS FACTOR
•WMS(Warehouse management system)
•TMS(Transportation management systems)
•RFID(Radio Frequency Identification)
•TRP(Transportation Resource Planning)
•Logistics Outsourcing
•EDI (Electronic Data Interchange)
•WIDE (World wide Integrated
Distribution Enterprise.)
•ROBOTIC Distribution Centre.
•Integration of ICT with innovative
manufacturing process CAD, CAM
•POSTPONEMENT
IBM- IT based Organization BENETTON- Fashion Based Branded Manufacturer and
retailer

Product flowProduct flow
Customer relationship ManagementCustomer relationship Management
Customer Service ManagementCustomer Service Management
Demand ManagementDemand Management
Order fullfilmentOrder fullfilment
Manufacturing Flow ManagementManufacturing Flow Management
ProcurementProcurement
Product Development and commercializationProduct Development and commercialization
Returns
Information Flow
Purchasing
Logistics
Marketing
& Sales
Production
R & D
Finance
Tier 2
Supplier
Tier 1
Supplier Customer
Customer/
End Customer
Supply Chain Business Processes

Pre-Shipment and Post-Shipment Finance
Pre-Shipment Finance
• It provides the exporters working capital between the time of the receipt of
order and the time of shipment to arrange for production or procurement of
goods.
• Pre-Shipment finance is of particular importance to small-scale manufacturers
and exporters who do not possess sufficient financial resources to meet the
expenditure involved in the production of goods for export.
• Pre-shipment finance is normally provided by the commercial banks. As in the
case of any other advance, the bank takes into consideration a number of
factors before making the necessary advance to the exporter namely, 1)
honesty, integrity and capital of the borrower, ii) exporter’s experience in the
line, iii) security offered, iv) the rate of interest, v) the bank’s experience about
the exporter and vi) standing of the foreign buyer.
• The security can be provided in the following form: i) Letter of credit, ii)
Confirmed order as evidence of having received an order iii) Relevant policy
issued by ECGC. iv) Personal bond in the case of the party already known to
the banker.

Post-Shipment Finance
• Post-shipment credits are intended to bridge the financial gap between
the time of shipment of goods and the actual payment received by the
exporter.
• Post-shipment finance is provided in one of the following form: i)
Export bills negotiated under letter of credit, Discounting of bills drawn
against shipment of goods, iii) Advance against bills under collection.
• The rate of interest on post-shipment credit is up to 90 days- not
exceeding 10 percent. Beyond 90 days and up to six months from the
date of shipment – 12 percent and beyond six months from the date of
shipment, banks are free to charge any interest.
• Repayment of the loan will generally take place when proceeds are
received from abroad.

Payment Terms
The export Sales Contract must clearly specify how and when the payment is to be
made.
Options of payments by the buyer:
•Advance Payment
•Open Account
•Consignment Sales
•Documentary bills
Documents against payment (DP)
Documents against acceptance (DA)
•Documentary Letter of Credit (LC)

Payment in Advance
• Most advantageous payment term for the seller point of view.
• The importer sends remittance with the confirmation of order or before the
shipment is made.
• The remittance is made by draft, cheque, mail or transfer.
• Advance payment may be insisted upon when goods are manufactured to
order in accordance to the specification of the importer.
• Buyers are unknown to the seller or his credit worthiness is doubtful.
Open Account
• Under this method the seller carries the entire financial burden.
• Here the seller ships the goods with no financial documents to his advantage.
• Because of great risks associated with the open account method by the
seller, it is generally restricted to cases of transactions between inter-
connected companies or where the exporter and overseas buyers have a
long and well established commercial relationship.

Consignment Sales
• The exporter makes shipment to overseas consignee/ agent, but retain the title
to the goods even though the overseas agents will have the physical possession
of the goods.
• The payment is made only when the goods are ultimately sold by the overseas
consignee to other parties.
• The procedure is costly and risky to exporter.
• His payment will be due on a date which cannot be foreseen – As a result he
may be faced with cash flow problem.
• This type of payment is risky too – if the consignee fails to sell the goods, he may
return the goods any time at the seller’s expense.
• Moreover the price to be realized is also uncertain and will depend on market
conditions.
• Advantage of such sale is that the buyer gets an opportunity to examine the
goods and the seller may get a higher price if the buyer is satisfied with the
quality etc.

Documentary Bills
Documentary bills act as a bridge between:
a) Exporter’s unwillingness to part with the goods until he is paid for and b)
Importer’s unwillingness to part with his money unless he is sure of receiving
the goods. Banks provide a via media by giving the necessary assurances to
both the parties. Under this form of payment, the exporter agrees to submit
the documents to his bank.
DP
•Exporter ships goods to foreign buyer.
•Exporter’s bank sends documents including bill of exchange and bill of lading to its
Correspondent Bank in the buyer’s country.
•Correspondent Bank presents documents to buyer and on payment of the bill of
exchange, delivers the documents to him so that the can take possession of the goods.
•The correspondent bank sends the money received from the buyer to the exporter’s
bank which is ultimately credited to exporter’s account.

DA
•The correspondent bank will submit the bill of exchange to be signed by the buyer
to indicate his acceptance of the payment obligation.
•After the buyer accepts the bill, he will get possession of the documents.
•On the due date of payment, the bank will again present the bill to the buyer who
then makes the payment.
•The money received is remitted through the usual banking channels to be credited
to the exporter’s account.
•DP bills are drawn on “sight” i.e. no credit is involved.
•DA bills involve credit for a fixed period and are therefore drawn on “usance”
basis.

Documentary Letter of Credit
•Under documentary credits, the importer approaches his bank, which on the
basis of the instructions given by the importer, gives a written undertaking to the
overseas exporter that if the exporter presents documents the bank will make
payment of the given amount to the exporter.
•In effect, the credit of the issuing bank is substituted for that of the buyer.
Parties to the letter of Credit
•The Opener – The opener is the buyer (the importer) - The LC is opened at the
initiative and request of the buyer.
•The Issuer – The issuer also called the opening or Issuing Bank is the bank in the
importer’s country issuing the LC at the request of the buyer.
•The Beneficiary – The beneficiary is the party in whose favour the credit is issued –
seller or the exporter.
•The confirming Bank – The confirming bank is a bank in the exporter’s country
which guarantees the credit.

How LC Works
This is explained by the following example:
•Suppose a US-based buyer wants to purchase goods from an Indian exporter.
•The Indian exporter instead of drawing directly on the US importer, requests him
to arrange a LC.
•The US importer applies to his bank in USA to issue a letter of credit.
•In his application for the LC to the bank, the importer sets forth the terms of sale
and mentions the documents which shall accompany the draft, the usuance, the
date of shipment etc.
•If the bank is prepared to issue the credit, the importer will sign the LC contract, in
which he will have agreed to reimburse the bank for all outlays and give such
securities as the bank demands.

•The issuing bank will now notify its correspondent bank in the exporters country
and request the latter to confirm the credit to the exporter.
•The correspondent bank will now inform the exporter that a LC has been arranged.
•The exporter will now ship the goods to the US buyer, draw a time draft on the
issuing bank in India. The Indian bank will mail the draft and documents to its own
correspondent bank in USA, which in turn, will present it to the drawn bank for
acceptance.
•The accepting bank will deliver the documents to the importer. Usually against a
“trust receipt”, an instrument under which the bank retains title to the merchandise.
The importer makes payment when the draft matures.

International Trade Procedures &
Documentation
Step by step of Export transaction framework
Identify an importer
Strike a deal (Export Contract)
Description of goods
Price of each item
Net & gross shipping weight
The terms of delivery
The terms of payment
Insurance & shipping cost
Currency of sales
Port of loading
Port of discharge
Estimated shipping date
Validity period of contract

Exports Transaction Framework
Payment
DocumentsExporter’s banks
Exporter
Port of loading
Importer’s bank
Importer
Port of discharge
Export contract
Carrier
Manufacturing
/ purchase of
goods

Export Import Procedures
The Procedures adopted for export are as follows
Compliance with legal framework
Concluding an export deal
Procuring/Manufacturing of goodsArranging export finance
Arranging cargo insurance
Appointing C&F agent
Booking shipping space
Sending documents to C&F agent Dispatching of goods to C&F agent (at the port)
Receipt of documents and cargo by C&F agent
Customs clearance, completion of port formalities, and cargo loading by C&F agent
Sending documents to the exporter by C&F agent
Sending shipping adice to the importer
Clearing export incentives
Receiving export incentives
Presentation of documents to the negotiating bank
Exporter receives payment

Incoterms
Category Applicable for sea
transport only
Applicable for all modes of
transport (including water)
E terms:
Departure terms
EXW (Ex works)
F terms:
Shipment terms, main
carriage unpaid
FAS (Free alongside ship)
FOB (Free on board)
FCA (Free carrier)
C terms:
Shipment terms, main
carriage paid
CFR (Cost and freight)
CIF (Cost, insurance, and
freight)
CPT (Carriage paid to)
CIP (Carriage and insurance
paid to)
D terms:
Delivery terms
DES (Delivered ex ship)
DEQ (Delivered ex quay)
DAF (Delivered at frontier)
DDU (Delivered duty unpaid
DDP (Delivered duty paid)
Source: Based on Joshi, Rakesh Mohan, International Marketing, New Delhi, Oxford University Press,
2005, p. 383

INCOTERMS
In international transaction a set of terms used:
•To describe the rights and responsibilities of the buyer and seller with regard to
•Sale and transport
•Uniform interpretation of these commercial terms (INCOTERMS) defining the cost, risks,
and obligations of buyers and sellers have been developed by International Chamber of
Commerce (ICC) in Paris

Incoterms 2000 include a set of 13 terms as under:
EXW – (Ex Works) named place
The seller’s obligation to deliver goods is complete when he places the goods at the disposal of
the buyer at his own premises or another place such as factory, warehouse etc. Here the goods
are not cleared for exports
FCA – (Free Carrier) named place
Here the seller’s obligation to deliver the goods is complete when he delivers to the carrier
nominated by the buyer at the named place cleared for export

DDP (Delivered duty paid) named place of destination
Any mode of transport; the seller delivers goods to the buyer, cleared for import
(including import licence, duties, and taxes) but not unloaded from the means of transport
Ex-works (EXW) involves lowest obligation while the DDP involves highest obligation for
a seller

SOME INTERNATIONAL CLOTHING JAINT

1. Yarn Manufacturing Technology
Link : http://www.facebook.com/pages/Yarn-Manufacturing-
Technology/485014954866808
2. Fabric Manufacturing Technology
Link : http://www.facebook.com/pages/Fabric-Manufacturing-
Technology/459520217425605
3. Garments Manufacturing Technology
Link : http://www.facebook.com/pages/Garments-Manufacturing-
Technology/472364799463126
3. Wet processing Technology
Link : http://www.facebook.com/pages/Wet-Processing-Technology-
Dyeing-/468645219825404
4. Fashion-Design-and-Technology
Link : http://www.facebook.com/pages/Fashion-Design-and-
Technology/587655294583875?ref=ts&fref=ts
My Facebook Textile related Pages
http://www.textilelab.blogspot.com (Visit )

International Marketing Textiles and Garments

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