International Marketing in a Global context
By Carl-Axel Engdahl, KTH, Royal Institute of Technology, Stockholm Sweden
Content
Preface 1
Content 3
Reading 7 Views
1. Global Marketing 9
1.1 Introduction 9
1.2 From passive to active marketing. 11
1.3 from exports to global presence 16
1.3.1 Active or passive internationalization 19
1.4 For companies motives for international activity 20
1.4.1 Economic motives 21
1.4.2 Non-economic motives 21
1.4.3 Other reasons 22
1.5 Some models strategy for international expansion 23
1.5.1 Product-market matrix 23
1.5.2 BCG Matrix 24
1.5.3 Selecting the market - attack is the best defense 26
1.5.4 guerrilla tactics - but do not seem to grow 26
1.6 Choice of strategy at the international establishment 26
1.7 Special Considerations for international marketing. 27
1.8 border barriers between domestic and export market 29
1.8.1 Examples of reasons for support and corrective actions 29
1.9 The Swedish border barriers on exports 31
1.9.1 licensing authorities 32
1:10 Answers to questions at the beginning of Chapter 1 of 33
Data. 34
Internship Fall 35
2 The global market 35
2.1 The nation as a subsystem of the global market 36
2.2 Countries with different levels of economic development 37
2.3 The various nations share of world output and world trade 38
2.4 groupings of nations 42
2.4.1 Market Block 43
2.4.2 Military Pacts 45
2.4.3 Cultural sites 46
2.4.4 Islands of prosperity 47
2.5 International customers 48
2.5.1 Public global customers 49
2.5.2 Global companies 51
2.5.3 Individuals global customers 52
2.6 National clients 53
2.6.1 National, public customers 53
2.6.2 National business 54
2.7 Answers to the questions at the beginning of Chapter 2 55
INFORMATION 56
3 Election of the market 56
3.1 What strategy is used to select the market? 57
3.2 Election of the market for exports 58
3.3 Additional costs of international marketing 61
3.4 Compensation for extra costs 62

3.5 Election of customers 62
3.7 Answers to the questions at the beginning of Chapter 3 64
Task. 65
4th International market research 65
4.1 gather knowledge about the market 66
4.2 Sources of market information 66
4.2.1 Statistics 67
4.2.2 Books and magazines 70
4.3 Methods for the treatment of secondary information 70
4.3.1 Trend Analysis 70
4.3.2 Derived demand 71
4.3.3 Analogies with developments in other countries 71
4.4 Custom market research 72
Data 73
5 Marketing design 73
5th l Marketing Mix Adaptation to the market 73
5.2 Competition of funds adjustment 77
5.3 Adaptation of the product mix 77
5.3.1 Safety 78
5.3.2 Economic Criteria 79
5.3.3 cultural differences 79
5.3.4.Service and spare parts as a competitive tool 80
5.4 Commercial communications - to get in touch 81
5.4.1 International advertising 81
5.4.2 Publicity 83
5.4.3 Promotion 84
5.4.4 Personal selling 85
5.4.5 Exhibitions 86
5.5 Pricing 87
5.6 Answers to the questions at the beginning of Chapter 5 89
Data 90
Internship Fall 90
6 Pricing for the International Sales 90
6.1 The price of competition 91
6.2 Pricing of goods 92
6.2.1 Duties 94
6.2.2 Taxes 95
6.2.3 Antidumping Rules 96
6.2.4 Discount 96
6.2.5 Price Control 97
6.3 Price strategies in different market situations 98
6.3.1 Introduction of a new market 99
6.3.2 Segmentation of the market 100
6.3.3 countertrading 100
6.3.4 Product-related considerations into pricing, 103
6.3.5 Price Decisions based on calculations 106
6.4 Answers to the questions at the beginning of Chapter 6 109
7th Customer Credits 110
7.1 Credit as a competitive tool 111
7.2 Differences between price and customer credit as a competitive tool 112
7.3 Risks of export credits 112
7.4 Opportunities for credit protection 113
7.5 Credit depends on different markets 115
7.6 Alternative funding opportunities 117
7.7 Response to the initial questions in Chapter 7. 117

Data 118
Praktikfall 118
8 Product development and monitoring of innovation 118
8.1 Description of the exchange on the international markets 119
8.2 Products with new features 120
8.3 Monitoring of new ideas 121
8.4 Sources of product ideas 122
8.4 1 User, as a source of new product ideas 122
8.4.2. Competitor watch 123
8.4.3 Research and development 125
8.4.4 Manufacturers 126
8.5 Standard requirements in different countries, 127
8.6 The customer's preferences for different characteristics 130
8.7 Continuous product - a guard? 131
8.8 pace of innovation 132
8.9 Answers to the questions posed at the beginning of the chapter: 133
Data 134
Cases. 134
9 Legal protection for the products and knowledge 134
9.1 product that anyone can copy is not worth 135
9.2 Protection of the company's unique expertise 136
9.3 Patents 137
9.3.1 Rights of prior use reduces the value of patent 137
9.3.2 A compulsory license may be granted if the patent is not used 138
9.3.3 patent protection varies 138
9.3.4 The cost of a patent can be sized 138
9.3.5 The patent provides protection to 139
9.4 Trademark Protection 139
9.4.1 Choice of brand 140
9.4.2 Constructing marks 140
9.4.3 Domain name extension of the brand 141
9.5 designs 142
9.6 Privacy 142
9.7 Answers to the questions posed at the beginning of this chapter. 143
Data 144
10 International commercial 144
10.1 commercial communications scope and purpose 144
10.2 Different audiences for commercial 146
10.3 Coordination of resources and local adaptation 147
10.4 Adjustment of different parts of the commercial communication 148
10.4.1 Text and layout 148
10.4.2 Trademarks 149
10.4.3 Selection of Media 149
10.4.4 advertising message 150
10.5 Internet as a channel for commercial 150
10.6 The effectiveness of the international commercial communications 151
10.7 Concluding comments 152
10.8 Answers to Questions in Chapter 10 152
Data 152
11 To organize global marketing 153
1.11 Different types of distribution channels 153
11.2 Long-and short-term effects 156
11.3 Cooperation between the home organization and distribution channel 157
11.4 Direct or indirect promotion 158
11.5 Swedish large company's choice of distribution channel 159

11.6 Business Ethics at the global operations 162
11.7 Multinational companies 165
11.8 An attempt to answer the questions at the beginning of chapter 11 168
Data 169
12 Licensing Sales 169
12.1 License sales spot in market planning 170
12.2 Different types of licenses 170
12.3 Grounds for licensing 172
12.4 Reasons for not giving license 174
12.5 Selling intellectual property and to conclude licensing 175
12.5.1 Setting the target 176
12.5.2 Searching and selecting licensees 176
12.6 To prepare for negotiations 177
12.6.1 Agreement for confidentiality 177
12.6.2 Negotiating fees and options contracts 178
12.6.3 Licensee's skills and interests of the Community 178
12.7 License object value 179
12.7.1 Coordination of various rights 179
12.7.2 Additional supplies 180
12.7.3 Methods to increase the licensor's skill 180
12.7.4 of license fees 181
12.8 Responsibility for the product 182
12.9 Transfer of knowledge and technology 183
12:10 An attempt to answer the initial questions for Chapter 12 184
Data. 185
Appropriate training cases 185
13 agents and other forms of representation 185
13.1 The representative will facilitate contact with the buyer 185
13.2 What is an agent? 186
13.3 Election of Representatives 189
13.3.1 Renegotiation and reform of the Representation 190
13.3.2 Applying for a representative 190
13.4 Agreement with Representative 193
13.5 Stimulation and support 196
13.6 Settlement of Representative, 196
13.7 Handelshus 197
13.8 A draft response to questions at the beginning of the chapter on agents. 198
Privacy 199
Appropriate training cases 199
14 own sales 199
14.1 Personal sales, the most effective distribution channel? 199
14.2 FSC's functions 200
14.3 Establishment of subsidiaries 201
14.3.1 Establishment through formation 202
14.3.2 Types of companies 203
14.3.3 The registration of companies 203
14.3.4 Acquisition of businesses 204
14.4 Time for establishment 205
14.5 Acquisition of 206 companies
14.5. L Planning for the acquisition 206
14.5.2 Financing of acquisitions 207
14.6 Assumption of the purchased company 207
14.7 Answer the questions in the beginning of chapter 14 208
Data 209
15 manufacturing subsidiaries. 209

l5. l Production in other countries 210
15.2 National forced ups 211
15.3 Beginning of the additional assembly and service 213
15.4 The local production as part of the purchase of market shares 214
15.5 Effects of local manufacturing marketing 215
15.6 Answers to questions at the beginning of chapter 215
Data 216
16 Exports Alliances and joint ventures 216
16.1 Collaboration makes business impossible possible 217
16.2 What is the export cartel? 218
16.2.1 Export Cooperative scale 219
16.2.2 Export Alliances - an alternative 219
16.2.3 Cost Benefit 220
16.2.4 Difficulties in coordinating the export cartel 220
16.2.5 Advantages of the export cartel 221
16.2.6 Disadvantages of the export cartel 222
16.2.7 Export Cooperative dynamics 222
16.3 Collaboration with foreign companies 223
16.4 Joint ventures 223
16.5 Joint ventures in market economies 224
16.6 Response alternatives to the questions at the beginning of chapter 225
17 Human International Marketing 225
17.1 Recruitment of international business 226
17.1.1 Pressures for overseas service 227
17.1.2 Company 227
17.1.3 International Head 227
17.2 The need for personnel for overseas service 228
17.3 Provision of personnel for overseas service 229
17.3. L family status, work and schools 229
17.3.2 Remuneration and 229
17.3.3 Renegotiations during the ongoing contract 231
17.4 Pressures during overseas service 231
17.5 To return from overseas service 233
17.6 Personnel Policy in the Global 235 company
17.7 Answer the questions in the beginning of Chapter 17. 235
Privacy 236
Appendix 1 Checklists 236
Checklist for decision on foreign establishment 236
Checklist, licensing 238
Checklist, Sale by Agent 240
Checklist, Equity sales 241
Checklist, Custom manufacturing companies 242
Checklist, Export Alliances 245
Annex 2 Tables of Swedish exports to some countries in 1983.2003 and 2004 251
Annex 3 Swedish exports in 2003 by commodity groups 252
Annex 4 The largest exporting countries in 2004, and India 253
List of Figures 254
List of Tables 256
Reference 256
Useful Internet addresses 258
Index 259

1. Global Marketing
After studying Chapter 1, the following questions be answered:
1. Why should our company to export this product?
2. How, in broad terms, this product will be adapted to different markets?
3. Which markets should we choose for this product for export?
4. Planned no changes in the global or regional market for our product?
5. Which markets should we give priority to this product?
6. If we offered to sell in a market, we will accept or wait?
The following issues are also dealt with in the chapter:
What is characteristic of global marketing?
Why is not export sufficient sales operation?
How can the internationalization and globalization of companies is explained?
When should a company establish itself abroad?
The basic idea of the importance of international commodity exchanges is that if every country, every company and
every individual performing the production they had relatively good conditions and no transaction costs occurred
when changing the finished goods, so wealth would be maximized. However, it requires a financial system for
distribution of wealth so that everyone will participate and for the system to function. International marketing is
certainly an even rudimentary method but still the best to increase trade exchange and to exploit the comparative
advantages of production and thereby increase the overall prosperity of the world. Internationalization has now shifted
to the initiation of a process of globalization as if it may continue going to change much, not only with regard to sales
but also the whole society everywhere.
1.1 Introduction
The reason for that whatsoever can talk about international marketing is that the Earth is divided into a number of
nations. Were the earth a country we would be talking about marketing on different continents and different
submarkets. The division of land in various nations is thus the reason why we can talk about international marketing, a
marketing effort that includes more than one country. Technological developments, both in transport and
communication as the production also affects the size and the continuous appearance of what could be a suitable
market for a product.
The main reason for the existence of international trade is usually in the older economic theory is presumed to be the
availability of various production factors vary from market to market. A reallocation of production factors is therefore
necessary to manufacture different products and satisfy human needs. Of factors of production on this particular raw
materials, whose uneven distribution previously observed in foreign trade theory. The presence of various mineral
deposits can be very variable. For some metals extraction is concentrated in a à two countries. The costs of extraction
can vary greatly. A mineral that is everywhere in large quantities can in some places may be obtained at such low cost
that only one or a few deposits are processed.
Although other factors of production as capital and labor show large fluctuations in the availability and quality, which
cost between countries. Labor quality - a difficult concept to pin down - has come to attract increasing interest. This
aspect of the labor force for all levels of business and society, and covers both the absolute knowledge of an
enterprise, science, technology, etc. as the ability to use them in business, group and society. With the ability referred
to as motivation, ethics, social, technical and personal skills, legal opinion, religion, values and organization. The
ability to initiatives or rather the power to take initiatives vary widely in different communities.
The technical competence, i.e. workers' ability to use existing resources, varies greatly in different countries. The labor
force is covered even when managers and potential managers. Capital allocation also varies between different regions
and countries. Thus provided not only the availability of cash, but especially the structure and infra-structure. For the
modern production requires many different components of high-knowledge (specialized) quality and often in
combination with the machinery and equipment of high quality and specialization. Some actions of these factors of
production may only require a few hours a year, but they are absolutely necessary to modern production facilities to
operate. This provides great benefits for cities and regions with a high degree of concentration, where the specialized
production factor can be used extensively and without long, cumbersome and costly transport / travel.
The existence of so-called "white elephants in developing countries is largely an effect of lack of maintenance and
upkeep. The corresponding problem for this factor is also available in developed countries, where enterprises in rural

areas burdened with higher costs than competitors in the big cities. The factors of production, finished goods and
services transferred across borders between countries and regions is not new. This has happened as long as people
have switched products with each other. This relocation is the basis for international trade. International trade has
grown in importance at the same pace as production processes and consumers put higher demands on the availability
of inputs and finished products. Once this process has accelerated, the first forced, partly supported by the means of
communication development for both the transport of goods and personnel information.
1.2 From passive to active marketing
The exchange of goods between countries has previously mainly been to make it what it had exported the surplus and
imported goods and services that we missed. Nowadays there is a clear trend in market economies to evaluate various
options for the purchase and sale regardless of which country the supplier / customer. It is actively seeking to locate
their clients and assess their needs and the opportunities it has to satisfy them profitably. In principle there is no
difference between domestic and international marketing in market economies. When marketing to the planned
economies, the few that remain, however, is a customer contact more difficult and often there is in these economies, a
major challenge for national policy considerations.
International marketing is therefore the independence of countries and frontiers are actively seeking to identify needs -
latent or documented - which can be met with respect to different stakeholders' demands for fair compensation for
their participation in production and marketing of goods and services.
The difference between domestic and international marketing consists primarily of efforts to identify, analyze and
meet customer needs in a mutually satisfactory way, but is complicated by national differences, distance and border
barriers. The international marketing are also in practice far more complex and requires a larger number of variables
into account than the national marketing.
Corporate horizons broadened. The geographical area in which you are looking for different customer groups and try
to solve their problems, thus widening the domestic market to a large number of countries, perhaps nearly 160
countries in extreme cases of a total of over 200 countries around the world in 2005. The number of independent
countries has grown through the colonies become independent states and by various minority people liberate
themselves and form their own states. In all these countries have different events and changes into account. Some of
the new countries have only a few ten thousand inhabitants.
Each market is different from the other in any respect. At the international marketing made it so before the
requirement to collect, systematize and analyze a much larger amount of information than the national marketing. We
also face the problem to overcome distance and to cross various boundaries with more or less developed barriers in the
form of administrative systems, customs duties, taxes, technology requirements, copyright restrictions, etc. The fact
that in international marketing are forced to study a variety of markets and to identify various cross-border barriers
and other barriers between the markets can, of course, on an initial analysis of the difference between domestic and
international marketing seem like a major fundamental difference. It should not be overlooked that even within a
country may be several sub-markets between which there sometimes are several important differences and border
barriers. Within a country may be differences in language, culture and various social differences and the boundaries
between markets in terms of different distribution systems and different standards and requirements for the product to
be used for different purposes. This element is often not as detailed at national and at international marketing. When
the market base allows would therefore sometimes also at the national promotion to win a lot to consider this situation
by eg differentiate their products and market measures for the various segments of needs. This is what companies with
multiple brands and different distribution channels for the same to be realized, and often successfully applied.
1.2.1 The global market - a large number of sub markets.
Differences exist in the various markets, either they are perceived as large or small. For a successful introduction of a
new product in a market requires that the market is that customers need the product and the product is properly
designed and marketed with the right arguments. This is difficult. An overwhelming number of product launches
conducted in the domestic market often fails because one or a few important factors overlooked, or not gone to change
as rapidly as the marketing managers had expected. At the launch of a new product on the domestic market may be
purely technical deficiencies as the cause of the failure of the product is not fully developed at the introduction. At the
launch on the international market is usually already an established domestic market for the product and the product is
technically completed. Market Adjustment and marketing will be critical for the device to be launched effectively in
the foreign market. Failures at the introduction of a product in foreign markets is not unusual, even if the product is
successful in the domestic market. The international launch of a product that failed in the domestic market is more

chance even though it can sometimes be right and succeed. The effect of market policies often vary throughout the
product lifecycle. Gosta Mickwitz have tried to show this in a graph of competitive funds relative effectiveness at
various stages of product life cycle.
1. Introduction
2nd Growth
3rd Maturation
4th Saturation
5th Waning
At the introduction of a product in a new market can Mickwitz model of competition in the efficacy of the different
market situations as an effective analytical tool, see Figure 1.1.
Figure 1.1 Revised picture of Mickwitz model of the different competitive funds relative efficiency at different stages
in the product lifecycle.
It's important to be aware that the model is an analytical tool and not a prescriptive set of rules. Reality is not always
the model assumptions, even if they have been tested in certain situations. When using the model, it is important to
define what the model is a product and what is a product variant on the new market. Is the product new to the market
or is it just a new product in our company, it is we who believe that it is completely new? The model can provide a
basis for the four combinations of market situations within the limits defined above. However, it is important to
remember that the model has been developed for a new product introduced in the market and not for new varieties or
brands. The vast majority of companies start selling in a new country makes it through the introduction of their
successful products, which then usually is a variant of a product already established in the new market. Completely
new products new revolutionary inventions that pen, the transistor, AGA lighthouse etc are not as common. Since the
product has already been established during a period in the new market has passed some of the product life cycle and
the market has been affected. Marketing, operations may have changed the nature of a number of times and the
various competitive funds relative power have changed. It may have different lengths of time elapsed since the
original product was introduced on the market. The market may have had more or less latent needs of the product,
which may have influenced the introduction process and at which stage the product group now finds itself. In the
election of new export markets and of measures for introduction of the product, you can use the following criteria:
(1) Markets that are similar to domestic market
(2) Markets that are ahead of the domestic market
(3) Markets are for domestic market
An introduction in markets where product resides on the same step or something for the home market is likely to be
more successful than other alternatives. It is easier to pay attention to the requirements laid down in the marketing of a
situation which we are accustomed.
Figure 1.2 The picture shows where the life cycle of a product is at a number of different markets.
Is the new market, far behind the domestic market of the development may need to be made with the introduction
methods, and a velocity equivalent to several years ago, with consequently low sales and slow development.
Marketing focus on key groups of customers who are able and willing to pay for the product's unique features. Only
part of product variants may be introduced at such a high quality oriented introduction. That while attempting to
launch low-priced variants can damage the entire introduction. Customers in a high-quality segments can provide the
product status and they can also, through its recommendations contribute to product marketing in the new
environment. By purchasing power customers in this segment of the market has been beneficial and economic
advantages of using the product despite its possible shortcomings so outweighs the benefits. At a broad introduction to
the market, the customers are processed not as willing to overlook the deficiencies for which the benefits the product
offers are not as important or perhaps almost been abandoned.
Example
Polaroid camera that delivers a photograph in a few seconds immediately after exposure was launched only in the

domestic U.S. market in the late 1940s. In the mid-1960s was considered an international expansion of the product as
a way to increase growth and to compete with traditional cameras. The introduction in France was carried out with all
the force that the big company Polaroid was able to mobilize. Its main product in the United States and which in the
past two years, had responded to rapid growth. SWING camera was selected as the product to which the French
market would be captured. Swing the camera was a cheap camera that cost about 100 French francs. It was easy to use
and offered to customers in different pastel colors. In the United States had SWING primarily sold as a second or third
camera for the family. Much of the market was presented market. The camera was in the U.S. a popular gift for
children and grandchildren, not least the sale transaction to Christmas showed. Despite a strong sale effort by 26
sellers who would process the photo retailers and department store sales were modest and the cost of advertising and
marketing efforts could not be covered.
The causes of failure can be explained by several factors, including lack of television advertising that is superior to
other media at the demonstration of the function, the lower purchasing power in France, a lower ownership rate of
cameras than in the United States. Cameras were purchased in France, mainly in the summer to take vacation photos.
But the very crucial weakness in the French launch of the Polaroid was the product choice and expectations of rapid
growth. When the Polaroid camera was introduced in the U.S., there was a quality product that turned into an audience
that consisted of surveyors, professional photographers and policemen, all of which had a need to directly obtain an
image at the time for investigation. When this target group used the product in mellan10 and 15 years were a great
knowledge of the product is also among the public. The introduction of low-priced variants was a great success.
Advertising and market processing had long-term effects despite the introduction was concentrated in the most urgent
target audiences. The product and brand knowledge gradually over a period AV15 years has been built up in the
United States in France could not be offset by a vigorous advertising and sales effort. To some extent seemed even the
traditional photographic trade to the detriment of Polaorids. Photo Traders were often one-person and got a large share
of its revenue from printing and enlarging, what they were afraid of losing the sale of cameras with direct printing.
Exports to markets located in the domestic market is perhaps more difficult, especially if the market had time to
evolve into maturity. It requires was either an equally wide and varied range of competitors, an equally well-
established service and warranty etc, and accessories, or to concentrate to a defined customer segments where a
limited range is sufficient. One condition is often a lower manufacturing cost to the customer despite the export and
introduction costs can be offered favorable prices. Exceptions are niche products where the design and snob value,
may justify a higher price. An excellent example is the European cars in the U.S..
1.3 From exports to global presence
During the past century, the volume of international trade, particularly raw materials and intermediate goods. The
production requirements for raw materials and intermediate goods were relatively low. Until the Second World War
was the communication of the international exchange of goods mainly through agents and trading houses. The
Swedish foreign trade was dominated for a long time före1600 century the Hanseatic League and in 1700 - och1800
centuries came English agents and trading houses play a major role. It was not the least English agents who responded
to the great Swedish exports of wood products in the late 1800s and early 1900s, several of them came to live in
Gothenburg. Unprocessed goods still account for a large share of world trade. Mineral oil is the largest commodity
group, coffee and cereals follows. Industrial products, however, show very strong growth and has done so throughout
the 1900s with some exceptions, notably in connection with the sharp price increases for oil and many other
commodities in the 1970s.
In connection with that industrial has come to represent an increasing share of world trade has also increased the
requirements on knowledge of how these products should be used and managed. This has led to demands for a
different organization of marketing than for raw materials. For those companies that want to commit industrial
products has become necessary to provide qualified technical know-how and service.
That proximity to customers is important is demonstrated not least the fact that already in 1638 established a
Dutchman who was active in the Swedish province of Bergslagen, established a wire factory in Surrey, England, in
order to sell their brass products. To establish operations abroad in order to facilitate the sale is nothing new.
Agents and trading houses have not always been able to provide this form of sales and marketing support. Training of
Representative's staff, so that it can pass on know-how, in most cases proved less successful. In particular, the
collection of information on markets served inadequately by agents' involvement. Increasingly, companies are trying
today to promote their products through its own sales offices and sales abroad. A strong contributing factor has
obviously also been a competition when the market shifted from being a seller to be the buyer's market. The
internationally established sales offices and subsidiaries play a major role in the intensively monitor the market and to
the parents pass on information as a basis for further product development. Marketing begins and ends with the

customer in a continuous cycle of information between customers and vendors. With the increased competition for
industrial goods has increased buyers 'requirements on sellers' ability to market goods and services at competitive
prices. Often, however, is not price but total economy, the decisive factor for the buyer. Vendor's ability to provide
security of supply, service and training in the use of the product is often crucial to success in the international market.
To effectively meet these demands, several companies established production facilities in the vicinity of major
customers. Popular people talk of "going over TARIFF WALL." In some cases, the cost savings achieved by
producing locally and not have to import that were important for the establishment of local production. In other cases
it may be supply security, which was important, as well as proximity to the customer, in order to effectively coordinate
product development and production.
In recent years, various tariff negotiations led to many tariff barriers eliminated. There has been including in the WTO
and former GATT and UNCTAD framework for the entire world economy but also in regional customs unions and
free trade areas. Work on changing the rules for world trade has been in what are called rounds, the first resulted in the
formation of GATT 1947, then followed a large number of rounds given names Dillon round, Kennedy Round, and
later Tokyo, Uruguay, and the current Doha Round. But the expected impact of a rapid increase in world trade were
met only partially, so long as the negotiations were only applied tariff rates. Non-tariff barriers and administrative
procedures, documentation, safety, product liability and quotas have emerged as very important border barriers, which
impede the international exchange of goods, and has therefore been included in negotiations as well as issues on
customs valuation, antidumping rules, trade in services and a series of specific questions covering only a number of
WTO member countries. Extends beyond the WTO General Agreement is now also a number of other agreements on
TRIMs trade-related investment, the GATS on trade in services and TRIPS for the commercial aspects of intellectual
property rights.
Administrative border barriers in the form of customs documentation and other documentation have been on average
for Swedish exports estimated at between 5 and 7 percent of goods value, of course, with variations for different
product groups and dependent on the quantity per shipment. Safety regulations, necessitated by concern for staff,
consumers and property for virtually any type of goods, and can sometimes be contradictory in different countries and
are usually designed with different maximum limits for hazardous substance and the minimum content of other
subjects. Procedures for testing and approval are different and the work must sometimes be performed by other named
authorities to be valid. The non-tariff trade obstacles’ share of the goods value of export products is very difficult to
generally estimate from zero at the commodity exports to around one third of the value of supplies of certain drugs.
The techno-economic developments have contributed to the forces both within and between companies a higher
degree of specialization in all product areas. The same rate is increased demands for raw materials and intermediate
goods. The company is a constant effort to improve their production, both as regards the production of inputs.
Although this work is carried out in dynamic business internationally. The international purchasing process is as
important as the international marketing and is an important part of efforts to improve corporate competitiveness.
Companies that limit their range to a good market-driven segments in conjunction with internationalization, through
thus larger volume of production to obtain cost advantages that firms that stop in a national market can not absorb.
Cost benefits for not only manufacturing but also product development, marketing and after sales. Production of raw
materials and finished products, thus showing an increasing tendency towards internationalization and specialization.
One can in this context to talk about a snowball effect. When a company has begun to specialize in one product area
and in particular large-scale marketing of its products, it has acquired a unique expertise. While giving the broadened
interface automatically lead to further improvement and deepening of its unique expertise. A company that specializes
in one product may thus gradually increasing their knowledge. It can thus achieve such an advantage over competitors
that are superior to those companies that do not focus on the analogy. Small companies with several hundred million
in sales can account for between 70 and 80 percent of the global market in its product area.
Very soon the competitors to be inclined to specialize and to internationalize their operations, if they want to compete
with the company that initiated the above developments in this product. More and more companies will in future be
forced to focus their activities in new areas or to concentrate and internationalize in order to satisfy customer needs in
the most effective ways to survive the competition. In Swedish industry Electrolux is an often quoted example of this
specialization and internationalization strategy.
Figure 1.3 A snowball that is rolling in, suck up more and more snow. Similarly, competition means that once a
company has decided to set up a new market forced a growing number of competitors to follow suit and enter new

markets. The combined effect is the globalization of a growing number of product areas and industries.
Clear oligopolistic tendencies can be observed in many production areas where a few firms account for a large part of
the world market, sometimes large and sometimes even among small businesses. Some small businesses may have an
even greater share of the global market leader in its niche, depending on the patent or from the beginning a rapid
expansion that did not provide competitors an opportunity to enter the market. Sometimes, the total market to be so
small that there is only room for one or two small businesses.
In order to be successful must specialization often run so far that the company has a leading position within a product
before further expansion can occur through diversification. Diversification of a too small business only leads to
fragmentation of resources. This diversification of risk can not be compensated by the profit opportunities that
specialization can bring.
1.3.1 Active or passive internationalization?
Internationalization Efforts need not only be active, ie that the company actively and consciously take steps to increase
its international sales overall, or within a group of products. Internationalization can equally well be passive.
Client Company may invite or require that their suppliers comply with them to new markets, when they otherwise
have to change suppliers even for current operations. Even new customers in countries to which the selling is done can
come and ask to buy but also make demands on local representation and service. Buyers of client companies is
actively seeking new and better suppliers of both raw materials and production equipment. Find the suppliers with
better equipment to offer than the current suppliers are taking the initiative. There are studies suggesting that a large
proportion of sales to industry takes place at the initiative of the buyer looking for alternatives to satisfy their needs.
This behavior of the customers often force suppliers to enter new markets. Companies that passively established itself
in a number of markets may later be necessary to reconsider its approach to international activities. They may find that
they have coveted products that can provide them with increased profitability by expanding into new markets.
As the first step in learning international business expansion will be taken on several new markets less demanding
than the first store.
Examples of outward foreign establishment is adjacent to a wide range of industries such as mining and engineering
industries. To companies in this sector, it happens that a specialist company agrees to supply completely finished
factories. In order to offer an entire factory, it may be necessary to occasionally buy machines that are manufactured
by companies that are not interested in exporting. The company undertakes to deliver their full factory look, of course,
as an advantage if all of the contracted manufacturers to offer local service in the countries where it supplies complete
plants. The manufacturer can not provide service on a competitive basis in the relevant countries will in general in a
worse position with regard to sales to companies that sell finished plants.
1.4 For companies motives for international activities
Companies' incentive to engage in international activities is an svårutforskat area. Some attempts to clarify the
rationale for different forms of international activity has been made, but no clear conclusions have not been reported.
Three groups of motifs can be distinguished:
1. Economic
2nd non-economic
3rd other motives
1.4.1 Economic motives
Among the economic reasons is a large number of distinguished:
1. Expansion Efforts based on a surplus of personnel, capital, raw materials and know-how or the inherent business
ethics.
2nd Profit opportunities, price competition and exploitation of know-how and research and development (R & D).
3rd Vertical re-assurance by the supply of raw materials.
4th Horizontal re-assurance through market diversification.
5th Profitability through economies - long runs.
6th Adaptation to the institutional arrangements through to get inside a new TARIFF WALL resp avoid being cut off
from a market.
7th Actively participate in the competition for wealth development.
8th Monitoring of innovation by establishing close research centers and leading customers, so that personal contacts

can be created.
For Swedish companies have been motivated 3, "raw materials", so far has been relatively uncommon. Some
examples are, however, the mining industry in eg Tunisia and Liberia, forest plantations in Portugal and forestry in
Canada. Oil exploitation has over 1970 - and 1980's attracted a number of Swedish companies. Oil exploitation and
mining operations in foreign countries are examples of extractive activities, which are often associated with high risks
of nationalization. These risks can often offset by high returns in the short time an extraction of "security" can last.
Best is to have agreements and also by the design or investment to create a binding situation for the country in which
the investment is to be made in order to avoid losses at a future nationalization or to undertake other restrictive actions
for the future.
The increased habit of outsourcing to low income country’s is an example of exploitation of local production
capacity.
Outsourcing may cover most activities in a company, most common are, Backoffice, service functions and production.
Motives 1, 2 och 4 are the most common for Swedish companies during the 1960- och 1970-ties also motive 6, when
EG later EU was established.
1.4.2 Non-economic motives
Among the non-economic motives can be distinguished as follows:
1. The spread of prosperity.
2. Work towards goal, based on undefined background factors: CEO likes to travel, the sales manager to get rid of a
troublesome vendors, etc.
The non-economic reasons for it is often harder to define than the economic. The non-economic motives may
encompass a lot of economic factors of individuals among its owners, directors, senior management and staff. The
non-economic reasons, however, play a not insignificant role in their internationalization, and without the personal
commitment to get people to be willing to sacrifice a personal freedom, foreign operation requires at an early stage.
Common is that companies of a chance to seek out a new market, for example, after an inquiry directly from a client
or friend of someone in management or someone from the management team found a contact for a vacation or trip that
is worth following up .
Among the reasons for the spread of prosperity, there are two main groups: first, that we so strongly believe that their
product actually provides a utility, such as cleaner environment, it must be spread over the world, and that it would
help create jobs. An example could be the Page project with sister company in Tanzania and Kenya, where several
small Swedish companies involved. Such a commitment would hardly be justified on purely commercial grounds,
although some projects are profitable.
1.4.3 Other reasons
1. Your organization's inherent vigor, Parkinson's Law.
2nd trial and error.
3rd power needs of individuals or groups within the organization.
Your organization's inherent vitality is crucial to the further internationalization. Staff with the expectation that longer
or shorter period of time to work abroad is a requirement for continued expansion. Having worked abroad, have often
been regarded as an important experience and qualification for continued career within the company.
Studies show, however, as soon as the opposite of those who succeed in their career in large Swedish companies. That
for some years have the opportunity to save money is an important motive for many to take a few years of overseas
service, and it can be a good slant on family situation and other private circumstances allow.
Some companies but they have been such a profitable that they can be developed by examining all possible ideas for
international business and more or less as proposals emerge.
Power needs of individuals or groups can take many forms. Getting rid of people competing for promotion within the
head office by sending them abroad is a possibility. Their own department or product group's internal strength of the
company can be strengthened through growth, which perhaps can only be done internationally, as other departments
and groups within the company defends its share of the domestic market.
1.5 Some models strategy for international expansion

A planned, structured and motivated international expansion requires a good tool to explain and demonstrate the
different situations and relationships between them. The following models can be adequate basis for analysis and goal-
setting:
1. Product-/marketing matrix
2. BCG Matrix
a. The learning curve
b. Market share model, the dominance theory
3rd Select Market, attack is the best defense
4th Guerrilla Tactics, grow, but not labeled
1.5.1 Product-/market matrx
A company that wants to grow can make it through to expand in any of the four cases shown in Figure 1.4:
Product Old New
/ Market
Old Consolidation/ Expansion into new markets
stagnation
New Product Innovation Diversification
Figure 1.4 Model of the options for expansion as a company, for its growth.
The companies that want to expand can do that by increasing the range or expand the market. Product-/market matrix
shows three expansion routes, besides the option to try to sell more of existing products in existing markets and
consolidate its operations. The first thing a company should do is obviously to sell more of existing markets if they are
not fully funded. Then the best profitability. The advice given by all companies wishing to export must have is to first
fully exploit the current market in order to increase their profitability and volume. Any expansion, whether in product
development, market expansion or diversification, costs more and gives less profits than to fully exploit existing
markets, provided that they are profitable.
Of the options for growth is the expansion rate in new markets the least risky and easiest to assess. Diversification is
the most difficult to assess and evaluate, even if it attracts many to try. Product Innovation is always associated with
many unknown and difficult to control factors but may be an option when it can be done in close collaboration with
customers who may account for the development work.
Despite all the problems that a broader market means it is usually more advantageous to increase the sale of an
existing catalog on the international market than to develop new products in a limited market. The differences between
the markets is usually not greater than the costs of adapting a product to multiple markets will be lower than the cost
of developing additional products for the original market.
1.5.2 BCG Matrix
Boston Consulting Group (BCG) developed a model to explain the link between growth and market share. The model
has been widely distributed and is based on two well-known and basic assumptions in the production and marketing.
These assumptions are that the cost of production per unit decreases with repeated production costs and also decreases
at increasing sales and the company's activities are superior to the sale will be greater than its competitors.
It has also found that for each doubling of production decreases the cost of learning by 20 to 30 percent per unit. Of
learning curve shows that the reduction of the initial cost of knowledge, experience and rationalization becomes
significant when the production volume is doubled, eg, 1 to 2, 2 to 4 and 4 to 8 units produced. The cost drops from
100 to 51.2 from the first to the eighth unit of production is planned and implemented effectively. The learning curve
is clearly attributable even at double the significantly higher production volumes, but it may be difficult to define what

is a new product in relation to a new model.
Marknadstillväxt i procent
Greater than 10 percent annual Stars Questionmarks
growth
Less than 10 percent annual Cash cows Dogs, products with low
growth growth and low profitability
Relative market share relative Competitor's market share is Market share is less than the
to largest 10 percent larger than leading leading competitor
Figure 1.5 BCG Matrix shows four situations in which products can be positioned along a combination of growth and
relative share of the market. At higher percentage than 1, l times the nearest competitor, the company has a
competitive advantage in the market.
In versions of an old product is already at the first production part of the previously accumulated knowledge to be
utilized and the repetitive effect is not as great.
The cost of marketing can be significantly reduced, and above all to be lower than its competitors on a larger quantity
of goods of that kind is sold by the market than what competitors are doing. Variations can exist between different
markets but they are usually small. In marketing the economies of scale in virtually all areas: advertising, publicity,
market analysis, exposure and sales. The fixed cost can thus be distributed over a larger number of units sold and you
get a better effect through a greater effort in various media and hence an increased attention.
According to the BCG matrix enables its products to be in four different situations: stars, question marks, profitable
"cash cows" Cash cows, and barely profitable "dogs" dogs. A company needs to (usually) profitable products to be
developed. BCG model was developed without regard to international marketing. The company can achieve similar
comparative advantage in manufacturing over competitors without being a player in the market if sales are made
internationally. For companies in market segments where the mass marketing and advertising are of relatively minor
importance, can be at major international business advantages of a well-developed production technology to be of
greater importance than the advantages of a major marketing effort.
The traditional interpretation of BCG Matrix for national advertising is that a company must dominate its market, ie to
be better than its competitors in the relative market share, and have a product that does not increase sales by more than
10 percent a year to maintain a long-term profitability self-financing.
Part of the profits must be reinvested in growth products, star products for long-term growth is assured. In Sweden,
Electrolux is best known for having worked for this model in its market expansion into different product areas and
different markets. A large number of companies have since followed the same strategy more or less pronounced;
example, ASSA-ABLOY, the locks, Monarch of bicycles and Securitas to watch.
1.5.3 Selecting the market, attack is the best defense
One strategy that has often proved successful is to choose the market in which you want to compete. By the
international expansion work faster than the competition and gain more profitable markets and choose where and
when it wants to compete can reach advantage. Chances are, of course, that it has but in some markets. This can be
exploited by competitors, but how can one know that if you do not already active internationally and at the markets
that may be relevant? In markets where there is a small market share might not be noticeable, but they can still make a
valuable contribution volume. This can increase the competitive ability and may later be possible through a major
operation soon take a larger share of a smaller market.
1.5.4 guerrilla tactics, to grow but not visible
Freedom to combine a variety of countries and market segments, provides excellent opportunities to select markets
where growth can take place relatively undisturbed from potential competitors. Major competitors might not react on a
distinctly niche application behavior. For some products the company chooses, instead, a ten-or twenty markets, with
market shares of between two to four percent market share. This may provide an equally high total turnover in a
market share of between 20 to 30 percent in three of the four markets. By this way systematically build productive

resources and economic strength, it may eventually be possible to acquire or actively compete to significant market
shares even in large and central market. It thus differs from the guerrilla-dominance strategy in the relevant product
while guerrilla strategy may still apply for other product areas.
1.6 Choice of strategy at the international establishment
Regardless of the motive that drives companies into an international expansion and establishment in different markets,
the following main strategies can be distinguished, see Figure 1.6.
Reason for international establishment little consideration for competitors close attention to competitors
Are invited to market Passive Defensive
Seeking Market Active Offensive
Figure 1.6 Four different strategies for international expansion.
The figure shows how the strategy for the establishment of foreign markets may be affected by competition and
customer situation. It is not uncommon for companies that passively begun an internationalization move to become
more active. Companies are not born international or multinational but develops into it if they have the ability to adapt
to and exploit the opportunities in the international market offers.
The process of internationalization of Swedish firms has been studied by Jan Johnson and Vahlne, Jan-Erik. This study
shows clearly how careful and slow progress has been during the late 1800s and early 1900s. A tendency to both
bolder and more rapid progress can be discerned for the company in recent decades has begun its activities abroad. In
a study of high-tech firms conducted by Uno Alfredéen on behalf of the Ministry of Foreign Affairs (1985) shows that
those starting their internationalization during product development period and that the first finished products can be
marketed in remote high-tech markets like the U.S. and Japan before the sale takes place in Sweden.
What is the difference between a high-tech companies and a development company based on traditional technology is
apparent, however, not the ministry's study.
1.7 Special considerations in international marketing
It was noted at the outset that there is no principled distinction between national and international marketing. Each
national market as a company is considering the process is a new market for which all the decisions about how
marketing is done must be reconsidered in the same way as the introduction of a new product on the domestic market.
Needs, market channels, argumentation, media, catalog, and all other market factors must be analyzed as carefully and
systematically as well as possibilities before deciding what strategy to be applied.
At an international scale it is not enough that each market must comply with the "traditional textbook''in marketing.
The following specific areas of concern must also be considered:
1. A greater distance.
2. SEconomic, legal and technical barriers to trade.
3. Geographical, economic, political, cultural and social differences, which often can be substantial.
4th Knowledge of and documentation of the problems associated with the transfer of goods and the environment,
which is often scanty and random.
5th Communication and language difficulties.
A larger distance can provide higher transport costs due to freight charges but also because of the need to unpack and
stow cargo more carefully to avoid injury. For goods that are capable of causing injury, eg, flammable, corrosive,
toxic, explosive or radioactive goods, also require a special documentation for them to get transported and often
different records for different modes of transport: train, car, boat and plane.
Trade barriers are constituted by duties, and also the documentation requirements of and regulations concerning its
nature.
Differences between countries in geography, topography, climate, etc., as well as economics, politics, culture and
social structure are often highly significant. In the following chapters, a large number of examples to be given to the
importance of these differences into account.
The lack of systemized knowledge of what differences are important in themselves constitute a difficulty in
international affairs. Experience and knowledge gives only a partial indication of the difficulties there.

Communication and language difficulties are a significant problem in international affairs. They can partly be
individual, but they are primarily cultural.
Figure 1.7 At each border are a number of known and unknown obstacles of transferring goods and services.
Different ways of doing business in different parts of the world and within different product areas may, before the
people who do business learned to master them, constitute obstacles which grows to a level that deals impossible.
Language differences are only some of the obstacles and is the part that can be easily remedied, for example, using an
interpreter. The other communication barriers can hardly be an interpreter, helping to overcome.
How those problems will be resolved, if they need to be resolved, or if our businesses are not material may not
generally be answered here.
Lärpengar, most companies have to pay the thorough investigation and analysis than is done, it can be much cheaper
to use "legal" advisors than to not use them. Many mistakes can be avoided, while still get to experience the joy and
trouble of collecting their own knowledge and experience.
1.8 border barriers between domestic and export market
For a number of goods requiring a permit for the export resp imports in the foreign country. The rules vary from
country to country. Other restrictions, customs duties and charges, and documentation requirements with different
attributes and form. All this prevents the free transfer of goods and services between countries. Market Drivers must
take account of these obstacles and take the necessary measures in various cases. The Swedish export regulations
discussed in Section 1.9.
Several reasons can be cited for tariff protection, among other things, that it can reduce consumption of foreign
products in favor of domestic products. Employment in the domestic industry can be stimulated (short term) and new
companies can be encouraged through improved profitability. Duties and taxes must always be finally paid by the
country's own inhabitants and loaded their own exports. They should be used only as temporary support and corrective
measures. Defense policy reasons may justify the support for domestic industries perpetuated in a significant cost.
1.8.1 Examples of reasons for support and corrective measures
1. New domestic industry needs to be stimulated.
2nd Employment needs to be protected.
3rd Foreign currency needs to be saved.
4th Standard of living and real wages can be improved.
5th Natural resources must be saved.
6th Competition from low wage countries.
7th Full employment, or reduced unemployment.
8th Security of supply for possible contamination by a foreign power.
9th bargaining power vis-à-vis other states.
10th Expansion of some domestic industries.
Meanwhile, following the EC's creation has been under United Nations Framework (GATT and later WTO)
negotiations were conducted to reduce tariffs and thereby facilitate trade.
The problem with these negotiations has been that the tariff structure seen different in different countries, so it was not
enough to agree on a certain percentage of tariff reduction, but that group of products for group of products has been
discussed.
The non-tariff barriers (ie, those barriers do not represent rates) have tended to increase as soon as possible. Examples
of non-tariff barriers are standard provisions, mandatory testing by designated organizations and agencies, quality and
labeling. A new set of such rules has also been introduced as a result of the increasing interest of protecting life,
property and environment. The producers' responsibility towards consumers have tightened, which has increased the
importance of following standards and recommendations. Through the economic transformation that has resulted from
the sharp increases in oil have protectionist tendencies re-asserted itself. Several countries have suffered foreign
exchange and labor problems. Temporary restrictions are in place and exchange rates have changed. In Sweden,
among others shoe import limited and textiles imports continued to be limited. EC countries' response to the slower
phase out duties on Swedish cellulose products would have cost Sweden more than was saved by limiting shoe import.
(This was at the EFTA negotiations with the EC on the EEA Agreement)
In a second round of UNCTAD was the non-tariff barriers to trade up. But it's not as easy to negotiate away safety.
Work started to including within the UN standards program to coordinate standards for a range of products. Provisions

relating to chemical products and manufacturing processes in which chemical substances are again the subject of
negotiations in the year 2005 ongoing Doha Round.
Companies are trying in various ways to reduce the cost of crossing the border between different countries. This can
be done in several ways:
The product can be separated into its components and cross the border, mounting can be done in the importing country
and some parts can be manufactured locally.
The product can be initially constructed to meet the requirements of several countries.
Figure 1.8 Cross-border barriers vary from country to country. Product, the various factors of production and the
know-how is also covered by various cross-border basis.
Customs clearance of goods can be done at less cost if the final product is divided into components. Figure 1.8 shows
how the barriers may vary for different production factors in the transmission between domestic and export market.
The barriers are different for different countries and different goods and factors of production. One approach that is
described may lead to the number of manufacturing units abroad increases, either now takes the form of subsidiaries,
joint ventures or subcontracting. The most common was that local production is in the form of its own subsidiaries,
not least the case for Swedish companies. The need to find ways past the customs barrier and hence the cost of
reaching markets have proved to be large, as documented in numerous foreign subsidiaries.
1.9 The Swedish border barriers on exports
The Swedish border barriers are now few and of little importance for most exporters. But especially after 11
September 2001 and the increased fear of terrorism, the demand for export control has increased. The growing
awareness of certain substances is detrimental impact on the environment has led to new export ban has been imposed
and that vigilance is required before the new ban could be introduced for environmental reasons. A concrete example
is the ban on exports of mercury as applied to Swedish exports since 1997, which the EU wants to introduce from
2011. Was formally bans export of Swedish products right up until the 1980s. Law from the Second World War was
still while the exception was granted for most goods. Now is the law abolished. Freedom to export the case with a few
exceptions, where an export license must be obtained before export can take place.
Commodity Areas with licensing requirements are:
1. Some industrial goods containing electronic high technology, and what has the U.S. as country of origin or
manufactured under license by the commitment to comply with U.S. restrictions on re-exports.
2nd equipment or materials for nuclear extraction
3rd Military equipment and technology for weapons production.
4th Unprocessed gold, drugs, certain older cultural goods.
5th Aerial images and some photographic images and maps.
In contrast, the license requirement for termination following categories:
1. Junk and vessel; reason is to secure the Swedish steel industry's raw material supply.
2nd Agricultural Products - This is also deleted some refunds why there is reason to be knowledgeable in the rules.
3rd Some types of seeds - to protect the Swedish agricultural competitiveness and prevent the export of "technology".
Permission are often well organized and involves no major delays or difficulties for the serious exporters who sell to
customers in Sweden's main export countries. But the license application can always be rejected, so all offers must be
subject to a license obtained. Commodity groups electronics and armaments in recent years several cases of export
publicly discussed, as well as the validity of the authorization given or to permit circumvention. It is sometimes the
licensing authority, and sometimes even export it difficult to obtain accurate information about the client's intentions
to purchase.
Caution should always be exercised in the export of goods licenspliktiga so that it does not suffer negative publicity,
fines and damages or cancellation of licenses. Although the individual employee for companies that export their
commodity groups should be careful when personal responsibility is sometimes charged. Some goods can normally be
unlicensed export, but their particular use makes them the authorities can, at least retroactively, will be classified as
needs license - something that may be impossible to realize. What makes a serious exporter of such a request for
quotation? It is an area of the individual's position, which is both difficult and important.
There are examples where private aircraft, which have no similarity to what we in Sweden are normally associated

with war planes, come to be classified as military equipment for export to a belligerent country. Discussion of the
assessment has been of major high-speed motor boats and trucks used by a belligerent state to carry missiles.
For used machinery, there is reason to be vigilant. They can include command and control equipment which are still
under U.S. prohibitions concerning re-exports of electronic components.
The examples are many. It's always tempting to take a profitable order even though it could ultimately cost society a
lot.
1.9.1 licensing authorities
Armaments Agency has since 2000 been replaced by a new agency that had a greater responsibility, Inspectorate of
Strategic Products (ISP), which controls Sweden's export of arms and dual-use items, ie products that can be used both
in civilian and defense purposes. ISP is also the national authority of the UN Chemical Weapons Convention. ISP says
its mission as follows on their website, www.isp.se:
Our Mission
Inspectorate of Strategic Products take care prudential and other controls under the Act (1992:1300) and the Law
(2000:1064) on control of dual-use items and technical assistance. Regulation (2000:1070).
The inspection shall also be the national authority, as Sweden's commitments under the United Nations Convention on
the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction
with the functions required by the Act (1994:118) concerning inspections in accordance with the United Nations
Convention on the Prohibition of Chemical Weapons and the Regulation (1997:121) concerning inspections in
accordance with the United Nations Convention on the Prohibition of Chemical Weapons.
The inspection shall also pass such information on export controls of military equipment and dual use items that
Sweden is obliged to provide that a member of the European Union. The same applies to information on export
controls within the framework of cooperation in
the International Group for control of biological and chemical products (Australia Group),
the International Group for control of nuclear substances and materials, etc. related to nuclear activity (Nuclear
Suppliers Group),
the International Group for control of missiles and missile technology (Missile Technology Control Regime),
the International Group for control of munitions and other strategically sensitive products (Wassenaar Arrangement).
Regulation (2000:1070).
The inspection shall annually before March end to leave the government a report on Swedish exports of military
equipment and other strategic products during the previous calendar year.
Interestingly, an increasing responsibility on the exporter, in case of doubt, any application of ISP. This applies to
products that are exported and can, if the request comes from a country that is suspected to have intended to use the
products for weapons development or weapons production, lead to a license requirement. A debate has started in
spring 2005 because of the skills and services can be used for weapons development. Information alleges that visiting
scientists took the information home with them to countries that use this knowledge in the development of weapons,
both conventional and biological and chemical. Representatives from many Swedish universities have been totally
ignorant of the ISP's existence and the freedom of research would no longer be as free as before. The desire to control
may entail many difficult decisions. Where should limits be drawn for students who have not been screened allowed to
study at some university? The training course may contain information that could be used improperly. The same
knowledge can be crucial to tackle environmental pollution or epidemics. There is reason to closely follow the debate
and the application of the laws that exist.
1:10 Answers to questions at the beginning of Chapter 1
At the beginning of the chapter introduces a number of questions, here is a proposal to answer these questions:
1. Why should our company to export this product?
This product is already profitable which probably shows that we have an efficient production or that we are alone
product, for example, through patent protection. Here is an opportunity to expand and improve returns on invested
capital and create secure jobs for our employees. Maybe we can also contribute to raising living standards for the new
customers in new markets. Our customers request it.
2nd How, in broad terms, this product will be adapted to different markets?
Through to find out what specific requirements and needs that exist in the new markets and make the necessary
changes, or by providing the product with appropriate accessories.

3rd Which markets should we choose for this product for export?
Start with countries such as the relatively low demands for changes in product and market communication, usually
neighboring countries or markets where the current global customers represent the customer group. (Exceptions exist,
such as New Zealand and Australia as culturally strong similarities with Sweden, despite the great distance and
language).
4th Planned no changes in the global or regional market for our product?
Join in the trade negotiations taking place within the WTO, the EU and within various standardization organizations
such as ISO and EMAS.
5th Which markets should we give priority to this product?
De som ger bäst avkastning på marknadsinvesteringen och de som är viktiga för produktutvecklingen.
6th If we offered to sell in a market, we will accept or wait?
Examine conditions: what is required of us, how much we bind ourselves to an agent / dealer who ultimately
do not meet our demands? What happens if we reject the offer, will a competitor to get the same offer, local
production will start later can become a serious competitor?
Data
1. How common is it that you use the products or services which are manufactured abroad
a. by foreign companies or
b. by Swedish companies?
Pick out a number of products and services that you regularly use, and try to find out where they are made.
2nd How common is it that the Swedish-made goods sold in other countries? You can get an idea by
studying the language used in the operating instructions and manuals as well as the reports of the contents of
the products. What languages are used?
Case study
Compulsory cases is intended to stimulate problem solving in study situations to train the ability to analyze
various business situations that illustrate internationalization.
Scandsam AB, a practical case which addresses the issue of how a startup company to work in their
marketing. The owners would like to sell for export.
AB Centrifugator, a practical case based on a compilation of a variety of situations in the internationalization
taken from several Swedish companies.
2 The global market
After reading Chapter 2 you should be able to answer the following questions:
1. What is a relevant market for a company with ambitions to sell their products in multiple countries?
2nd Countries that have geographical areas still have a role in global marketing?
3rd Where can I find information on various sub-markets in the global marketing?
4th What customers can come to act as buyers of more than one market?
5th Have the different trading blocs like the EU, LAFTA, ASEAN and MERCOSUR have an importance in the global
marketing and if so what?
6th How often must prioritizing of the choice of markets for special coverage of the competitors be?
Additional issues raised in Chapter 2.
What characterizes an international market?
Why is it useful to group countries into different market segments?
How can the groupings are the nations in various forms of interaction affect marketing strategy?
What is a global customer?
How does global customers, the company's marketing promotion?
National customers are always nationalist?

2.1 The nation as a subsystem of the global market
The global market, which can be said to consist of all buyers and sellers in every country, no strict definition of the
global market does not exist. The market is divided into different segments depending on the product and business
needs. For each theoretical international product market there, according to the various difficulties of organizing the
market, a larger or smaller number of local markets, sometimes national.
Because of the practical problems of information exchange, transport and total character formation of local markets. A
global market where all buyers and sellers in the world involved directly is rare. An international markets where a
number of countries participating companies are, however, relatively common. The foreign exchange market is
perhaps one of the best examples of an international market where trading takes place around the clock via phone and
computers. Formal market is certainly a number of local currency markets in Frankfurt, London, New York and
Tokyo, but these are intimately linked and their clients to run simultaneously on several of these markets.
For many other products are similarly international markets by way of example. a commodity exchanges such as in
Chicago and London. These international markets are important for national markets, but many buyers and sellers are
unable to directly participate in trading on international markets because they are too small or do not have the skills or
the capital required for the trade at the exchanges .
Local markets with relatively independent price discovery is, especially for agricultural products, this may be striking.
On the international stock exchanges are negotiated, as a rule of uniform and clearly defined technical qualities, such
as in the case of metals. Cereal and coffee is often complemented with samples to show offered the required quality.
In the case of goods for which it is impossible to provide uniform quality specifications may trade happen directly
between buyers and sellers and on terms to be agreed in each case, which prevents a uniform pricing.
The regulations contained in the national markets that border for exports and / or imports means that there can be large
discrepancies between the qualities and prices of the various national markets. These conditions can be quite different
than the conditions in which business takes place in international trade for the particular goods. One reason, in
addition to national regulations and trade restrictions, are difficult to explain and justify the differences in quality and
to obtain fast shipping and transport permits.
The cereals market is really first of a number of major national markets and a market for international trade, which is
significantly smaller than the largest national market. The prices on the international market affected by the excess
quantities are disposed of in this market, and sometimes considerably lower prices than in the country where cereals
are produced. The quantities allocated internationally is still so great that many smaller countries to meet all needs can
be purchased on the market without the price reaches the cost of production at their own "rational" production. It is
mainly a number of developing countries which are mainly engaged in agriculture, which applies a free imports of
grain while countries with a large industrial application of levies on its imports to protect its agriculture. (It should be
opposite to achieve a change of employment and living standards in developing countries.)
The international exchange of goods stimulated by the company is studying opportunities to buy cheaply and sell
dearly to any processing in order to circumvent trade restrictions and the organization and thereby develops an
international trade.
The differences that exist between nations in terms of quality, standards, quantities and prices are good protection for
the incumbents either the national or international with a suitable local business. The same company can be a
movement in the area actively work to harmonize trade and standards, while in another can actively work to ensure
that national special provisions shall prevail. There is more concern for consumers who should be subject to
harmonize standards and other local differences, but because consumers in general are also employees so their job
must be considered.
2.2 Countries with different economic development levels
World countries are usually divided into different groups according to level of economic development. Before 1974
they talked generally about the industrialized and developing countries, but the big rise in oil, among other things
meant that it was found that a more nuanced picture was needed. OPEC countries became a particular group as well as
developing countries come a long way towards industrialization, the so-called NICs. It also tends to divide developing
countries into those that are respectively for those that have valuable commodities. This division of the world's
countries are simplified. In some area of major countries, the regional differences to be significant with significant
technical, social and economic discrepancies.
Several developing countries with access to oil and other commodities have coveted by the exploitation of these
deposits have increased opportunities to finance their development, without aid or assistance from other countries.
These countries have more choice when shopping, then in principle they are no longer as dependent on credit from
their suppliers. The ambition to achieve more rapid development has made some debt financing needed for almost all
the oil countries. Some developing countries with access to oil and minerals and with an ambitious state management

has demonstrated a strong economic expansion, which attracted foreign firms. Some of the more conspicuous
examples are Abu Dhabi, Indonesia and Brunei.
Because of his stance or general doubts about the stability of the country, many developing countries with good
financial resources, however, attracted a very chilly interest from foreign companies. With some surprise, noted
several export companies to markets that had previously not worked suddenly become important and dollars in the
years 1973 -74. Purchasing power was, however, to disappear just as quickly, which, among other countries such as
Zambia copper are examples.
For developing countries, trends in assets are their raw materials essential to their financial situation. Large swings in
commodity prices can be expected in the future. In companies with products in demand by countries in this group, it is
therefore important to be well prepared for such changes that may lead to increased revenues, while imports tend to
grow very rapidly. The long time intervals between periods of rising prices of commodities because when production
capacity is done as a rule, an excessive expansion. It can then take many years, perhaps up to several decades, before a
new shortage occurs due to insufficient capacity. The rapid economic development in China and even India have led to
increased demand for a range of commodities in the first years of the 2000s, as iron ore, steel and oil products to name
a few examples where the production capacity does not match demand, with sharp price rises on world markets as a
result.
2.3 The various nations share of world output and world trade
Completely dominant in the world are the U.S., both in production and share of world trade. The U.S. accounts for not
less than 31 percent in 2003 compared with 40 percent in 1984 of world GDP and 15.4 percent in 2003 and 16 percent
in 1984 of world exports.
As table 2.1 shows that the U.S. position will not be as dominant if compared with the euro area in 2003 accounted for
15.33 percent of world exports and that the EC had 36.7 percent of world exports in 1984. (It must be noted that the
EC's high figure for 1984, helps the relationship to the internal trade between the countries of the EC included. Could
its internal trade are eliminated decreases the EC's share of world trade sharply).
The trivial Japan in the total world exports is significant and it can only be explained by the fact that Japan has a far
less foreign trade than Canada in relation to GDP: Japan's share of world exports was 10 percent for 2003 and 16
percent in 1984. For Sweden, the corresponding proportions were 47 per cent in 2003 and 37 percent in 1984.
Although the U.S. has foreign trade a small role - exports represent only 8 percent of GDP both in 1984 as in 2003
while imports account for 12 percent of GDP in 2003.
(source for data in 2003, The Economist Pocket World in Figures)
Miljarder US$ 1974Procent 1984Procent 2003Procent
Hela världen 532 398 100,0 1 211 213 100 9 298 000 100,0
OECD 378 325 71,1 863 043 71,3
USA 58 732 11 193 642 16 1 011 500 10,9
EG 161 840 30,4 44 4358 36,7
EU 1 466 800
Varav
Danmark 7 327 1,4 13 965 1,2 99 400 1,1
Frankrike 33 621 6,3 78 090 6,4 485 600 5,2
Italien 23 939 4,5 48 437 4 364 800 3,9
Nederländerna 28 026 5,7 54 342 4,5 357 100 3,8
Storbritannien 31 917 6 79 574 6,6 448 000 4,8
Tyskland 47 280 8,9 107 629 8,9 863 900 9,3

EFTA 48 142 9 87 934 7,3
Varav
Finland 4 304 0,8 7 627 0,6 60 700 0,7
Norge 6 673 1,3 11 592 1 89 100 1,0
Sverige 12 654 2,4 21 696 1,8 131 500 1,4
Japan 20 343 3,8 42 650 3,5 542 400 5,8
Kina 484 300 5,2
Australien 92 200 1,0
Table 2.1 Some countries' exports and share of world exports in 1974, 1984 and 2003. For 2003, includes both goods
exports as exports of commercial services. EFTA decreased when Sweden, Finland and others joined the EU in 1995.
EC is not the same countries as the EU.
Belopp i MSEK kronor
Land 2003 Procent 2004 Procent
Total 814 966 888 251
export
USA 94 766 11,6 96 348 10,8
EU 469 840 57,7 514624 57,9
Varav 0 0
Tyskland 81 553 10 90 465 10,2
Storbritan 62 934 7,7 69 059 7,8
nien
Frankrike 3 980 4,9 42 656 4,8
Italien 29 057 3,6 32 974 3,7
Nederländ 40 087 4,9 42 706 4,8
erna
Belgien 36 756 4,5 40 386 4,5

Spanien 25 780 3,2 26 145 2,9
Österrike 9 444 1,2 9 692 1,1
Portugal 4 398 0,5 5 103 0,6
Grekland 4 513 0,6 5 255 0,6
Norden 166 680 20,5 185 358 22,7
Varav 0 0
Norge 69 226 8,5 76 996 8,7
Danmark 50 556 6,2 56 888 6,4
Finland 44 996 5,5 48 973 5,5
Island 1 902 0,2 2 501 0,3
Ryssland 11 359 1,4 13 600 1,5
Estland 5 565 0,7 4 948 0,6
Lettland 2 816 0,3 2 859 0,3
Litauen 2 836 0,3 2 654 0,3
Swiss 9 162 1,1 9 945 1,1
Table 2.2 Some countries'
exports and share of world
exports in 2003 and 2004.
In 1984, "said the ten
largest exporting countries
for 73.2% of total world
exports. Source: Trade
Council.
When comparing Table 2.1
and 2.2 shows that among
Sweden's ten largest export
markets are no neighbors
that are important for
Sweden, while in the
world more important
trading countries are of
relatively minor
importance for Sweden.

Kina 18 026 2,2 18 648 2,1
India 7 111 0,9 8 291 0,9
Japan 15 895 2 15 531 1,7
Taiwan 4 555 0,6 4 466 0,5
Vietnam 814 0,1 975 0,1
Australia 9 444 1,2 9 692 1,1
New 1 079 0,1 1 297 0,1
Zeeland
Brazil 4 369 0,5 5 173 0,6
Argentina 582 0,1 1 419 0,2
Chile 1 368 0,2 1 561 0,2
Iran 5 137 0,6 6 981 0,8
Israel 2 179 0,3 2 390 0,3
Tanzania 293 0 194 0
South 3 577 0,4 4 427 0,5
Africa
Ten largest 67,4 67,3
export
countries
Figures in million £ Exports and international sales in 2003
Siffror i MSEK kr Export Utlands-
försäljning år
2003
AB Volvo ... 168
Electrolux 6 122
Ericsson 73 112
Skanska ... 98
Ikea 8 97

Volvo ... 87
Personvagnar
SCA 6 78
Vattenfall ... 72
Coop Norden ... 57
Securitas ... 54
Sandvik 0,9 47
Scania 4 47
Atlas Copco 1,7 44
H&M ... 44
Telia Sonera ... 41
SKF ... 39
Astra Zeneca 38 38
Gambro 6 26
Nordstjernan ... 26
ICA ... 25
Assa-Abloy ... 23
Saab Automobile 19 22
ABB 19 19
Trelleborg 0,7 16
Preem Petroleum 15 15
Table 2.3 Sweden's biggest export industries, export and foreign sales. For groups with shared nationality, but the
foreign office as ABB and AstraZeneca has chosen to only count the Swedish part. Exports and foreign sales coincides
therewith. Many groups provide no information on exports from Canada. Source: Mauro Gozzo, chefeskonom Trade
Council.
2.4 groupings of nations
For various reasons, the nations since the distant past have come together to take advantage of common interests. Such
groups of nations may depend on economic, political, military, religious or other common interests. In some cases,
groups remain more or less regionally stressed. These economic units is of great importance to the marketer.
In recent decades, an increasing number of attempts have been made to exploit the economic benefits of cooperation
between nations, and a number of regional groupings of nations has come about. Examples of common types of
groupings of nations is the market blocks and military pacts.
Try to global economic cooperation has also been made, but the results have not been as extensive nature of the
regional groupings of nations.
2.4.1 Market Block
The advantages of large, economically dollars markets have become increasingly visible. By that join together to

market bloc nations can take advantage of economies of scale and specialization in different industries and thus
stimulate the economic expansion in the countries concerned. A long list of attempts to create such trade areas have
been made. Many have failed, but few have succeeded.
Figure 2.1 A customs union is characterized by the members TARIFF WALL common approach to the world. In an
FTA, however each country designing its TARIFF WALL towards third countries.
Two main types of market-blocks can be distinguished:
1. Customs Unions
2nd FTAs
The EU is an example of the customs union.
The internal tariffs and trade barriers are reduced, while building up a common external TARIFF WALL. Each country
maintains or adjusts its TARIFF WALL outside the Community. Internally, the country is not something tariff
protection or no duties. Other barriers can be removed, see Figure 2.1.
A current statement of the active market, the blocks are shown in table 2.3.
Other market groups in different parts of the world:
COMECON or Ceam is the Eastern European Economic Cooperation Organization, which ended with the Eastern
bloc and the dissolution.
NAFTA is the free trade area "in the North American continent and includes the U.S., Canada and Mexico.
In Central and South America are a number of trade areas:
MERCOSUR is a collaboration between the four countries, Argentina, Brazil, Paraguay and Uruguay.
LAFTA is perhaps the most significant and largest, but also a subgroup, called the Andean Group, are of great interest.
Of the various commercial areas in the world, it is basically the only two European developed as a truly effective and
functioning markets, although EFTA now includes only four countries. In other market areas are tariff dismantling
much slower, although it is leaps and bounds.
For the individual company, it may be important to know the status of their products within their trading area as well
as anticipated changes. Companies operating within a trade area can suddenly observe a significant change in the
competitive situation, where their goods will be duty free within the trade area.
Trading Members Associate Members Remarks
Europe Several African states
Belgium
Denmark
Cyprus
England
Estonia
Finland
France
Greece
Italy
Ireland
Lithuania
Latvia
Luxembourg
Malta
Netherlands

Slovakia
Slovenia
Sweden
Spain
Tjekien
Poland
Portugal
Hungary
Austria
EFT Association Agreement between EFTA and the EU
Norway
Iceland
Switzerland
Lichtenstein
NAFTA Canada
Mexico
United States
Table 2.4 Some of Sweden's most important trade areas.
Marketing blocks are attractive markets for companies wishing to establish themselves internationally. New
opportunities for sales generated as the markets opened, with which it has previously been difficult to sell. During
such a period of restructuring, there are good opportunities for well-consolidated and competitive businesses to gain a
good position in the new market. Provided, however, often to companies willing to invest in local production, at least
for some parts of the catalog to be sold on the market. These investments may sometimes need to be in various forms
of cooperation with companies in the market, such as minority partners, joint ventures, subcontracting, or licensed
production, for political and commercial barriers should not prevent progress.
Even countries that are not part of any trading bloc may be through free trade agreements create a substantial duty-free
market for their exports. Chile has separate FTAs with among other things, the EFTA, EU, MERCOSUR, and
countries like the U.S., Canada, Mexico and several Latin American countries have created a duty free market,
amounting to 1.25 billion people, the bulk of its exports. Chile also negotiating with China, India, New Zealand and
Singapore on a similar free trade agreements. In 1975, exported 200 Chilean company 200 product groups to 50
countries, compared to the year 2003 when the corresponding figures were 6435 companies exported 3854 different
product lines to 165 countries.
2.4.2 Military Pacts
A wide range of products and raw materials are of greater or lesser military importance, depending on the situation in
the world. Countries and among all countries in a military alliance has therefore drawn up lists of goods they wish to
control, to be sure of being able to gain access to and sometimes in order to prevent other military organizations are in
possession of such goods or skills. The international trade has been in the 1980s mainly been advanced technologies in
electronics and computer technology which was the subject of attention. During the 1950s there was a range of
commodities and metals, which attracted great interest.
Military account exists for either a single nation or military alliances, which have agreed on certain rules for
international trade in goods. Import or export may be impaired or halted entirely dependent on which country is the
prospective counterparty in a transaction. U.S. takes a very restrictive approach and do not allow exports from the
U.S. by a series of products without the recipient undertakes not to resell the goods to any country without first
obtaining permission from the United States or by proxy. Countries within the NATO alliance is often a proxy and can
itself carry out inspection and issue permits for re-export of the input product is not classified as strategically
important. The corresponding control system may exist in other countries, but usually only when the cover exports
from the country itself. The United States uses the rules represent a compromise between the U.S. exports its own
interests and military considerations. The country would also like more than to keep the products and knowledge for
itself stimulate economic growth and technology development in the countries they have friendly relations with.

Through the long-term defense planning is also governed the choice of sources. In Sweden, the National Board for
Economic Defense for such civil contingency planning and storage, and the military for the military. Equivalent in
other countries and in defense alliances. Requirements may therefore already in peacetime may be made at a local
manufacturing or preparation shall be made, at short notice to start production within certain designated areas before a
deal can be implemented.
The importance of Military light varies with the type of goods and customer country but are likely to affect products
that are not in themselves military equipment. For arms, of course, the described topical issues and there may be views
that certain standards be maintained to facilitate coordination and parts supply in a military alliance.
2.4.3 Cultural sites
The various cultural regions of the world means that goods and services and commercial communications for sales
need to be adjusted more or less according to the different cultures. The need for a product may not exist within a
cultural area, but are large in others. The differences of different cultures is therefore of great importance in the
selection of markets and product adaptation. The cultural differences may tend to be covered but they are there. A real
market adjustment and prioritization of the most profitable markets are essential for success.
The cultural difference that exists in Europe between the areas with dominant Protestant and Catholic influence has
sometimes been emphasized as an important explanation for differences in the Swedish export allocation than
differences in language. This is perhaps worthwhile to investigate properly.
Linguistic areas are in the same way as cultural fields an opportunity to divide the world into different markets. Why
not continue with all countries that have the relevant language, if you already have sales materials in that language?
The logic may seem obvious but the language and nuances vary in each case for consumer goods gives the cost of a
linguistic adaptation to the local language of the target group is often a good return.
2.4.4 Islands of prosperity
At the international marketing of consumer goods is a study of the income situation in the different markets of great
importance. Per capita income often varies greatly between countries and between different parts of the individual
countries. The data gives an indication of the purchasing power of the population in different areas but they of course
give only an average picture of purchasing power in the country. Large differences may exist between different
communities, both socially and regionally within a country or a region.
Per capita income also says something about the standard of living, but this is conditioned also by the costs that must
be challenged to meet the necessary requirements in different countries and regions. In a warm climate is spending on
clothing and housing lower than a cold. Although spending on food and drink varies. It should be noted that a lower
per capita income in a warm climate for some categories of products may pose an equally high potential purchasing
power as a higher per capita income in a cold climate. The disposable income for consumption of goods can thus be
equal at different income due to less or more in need of products for housing, food and clothing.
Per capita income also gives an indication of a country's level of development and are important in the marketing of
industrial products, machinery, raw materials and the like. This measure is used often in conjunction with other
measures of the country's development. Such data, for example, energy consumption, electricity consumption, oil
consumption, number of cars per thousand inhabitants, etc., can be downloaded from various statistical publications.
Projections of future developments in different parts of the world can provide interesting ideas about where markets
can be. To timely monitor a variety of day perhaps relatively uninteresting markets can only firms with specific
resource surplus. It is always difficult to monitor the statistics and the way in time to send out signals that a new
important market is evolving. It also takes time to build up contacts among local businesses and traders who needed to
do business.
Within Electrolux has already been too many years ago consciously invested in by agents and small market companies
to monitor peripheral markets in parts of the world that does not justify its own subsidiaries and a powerful effort. This
has, among other things previously done by the Electrolux International. For some of the markets in this way has
proved watched big business opportunities. One example is the African countries in this way subscribed. Through the
WHO, World Health Organization within the UN, and you got a request to contribute to the cold storage of vaccines.
A full line of products developed through the modification of some existing products. Electrolux could then sell an
entire "cold chain" for transport and storage of vaccines and blood in Africa. This market could become a strategically
important prerequisite for the further expansion of other products to customers in both Africa and other developing
countries with warm climates.
The big difference in education and living standards that exist within large countries is important to consider. Not less
than about 250 to 300 million people in India have a living standard at European level in 2005. The corresponding
estimate for 1986 was 80 million. This is a significant market segment, larger than the entire U.S. population. How
many companies are watching this segment? The same applies to China where living standards have risen rapidly and

is concentrated in a number of growth areas.
2.5 International customers
In recent decades it has on the international market has emerged as customers have the ability to compare the range of
several local markets in the world. These customers can make purchases where they find it advantageous for their own
values. It can be a selling companies involve special problems to deal with these customers. Specific knowledge of
these clients' organization, purchasing patterns and market behavior is necessary in order not to unnecessarily give
them a better hand.
These customers are often large, but also individuals can behave as tourists in many markets and make observations
and conduct themselves as customers.
The major customers are:
1. Public international bodies of various kinds, especially the UN and its specialized agencies, which act as
procurement organizations
2nd Other international organizations, such as regional development banks, aid agencies, etc.
3rd International companies or large enterprise purchasing departments.
Purchases usually occurs locally in these organizations, but only after it within the organization compared prices and
other trading conditions in various local markets and world markets.
Many companies and organizations also often arrange transport themselves to where they need the goods. They pay
and organize cargo, customs, insurance, etc. on their own. In the following two sections describe these types of
customers in greater detail.
2.5.1 Public global customers
FN genom UNDP och dess 20 olika fackorgan, t ex Världsbanken, WHO, UNICEF, och andra multinationella och
regionala organisationer, t ex regionala utvecklingsbanker, utgör en intressant marknad. The development has been
rapid and the annual turnover in this market is significant. The total value amounts to approximately SEK 100 billion
per year, of which UN agencies own purchases is about 10 percent. The rest are projects in which they participate in
different ways.
As with all public procurement is the important part of the tender and it is common that the price is most important as
a competitive tool. Companies that use quality as a competitive tool is therefore difficult to assert itself. Nevertheless,
the Swedish company, which sells high-quality products, managed to obtain orders. The advantage of the tender is that
it is always possible to attend the bid opening and to then ask questions about competitors' bids. The public
proceedings can learn a lot about the competition and the characteristics valued by the buying organization. A
drawback of such procurement activity in the short term is that the customer (purchaser) for a long time does not come
into direct contact with the equipment supplied. It is usually considered enough that everything works in supply and a
limited warranty.
Awareness of the overall economy's importance has begun to gain ground and opportunities have increased for
companies that use quality and service as a competitive tool. The experience of wrecked, has brought hard-earned
experience. Recipient countries have a major influence on the choice of supplier and it is worthwhile to present their
bids even for the recipient country representatives and clarify the value of their commitment. Many beneficiaries who
were previously colonies, still have the best knowledge of the former colonial powers and products often prefer them,
in part rightly. Spare parts supply and repair knowledge is already on the products of the colonial enterprise has long
delivered.
Policing the tender requests can be a difficult task. UN agency procurement offices are scattered in a dozen places.
The local UN representative in the host country and also the recipient country's representative may need to be
processed and information on the requirements sought prior to bidding. The tender period is usually only a few weeks,
so there have to be prepared prior to the call for tenders will.
To facilitate and streamline procurement operations, the United Nations since 1978, a special coordinating body, the
Inter-Agency Procurement Services Unit (IAPSU), whose task is to coordinate and compare prices and other terms of
goods purchased by several UN agencies. IAPSU publishes and operates in different ways for all procurement within
the UN agencies and related organizations must come from the providers' knowledge. IAPSU uses the national trade
associations, Trade Council of India, to disseminate this information. The volume of purchases of goods and services
IAPSU were coordinated for the year 2004 5 084 million U.S. $.
In order to monitor the international procurement of UN, World Bank, aid agencies, etc. companies often try to
cooperate. The export support organizations, such as Trade Council in India, trying to monitor and disseminate
information on current projects and contracts in the various international organizations. Large companies, whose

market is part of these international organizations, procurement is often linked to its own personnel on site to monitor
and represent their interests in these organizations.
To have its own staff for such coverage in New York, Washington and Geneva is expensive and more Swedish
companies are the only way to achieve effective coverage to interact with other companies.
While the procurement operations within EU bodies and of different countries' aid organizations are important to
monitor. Swedish companies are not excluded, but may be very welcome to supply other countries' aid projects in
developing countries. It is usually the management of the international company who must take the initiative to
monitor this sub-subsidiaries in different countries or to the monitored centrally. Subsidiaries in different countries
probably focus on the national markets where they operate.
Swedish subsidiaries of our neighbors has won several orders on projects funded by NORAD and DANIDA, the
Danish Norwegian respective development organizations. The projects were then with the help of staff and supplies
from Sweden have been carried out as a subcontract to the respective subsidiaries and sometimes even directly from
the Swedish parent company. Both the Japanese and Dutch and other aid organizations have an interest to be able to
purchase qualified equipment and the entire project from other countries. In Japan wants to buy from other countries,
thereby "increasing imports". Japan has of course a large trade surplus as regards the reduction to be considered a
good and reliable citizens of the world. Netherlands motives are similar.
2.5.2 Global businesses
Global business means special problems for the marketer. When a multinational company subsidiaries and affiliates is
acting as clients under joint names, it is possible to understand that coordination may be in the purchasing process.
Many global companies often work with affiliates that have names that do not suggest any group affiliation. It can be
difficult to detect and understand that the request comes from a multinational company.
The global business is that all buyers interested in obtaining the best possible terms for their transactions. While
purchasing decisions are delegated to local units of multinational companies, present in many global companies
systematic internal comparisons of prices in different markets. Global companies may have large supplies of certain
raw materials and intermediates in their production. They occur when the big buyers in the market. If the price of a
selling company's various subsidiaries are different between different markets, the global company to place their order
with the subsidiary on the market, where they find it appropriate to stay and their needs in different places, or takes the
central contact for to get a framework agreement at the lowest price. The global companies arrange the transport,
customs clearance etc at their own expense if they deem it appropriate. They can because they are big buyers of
transport services have discounts and conditions in general, which means that they are carrying to much lower cost
than a smaller supplier.
Example 1
A Swedish manufacturer of engines for recreational boats trying to enter markets in the Far East, while a Japanese
manufacturer tried to enter the Swedish market. Both companies had a price in its home market and a much lower
price in the new market in order to facilitate entry. Customers, who among other things, consisted of småbåtsvarv in
Sweden who themselves sell for export, high-profile relationship. Their action was to deliver some of the boats, to be
exported in Sweden bought Japanese engines when customers wanted a Japanese engine. To Swedish customers, who
usually preferred a Swedish engine, the engine was bought in Japan at the lower price and was transported back to
Sweden by train.
Example 2
The global firm Norton in the U.S. manufacturing including grinding wheels is an example of companies that had
problems with one of its international customers, the global SKF, which has been able to compare prices, quality etc of
Norton's businesses worldwide. Norton is about the size of SKF, which manufactures ball bearings and other stocks.
Manufacturer of stock is one of the largest user groups for grinding wheels and other abrasives. SKF is, therefore, with
its 22 per cent of the world market, a major customer of Norton's company worldwide. SKF has the same problem
since about 40 to 50 percent of all stock is sold to the automotive industry, which is dominated by multinational
companies.
It is thus necessary that the pricing situations into account the global customer's behavior. A pricing policy which takes
into account only the local market can not be applied. One way to deal with global customers is to first adjust the price
on local markets for local purchasing power, and steer the international customers' behavior by conducting a detailed

price calculation and to also make the key conclusion regarding price and quality.
Shipments can according to customer needs on a case be made with the price adjustments to different parts of the sales
and distribution organization. It may be possible to a limited extent and in special situations of individual markets to
apply a lower rate than the global customer receives, provided that the quantity delivered may be defined for these
markets.
If the local customers are willing to pay more for product than the global customer acceptance and without
simultaneously reduces the occupancy of one or more factories in the local market, it should be possible through the
coordinated production planning to apply for a higher price in some markets.
2.5.3 Individuals as global customers
Previously, it was primarily for tourists and travelers as individuals came into contact with product and service
offerings in other countries and in the global market. With the opportunities to trade over the internet is so personal an
already significant and growing group of players in the global market. In many companies offer their customers web-
based forum for the exchange of experiences, or that customers are starting Web sites that offer opportunities for
customers to exchange experiences in the use of a product that becomes the ultimate private person is an important
global player in the marketing and in terms of stimulating further development of products and services. CK Prahalad
gives several examples of this in his book The Future of Competition.
2.6 National clients
Despite corporate and trade internationalization is still ongoing, most customers are buyers at the national or even
smaller markets. Within the national context can, as before, which could see both public and private enterprises and
individual consumers.
2.6.1 National public customers
Both the private and public national customers with a more or less distinct national feeling and a belief or disbelief in
their own country's products. Confidence is considering probably in the vast majority of customers, while significant
minorities may have greater confidence in products which have another origin.
Each country and its public agencies often have special contracts regulations. In some countries, provides that certain
benefits be given national product, so that the price of national products in some cases may be a few per cent higher,
up to between 10 and 50 percent occur, than the products of other origin. Special arrangements can also be made to
further a higher price shall be allowed for domestic products in comparison, where it is suspected that the imported
product is assigned a special low price (even without the price reduction is so large that it can be classified as
dumping). Such a preference for domestic products can be seen in several countries.
In other countries, again displayed a strict neutrality vis-à-vis their own and foreign products. It is thus not domestic
products no advantage in price terms. However, it is quite obvious that the quality characteristics in terms of local
official standard, safety and similar substances are always an advantage to the locally manufactured product. A
domestic product can easily be adapted to market demands for local safety than is the case of an imported product.
In most countries there are from time to time in recession campaigns such as "buy national" or "buy domestic
products". This reflects not least the preference of domestic products can receive both at the public procurements of
individual customers' purchases.
Within the EU there is a record of all current public procurement in member countries, Tenders Electronic Daily, TED.
This is an excellent source of information for companies wishing to sell to the public purchasers in the EU.
2.6.2 National business
Although companies have in some cases, preferences for local products. Many have found that local manufacturers
can often provide greater resources, in the case of spare parts and other services. It was formerly not unusual to
experience from the Second World War in some industries was crucial in the choice of supplier. It was hit often long
after wars end to foreign manufacturers and suppliers of machinery and equipment had major supply problems, or
perhaps entirely ceased to deliver. The preference was therefore main producers in the hope that they will be more
reliable with regard to parts and service. It was therefore willing to provide local domestic suppliers a preference
towards companies that differ geographically or culturally. Some buyers may have left these or similar memories
when it comes to reliability and guided by these experiences. (Among other things the United States renewed talk of
export restrictions for certain commodity groups immediately after September 11 may have affected the purchasing
plans of any single company).
Individuals may often have a more emotional than objectively justified preference for domestic products. Conversely,
when the quality, appearance and other factors in a consumer usefully different from what is the case with the
nationally manufactured products can, for example certain status effects give the foreign products are preferred.

In some industries and the industrial countries may prefer imported products, especially in the case of technologically
advanced products. There are often interested in buying the latest from the company in the world what you think
Forerunners. Such statements are especially common in combination with a strong national feeling, for example in
Latin America and some developing countries, which have a preference for the latest models of machinery and
equipment for their industries. It would thus emphasize that in their own country is technologically aware and that
they can achieve results as good as elsewhere, even though it might get by with excellent products of any mature
engineering and with slightly lower performance and significantly lower prices.
2.7 Answers to the questions at the beginning of Chapter 2
The introduction to this chapter introduces a number of questions, here comes a proposal to answer these questions:
1. What is a relevant market for a company with ambitions to sell their products in multiple countries?
All countries and geographic areas where there are individuals and companies with a current or latent needs of the
functions of the product or service offers. In other words, all countries, sub-markets and places where the product can
provide the customer with greater exchange of work or increased satisfaction of their needs. The problem for the
marketer has to solve is that at a reasonable cost and in a reasonable time to find the most interesting markets which
the company selling it has the resources to sell their products, but one should not exclude any but a certain, albeit
superficial initial analysis. Surprises can be.
2. Countries that have geographical areas still have a role in global marketing?
Partly it is, criteria other than national borders that are important, such as what I described as "islands of prosperity".
They exist in almost all countries and can have significant purchasing power, high capacity for innovation, as well as
the presence of global and international clients. For industrial goods is also the presence of certain industries and
agriculture as a criterion may be more important than national boundaries in the definition of relevant markets to
work.
3. Where can I find information on various sub-markets in the global marketing?
Always start with the Trade Council's website. There are a lot of information. Then there are Statistics Sweden (SCB)
statistics. Thereafter, it is advisable to seek international sources such as the United Nations, World Bank and various
international trade organizations web sites. Most countries have also statistical publications available on the Internet.
Newspaper articles in newspapers and specialized publications can also provide much information, as well as
competitors and larger websites.
4. What customers can come to act as buyers of more than one market?
All individuals and companies. E-commerce has made it possible for individuals to a greater extent, and not only at
tourist trips, shopping in markets other than their own local market. It is particularly important to take into account
large companies and companies with ambitions to grow. They are looking out on the global market to find the best
source of supply or clean out to help those which are created through business if they find good feeding conditions
that are not already using. Corporate buyers often travel internationally more than sellers.
5. Have the various trading blocs like the EU, LAFTA, ASEAN, have an importance in the global marketing, and if so
what?
To some extent, they have it when it comes to monitor competitors and sell to major global customers. Unable to work
with the first reach a certain market share in the trading area, and then process the next with the same goals, without
regard to prioritize global customers wherever they are if they want to buy and to monitor the new growth companies
that can develop into good customers in the future as well as to monitor companies that otherwise might subsequently
become serious competitors.
6. How often must Prioritizing of the choice of markets for special coverage of the competitors be?
Some constant preparedness must be a re-prioritization. New mineral and oil wells can be detected, rapid political
changes occur, etc.
Tasks.
1. What are the different trade areas to customs unions, free trade areas and other more significant groupings of
countries in the world?
Studying WTO, UN's, and websites of Trade, which is a lot of information about the various trade areas.
2nd What differences exist in the proportion of exports by country for a specific product or group in relation to the
percentage of total exports to each country? Management: making a similar statement as that contained in Annex 3 of
the Swedish exports, for a few different product groups, distribution of a number of export markets. Information for

this analysis is available from the Trade Council homepage export profile of various countries or from the Central
Statistical Office's website.
3rd Which countries are the most interesting emerging markets? The task can be solved by downloading the
information on GDP growth for a number of countries, and by trying to understand what are the causes of high GDP
growth and retrieve information about these causes, such as population growth, education, access to medical care.
Information, visit the UN's, the World Bank and WHO websites, as well as from the Internet side
http://www.gapminder.org

3 Choice of market
1. When it is topical to select export market?
2. What criteria influence the choice of export market?
3. What happens to the company's profitability in the international establishment?
4. Is it possible to work everywhere but the establishment of a number of foreign markets?
5. What guidance provides trade statistics for the choice of market.
6. Can the choice of markets is facilitated by greater analysis of statistics available on the Internet?
These are some additional questions to answer after this chapter studied.
What strategy is most effectively concentrated or differentiated marketing work?
How to choose an appropriate export market?
To what extent should take into account additional costs on exports?
How does competition in the choice of the market?
3.1 What strategy is used to select the market?
All marketing is more or less consciously to certain customer groups. In cases where the marketing focus on a single
customer group is referred to as concentrated marketing.
Choose from several different sub-markets, market segments, which are processed by different methods, one speaks of
differentiated marketing. Differentiated marketing results, however, always higher costs due to the alignment of
competitive balance to the current market segments requirements. Revenues may also be higher and it is intended by
higher average prices and higher total sales.
International marketing is therefore that by selling in several countries have introduced an additional opportunity
compared to advertising in the domestic market. In global marketing account market conditions in many countries
while providing many new opportunities and challenges. Market changes in all countries and in markets monitored in
the global marketing is fully implemented, which is almost never the case.
In undifferentiated marketing process to all customers with the same offer and in the same way. In international
marketing, this is not possible, partly because of language differences, distance and culture, while at the global
marketing has evolved the ability to communicate and work independent of distance in time and space and respect
cultural differences. The benefits of an undifferentiated marketing is low production and sales costs in situations
where competition does or product still is standardized so that any deviation occurs between the manufacturing and
retail outlets. Dividing the total market in various segments of appropriate criteria is a creative work and selecting the
right segmentation variables can strongly contribute to the relevant needs of different customer groups are observed
and evaluated. This then gives the company the opportunity to choose the segments where it can work with good
profitability. The conclusion that getting to know the different market segments and the needs and the marketing that
is appropriate requires a lot of work.
Only big companies can afford to systematic and unbiased collection of information in order to observe and analyze
the various segments of the market. The manager's knowledge and past experience and its possibilities in terms of
production, product development and marketing are often a major influence on how the search for suitable sub-out.
Efforts to evaluate the market should not be delegated, it is the market manager's most important strategic decision to
choose the right market segments. Since the choice of segments is done takes work to get to know this market and to
align marketing efforts to satisfy customer needs better than competitors who are working with a different
segmentation.
At the international marketing probably show more of the segmentation variables used for segmentation of different
values in different countries. Each new country, in which the company chooses to market its products, the company is
also entering a new market segment, which may require an adjustment of at least parts of marketing. This increases
costs, but the choice of new countries are systematic, it is possible to choose options that allow changes will be
insignificant or small for the first countries chosen. Wish the company in a second step to market their products in
several countries can find it more appropriate to select a group of countries that have strong similarities with each
other within the product and market segments is working. In certain product may be similarities between segments in
different countries to be so large that the differences can be neglected. This may include for example high-tech
equipment in research and development, where the same values and equipment held by virtually all customers in the
world. Relevant market segments in high technology may be all laboratories for product development. Division of
countries into different groups which are not relevant.

Border barriers and distance may in certain product areas and situations to be of less interest than variables such as
income, education and climate. In the case of companies can trade, technology and R & D activities to be more
relevant variables than country-related variables.
3.2 Slection of the market for exports
The choice of export market has not always been an active choice. There have been at least as common for buyers
seeking contacts for buying and that a contact has been established in this way. For products where there are several
substitutes must continue to be a more active market intervention made an active choice of the market must be done.
For unique products are always a big demand that customers themselves can take the initiative if they want to buy. The
choice of the market are made in this case by saying no to customers in markets that we want to process only later. To
wait to enter a market until they can offer the service and presence required by the market can be a very wise decision
and a number of companies also includes such decisions.
Traditionally, the choice of origin on the export market opportunities for communication especially when the sea and
to a lesser extent by land transport, which in the past, before the railroads, worked very restrictive to trade. These
restrictions, however, declined in importance. Air transport has for example become more common.
Traditionally, the trade for most countries in Europe, most dramatically with the neighbors. Although factors other
than the pure freight costs can of course have influenced this relationship. Knowledge of the neighboring countries is
usually greater than the knowledge of more distant countries. Similarities are generally more widely in other respects.
Closely related languages and common view of society may eg facilitate trade.
Knowledge of the market is therefore an important prerequisite for any promotion. Opportunities to quickly and
efficiently gain knowledge has grown strongly through the expansion of aviation, telecommunications and computer
connections. The traditional choice of export market which means that the market for which the transport cost is
lowest is chosen first is thereby reduced.
When a company is traditionally considered to engage in export, it has often been the case that the desired use some
excess capacity. It has since been natural to look to export markets, where there already existed a need for the products
they manufactured. People have also naturally been interested in that at all times to get an outlet for their product in
appropriate quantities and at such good prices as possible.
The ongoing globalization has its reasons that many of the traditional costs of communication and transportation as
well as knowledge about culture and living conditions in distant markets has changed significantly. In telephone and
data communications are basically the cost regardless of distance through the expansion of the internet and the pricing
of which apply. While the traditional telephone and fax communications are the underlying costs have been reduced so
drastically that they are often just as high even in a small country. Competition has made this come individuals and
businesses to share. Knowledge about other countries' culture and living conditions has risen by radio, television,
movies and magazines and books. The increase in tourism to more distant destinations have also increased the
knowledge of distant markets.
These technological changes will continue to facilitate communication, travel and transport. Importantly, among other
things, the new aircraft that is capable of direct flights to other side of the world in about 10 hours and is equipped
with sleeping. This means that a trip Canada-Australia soon, is no more strenuous than a trip Stockholm-Gothenburg
in the 1950s. These technological changes will further stimulate globalization.
Two other causes of the increasing globalization of the international agreements reached on the reduction of customs
duties and harmonization of trade rules and the liberalization of national monopolies that have occurred, which made
it possible for private companies to engage in a wide range of service-producing activities internationally.
In Figure 3.1, option B, shows this situation schematically.
By exporting companies hope to receive some risk diversification, ie, greater resistance to cyclical changes and
compensate for seasonal variations in different markets. A decision to export is therefore to be more or less
consciously trying to meet a number of objectives. Expansion goal is perhaps the most prominent. But it can also be
cyclical and seasonal adjustment is justified.
FIG

Figure 3.1 Schematic description of the terms domestic marketing, export marketing, international marketing,
multinational marketing and global marketing.
Slightly lower down the goal hierarchy can be justified by the nature of the export market can provide valuable
impetus to the development of new products and further development of the previous product or products. Other
motives are to obtain knowledge of competitors' marketing activities and their development.
The Swedish export companies have traditionally been primarily the Nordic neighbors several companies expected
today, however, the Nordic region as its home market. In the alternative, we sought to other European countries, and
only then to more distant markets. Exceptions exist, of course.
An example of such an effort is Sweden's largest exporter Volvo. A few years after the company was founded, it
started to export to Latin America to compensate for seasonal variations at home. The development may not be said to
have been successful, but the principle to seek compensation is correct.
In international marketing, the purpose, however as soon as possible to obtain a stable outlet at a reasonable cost with
an acceptable profit on a number of markets, see Figure 3.1, option C. It is now not uncommon for new products
developed directly for distant markets.
When working with product development in the somewhat difficult-defined area is commonly referred to high-tech
products are often already under development a significant exchange of information with researchers and companies
in other countries. When the product is ready to be sold as soon as it is obvious that the first customers are among the
foreign partners involved in development work. In markets where the interaction partners are in development, there is
usually customers who need the new product. It is then natural to start promotion in these markets, which can often be
distant markets like the U.S. and Japan. The traditional criteria for länderval is no longer valid, but new considerations
must always be made.
3.3 Additional costs of international marketing
The cost per unit sold in international marketing are usually several causes higher than at marketing in the domestic
market.
The new market involves significant initial costs to train local staff and parent organization to adapt to the conditions
in the new market. Moreover, for most companies, so that the bulk of the company's sales or production earmarked for
the domestic market, while the smaller part is divided in several markets. The cost of international marketing are
therefore higher than the marketing in the domestic market.
Although exports in the happiest circumstances, would succeed so well that any extraordinary expenses not incurred,
this is an exception. Only the major exporters and major Swedish companies with an export of well over 50 percent of
sales in individual markets should be able to reach such a turnover that they can fully exploit economies of scale in
marketing and therefore able to report the same cost per unit sold for export to the marketing in Sweden . Companies
that developed and established local production can sometimes have attained such volume that they can recognize a
larger market share and a larger number of units sold in the export market than in Sweden, and marketing costs are
lower than the domestic costs per unit sold. The company has reached such a situation, the market has been through
acquisitions of companies, market share and production.
In a study by Hirsch compares the costs of marketing in various companies for export. The costs that businesses have
to contest on exports is partly the same costs for the domestic market, and increased costs for the adaptation of
product, packaging, transportation, insurance and customs.
Customs duties may not always be regarded as a cost, but they must nevertheless be taken into account because they
affect the product's final price. The design of advertising and sales messages to the foreign market may pose great
difficulties and higher costs than the domestic market. Higher wages can be paid to expatriate staff, etc..
3.4 Compensation for extra costs
The costs of exports causes often compensated by higher prices at the company's products, increased sales or
indirectly through eg increased knowledge of the market.
For an attractive product with a relatively high price elasticity and with a limited supply on the domestic market,
despite the export of certain quantities to maintain sales in the domestic market by raising prices. The total revenue is
increasing, if for example, applies a higher price in the domestic market and a lower price in export markets is
sometimes improperly referred to as dumping. The pricing policy of an export market are therefore often related to the
pricing policies of the company's other markets. This is possible only when individual shops and then longer-term
market development issues are not accorded any greater significance.
The economically quantifiable revenue is thus closely linked to pricing policies. This dealt with more extensively in
Chapter 6. Among the more difficult to estimate indirect proceeds of export sales is the increased knowledge through

market and competitor monitoring the most significant. The proceeds of the sale on the export market should be
corrected with the cost needed to watch the market and competitors would result in the traditional market research.
3.5 Choice of customers
It is important to clearly define the clients you wish to process. Only then can we control the marketing to make it as
efficient as possible.
At an international scale is complicated, however, decision-making that usually more options available than the
national marketing. You can for instance apply the three main strategies undifferentiated, differentiated and
concentrated marketing to the entire world market or in different markets.
To control the marketing of certain groups of customers in all countries can be interesting. This can obtain a large
sales volume with the same design of a product. However, it is not always clear on the basis of segmentation variables
age, gender, income, residence, etc., or an appropriate combination of these factors may delineate a group of
customers that have the same needs and the same attitude towards the product in all the countries to which exports can
be currently.
Instead, it could prove that, while in one country can successfully market a product to a particular segment, such as
national resources, it is in a different market segment needs to be defined on the basis of other factors.
Sometimes it is even necessary for each individual market, establish specific, in the country relevant segmentation
variables to achieve the different countries shared client group. One can not therefore apply the same principles of
segmentation in all countries.
For the segmentation of international marketing is the location of an important factor. An alternative is then to
segment the global market, so that some countries are given priority over other countries.
FIG
Figure 3.2 segmenting a market may mean that you decide to process a particular segment, eg segment with horizontal
lines in a single country. Processes to a particular segment in several countries, these national segments of an
international market. In global marketing, processing the selected segment in most countries where the market is large
enough.
One can also imagine that the selection of certain population concentrations or areas with some type of professional or
industrial activities regardless of which country consumers or businesses are located. The figure 3.2 shows
schematically how the international market can be segmented, with or without regard to national or regional
boundaries.
The choice of the customer and customer group must also be adapted to the company's product group and market
position, see Figure 1.1, which describes the competitive funds relative effectiveness at various stages of product life
cycle.
Customers that have special value as a reference object, or because they are opinion leaders and affect the future
perception of the product is especially important. In some markets may also be customers who have an opinion-
forming power beyond its own domestic market.
3.6 Election of the market through analysis of large data sets
By analyzing the potential export markets using large amounts of data describing the respective countries with
cultural, economic, geographic and political variables can be interesting and thought-provoking results obtained. An
image from a study conducted by S. Prakash Sethi and David Curry appears as an example of the somewhat surprising
results that can be obtained.
This study included 56 variables for the 96 countries included in their analysis shows that countries such as Austria,
Australia, Canada, Finland and New Zealand are the countries with the greatest similarity to Sweden.
An analysis of the kind Sethi and Curry reports need to be updated because the countries is changing and must be
applied with caution; companies export products that appeal to certain customer groups and not to the entire
population. But it can still be interesting to take note of similar studies and conduct their own analysis of where the
company's products relevant variables have greater weight.
3.7 Answers to the questions at the beginning of Chapter 3

An attempt to answer the initial questions for Chapter 3:
1. When it is topical to select export market?
The increasing rate of globalization means that a manufacturer or qualified service already at the start of their business
strategy needs to consider the choice of markets to foreign business, it should be part of the first business plan.
2nd What criteria influence the choice of export market?
In the first stage is the founders' and management's personal knowledge and contacts in various markets to determine,
but may since aspects such as cost, time to market the product in different markets and the likely sales volumes
increasing importance for the selection of "early" export market.
3rd What happens to the company's profitability in the international establishment?
Unfortunately fall usually profitability, it takes time, commitment, and money to establish themselves internationally,
even if conditions are good. The profitability decline in the short term and wait to be better than if such an
establishment not been conducted.
4th Is it possible to work everywhere but the establishment of a number of foreign markets?
In principle yes, but the experience is that customers require a local presence in order to have confidence in buying.
Some first order from a customer in a new market might be, but then follows the requirement for local presence of
additional fast delivery and service.
5th What guidance provides trade statistics for the choice of market?
It provides, legal use, very valuable information. For smaller markets, so-called mirror tests have to be used.
6th Can the choice of markets is facilitated by greater analysis of statistics available on the Internet?
Yes, without hesitation, especially when periodic reviews of the countries and markets that need to be given priority.
Task
1. Leaving aside the traditions and cultural contexts, are there countries to which Swedish companies should export
more? Reasons for your answer with examples of products / product groups where the percentage is high, and low in a
number of countries. Management: Trade Council's profile and Statistics Sweden's statistics can be used for analysis.

4 International market research
Objectives of the chapter is that it should be possible to choose and use the sources of market information that is
publicly accessible, and to assess when there is justification to do its own investigation.
Learning to understand a country, its economy and its foreign trade requires great interest and much work. Often,
business development closely linked to both the physical environment such as culture and tradition, resulting in a
complex series of reasons why the situation is what it is. When prioritizing markets, it is therefore necessary that the
relatively coarse indicators sort up markets that deserve closer study. In this chapter, the most common sources of
information for such a separation and even some analytical treatment. Subsequent to read this chapter it shall be
possible to implement a single market.
The following questions should be answered in the chapter read:
How can you get access to statistics from other countries?
Who needs market data within the company?
What opportunities are there to assess the market in another country, although statistics are not available for the
product?
What information is needed to assess a market?
What opportunities exist to help with market research?
Market research can help to prioritize the different markets?
What sources exist for obtaining information on different markets
4.1 gather knowledge about the market
The previous three chapters have dealt with fundamental considerations when deciding on an international scale. This
chapter shall address how information can be gathered as a basis both for a decision to export to a new market for the
decision on market priorities and detailed decisions on action in the markets where activity is already undertaken.
Much of the information needed for marketing decisions are already collected and available in the form of official
statistics and published market reports. The difficulty is to find information and to use it correctly.
It is often associated with great difficulties:
1. delineate and define the need for information, especially for new
markets may differ from the domestic market,
2nd find the relevant sources of information and
3rd rapid access to information even if you know where to find it.
Secondary sources of information can be found in large numbers in the form of statistical publications, magazines,
books, market reports and feature articles in newspapers, most of which is available on the Internet. This information
gives a true picture of the market in many countries there are hardly any exceptions. Before making their own travel
and ordering investigations is to gather new information through interviews, existing data should be collected and
analyzed. Own travels and studies may indeed still be totally necessary but time and money can be saved if existing
information in advance, analyzed the right way. Import volumes, import prices, overall market size, etc. can usually be
calculated from the statistics available. Own studies can then focus on more detailed issues relating to their own
product and how marketing should be designed to ensure its success.
4.2 Sources of market information
Market information is available in several forms and databases are very common. The information contained in the
databases are almost always also available in printed and published form. Speed of access to information and saving
time in search of information makes the databases, however, is an effective and widely used tool. Used a single
source, often, or have been close to a library with good collections may still the printed and published information
may not be more convenient and efficient to use than databases.
Databases are the two main types:
1. Reference data, which provides information on sources of information
2. Databases, these are usually divided into
a. Text Databases
b. Numerical databases

A very large number of databases are available, most with access from your own computer, if you have subscriptions
and access to the access or user code.
Because of the large number of databases, it is common practice to rely on wholesalers, known as database hosts, who
have a subscription to a large number of databases, usually specializing in a particular subject. These hosts database,
which is a Trade Council, Wennergren-Williams another, found in large numbers. A number of university libraries is
the database host or connected to multiple databases. Several large companies have their own subscription to the
databases that they use often, or agreements with database hosts. Some databases may be restricted to members of a
trade association or larger companies with access to the same technology as external databases.
4.2.1 Statistics
Basic economic statistics are often linked by a central authority in each country or by different authorities in order. In
Sweden, made the most of basic statistical information assembled by Statistics Sweden (SCB) as well as various
agencies and utilities compiling and publishing a lot of statistical information. Organization in other countries vary
and some index series can in some countries, such as being compiled and published by private companies. It is not
unusual for customs authorities independently publishes trade statistics.
The key elements of economic and demographic statistics produced for the world's nations together by the UN. For
obvious reasons such a statement is not time to date. United Nations statistical publications are still valuable since
they cover many countries, any differences in measurement methods have been sorted out or you are remarks about
the differences.
A number of UN specialized agencies like WHO, FAO and the World Bank and IMF will publish statistics in their
respective areas of expertise. Although a number of other organizations and coalitions of states publish their own or
compiling national statistics. Major sources of such specialized statistics can be OECD, EU and EFTA. The principal
library in Canada to seek statistics from various countries and the UN and OECD Statistics Office Library in
Stockholm. The official statistics are not available where there is almost no.
Through computer technology, most of the official statistics in the world achieved through various databases. A good
example is the numeric IP database company Sharp has been in Canada, the World Trade Database (WTDB). This
database covered all OECD countries' foreign trade statistics since the late 70th taletoch a number of years. In addition
to providing the various countries' trade statistics, the company had adopted the bridges that automatically took into
account that different countries are not using the same statistical numbers for the same commodity group. IP Sharp
also provided a range of methods to analyze trade data and bl. a by studying all the OECD countries' exports to
country A is country A's import statistics displayed by a so-called mirror analysis. It was therefore possible to
relatively easily obtain statistics on imports even for countries which themselves do not publish statistics or to verify
the published statistics. (Note that data for export is often referred to FOB while imports down CIF.)
Of market research is used primarily the following types of statistics:
1. trade statistics (imports and exports)
2. production statistics
3. general statistics of various kinds
4. business accounts, industry statistics and similar substances
The published statistics of trade and often the production is built up after a multi-country common nomenclature. This
facilitates comparison and analysis of the published statistical material. Unfortunately, not all countries use the same
nomenclature. Even among countries that use the same nomenclature, there is also a need to distinguish certain groups
of products, for which the nomenclature has not reserved any codes, but instead made room for national codes.
Obviously reduces the possibilities to make national comparisons.
To obtain a better trade statistics, which increases the possibility of comparisons between countries introduced from 1
January 1988, a new classification, known as the Harmonized System, the Harmonized System, or CCC,
Commonwealth Code Classification, which it also called. The new nomenclature is largely based on the previously
used nomenclature.
HS nomenclature has been accepted by the countries that used previously, Brussels Tariff Nomenclature (BTN) and
the U.S., Canada and the Soviet Union. Nor does the new classification will be universal, at least to begin with, but
national and regional differences in the choice of nomenclature will be retained. BTN classification is usually used in

Europe while the U.S. and Canada previously used a variant of SITC, Standard lnternational Trade Classification.
For several years, the market researchers to be referred to the trade statistics based on these earlier classifications and
therefore must take into account the difficulty of comparing data from different sources.
BTN classification existed in its original version already in 1950. It was subsequently revised and published in its final
state in 1955. The nomenclature has been developed by Custom Co-operative Council and has been accepted by some
110 countries. Sweden's exports to countries that use the BTN classification amounts to about 4 / 5 of total exports.
According to this classification of goods classified in 21 sections. These sections are then divided into 99 chapters,
which in turn are subdivided into a total of 1 098 baspositioner.
SITC has been developed within the UN to facilitate the economic and statistical calculations. This classification
includes 10 main departments, 56 departments, 177 commodity groups and 625 subgroups, some of which are broken
down into additional subgroups. Total includes SITC classification 1 312 of items.
U.S. and Eastern Europe including Russia from applying statistical nomenclatures. U.S. handelsnomenklatur based on
the SITC and comparisons can be relatively easily done by code keys. For Russian and Eastern European countries,
the problem is more difficult. The same can be there to be classified under various subheadings, depending on use.
The situation has improved since a number of Eastern European countries became members of the EU.
The use of the new HS nomenclature in trade and manufacturing will greatly facilitate the statistical analysis of trade
and industry statistics. At the same time, it will be possible to operate at a higher level of detail in that although the
last three digits in more than ever before been the subject of uniform standards across countries. However, it will take
several years before the new classification will be available in statistical publications.
A consequence of the revised tariff nomenclature is that some products changing customs code, which may affect the
rules of origin, such as the EU rules of origin. See further on the rules of origin in Chapter 8. A change in
nomenclature and the changing rules of origin can lead to products that previously passed the requirements to be
amended in future to cope with new source requirements. This concerns mainly countries that are members of FTAs,
including Sweden, the former membership in the EU.
4.2.2 Books and magazines
In addition to statistical publications, three groups of sources of secondary data to be of value:
1. research papers
2nd country studies
3rd journals of various kinds
Research reports from various institutions and textbook stressed books, which deals with economic, political and
social situations or developments in different countries, are often of great value as an introduction to further market
analysis. This kind of literature is primarily available at university libraries and university databases.
4.3 Methods for the treatment of secondary information
Before carrying out direct surveys to collect primary data, is the state position on the use of secondary data as
efficiently as possible. Thus avoiding unnecessary costs and lost time.
The total market demand can be calculated without too rough approximations. Estimating demand for a modification
of a product or multiple products is, however, coupled with estimates of considerably more complex competitive
environment.
The use of personal computers makes it by default, such as Excel, you can quickly do fairly sophisticated analysis
based on the numerical statistical material that can be retrieved from different databases. There is also much more
powerful analytical tools for personal computers that help to analysis described below can be performed and presented
in both fast as orderly. Often, it is useful to use experts to make these statements and analysis as the process of
collating data to correct format and to convert to different currency exchange rates and different quantity of entries
require a lot of manual work. Inventories can be valuable to obtain periodically and it helps when these standard tests
are purchased from a service company.
4.3.1 Trend Analysis
By compiling data on imports, exports and production, you can calculate the consumption in a market as follows:
Consumption = imports minus exports plus production.
Such a simple analysis does not account for stock variations and can be misleading if it is carried out only for one or
two years.
However, one could extend the analysis to cover a longer period of time, indicating the consumption of several sub-

periods, eg years, quarters or other suitable period. Deviations from the trend in development can at least partially
reflect the adoption of stock fluctuations, and the prognosis can be corrected accordingly.
The analysis can be refined further by variations in seasonal and cyclical patterns observed.
4.3.2 Derived demand
If available information indicates deficiencies or gaps, perhaps it is instead possible to collect information on demand
for complementary products or whether more fundamental factors affecting demand, factors such as population
growth, income, industrial investment, or similar. Then, through correlation analysis to calculate the relationship
between different variables and the product market analysis concerns. The prerequisite is that the availability of
reasonably safe and timely data.
Example
If statistical data can not be purchased on the market for car batteries in one country may instead link between the
Swedish consumption of automotive batteries for used cars correlated with the stock of automobiles. After that car
population in the country for which information on the market for car batteries required included in the calculation and
a battery demand derived.
The analysis can be refined in various ways so that it provides more reliable information.
4.3.3 Analogies with developments in other countries
There is no or only uncertain information about the size of the overall market in one country, one can instead estimate
the demand size.
Assuming then that:
1. demand is determined by one or more factors affecting the demand for which statistics are available, and
2 sets with either at this time or during the earlier period between these factors affecting demand also apply in
countries for which the demand of the product is known.
This method to estimate the demand called by analogy method and it is very simple. Commonly used for the
preliminary estimation of demand and to assess the reasonableness of the demand calculated using other more
sophisticated methods. Statistical data on such underlying factors as per capita GDP, population, consumption of
electrical power, car fleet etc are often readily available and they are important in this kind of calculations.
4.4 Own market research
For an initial analysis of which markets are interesting and to analyze the overall market development is often
secondary data sufficient to support.
For a more detailed analysis of a market that some assessment of their firm's ability to market needs, however, often
carry out their own market research.
If you use secondary data as efficiently as possible, own investigations concentrated on tasks for which information is
missing.
Primary data can be obtained from:
1. interviews with current and potential customers of the product,
2nd observation of users,
3rd interviews with people in various distribution channels,
4th interviews with specialists of various kinds, such as researchers, professional associations managers, etc.
The investigation can be conducted either through surveys or interviews.
The traditional cost aspects of market research also applies to international studies. It should be noted that both
telephone and personal interviews will be considerably more expensive, if they are to be performed by personnel from
the exporting company's home office.
To administer questionnaires on their own can cause problems in finding the correct register of the population from
which a selection is made. This may particularly be the case, in the case of consumer goods. In the area of producer
goods is however less than the population in the area of consumer goods. Often the size of the relations between
potential customers such that instead of using a statistical sampling method may make an assessment of the companies
that are interesting to include in the survey.
It is important to examine the market for a product without the specific technical characteristics and applications, it
may be appropriate to transfer the survey work to a market research company, provided that you hire a company with
good recommendations. Finding an appropriate investigation companies, which are deemed qualified for the task, can

be difficult and caution should be exercised.
Chamber of Commerce and other Swedish companies and Swedish consultants can often give valuable advice and
recommend partners in other countries.
Regards the other hand, to explore possibilities to promote specific technical characteristics of products and
applications, can be so very valuable side information typically gathered that this justifies the extra cost of letting its
engineers conduct the investigation.
Data
1. Undertake a market for a product by using statistical sources, Swedish, international and foreign. Management:
choose a product which is of interest to you.
2nd Undertake a market for the same product that you chose in Task 1 by searching information on the Internet.
Management: use the various search engines and if you have access to a library's subscribed databases, search there as
well.

5 Marketing mix design
The goal of the chapter is to you, after you read it, it will be able to answer the following questions:
1. What differences in the arguments of a product needed in mass communication, and other advertising sales to
countries where the product at different stages of product life cycle?
2nd What could be the cause of failure when a product is introduced on a market-where the product group is new and
the competition does not?
3rd Why it may be necessary to build a service organization of an export market for its own service organization is not
needed at home?
4th How big the chance of success with the establishment of a new well-developed market with competitors who offer
a wide range when the export firm has only one product variant?
5th What factors should be considered in the creative design of a promotional message?
6th Can be used in television commercials with the dubbing of the sound?
Some additional questions you can think about.
How are the marketing mix of conditions in different markets?
Is it possible to use the same marketing mix in many countries?
Where can I find the adjustment to be made?
What can happen if different market mixes used for the same product?
5 .1 marketing mix adaptation to market
With the marketing mix refers to the combination of different types and different format for the content of the
competitive funds available for marketing efforts. Since the effect of the different competitive funds are not linear and
uniform in comparison to the cost of them, it becomes important to choose the right combination. Top level of
competition is product, price, sales promotion and distribution. It is basically the same competitive tools available at
both international and domestic marketing.
Prioritizing equally well using the same format for all means of competition in all markets would be from internal
administrative point of view an advantage but not even domestically marketed the same product to different customer
groups in the same way. Significant cost advantages are of course about as much as possible can be standardized and
coordinated, but it is not low costs in the marketing that counts but the resulting gross margin. The opposite of overall
coordination would be a complete adaptation to each market. It would mean that only certain part of the production
and management of resources could be shared. The rest of the marketing mix should be locally adapted.
A local company has most likely an advantage if the market requires as much adjustment to the product, brand,
communications and distribution tailored specifically to the market.
The alignment of the various competitive funds is complicated by the various market trends and the situation is
different to the situation "in other markets. This reduces the possibility of a "standard" marketing mix implement a
successful sale. Standardization can be more or less extensive.
FIG
Figure 5.1 Schematic representation of the volume of sub-markets for which a market adjustment needs to be
considered. Market segmentation and location of the product life cycle is a normal part of such an analysis. National
characteristics to be at the international and global marketing.
Differentiation and adaptation of the different competitive funds to the markets in which the sale is conducted
increases the direct costs but often also the direct revenue and gross margin, the adjustment made after the markets
various conditions. For many companies, it has proved necessary to adapt the competitive funds for the different
market situations. It is thus important to note that international marketing is not only implies that the product is sold to
a new market but it also may be concerned about choosing a different market segment than in the domestic market as
well as to the product group may be in a different stage of the product lifecycle in the new market. Some exceptions
are where almost all the markets managed to implement a consistent marketing. One such example is the Coca-Cola.
We used the same brand, same product, same packaging, same price, same advertising and broadly similar distribution
channels in nearly all countries where it operates. For most companies vary the combination of competitive funds
from market to market. The basic similarities are limited to goods, in each case its basic components, and the brand.

On the other hand vary both price, advertising, distribution channel between the different markets.
For products that have long been on the market and may have already reached the saturation stage in product life
cycle, may be a local expectations and beliefs about how the product must be constructed while those expectations
have not yet had time to establish itself in new products that are at the stage of introduction. Electrolux white goods
division, has determined that for conventional electric oven, set it on different markets completely different
requirements in terms of function, color, size, design, etc. For electric stoves therefore calls for a market-driven
manufacturing. Each manufacturer could choose its own standard significantly for microwave ovens where they were
a new product. This has, among other things meant that Japanese and Korean manufacturers of household goods
quickly captured a significant share of the market for microwave ovens while they hardly exist in the market for
electric stoves in the U.S. and Europe.
It is very difficult to strike an appropriate balance between overall adjustment and maximum uniformity, which are the
two extremes. A total uniform marketing and marketing mix means that all attempts to persuade customers to accept
the product and its presentation.
This places great demands of marketing design and implementation. A company wishing to work internationally in
their marketing and, if possible, to reach the global stage, ie when all markets are treated equally, are faced with
difficult trade-offs. To the extent that it succeeds, it is creating an opportunity for their competitors to take advantage
of the already implemented marketing. This can be said to be a factor to some extent do that even skilled companies to
refrain from going as far in uniformity as they could make in the processing of different markets. They may therefore
choose rather to seek preserve local differences and requirements for adaptation of marketing to make it harder for
competitors to apply a uniform market penetration.
In a study by Sorensen and Wieckman is the standardization of advertising decisions for different means of
competition analyzed in European subsidiaries of multinational companies. The study is based on interviews with
hundreds of decision makers in 27 companies in the area of goods easy moving consumer goods, see Table 5.1.
The results Sorenson & Wieckman reported in its report may not generalize too much. The study covered only a
limited range of easy-moving consumer goods, and it is limited to the following countries: England, Germany, France,
Italy, Belgium, Holland, Sweden, Switzerland and the United States. For other product categories and countries where
there are differences both on the possibilities of standardization regarding the degree of completion of standardization.
Perhaps the main conclusion of this study is that it is primarily a decision on procedures for market planning
standardized, while decisions on the use of competitive funds not been standardized to an appreciable extent.
Table 5.1
The figure indicates the percentage of the extent to which rnarknadsföringsbesluten standardized within the European
subsidiaries of multinational companies. Source: Sorenson & Wiechman, Harvard Business Review. May-June 1975th
Components of the marketing mix ratio of standardization
Low Moderate High
---------------------- ------------ ------------- --- --------------
The whole marketing mix 27 11 63
The product is 15 - 81
Trademark 7 - 93
Packages Container 20 5 75
The retail price 30 14 56
The basic advertising message 20 6 71
The creative design 34 4 62
The promotional activities 33 11 56
Media choice 47 10 43
High degree of standardization of the trademark occurs for 93 percent of companies surveyed, while the
high degree of standardization of media choices only exist for 43 percent of the companies. It is worth
noting that 15 percent of companies sell other products for export than domestic prices, and that only 7
percent of companies use brands in export markets that are not used domestically.

5.2 Competition of funds adjustment
The claim that a well be selling itself is certainly exaggerated, but the fact remains that a good being is
often easier to sell than a bad one. What's in a situation perceived as good as can be in a different
situation and in other circumstances perceived as less good. This situation also applies to competitive
funds. Considering it does not adapt to local markets are already at the core decisions about product
design and marketing, these mistakes are often not compensated by a subsequent adjustment, as regards
the design of other parts of the marketing mix.
At the national marketing is the most well-known environmental factors so that they do not need
special consideration. At the international marketing of important environmental factors may be
overlooked because it does not usually tend to take them into account national marketing. For each new
country must therefore expect the company to meet a new set of uncontrollable environmental factors
that must be taken into account by adjusting the competitive funds. Figure 5.2 shows this
diagrammatically.
FIG
Figure 5.2 Simplified overview of the factors to which the company must adjust its marketing mix: the
verifiable, in the center, the non-verifiable at home in between the circle and the non-controllable in
various foreign markets in the figure's periphery.
Combining competitive funds and to adapt them to different local markets thus requires much more of
the market drivers in international than in domestic marketing.
5.3 Adaptation of the product mix
A company operating in several markets often face the requirement to undertake a major adjustment of
the product to local conditions. This applies particularly to complex products and goods that could be
hazardous to the user or surroundings. Simple products, mainly raw materials and goods that are
handled by people with specialist skills, meets usually not be as great demands on local adaptation. In
particular, there are significant demands for products used by large and broad user groups. Examples of
the latter type of products are processed food, automobiles and household appliances. For these product
groups is almost always required to meet local government requirements that whatsoever shall be sold.
For commodities, it is rather often the customer manufacturing process that will determine the
acceptable quality.
The requirements for a product varies so from country to country but also from the user group to user
group within a country depending on economic, technical and cultural requirements. The reasons for
the product adaptation required can be grouped into three sections:
1. Safety
2. Economic criteria
3. Cultural differences
5.3.1 Safety
Regarding safety, there are many differences between countries. This is perhaps particularly easy to
understand for ordinary people, if we consider the automotive industry. Within this there are in each
country, different rules about how a car must be constructed in a variety of ways. This also applies to
many other product areas, where the design of the individual products must take into account different
countries' security regulations for the product is to be sold.
Adapting to these different demands claiming great flexibility of the producing company. It is usually
not with minor adjustments, but usually is more radical changes necessary. Sometimes it may even be
necessary to develop completely new products.
The provisions that companies must comply with in ways not usually issued by one or more central

authorities in each country but by a multiplicity of authorities with respect to various characteristics of
the product. It is often difficult to obtain an overview of the authorities in one country may issue
regulations and rules regarding a product. The company may, despite major efforts run into unpleasant
surprises even after the promotion has started and lasted for a while. You may have overlooked some
authority with respect to properties that affect its area of competence.
A product can be used both by industry and by consumers may have to meet requirements under two
different sets of rules, even if it only intends to sell the product to one market. In the U.S., this may be
especially important to check. The penalties of damages where a product is listed at the time of injury
which can be considerable, unless you can prove that all possible measures taken for the product to be
safe and not likely to cause injury if the instructions are followed. The instructions must therefore be
designed with great care so that every possible user should be able to understand them.
Product adaptation and product development as well as standards and rules will be comprehensively
dealt with in Chapter 8.
5.3.2 Economic criteria
Different customer groups have different purchasing power, needs and motives for buying a product.
This obviously affects the design, either the consumer or industrial products. It is thus not sufficient to
conclude that there is a need for a product in one market and the economic situation. One must also
analyze the factors that, in various sub-markets and at various times relevant to the customer's demand
of a product. Who needs the client wishes to satisfy: financial, physical or psychological? These needs
strength, duration and frequency affect the buying decision. This also applies to industrial products.
Customers on low incomes or weak economy may primarily demand products which perform basic
functions while customers with a good economy may wish lots of extras, and exclusive features.
Although the requirements for services such as user training, installation and maintenance can vary
with the client's financial criteria.
The economic situation seems to be naturally strong customer interest and opportunities for example to
add aesthetic and / or longer-term aspects of product purchase. The product must be adapted both to the
technical requirements of the customer's willingness to pay for different characteristics.
5.3.3 cultural differences
Consumers' perceptions vary considerably, eg in terms of the aesthetic design of a product. Deviations
are often large, both between different groups of individuals within a country between people of
different countries. Colors, symbols, words, shapes, etc. In addition, different meanings in different
cultures.
Some examples:
In some markets, a white paint on a refrigerator and other household appliances (white goods) act as a
deterrent, while the white color is normal in other markets for this product.
The green color is Allah's sacred color. A green color for machine tools has therefore been able to
operate while aggravating a blue color, however, has proved able to facilitate the sale (if the customer
has a choice) in Muslim countries.
These are just two examples of factors that can be attributed to the group cultural differences. In itself,
the product is neither better nor worse if it has a different color. Such a measure to introduce the
product in the right color may thus be crucial for the prospects of finding outlets for it in a particular
market.
We must therefore take into account cultural differences both in the design of a product and its
packaging at the presentation. Colors can be relatively easily varied while the components and
functional characteristics are not as easy to change. Doors on a cabinet for example, be designed so that
a cross appears a religious symbol, such as not allowed in certain Muslim countries. Parts and
components can be designed so that they are associated with value-charged symbols. Mistakes can
often be avoided when taking into account cultural factors already in the design.
Colors, symbols, words and forms may offend only a portion of the population. Within a segment of a

market can be to start with a certain quantity of product marketed without adjustment. But in recent
initiatives to sell to other segments of the reaction can be from religious, intellectual or political groups.
The cultural adjustment can sometimes provide opportunities to offer certain groups of customers in
other markets, a wider range, thereby increasing competitiveness in markets where the company is
already well established. The cultural differences may have larger role in advertising and
communication than for product design.
5.3.4. Service and spare parts as a competitive tool
Example
From Volvo Annual Report for 2004 (page 15):
"Volvo Action Service provides on-site service around the clock in our major markets.
In addition to help with operating errors offers Volvo Action Service also services operation ensures
that customers will be able to get the most out of their investments. "
CK Prahalad reports an example of GE's service commitments to aircraft engines. The control system
detects a malfunction indication during a flight. Via satellite broadcast information service that analyzes
the information and ordering parts and service to the airport the aircraft will land on next. The error
corrected before it had time to develop into a major injury. Preventive maintenance based on statistical
analysis intervals is a long used method in many companies, especially aero-engine industry, it is new
condition-based maintenance, where even small disturbances in the function are recorded, analyzed,
and service measures are put in, before traditional methods would notice the problems. Methods of
implementing the service in this manner with longer periods, avoidance of unnecessary service
briefings when everything works flawlessly is that advanced instruments connected to a computer
central processing unit and the information is sent to a control system with sufficient capacity to
receive, analyze and take action before serious damage occurs. Keys of this is nanotechnology, silicon
technology and internet communication.
5.4 Commercial communications to make contact
To make contact with customers to present the product and the services it can offer are key targets for
marketing.
Communication with the market is important and it is usually divided into different steps: advertising,
publicity, promotion and personal selling. Trade shows are a combination of these various measures are
important for certain product groups and in some markets.
That in international marketing communication design so that it contributes effectively to the product
and the company's success is an area where all knowledge and experience in international marketing
combined. It might even be more difficult to customize the advertising and other commercial than the
product of international relations.
Commercial communication thus requires to be successful a lot of knowledge about, feeling for and
experience of the local market, culture, knowledge, habits, language and economics.
5.4.1 International advertising
For an adequate adaptation of the advertising, the company initially rely on staff in the domestic market
and the knowledge held by the advertising agency that they have chosen to work with. With its own
offices with skilled personnel, with regard to advertising, launched on the market improved
considerably the possibilities for local adaptation of the advertising message.
Advertising required to get a good effect that the message is designed to raise interest and give the
customer more knowledge. Local trends, competition and competitors' arguments affect the argument
and the message that their advertising must make to bring a positive interest in and influence the
customer to decide to buy.
What should be considered for advertising must be positive and not negative reactions of customers
vary in different cultures, and there is not any record or regulatory system to easily determine which
arguments will be the best. Many unknown pitfalls and difficulties, and good advertising is often

creative and innovative, why conventional advertising messages and designs may be as smooth
underlined that they are unable to generate interest. Although many ad agencies have international
status and many other international co-operation is great difficulty to achieve a compromise between
creativity, boldness and local adaptation. Media choice is as important as the message. In some markets
there is such a diversity of media, television, radio, newspapers and periodical magazines and
newspapers the possibilities are difficult to manage. In other markets are media keys allow the real
problem.
Language Adaptation is the part of advertising design that is easy to identify. Local advertising writers
with experience in the product and target audience should always be used. But it is unfortunately
common that the text of brochures and printed material have such shortcomings that representatives of
the foreign market, avoid using them. Particularly common is it maybe that particular English text, but
also texts in other languages down by someone in the company who know the language well. Nuances
and versatility in a language requires that the texts for the professional people who know and live in the
respective country. Linguistically correct but still inaccurate and sometimes offensive formulations can
be avoided. There must not be overlooked that, from a creative point of view can be exotic with å, ä and
ö in the advertisement. Swedish words and phrases in ads in foreign countries to fill that particular
feature. They form when a creative part of advertising message and be valued accordingly. Advertising
texts which have been translated for certain products and market segments, sometimes proved to be
very effective. They will then obviously be used. The only way to be sure that you get a well-
functioning and effective advertising is to conduct a thorough marketing and advertising testing
connections even those professionally done. There are companies who have long experience in carrying
out tests and evaluations in the international communication of advertising messages and inquiries. As a
rule, it is almost always a mistake to hire a reputable survey company in their own home market for the
mission in a foreign country which they have no knowledge, unless they have their own field staff in
this market.
Advertising in traditional media has now been supplemented and partially superseded by both the
advertising product via the internet. Waiting for "banners" can be bought on websites where it is
considered that members of the audience often passes when surfing. Information is however up on their
own or rented server space.
The advertisements and the information that reaches the target audience via the Internet is the same
everywhere in the world. To provide the best marketing power for as for any other commercial
communications to advertising and information via the Internet must be sensitive to the situation,
cultures, interests and other segmentation variables. Companies that want to be successful in their
marketing is working on several ways to achieve this, the communications over the Internet.
Registration of national internet domains in the different countries where they operate, see the United
States, hu for Hungary, no for Norway, etc, would also fulfill a function to protect the company name
and different brands against other people or companies use them.
On the company's portal page with "international" or home surfing the domain name are invited to
choose the country. The purpose of this election is that the person seeking information is exposed to
Web pages tailored to the reader's culture and situation in general. In more advanced forms let anyone
who wants to spread the advertising and provide information on surfing register and then use this
information to customize page content to surf andes situation. IP number is saved and next time it's
surfing returned to any of its websites is the surfing spirit computer recognized and customized
information. How differences in culture and language, etc. will affect the layout of web pages is the
subject of considerable interest, but any advice, it is too early to come up with. The development has
just begun and much will be done in this regard.
5.4.2 Publicity
Publicity is an opportunity to disseminate, particularly to new products and innovations that can make a
major impact with limited costs for the small company. For larger companies that want to use publicity
in their marketing, this requires planning and involves non-negligible cost to invite journalists and take
care of them when visiting the company. Journalists from major newspapers and magazines are always
well trained and professional. They are usually very familiar with the companies they're to collect new
information. They expect a professional host and factual information available in written form.

Exchange Code of Ethics, which is often true of this group of enterprises means that news can rarely be
presented to journalists other than in special press conferences. If the company is great and it really is
news that is usually present, a significant interest will eventually be established for the company's press
conferences. Later articles in major newspapers and business magazines, in which the company's
business strategies and developments are described, can also be the result of a well-run relationship
with journalists.
For smaller companies, it is principally possible to get publicity in trade journals. But even big
companies have, of course, interest in gaining publicity in the trade and industry journals. The number
of such magazines is very high and their product is not by nature a very special one, it may be difficult
to know which journals are concerned. There are a number of consulting firm specializing in media
choices for publicity, criteria and technology is different from advertising.
There are also a number of information services firm that specializes in sending out press information
and that the mission undertakes to send press releases to a range of companies. Press information can a
business course, produce and broadcast itself. To use a news-watching information, companies do
provide a certain guarantee of quality for the journal and a material that is professionally designed and
presented with numerous innovations. There is then also a possibility that even a small company's
product or application news will be considered by more journalists than if the information is sent
separately. Within the group trade and professional journals are also requirements and / or the
opportunity to "buy" publicity by announcing more or less extensive in the newspaper. Such an offer to
the major newspapers would probably have the opposite effect.
The advantage of the publicity for the product news is that a market reaction could very rapidly from
virtually all over the world. The case then be able to take care of all the candidates and proposals that
will. The reaction can be read both in the details of the journals that had the information, both in how
fast and with what intensity customer-/partner reactions will be realized.
5.4.3 Promotion
Promotion in the form of gifts with company logos and names may have great value. Signage in stores
and department stores, and contests of various kinds, both for customers and vendors are other
examples of sales promotions.
The use of promotional measures vary widely between different markets. A good knowledge of local
rules and practices is necessary so that laws and regulations are not exceeded. It is also important to
know the local practice so that the lack of gifts and contests do not affect competitiveness. Aways are of
course forbidden in Sweden but occurs widely in many other countries. Competitions, especially for
sellers, may easily adverse tax consequences for sales in Sweden, but is both common, popular and
motivation seekers action in many other countries and without adverse tax consequences even when all
the seller's family may be eg a vacation. For the company that has its own subsidiaries or other
representation in the market leaves it as a regular for them to design the promotional activities. There
are also gifts that are developed centrally for the whole of the international market for example, an
introductory campaign. A company working internationally only through agents or smaller local
companies can sell games to be very stimulating, sometimes turning them directly to the agent and the
dealer sells.
5.4.4 Personal selling
Personal selling is usually sold with a national homeland for the market in the most appropriate. This is
confirmed by the local sales organizations on a large scale built up by many international companies.
The person is at home on the market and has lived in that culture, attended the same schools and have a
lot of other relationships with the customers and business friends he meets in his work has obviously
many advantages over those who will travel from a foreign environment . That local sellers are not
always used, several explanations but the most plausible is that the volume of business is too small to
fully employ a local vendor. Product complexity can also be such that only the sellers who are working
with several customers with the same need to reach the competence required. The last usually left to
technical specialists, and need not be charged to the seller.
The main task of international travel sellers is insäljning of the company and its products among

importers, agents and dealers and to engage new representatives as well as to motivate and train the
representatives and, in doing so together with them to meet key customers for both new sales and to
clear up complaints . Of the international vendor is primarily an internal vendor. Local sales staff is
doing a better job at less cost, subsistence, hotel and travel costs will be considerably less.
Although international sales are primarily inter-sellers, they have important tasks in building up new
markets - to perform an initial sales directly to the customer before the final volume has been such as to
justify a permanent representation in the market or to the negotiations with a prospective agent,
importer or distributor being able and motivated to negotiate such an agreement that the company
prefers.
För att säljare eller snarare ansvariga för regioner eller produkter över hela världen skall kunna fungera framgångsrikt
krävs av dessa en förmåga till anpassning och kommunikation med affärsmän från andra länder så att helst goda
vänskapsband kan knytas. Utveckling av säljare för internationell marknadsföring är ett mycket omfattande arbete.
Det kräver flera år av praktiskt arbete. Vissa teoretiska kunskaper kan vara svåra att motivera för yngre individer innan
de själva hunnit begå misstag och förstått betydelsen av att ta hänsyn till och visa intresse för affärskollegans religion,
seder och bruk. Den övergripande förståelsen för detta kan kanske demonstreras och det kan skrivas böcker om det.
För säljaren eller den tekniske specialisten som måste byta ut jeans mot kritstrecksrandig kostym och ta hand om
kunden under långa luncher och middagar gäller det framför allt att kunna bygga upp förtroende på det mänskliga
planet, innan affärer kan börja diskuteras. Det är när affärer börjar diskuteras långt senare kanske efter dagar och
veckor som den svenske säljaren sätts på prov, berövad värdet av fackkunskapen om produktens egenskaper och
förmåga. Samtalet måste föras på andra områden. Hur och i vilken utsträckning främmande seder och bruk skall
beaktas varierar med motparten. Även motparten kan vara inställd på långtgående anpassning och det gäller att kunna
bedöma situationen så att rätt nivå uppnås i umgänget. Skickligheten framstår inte i att fullständigt anpassa sig till den
främmande kulturen. En fullständig anpassning kan verka löjeväckande. Målet bör snarast vara att man blir en
respekterad utlänning.
Det finns flera kurser i och böcker om hur man bör bete sig i olika länder och kulturer, vilka kan ge god kännedom om
förhållandena. Men kunskapen kan snabbt bli föråldrad och beteenden och sedvänjor varierar inom länder beroende av
motpartens vana att umgås internationellt. Utnyttja därför den kunskap som kulturkurser och böcker ger men med
urskiljning. För den som vill ta del av olika aspekter av att driva affärsverksamhet i olika kulturer kan Björn Bjerkes
bok Affärsledarskap i fem olika kulturer rekommenderas.
5.4.5 Mässor
Mässor som säljhjälpmedel är en möjlighet till kontakt och i vissa fall ett tillfälle för avslut som måste användas. I
andra fall är de en god möjlighet och i en del fall endast en "onödig" kostnad. Vissa länder "kräver" att man deltar ett
par år på någon stor mässa i landet innan man kan börja diskutera affärer. Tidigare, före östblockets nedmontering, var
vissa länder exempel på detta. Det kan kanske även gälla andra länder med en stark central kontroll av utrikeshandeln.
I vissa länder är mässor ett tillfälle att träffas och umgås som man omhuldar och det är därför väsentligt att delta på
mässor.
Mässor är utan tvekan en kontaktpunkt. Den stora expansionen av och volymökningen för etablerade mässor är
indikationer på att mässan fyller en viktig funktion. Svårigheten är att välja rätt mässa i det stora utbud som finns.
När beslut om att delta i en mässa är fattat gäller att hela deltagandet måste ske professionellt: monter, trycksaker,
varuexponering, monterpersonal, kringaktiviteter, drinkar i montern, konferensrum, middagar, pressmottagningar,
inbjudningar och efterföljande uppföljningsarbete. Planering och uppföljningsarbete kräver mer arbete än själva
mässan. Internationella mässor vänder sig till en bred internationell publik, vilket kräver språkkunskap samt kanske ett
mera aggressivt uppträdande än vad som tillämpas i Sverige. Monterpersonalen måste utbildas för att kunna ta kontakt
med personer som passerar och effektivt hantera relationer. Det är viktigt att intressanta besökare fångas in och rätt
budskap överförs. Vid nationella mässor kan variationerna vara stora i vad som förväntas vara viktigt att beakta.
Används inte en avsevärt mera aggressiv metod för att ta kontakt i USA än i Sverige kan resultatet bli en besvikelse.
Amerikanska företag söker kontakt med mässbesökarna redan i gången och bjuder in dem till montern.
5.5 Prissättning
Priset är ett viktigt konkurrensmedel för att påverka både försäljningsvolymen och intäkterna av försäljningen. Gängse
metoder för att fastställa priset gäller även vid internationell marknadsföring.
Prissättningen kan ske så att samma pris erhålls i alla länder genom omräkning enligt de officiella valutakurserna. I en
situation där produkten möter priskonkurrens, kan ett sådant stelbent förfarande dock vara ödesdigert, såvida inte de
verkliga kostnaderna för distribution av produkten är lika för alla företag något som dock inte är lika säkert. För vissa
produkter kan det emellertid vara lämpligt att tillämpa praktiskt taget samma pris på i stort sett samtliga marknader.

Detta ger fördelar i form av minskade krav på beslutsfattandet. Vid exportförsäljning är det t ex vanligt att man
tillämpar ett pris, oberoende av de lokala förutsättningarna på marknaden. Man tillämpar då ett exportpris fritt fabrik
eller fritt hemmahamn, dvs en kostnadsanpassad prissättning.
Vid internationell marknadsföring tillmäter man dock oftast de främmande marknaderna en mer permanent betydelse
för företagets fortlevnad och expansion. Då måste konkurrenssituationen och inte minst priskonkurrensen på de olika
främmande marknaderna beaktas. Är t ex efterfrågan stor på en viss marknad och kunderna villiga att betala ett högre
pris än vad som är fallet på övriga marknader, så bör naturligtvis detta förhållande utnyttjas av företaget vid den
internationella marknadsföringen. Är man sålunda mer intresserad av lönsamhet än likformig bearbetning av olika
marknader, är detta en riktig politik. Inte minst gäller detta vid introduktion av en produkt på en ny marknad.
Uppfattas produkten som ny, kan det vara lämpligt att beakta skimming price policy kontra penetrating price policy.
Möjligheterna att differentiera prispolitiken är begränsade. Kunderna eller de olika mellanhänderna kan ofta utan det
säljande företagets kontroll flytta produkten från marknad till marknad. Är dessa möjligheter stora, blir en
differentierad prispolitik i praktiken starkt begränsad. Marknadsförs däremot produkten under olika varumärken och
med något olika utformning på olika marknader, kan fördelarna med en prisdifferentiering vara betydande. Denna
politik kan därför rekommenderas för det internationellt arbetande företaget.
Example
Ett företag levererade ett parti av en välkänd produkt till en exportör i Rotterdam. Denne hade uppgett, att han hade en
köpare i Indonesien. Efter att ha tagit emot partiet omdisponerade exportören dock detta till Schweiz. Där
distribuerades partiet till en varuhuskedja, som sålde det till ungefär halva det normala priset. Tillverkarens renommé
skadades allvarligt genom denna händelse. I vanliga fall distribuerade nämligen det tillverkande företaget sina
produkter selektivt på denna marknad, och en hög-prislinje följdes.
I vissa fall kan prispolitiken påverkas kraftigt av lokala skatter och tullar. När så är fallet, torde en lokal
prisanpassning vara nödvändig. Prissättningen får då ske på traditionellt sätt med hänsyn till faktiska kostnader,
konkurrens och efterfrågan. Detta kan dock leda till att i och för sig samma produkt kommer att inta platsen som
massprodukt på en marknad och statusvariant på en annan. Framträder denna skillnad alltför tydligt kan det verka
frustrerande på de konsumenter som rör sig mellan länderna och därvid lägger märke till priset och produktens image
på olika marknader. En internationell eller rent av multinationell prispolitik kopplad till produktens marknadsmix i
övrigt är då att föredra framför kraftiga avvikelser i pris för exakt samma produkt i en internationell miljö, där
konsumenternas rörlighet ökar allt mer. Internethandeln har ökat konsumenternas möjligheter att jämföra produkternas
priser och egenskaper i ett stort antal länder. När det gäller produkter som kan sändas med post eller kurirföretag som t
ex UPS ökar kraven på prispolitiken.
För producentvaror som marknadsförs till internationella eller multinationella företag, vilka är vana vid att själva
importera råvaror och exportera viss del av sin produktion, ökar kraven på en likformig prispolitik. Avvikelserna i pris
mellan olika marknader bör därför i stort sett endast motsvara de skillnader som uppstår på grund av att kostnaderna
varierar från marknad till marknad när det gäller tullar, skatter och transporter. I annat fall är riskerna stora att
företagen importerar från den marknad, där produkterna är billigast.
Stora företag tillämpar en systematisk internationell inköpsverksamhet, international sourcing, som innebär att man
inte nöjer sig med att begära anbud från inhemska tillverkare och lokala agenter utan att man också aktivt söker direkt
kontakt med tillverkare världen över av de råvaror, komponenter och andra detaljer man behöver för sin produktion. I
sådana fall blir givetvis kraven på enhetlig prissättning ännu större.
5.6 Svar till frågor i början av kapitel 5
Försök till svar på de inledande frågorna om marknadsmixens anpassning:
1. What differences in the arguments of a product needed in mass communication, and other advertising sales to
countries where the product at different stages of product life cycle?
Argumenten i annonserna måste anpassas efter kundernas medvetenhet om att produkten finns, kundernas kunskaper
om nyttan med att använda produkten och hur produkten ska användas. För helt nya produkter på marknaden krävs
mycket information, för gamla välkända produkter enbart en påminnelse om att produkten finns. Kraven på
anpassning av argumenten är stora.
2nd What could be the cause of failure when a product is introduced on a market-where the product group is new and
the competition does not?
Orsakerna kan vara flera, bl a att kunderna vill inte binda sig för ny teknik från en leverantör när alternativ inte finns,
kunderna inte förstår nyttan av att använda den nya produkten, eller att marknaden inte existerar inte för denna typ av
produkter.

3. Why it may be necessary to build a service organization of an export market for its own service organization is not
needed at home?
Domestically, a number of independent small businesses build an efficient service. In the new market is no such
company, or it would take time to develop their skills for servicing of the new product. It is therefore in any case in its
early stages is important to establish its own resources to provide customers with adequate access to care.
4th How big the chance of success with the establishment of a new well-developed market with competitors who offer
a wide range when the export firm has only one product variant?
It is very difficult. The possibility that there is a concerted effort on the segments of the market where the new product
version provides major benefits in relation to what is already on the market.
5.Vilka factors should be considered in the creative design of a promotional message?
In particular, those factors that have to do with religion, culture and social traditions in the market account so that
"taboos" are not violated. In addition, all arguments, symbols and pictures that can cause severe offense avoided while
it comes to attracting attention, and then those images and symbols effective terms of being able to balance.
6th Can be used in television commercials with the dubbing of the sound?
Hardly. Production of new commercials for the current market is usually preferable, despite the cost.
Task
1. Present five examples of differences in ad design and / or argument for buying a product that is sold in several
countries. Management: select a number of foreign periodicals in the library and look for ads for products you
recognize, then study the ads and advertising in Sweden for the same products.
Praktikfall
Indra AB. Internship The case deals with export and marketing of ready meals to Germany.

6 Pricing for international sales
The goal of Chapter 6 is to be able to answer the following questions:
1.Vilka rules, national and international, may need to be taken into consideration when pricing?
2nd The company has the freedom to put whatever price they want on a new export market independently of the prices
they charge in other markets?
3rd Are there opportunities to protect themselves against commodity price changes on offer?
4th The benefits normally available to the company selling it with tiered pricing may also apply for international
pricing?
5th If the company is able to obtain some form of financial aid in a country where in one of its factories manufactures
a product may have implications for the pricing of its products?
6th Is the adjustment of domestic prices in a global company a good method of transferring profits to the company
selling it?
7th Why can not a global company always price their goods in one currency, eg U.S. $ or euro?
A few more questions to be answered.
How will the price be?
What methods can guide the pricing of a foreign market?
How are our intermediaries in other countries of our price contract?
When is a small price considered dumping?
Should taxes and tariffs influence the price?
How can the price change in cost increases over the delivery time?
6.1 The price of competition
Price as a competitive tool occupies a central role in any advertisement. For supplies of standard price sensitivity is
higher than for specialized goods and services.
The bulk of world trade is in goods of more or less standardized in nature. For these goods, therefore price sensitivity
is high. This particularly applies to raw materials, fuels and intermediate goods of various kinds, but also for finished
goods can be more or less equivalent substitutes exist. Price sensitivity is high for a significant share of world trade.
For the smaller part of world trade, which includes specialized products of high technical quality, or with special
design, the price of secondary importance. It is rather the qualitative characteristics that are crucial. Goods coming
from foreign countries are often associated with negative expectations. There is some risk that a continuous and stable
supply of goods can be compromised in various situations, such as war, strikes or other external conditions, neither the
seller or the buyer's control. For goods of comparable quality, it is therefore necessary to offset these risks through
lower prices than domestic goods.
Price Benefits must therefore be made as soon as the product is not superior to domestic goods in another attractive for
the customer. For many companies, the ability to provide preferential price offers their primary means of competition
in international marketing.
The possibilities of using other means of competition is often less in international marketing, depending on the poorer
knowledge of the market and the difficulty of adapting a product market so that it receives the same features as locally
manufactured products.
Pricing as a competitive tool is therefore of utmost importance for a wide range of goods in international marketing. It
gives the right used, both a satisfactory gross margin as a high turnover. The price can be set by a decision of a number
of monetary units per unit of a product or service. The difficulty in setting the right price for international sales is
basically the same as for domestic sales. Knowledge of market and customer needs and options, however, is smaller
and sometimes completely absent, and thus increases the difficulty of getting prices right.
The price to the final customer can not as easily maintained and controlled at the international sales when the goods
pass through a series of intermediaries in the form of agents, distributors and subsidiaries and sometimes retail major
wholesalers and retailers.
The pricing policy is influenced by the company's goals. The objective is to maximize profits according to classical
economic theory or other goals, such as increased market share and market growth? The complexity of the strategy for
growth, with different priority targets at the different stages of a company's expansion, the permit price decision
becomes much more complicated in international sales.

To put a price on the domestic market, where only one market segment are up to date, has the economic theory of a
clearly defined model. The price is under this set so that marginal revenue is equal to the marginal cost of the last unit
sold.
FIG
Figure 6.1 The theoretical model for the pricing of a monopoly.
The price is determined by supply and demand. This is true in a market situation of monopoly, ie only one seller and
many buyers.
For sale in several markets, the situation is complicated by the fact that the company regularly works with a supply
curve is determined by the manufacturing takes place in a factory and the disposal takes place in multiple markets
with different demand. Theoretically, the company's total profit increase on higher prices charged in the domestic
market and a decrease in the export market. The overall higher volume leads to lower manufacturing costs, resulting in
a gross margin that increases with each unit assigned to the domestic market and partly by a lower manufacturing cost,
partly through higher prices. On the export market is obtained, perhaps a gross margin lower than the former on the
domestic market. But a larger volume in the domestic market may force price cuts, so the total gross margin will be
greater for exports and price differentiation between markets.
For international sales, where several markets are processed, it becomes difficult to use model. The picture is further
complicated if the manufacturing is done in several factories with different cost structures. In such a situation will be
the best manufacturing division between the various factories of the volume that gives the same marginal cost at the
various factories. The price may be determined by each market's own terms.
6.2 Pricing of the product
When exporting companies can, in principle, apply the following methods to price the product:
1. The price adjusted to the export market, so-called market price.
2. Normally, domestic prices apply to mark-up for their export costs.
3. The price is related to the expected turnover, the so-called market share.
These methods will be described as a number of different situations and conditions that complicate the pricing of
international marketing.
The first method, the market price, places the company in its pricing in relation to various intermediaries or its own
subsidiaries on the foreign market puts such a price to the final price to the customer at the same level as competitors.
This pricing policy is essential in situations where there is a market. Such an adjustment of price, of course, requires
knowledge of the current market price. This method can be difficult to apply in cases where contacts with the market
is less good, for example, when selling through an agent or directly to the final customer.
The second method is that it applies to the normal domestic price and makes a mark-up for the increased costs for
exports. The price to the customer at the foreign market will consequently its normal price of domestically-plus for the
company's increased costs in terms of product adaptation, packaging, customs documents, payment documents, etc. all
under the supply and guarantee conditions for the sale. Customers can self-will have to answer for a significant
proportion of freight, insurance, customs and repatriation costs. A variant of this method is that rather than rely on the
manufacturing costs and make the mark-up for other costs and profit.
The advantage of this method is that the level of profits on export sales are not reduced by any additional costs taken
into account in the calculation, but the opportunities to make better business organizations, are not.
The third method is that it calculates the price is expected to produce the desired turnover in the foreign market, a
pricing policy aimed at effectiveness in terms of the desired turnover, occupancy in the factory or market share. This
form of pricing typically require a good knowledge of the market or bargaining with a few customers who can buy all
the volume you want to remove.
The strategy the company wishes to apply and the methods can be used to set prices at the international marketing of a
range of factors and the market situation in each market.
The most important factors to consider are:

1. Delivery Terms
2. delivery conditions
3. duties
4. taxes
5. antidumping rules
6. discounts
7. Price control
The market is obviously crucial for sales opportunities and pricing.
6.2.1 Duties
Duties based on several products in international trade. Exceptions apply in different countries for a small number of
products, which are completely free. In the various market blocs, whether they are customs unions or free trade areas
are most goods duty free; occasional exceptions occur.
The duty is normally calculated as either the value or quantity of customs duty on weight, volume or number of units.
When duty payable on the quantity, there is no reason that pricing should pay particular attention to duty. Delete the
other hand, the duty of certain percentage of the value of the product, it is in principle possible to reduce customs costs
by setting a lower price on the product at the sales from the manufacturing company to the company that sells the
product on the export market. Is it to proceed in this way, one can avoid the high tariffs which should normally be the
case. That this method can easily be suspected by the customs authorities, especially if the products are for use in a
subsidiary for its own account or for resale. Mark-up may then be adjusted in the subsidiary proportionately and profit
arise in the foreign subsidiary rather than in the manufacturing company.
However, if exporting to independent intermediaries or to the final customer, is this sort of thing less likely. This
would only give the other party a more favorable price than what is necessary. Even in this case, however, a process of
differentiation of the product's export price be of benefit to the exporter, for example, on several goods, for which
different rates apply, sold to same buyer. Exporter and importer can share in the benefits resulting from this procedure.
Customs authorities are well aware of these opportunities. They therefore engaged in a very careful control of the
values assigned to the goods in the invoice are correct and not manipulated. This does not now that such manipulation
sometimes successfully used with all the risks it poses to the exporter. Detect such errors, the company is marked for
long time. It may be difficult to quickly get their goods tariff treatment and this may lead to significantly outweigh the
benefits that you may occasionally prepare themselves by manipulating the tariff values in their bills.
In some countries, customs specific expertise who travels around and go through the importing business accounts. It
then checks that the cash that was paid to foreign suppliers, meets the invoice values declared at the customs
clearance. Such is the case in eg Germany. In some other countries apply a procedure requiring consular invoice or
price list on the exporting company's products.
A consular invoice is issued, usually on a special form, provided by each country's consulate or embassy. The
information contained in the invoice is reviewed and certified by the importing country's consulate in the exporting
country.
Before approval, the consular authorities take more or less comprehensive studies of price levels and other conditions
that they have a mandate to review. It may be difficult for a consulate to make more than a formal investigation, and
some hire consultants because of the control of prices, qualities and quantities in relation to imports.
6.2.2 Taxes
In some situations, companies may be tempted to charge their own sales on the foreign market higher or lower prices
than matched by the actual costs exactly the same way as in the case of duty. With regard to the tax are the conditions
for such a procedure should be attractive to:
1. tax in the foreign country differs from the tax in the exporter's home country and
2. profits can be between subsidiaries and parent companies without additional tax burden, or with as low an
additional tax burden to the tax total is lower.
In some situations, the interest to avoid high tax burden may be directly contrary to the interest to avoid excessive
customs. The company is then in the ass between two WISP OF HAY: To avoid customs or taxes. Figure 6.2 illustrates

this situation.
The tax authorities are aware of the opportunities available to the invoices indicate different prices in order to avoid or
to obtain more favorable taxation. The tax authorities therefore controls the price differences remain within allowable
limits, partly by controlling the price ranges from its customers in different countries and by comparing with the
potential market. Price Discrepancies are generally acceptable as long as they do not deviate from the prices at which
transactions carried out with completely independent company. However, there may be a matter of difficult trade-offs.
A product of nature or mode of output range can of course instead of being discarded have sold at heavily reduced
prices to at all be sold. But the tax and customs authorities are vigilant. Sometimes they disagree on the value of the
product.
FIG
Figure 6.2 The tax and customs authorities estimated prices may differ more or less from the real prices. If therefore in
a situation such as increasing the price invoiced to avoid high taxation of the parent company, this procedure can result
in higher tariffs on departure from and / or entry into a subsidiary.
6.2.3 Antidumping Rules
Several countries apply special rules when dumping can be expected, the so-called anti-dumping rules. Those rules
provide that a product which is quoted at a price of customs administration is perceived as too low to be dumped can
be burdened with additional import taxes or other measures to eliminate the injury to the low price may cause other
companies selling in the market.
In order to regulate the international trade after World War II met with the leading industrial nations of a general
agreement on trade and tariffs, the GATT (General Agreement on Trade and Tariffs). The agreement contains certain
provisions on the way to act against dumping. For the GATT states can impose an imported product antidumping
duties required that the domestic industry is injured by imports. If so, it assumes an anti-dumping duty fee in addition
to the product. The fee may not exceed the dumping margin, which usually represents the difference in the export
price and the price of the exporter's use in their home country or the price of the importing country accepts without
classifying the low export price dumping. Methods for calculating dumping margins vary from country to country.
Even under other trade agreements are rules for dumping.
In practice, antidumping duties on most exports to the United States and Canada. Criteria for dumping on exports to
the United States is to:
1. price is below the domestic price and
2. U.S. industry injured by imports.
These rules have given room for broad interpretations. Customs authorities have in several cases, exporters have
caused problems. The U.S. authorities also tend to measure the prevalence of government subsidies to the exporting
company of great importance, in deciding whether dumping exists. Governmental investment grants and other forms
of industry support can be an important and difficult to export to the United States.
6.2.4 Discounts
The use of discounts can sometimes be a method to differentiate the price but it can sometimes pose a series of
complications.
Discount ring with different rates to different customers in a given country, which carefully controls the customs
values and watchdogs for hidden profit repatriation does not occur, can cause problems. To customers in countries
with meticulous control of the customs value should be used with caution discounts. Instead, a stable price used to
reduce the risk of lengthy and difficult discussions with the customs authorities. For large and complex supply may be
discussion about which parts of the delivery rebate for high and low tariff rate. The risk of this kind of problem is
large at the ad valorem duties, but not in quantity duties.
6.2.5 Price Control
The existence of price controls in the importing country may require special consideration in the formulation of

pricing policy. Price controls may mean that a product must be assigned a much lower sale price to the customer than
it exports and intermediary (agent) intended to charge.
The price control authorities may limit the margin here, and also prevent price changes because they must first
approve them. The product could be price controls be sold to a too low price and be regarded as a cheap version on the
market, while its quality and price justified it as a status, as in other markets. The price control authorities usually are
forced to accept the import price as a base for calculating the price to the customer, but among others in Sweden, there
have been the exporter's price increases are not approved for example, devaluation and price freeze. Typically, the
price of the supervisory authorities have to accept the import price in calculating the price to the customer and by
using the desired market, the export price is calculated.
What methods and principles for calculating the maximum price to the customer that the price of the supervisory
authorities apply should be verified before quotes and deliver a product. Adjustments are easier to do before any prize
pledges made. The procedures and practices relating to price adjustments in the future should be monitored in as early
as possible so that if possible, take into consideration the difficulties ahead for the price adjustment that may arise. In
some countries, price adjustments take considerable time, up to several months and in the meantime, the sale may be
made to the previously loss-making price, if you do not want to disappoint customers and provide them with
problems. Severe disturbances in the relationship with customers can occur, if they do not get the supplies they need
for their activities.
6.3 Price strategies in different market situations
The right price is always the highest price the customer is willing to pay. The requested price may not be lower if the
best outcomes sought. Considerations on customer relations in the short and long term that may lead to lower prices
charged. At the international marketing and price negotiations with customers in distant markets, it may be difficult to
know what options the customer has and what prices the customer usually have to pay for similar goods.
Example
After several days of fierce price negotiations with suppliers are in Madrid, José, returning buyers Kalle Svensson in
Stockholm late Friday night to be at home with family during the weekend. The negotiations eventually led to an
agreement, and Donald is happy. He was José lowest price, it said José myself to him. Monday morning arrival of a
message, which tells José that he lowers the price by 10 percent as thanks for the nice talks. Donald announced that he
cancels the order.
- Why cancels Donald warrant?
- José we shown that you can not trust him.
- Why lower the price by more than ten percent? Mr Donald would show that it was he who won the hearing. He did
not exploit their power to reach a settlement, and Donald was such a pleasant acquaintance. Mr Donald would show
that he won while giving him a better deal.
That at the negotiations and discussions are not always easy to come to the other party's actual situation, this example
shows.
In addition to knowledge of the market and prices have also costing up to you to decide which markets and customers
is a priority for the best cost-benefit to be obtained.
Practical Pricing
The market price applied with some adjustment, whether the product should be given the nature of exclusive luxury
product and low cost alternatives, some attributes of the product, packaging and advertising needs, of course,
consistent with the chosen pricing strategy.
Another way to determine the price is to base a calculation of costs and making some mark-up for profit, and
incidental expenses. This method is often used even though it is fundamentally flawed.
The price should always be based on what the customer is willing to pay and not on production costs. Another thing is
that the high cost of production can sometimes be an argument to defend a price to the customer. Better would be to
argue on the basis of the utility customer of the product and the benefits it provides. The latter requires knowledge of
the customer's situation and the needs that the product must satisfy the customer. Knowledge of the characteristics
which the customer attaches value may be inadequate. Negotiations with customers in difficult situations that are
different than what is usual in the domestic market do not have pricing simpler.
Some special situations to consider in pricing are:

1. introduction of a new market
2. market segmentation
3. assortment composition
4. counter-trade
6.3.1 Introduction of a new market
At the introduction of a new product in a market is pricing decisions depend on the following conditions:
1. new product to existing customer
2. new customer
3. competitive situation
At the introduction of a product to an existing customer are relatively high potential to exploit the previous
relationship to get information about his circumstances and thereby determine what may be negotiable space, and the
characteristics and performance that customers appreciate. For the pricing of a new consumer products introduced in
the market can Mickwitz model, figure 1.1 for the competitive funds relative power during the various stages of
product life-cycle guide. It is important to note that the product life cycle varies from country to country and from
market to market and product lifecycle of the product and not the company's own brand or product variant. What is a
new product and a new variant can be difficult to determine.
Example
The introduction of Wasa crispbread in Germany is an example of how the product life cycle may be an appropriate
method to describe and analyze the introduction of a product in a new market. Rusks were a completely new product
on the German market. Choice of market segments, arguments, and price was so high priced the product at twice the
price of domestic market. As a high purchasing power segment were young, unmarried working women, who also
judged to be susceptible to arguments about high-fiber diet and low calorie. The product is exposed as an exclusive
product by selection of exclusive environments in which breaking the bread was, for example, at finer dining and
parties, along with other exclusive products to fine cheeses and tropical fruits.
Only several years later began the broadening of the market and crisp bread sales will also go to families with children
and as a standard part of the diet. Although economic arguments were developed in Germany.
6.3.2 Segmentation of the market
International marketing provides automatic access to some segmentation of the market and the opportunity and
sometimes the requirement to use different price on the product in different markets. The possibility that the
breakdown in different country markets to price differentiation can not be overestimated. Customers who travel across
borders may find it frustrating and not credible to find the same product at different prices in different markets.
It is therefore appropriate to combine sales in different countries with other forms of differentiation, so that the
customer does not identify the product, if sold at different prices.
Differentiation of a product will normally be one or more of the following actions:
1. product variants
2. various brands
3. equal distribution channels
4. specific designs for different customer groups by product
5. various large guarantees.
By combining some of these various methods for differentiation of the sale in different countries can be more effective
segmentation of the market maintain and price comparisons more difficult for the customer. It becomes easier to apply
different rates without the risk of larger quantities of the product "illegally" transferred from one market to another
consumer or commercial. In particular, if traders are price differences large enough for an "illicit" trade in the product
across markets lead to significant revenue losses for the manufacturer and the retailer engaged in the sale.
A warning for the price differential is justified, there are always commercial pirates who try to exploit price

differences. Consumers can also sometimes evade taxes and duties as they travel freely in the conduct of certain
quantities across borders. For perfumes are the consumers of imported quantities of a significant proportion of the
overall market.
6.3.3 counter trading
Counter-trade is not only a way to pay, but also a way to market goods and services internationally. Which payment
may counter trade deliveries and various forms of
barter transactions to be complicated. The difficulties with which the counter-trade, barter, offset, buy-back and other
forms of Mother and agreements are linked can be many and varied and it makes them difficult and uncertain. This is
not the place for a detailed review of various forms of barter trade agreements or their law. This is instead an attempt
made to analyze some aspects of the marketing terms of pros and cons of counter-trade. Counter-trade used here as a
generic term for the entire contract area is countertrade.
When negotiating the purchase of goods, often of complex nature, such as a full installation of both machines as
services, are often required to receive payment shall be made up of other goods and services from the contract. The
buyer wishes through this approach persuade the seller to help dismiss the buyer's products or the buyer country slow-
moving products or products for which the buyer has not yet been reprocessed any market channel. It can also be the
case if the purchaser wishes to develop its activities and seek support for this by the seller. The latter has been a
method that Saab used in the sale of military aircraft to various countries, to contribute to industrial development and
employment in the purchasing country; see below quotes from Saab AB's Annual Report 2003, page 14.
"Often requires commitment from the selling father, for example in the form of transfer of technology or different
forms of industrial jobs.
These commitments are important, as regards the conditions for establishing a long-term good relationship with the
customer. ...
Saab, through its networks and contacts to offer an industrial cooperation on a commercial basis. It provides long-term
positive impact on the purchasing country, but also new business opportunities for other companies.
The buyer in this way requires the seller to commit to finding customers for products, which he normally does not sell,
and to him unfamiliar markets. A seller, usually a company from a Western country, who hits a counter-trade
agreements need to fulfill this sales mission to close a considerable effort to sell products, and often at a lower price
than the market price for the relatively rapid sell the products.
For his one-time charges and discounts seller need to attract either a low price in the offsetting of counter-trade
product or increase the price of their exported goods to the customer.
The fact that motaffärer often-recurring means that any market channel never reprocessed and accrued expenses to
dispose of the products charged to each business.
In counter-trade transactions, but perhaps a customer values the product is so positive that more business can be
conducted with the customer. Abandoned the search and contact costs can then be distributed in a wider range of
shops. The cost of each business can be significantly lower when it takes place between parties known to each other.
By establishing solid customer and salesmen relationships, dialogue also about the product's adjustment to take place,
which means that the buyer in one country and the manufacturer in another country can produce goods of a quality
that commands a higher price. Ideas for product development can also be obtained in larger scale on a stable customer
relationship can be built with the help of intermediaries in a stable market.
How much then is a stable market channel host compared with temporary buy? A general answer is difficult to
provide. For commodities, the benefits to be small while those for the industrial complex would cost mellan15 and 25
percent of the vendor's product value, a real help in the buyer's sales effort.
When pricing a product in which counter-trade requirements can be expected later in the hearing must be at the first
offer the possibility of a possible counter-trade requirements into account. It may be impossible to later raise the price
as much as needed to manage and sell the goods re-counter trading. Typically, the cost for counter-trade agreement for
approximately 15 to 30 percent of the contract sum, and that the deal should go together, this may be covered by the
price. To more accurately determine what the cost is for counter-trade, can not determine before the agreed upon
which goods and with the proportion counter trading goods shall be included as payment in the affair.
Example 1
Spare parts can largely be priced by the same prices apply to the domestic market as export markets, prices are

converted with a factor for the entire range of spare parts. This can be a proper pricing strategy for the markets near
the home market and with a similar structure. For more distant export markets, wages, salaries and other conditions
give rise to certain parts of 'light' can be produced
locally at much lower costs.
Other elements may exist as standard products, and certain parts can, for example because of material grades to be
prone to use other than as spare parts, so they could be priced higher. Differences in the market of the kind described,
it will also spare parts can be necessary at the individual level into account both the existence of piracy use for other
purposes. Normally, the spare parts sales of profitable, so there is too much concern about the sale of certain parts
more than the injury rate. Men en varning är befogad. Det kan visa sig att om försäljningen blir alltför stor kan tull
eller andra hindrande åtgärder komma att införas. Prisfördelen kan bero på importrestriktioner för råvaror till den
aktuella reservdelen eller för delen som sådan när den importeras under sitt eget tullvarunummer och inte som
reservdel till maskin X.
Example 2
Saab - Gripen. Att lokal pirattillverkning av delar utgör ett problem kan vara lätt att förstå. Lokalt tillverkade delar
som försämrar produktens egenskaper eller berövar lokala återförsäljare lönsam försäljning utgör alltid problem. En
positiv åtgärd vore därför att lokalt starta egen eller legotillverkning av de delar som lokalt kan tillverkas till lägre pris
än i hemlandet. Konkurrensförmågan skulle kanske också kunna ökas i koncernen som helhet om sådana delar som
kan tillverkas på en lokal marknad också kan användas för hela koncernens behov.
6.3.4 Produktrelaterade hänsyn vid prissättning
Det kan finnas anledning att kommentera pris- och köpbeslut beroende av produktens egenskaper och köpsituationen.
Variationer i inköpsbeteende och de värderingar som styr inköpsbesluten finns mellan olika kulturer och länder samt
mellan olika grupper av inköpare beroende av inköpssituation och ekonomiska och organisatoriska förhållanden. En
vanlig uppdelning av produkter med hänsyn till inköpssituation och produkt är följande:
Consumer goods Industriprodukter
Consumption goods RawmaerialShopping goods Components
Capital goods Additive products (welding roods)
Machinery
Factories
För produkter som säljs till konsumenter kan låg köpkraft ha stor betydelse för prissättningen. För att
över huvud taget kunna köpa kan konsumenten kräva att produkten säljs styckevis i stället för i hela
förpackningar och utan att styckepriset höjs på det sätt som vi är vana vid i Sverige. Detta gäller kanske
främst utvecklingsländer men traditionen kan vara lika viktig som priset för konsumenten inom vissa
varuslag.
Finansieringen kan för större kapitalprodukter vara viktigare än priset för att kunderna skall kunna köpa
dem och utan en distribution som kan klara finansieringen går de ofta inte att sälja. Detta gäller i stora
delar av världen och inte minst i många industriländer där konsumenterna visserligen har en stor
köpkraft men av tradition vant sig vid att köpa vissa kapitalvaror på avbetalning. Priset på vissa av
dessa marknader kan behöva sättas så att en del av kapitalkostnaderna täcks och inte tas ut som
kreditkostnad. Samtidigt finns det länder där kontantköp är det vanliga. Kunderna sparar först själva
och köper sedan kontant.
Inköpsvanor och inköpsbeteende kan variera mycket från land till land. Ett exempel är den
prisdifferentiering som tillämpas av amerikanska varuhus. Källarvåningen är där ofta en
lågprisavdelning som säljer samma varor till lägre pris än högre upp i huset; det anses inte fint att

besöka källaren.
För industrivaror kan inköpsbesluten vara olika hårt centraliserade. Särskilt inom stora företag med
professionella inköpare görs nästan alltid prisjämförelser, varför priset måste sättas i relation till
konkurrenternas pris och kvalitet. I mindre företag kan ofta inköpsbeslut tas mindre formellt och utan
att konkurrerande offerter och priser jämförs. Det gäller t ex när företagets ägare själv köper
kontorsmöbler till sitt eget kontorsrum och ny utrustning, där kvalitet och personlig försäljning har stor
effekt. Praktikfallen HADAK och Round Office är exempel på detta, Praktifallen finns på
Studentlitteraturs hemsida för denna bok.
Vid försäljning av maskiner och anläggningar är det inte ovanligt att avsevärd tid förflyter från
offertdagen till leveransdagen. För att skydda sig mot prishöjningar på ingående råvaror och arbete är
det vanligt att prisangivelserna är relaterade till olika kostnadsindex för vissa angivna procent av den
totala leveransen. Det levererande företaget behöver inte räkna med skydd för kostnadsändringar i sin
egen prissättning och kan genom detta förfarande lämna en offert där kunden i stället får ta risken
medantingen en prisökning eller en prissänkning beroende av indexutvecklingen fram till
leveransdagen. Att koppla priset till olika index är vanligt. Detta finns särskilt reglerat bl a i
kontraktsblanketten ECE 188 (se nedan), som utarbetats av United Nations Economic Commission for
Europe och som är en allmän leveransbestämmelse som används i relativt stor omfattning i
internationell handel.
Prisrevisionsklausulen enligt ECE 188
P1 = P0/100 [ a + (b x M1)/M0 ..... + (c xSl/S0)]
P1, Det pris som kunden skall betala efter justering av index.
P0, Det pris som avtalats och som gäller vid angivet datum.
Från detta datum skall omräkning av index ske.
a, b, Angivelser för hur mycket av priset som skall vara fast.
c, Justeras med hänsyn till index för material respektive
lönekostnader.
MO, Index för material vid avtalets början.
M1, Index för material vid avtalets slut.
S, Löner och för dessa gäller samma justering som för material.
För såväl material som löner finns möjligheten att dela upp dessa komponenter i flera delar (bl, b2, b3
etc resp cl, c2, c3 etc).
Vid användning av ECE 188 eller andra standardkontrakt är det viktigt att fylla i indexklausulen, vilken
inte får någon effekt om den inte är ifylld.
Som framgår finns det möjlighet att fördela leveransen på de olika ingående varor för vilka det finns
index. Genom en noggrann uppdelning kan hela risken för kostnadsförändringar övergå till köparen,
om köparen godtar klausulen och gjorda preciseringar.
Vid många stora leveranser är det inte ovanligt att ägare eller företagsledning, särskilt i länder med svag
valuta och viss kapitalflykt, önskar en del av ordervärdet insatt på bankkonto i något industriland. Det
kan även förekomma att detta framförs redan innan offert begärs så att säljaren skall kunna beakta det i
sin kalkyl. Detta gäller dock ett gråzonsområde, där det är viktigt att veta var gränsen mellan tillåtet och
otillåtet går. Det gäller att känna köparlandets lagstiftning och affärspraxis som kan vara en avvikande
från lagen. Som utländskt företag kan risken att bli använd för att statuera exempel vara större än för ett
lokalt företag, varför försiktigheten bör vara stor så att inga misstag görs.
Den svenska lagstiftningen lägger inga hinder i vägen för betalningar av detta slag, men svenska
myndigheter tolkar uppenbarligen detta olika. Även om ett företag enligt svensk lag inte döms i Sverige
kan en undersökning kanske genomföras och information utväxlas med myndigheter i det andra landet,
där transaktionen är straffbar även om den är förenlig med praxis. Den svenska lagstiftningen skyddar
inte med säkerhet svenska företag i andra länder även om de inte kan straffas i Sverige. Svenska skatte-
och tullmyndigheter samarbetar i ökad utsträckning. Utbetalning av ersättningar och provisioner kan
alltid bli föremål för skatte- och tullkontroll och det kan senare visa sig att beloppet nått mottagare som
inte borde haft ersättning enligt köparlandets lagar.
Lagstiftningen i USA förbjuder uttryckligen amerikanska företag att betala ersättningar till icke
behöriga mottagare. Även andra företag som tar en del av varorna i en leverans från amerikanska

dotterbolag bör vara vaksamma så att inte de amerikanska reglerna åberopas.
Om agenter, återförsäljare, importörer eller handelshus, som normalt medverkar i exportförsäljningen,
på ett obehörigt sätt betalar ersättningar för tjänster som de köper i sin affärsverksamhet kan inte
exportföretaget lastas för detta. Även här bör dock viss försiktighet iakttas. Detta gäller speciellt om en
agent begär att provisionen på en affär kraftigt skall höjas för att affären skall kunna genomföra den och
det inte är helt klart att det rör sig om en omfattande provtillverkning och tester som agenten måste
genomföra lokalt för att kunna utvärdera maskiner och produkter. Tolkningssvårigheterna kan dock
vara stora på grund av svårigheten att få säker information. Några andra regler för hur den enskilde
exportören skall agera kan inte ges här än att svensk lag självklart skall följas.
6.3.5 Prisbeslut baserade på kalkyler
Prissättning baserad på hemmamarknadspris eller tillverkningskostnader och alla med exportförsäljning
förenade kostnader samt med ett vinstpålägg som även tar hänsyn till den risk som exportförsäljning
medför är en metod som går att tillämpa även när kännedomen om marknadspriset på den aktuella
marknaden är obefintlig. Om man sedan får en order är en annan sak.
Att bestämma vilka slags kostnader som skall tas med i beräkningen av priset vid export är den första
delen av arbetet. Den andra är att ta fram aktuella kostnadsuppgifter för att kunna addera dem till en
totalkostnad på vilken ett eller flera pålägg för vinst och risk görs.
Kostnaderna vid export kan fördelas i fem huvudgrupper:
1. manufacturing costs
2nd försäljningskostnader
3rd leveranskostnader
4th betalningskostnader
5th garantikostnader
En grupp som vanligen observeras är leveranskostnaderna i form av frakter, tull etc. Viktigt är dock att
gå igenom hela kostnadsstrukturen så att inga kostnader glöms bort att man sedan i det praktiska arbetet
hoppar över sådana som i det egna företaget är av mindre intresse är en annan sak.
Tillverkningskostnaderna kan vara annorlunda och vanligen högre vid export. Här ingår kostnader för:
1. konstruktionsarbete för att modifiera och anpassa produkten eller vissa delar av den till lokala
standarder och säkerhetskrav
2nd material och komponenter för att motsvara köparkraven
3rd material- och komponentbyte för att uppfylla EG:s ursprungsregler eller USA:s (Wassenaar
Arrangement, tidigare COCOMs) exportembargo av högteknologi
4th kontroll och dokumentation under tillverkningen
5th särskilda prov och leveranskontroll före skeppning
6th emballage och skydd av varan under transport
Vid leverans av standardmaskiner brukar inga av ovanstående kostnader uppkomma men en kontroll är
nödvändig.
Försäljningskostnaderna är vanligen betydligt högre vid export på grund av längre resor men även på
grund av att det krävs mer arbete för att dokumentera kundens krav. Följande kostnader bör beaktas:
1. rese- och traktamentskostnader, representation. Merkostnader för egen och kundens personal
2nd dokumentation av kundens krav och önskemål
3rd underteckning av kontrakt, eventuell middag och presentation av beställningen
4th provdrift och teknisk utvärdering hos kunden.
Kostnaderna för försäljningsarbetet kan bli betydande. Om de skall tas med i kalkylen eller inte beror
på vilka försäljningskostnader som ingår i kalkylen för hemmamarknadspriset. Kan dessa anses lika
stora eller täckta av de gemensamma försäljningskostnaderna?
Leveranskostnaderna är ofta betydande vid export och kan uppgå till åtskilliga tiotal procent av
varuvärdet. I vilken omfattning de behöver beaktas beror på enligt vilken leveransklausul offerten och
prisuppgiften lämnas, men även i vilken omfattning säljaren skall tillhandahålla dokumentation och
intyg för varans utförsel, införsel och transport.

De leveransklausuler som vanligen används inom tillverkningsindustrin är Incoterms som utarbetats av
Internationella handelskammaren, ICC. Inom andra branscher, t ex skogsindustrin, används vanligen
andra leveransbestämmelser.
Leveransbestämmelserna reglerar var godset skall levereras, vem som bär risken om godset skadas eller
försvinner och vem som alltså lämpligen bör skydda sig genom försäkring, vem som betalar frakt och
skaffar transportmedel samt vem som ansvarar för transporten.
Leveransbestämmelserna är delvis olika beroende på vilket fraktsätt som används. Stor noggrannhet bör
iakttas så att rätt leveransklausul används, då ansvarsfrågan i annat fall kan bli annorlunda än man tänkt
sig och skyddat sig för.
Säljaren får alltid på egen bekostnad tillhandahålla de dokument som krävs för att godset skall kunna
tas om hand av köparen eller en transportör.
Vid alla leveransklausuler utom vid landsvägstransporter innebär klausulerna F.O.R./F.O.T. att säljaren
skall tillhandahålla alla dokument för utförsel. Därutöver är säljaren alltid skyldig att hjälpa till att
skaffa alla dokument som krävs för import på köparens bekostnad om det inte redan framgår av
leveransvillkoret att säljaren skall svara även för denna kostnad.
Exempel på övriga kostnader som måste beaktas och i tillämpliga fall tas med i beräkningen av priset
är:
1. export- och importdokument
2nd Packaging
3rd speditionskostnader
4th hamnavgifter
5th transportförsäkring
6th freight
7th hamnavgifter, hyra av lagerlokal i hamn, försäkring
8th tullar
9th lastnings- och lossningskostnader
10.betalningskostnader
11th kreditkostnader, inklusive risken för kreditförlust
I vissa fall kan det innebära betydande arbete att få fram de rätta exportdokumenten. Vissa länder
kräver intyg på egna blanketter som måste köpas på ambassad eller konsulat. Besiktning och kontroll
av godset kan behöva ske för att intyg skall utfärdas, varvid avsevärda kostnader för behörig
besiktningsman kan uppkomma.
Speditionskostnaderna är ofta omfattande. Speditören kan åta sig hela administrationen för transporten,
inklusive intyg, försäkringar etc, och tar givetvis betalt för sitt arbete. Det är därför viktigt att noggrant
specificera speditionsföretagets åtagande och ersättning. Fraktkostnaderna kan bestå av många olika
delar beroende av transportvägen. Den besvärligaste är vanligen landtransporten i mottagarlandet.
Speditörer kan dock lämna pris i förväg. Vem som upphandlar transport billigast säljaren eller köparen
beror på vem som har den bästa förhandlingspositionen. Det kan vara lämpligt att be köparen
upphandla transporten även om säljaren skall betala frakten.
Beträffande hamnavgifter och terminalkostnader är stor försiktighet nödvändig. Det kan ta avsevärd tid
innan transportföretag som köparen anlitar hämtar varorna eller tills köparen löser ut dem vid
rembursleverans. Under tiden förvaras de på kaj eller i hamnmagasin som det kanske åvilar säljaren att
betala. Uppskattningen av kostnaderna blir ju då omöjlig. Det är inte ovanligt att hamnavgifterna efter
två till fyra månaders förvaring i utvecklingsländer överstiger varuvärdet och att varorna säljs på
auktion av hamnen. Köparen kan då vara importören som får varorna billigare än om han löst ut dem
enligt villkoren i avtalet.
Betalningar inom ett land kan normalt ske snabbt och säkert, medan de vid internationella affärer kan
vålla problem och orsaka merkostnader. Det förekommer även i stora industriländer som USA att
betalningar kan ta avsevärd tid beroende på dels lagstiftningen, dels banksystemet.
Betalning anses ju normalt ha skett när en check på beloppet överlämnats. Det kan dock ta avsevärd tid
innan beloppet kan gottskrivas det egna kontot, om banken inte vill göra det innan beloppet överförts
från den bank på vilken checken dragits. Att i betalningsvillkoren noggrant specificera var och hur
betalning skall ske är därför nödvändigt om man vill undvika onödigt dröjsmål och därmed förenade

ränteförluster.
Vid internationella affärer finns dessutom följande tre huvudtyper av risker som kan försena eller i
värsta fall medföra att betalning inte erhålls:
1. kommersiella risker
2nd valutarisker
3rd politiska risker
Mot alla dessa risker kan man i varierande grad försäkra sig. För svensk export är det vanligen
Exportkreditnämnden, EKN, som anlitas av företagen, men även såväl svenska som utländska
försäkringsbolag erbjuder sig att teckna försäkringar. Det kan löna sig att undersöka olika alternativ.
Kostnaden är vanligen 1 till 5 procent beroende på land och skyddets omfattning. Skyddet uppgår
vanligen inte till mer än 80 till 90 procent av ordervärdet, varför en viss risk kvarstår.
Vid försäljning till villkor som innebär kontant betalning och då kreditriskerna är minimala kan det
ändå vara viktigt att ta med ett rembursvillkor, särskilt om varorna är tillverkade efter kundspecifikation
eller utgör en ovanligt stor leverans. Remburskostnaderna är väl motiverade och så viktiga att de bör tas
med i priskalkylen vanligen 0,5 till 1 procent av varuvärdet samt en fast del.
Garantikostnaderna kan bli betydande beroende dels av tvingande lagstiftning i köparlandet, dels på att
resorna för att avhjälpa fel kan bli långa och många om lokal servicepersonal saknas. Det mest
omfattande problemet är den amerikanska produktansvarigheten, vilken det kostar mycket att försäkra
sig mot. Minimipremier om 50 000 till 100 000 kronor per år nämns. Men även kostnader för
bankgarantier om fullgörande av leverans kan bli kostsamma när kunden kräver leveransgarantier.
Kostnaderna för garantier och försäkring för garantikostnader kan bli betydande och i extremfallen så
stora att de omöjliggör export till vissa länder.
Av redogörelsen framgår att det kan vara svårt att förutse och beräkna alla de kostnader som kan
uppkomma vid export. Genom rätt utformning av avtalet med kunden kan vissa kostnader visserligen
elimineras men kunden brukar själv begära offert enligt vissa leverans- och betalningsvillkor för att
kunna jämföra olika leverantörers anbud.
6.4 Svar till frågor i början av kapitel 6
1.Vilka rules, national and international, may need to be taken into consideration when pricing?
Nationellt kan regler om prisstopp, eller på annat sätt lägsta pris behöva beaktas. Det kan finnas regler
om att priset i det enskilda landet ska gälla vid fabrik alternativt importhamn och att alla frakter inom
landet ska betalas av den lokale köparen.
Internationellt finns regler om dumping som måste beaktas.
2nd The company has the freedom to put whatever price they want on a new export market
independently of the prices they charge in other markets?
I princip så kan företaget sätta det pris de önskar men de internationella reglerna om dumping liksom
riskerna för att kunderna köper på andra marknader behöver beaktas.
3rd Are there opportunities to protect themselves against commodity price changes on offer?
De fördelar som normalt finns för det säljande företaget med differentierad prissättning - kan det
tillämpas även vid internationell prissättning?
Ja, det går att skriva in prisjusteringsklausuler med hänsyn till såväl råvaru- som löneutvecklingen
kopplat till en viss valuta och till ett index även i offerten.
4th The benefits normally available to the company selling it with tiered pricing may also apply for
international pricing?
Ja, men beakta att visa kunder uppträder i flera länder vilket kan påverka utformningen av
prisdiffrentieringen.
5th If the company is able to obtain some form of financial aid in a country where in one of its factories
manufactures a product may have implications for the pricing of its products?
Ja, konsekvenserna kan bli stora. Om konkurrenter i landet som importerar varor från företaget anmäler
företaget för låga priser till sitt lands myndigheter, kan antidumpingavgifter komma att tas ut efter
myndigheternas utredning. Att genom WTO få en sådan andidumpingavgift borttagen kan ta tid. WTO
kan i värsta fall finna antidumpingavgiften befogad och även kräva att priserna höjs innan
antidumpingavgiften tas bort.
6th Is the adjustment of domestic prices in a global company a good method of transferring profits to

the company selling it?
Knappast, även om det skulle fungera. Såväl skattemyndigheter som tullmyndigheter kan komma att
starta utredningar samt besluta om skatte- och tulljusteringar med hänvisning till justerade internpriser.
Stor försiktighet vid metodens användning är att tillråda.
7th Varför kan inte ett globalt företag alltid prissätta sina varor i en valuta, t ex US$ eller euro?
Kunderna vill oftast erhålla ett pris i sin lokala valuta för att kunna jämföra priser och slippa arbetet
med att skydda sig för valutafluktuationer. För vissa varor finns världsmarknadspriser i en av de stora
valutorna och det är inom sådana varuområden rationellt att följa praxis i de flesta fall.
But a warning is justified. It might appear that if the sale becomes too great, duty or other prevention
measures be introduced. Price advantage could be due to import restrictions on commodities to the
reserve component or element such as when imported under their own tariff commodity code and not as
a spare machine to X.
Example 2
Saab – Gripen (Jas). To local piracy of parts is a problem can be easily understood. Locally
manufactured parts that affect the properties or deprives local dealers profitable sales are always
problems. A positive step would be to start your own local or subcontracting of the parts can be
produced locally at lower prices than at home. Competitive ability might also be increased in the group
as a whole on the parts which can be produced at a local market can also be used for the entire group's
needs.
6.3.4 Product-related considerations into pricing
There may be reason to comment on pricing and purchasing decisions depend on product
characteristics and trade situation. Variations in purchasing behavior and the values that guide
purchasing decisions between different cultures and countries and between different groups of buyers
according to the purchasing situation and economic and organizational conditions. A typical breakdown
of the products according to the purchasing situation and the product is as follows:
Consumer goods Industrial
Consumption goods Rawmaterial
Shopping goods Components
Capital goods Additive products (welding rood)
- Machinery
Homes Factories
For products sold to consumers for low purchasing power have a significant impact on pricing. To
whatsoever to buy the consumer may request that the product is sold individually instead of in the
whole packaging and without the unit price increases as we are accustomed to in Sweden. This is
perhaps mainly developing countries, but the tradition can be as important as price for consumers in
certain types of goods.
Funding for the larger capital products to be more important than price to customers to buy them
without a distribution that can handle the financing, they often do not sell. This is true in much of the
world and especially in many developed countries where consumers certainly have a great purchasing
power, but has traditionally been used to purchase certain durable goods on installment. The price of
some of these markets may need to be set so that a part of the capital costs are covered and not charged
as cost of credit. While there are countries where cash purchases are common. Customers save
themselves first and then buy in cash.
Purchasing habits and buying behavior can vary widely from country to country. One example is the
differential pricing used by U.S. department stores. Basement which is often a low-cost title that sells

the same products at lower prices than higher up in the house, it is not nice to visit the basement.
For industrial purchasing decisions can be different hard-centralized. Especially in large companies
with professional buyers are almost always price comparisons, so the price must be related to the
competitive price and quality. In smaller companies can often purchase decisions are less formal and
without competitive bids and prices are compared. This applies for example when the business owner
himself purchase office furniture for their own offices and equipment, where quality and personal
selling has a great impact. Internship Fallen Hadak and Round Office are examples of this,
Casaestudies in Studentlitteratur website for this book.
On sale of plant and machinery, it is not unusual for a considerable time elapses between the offer date
to the date of delivery. To protect themselves against price increases for input materials and labor, it is
common for display of prices is related to various cost indices for certain specified percentage of the
total supply. The supplying company does not need to count on the protection of cost changes in their
own pricing and can by this procedure provide a quotation in which the customer may instead take the
risk, while either a rise or a price reduction depends on the development index, until the day of delivery.
Linking the price of various indices are common. This is particularly regulated among others in
contract form, ECE 188 (see below), prepared by the United Nations Economic Commission for
Europe, which is a general supply measure used in relatively large scale in international trade.
Price Revision clause to ECE 188
P1 = P0/100 [a + (b x M1) / M0 ..... + (C x Sl/S0)]
P1, the price the customer pays for the adjustment of the index.
P0, the price agreed and in effect at the dates indicated.
From this date, the conversion of the index take place.
a, b, indicating how much of the price to be fixed.
c, adjusted to the index for materials and
payroll.
MO, index of materials at the start.
M1, index of materials for terminating the contract.
S, salaries and subject to the same adjustment for materials.
For both materials that wages are the ability to separate these components into several parts (bl, b2, b3,
etc. respectively cl, c2, c3, etc.).
When using the ECE 188 or other standard contracts, it is important to fill in the index clause, which
may not have an effect if it is not filled.
As shown it is possible to distribute supplies to the various input goods for which there is an index.
Through a careful separation, the entire risk of cost changes released to the buyer, the buyer accepts the
clause and made clarifications.
At many large shipments, it is not uncommon for owners or managers, particularly in countries with
weak currencies, and some capital flight, would a part of the order value inserted into a bank account in
any developed country. It may also be that this raised even before the quote is requested so that the
seller must be able to consider it in its calculations. This case, however, a gray area, where it is
important to know where the boundary between permissible and prohibited yesterday. It is important to
know the buyer country laws and business practices which may be a deviation from the law. As a
foreign company can risk becoming used to set an example to be greater than for a local company, so
precautions should be large so that no mistakes are made.
The Swedish law places no obstacles in the way of payments of this kind, but the Swedish authorities
apparently interpret this differently. Even if a company under Swedish law is not being tried in Sweden,
an investigation may be conducted and information exchanged with the authorities in the other country,
where the transaction is punishable even if it is consistent with practice. The Swedish law does not
protect the safety of Swedish companies in other countries even if they can not be punished in Sweden.
Swedish tax and customs authorities cooperate to a greater extent. Payment of allowances and
commissions can always be subject to tax and customs control, and it may later turn out that the amount
reached the beneficiaries should not have had under consideration the buyer country laws.
The laws of the United States expressly forbids U.S. companies to pay benefits to non-authorized

recipients. While other companies are taking some of the goods in a supply from the U.S. subsidiary
should be vigilant so as not to the U.S. rules are invoked.
If agents, dealers, importers or trading houses, which are normally involved in export sales, in an
unauthorized manner to pay compensation for the services they buy in their business can not export it to
blame in this. Even here, however, some caution. This is especially true if an agent requests the
commission on a deal to be sharply increased to shop is to implement it and it is quite clear that there is
an extensive test manufacturing and testing the agent must carry out locally in order to evaluate the
machines and products . The difficulties of interpretation may be large because of the difficulty to
obtain secure information. Some other rules for how the individual exporter shall act can not be used
here than to Swedish law, of course, be followed.
6.3.5 Price Decisions based on calculations
Pricing based on the domestic market price or cost of manufacturing and all export sales and costs
associated with a mark-up that also takes into account the risk that the export sales result is a method
that can be applied even when the knowledge of the market price in the market is nonexistent. If you
then receive an order is another matter.
To determine what kind of costs to be included in calculating the price for export is the first part of the
work. The second is to provide current cost data in order to add them to a total cost of the one or more
mark-up for profit and risk are made.
The costs of exports can be divided into five main groups:
1. manufacturing costs
2. acquisition costs
3. delivery costs
4. payment costs
5. warranty costs
A group of commonly observed is the delivery cost in the form of freight, customs, etc. It is important
however to go through the whole cost structure so that no charges be forgotten that, since in practice
jumps over those of their own holdings are of less interest is a Another thing.
Production costs may be different and usually higher for export. This includes costs for:
1. construction work to modify and adapt the product or any parts of it to local standards and
requirements
2. materials and components to meet köparkraven
3. materials and component replacement to meet the EC's rules of origin or the U.S. (the Wassenaar
Arrangement, the former COCOM), the export ban of high technology
4. verification and documentation for manufacturing
5. special test and supply pre-shipment inspection
6. packaging and protection of goods during transport
On delivery of standard machines are usually none of the above expenses incurred, but an inspection is
necessary.
Selling expenses are typically much higher for exports because of longer journeys, but also because
more work is needed to document the customer's requirements. The following costs should be
considered:
1. travel and accommodation expenses, business entertainment. Additional costs of its own and
customer's personnel
2. documentation of customer requirements and preferences
3. in the underwriting of the contract, any dinner and presentation of the order
4. test operation and technical assessment of the client.
Cost of sales work can be substantial. If they are to be included in the calculation or not depends on the

acquisition costs included in the calculation of home market price. Can be regarded as large or obscured
by the joint marketing costs?
Shipping costs are often significant for exports and could amount to several tens per cent of goods
value. To what extent do they need to be considered depends on which trade term quote and price
information is disclosed, but also the extent to which the vendor shall provide documentation and
certification for goods export, import and transportation.
The trade terms commonly used in manufacturing are Incoterms prepared by the International Chamber
of Commerce, ICC. In other industries, such as forestry, is usually used other delivery arrangements.
Terms of influence where the goods are delivered, who bears the risk of goods damaged or lost and who
is therefore appropriate to protect themselves by insurance, who pays for shipping and provides
transport and who is responsible for the shipment.
Terms are partially different depending on which shipping method used. Great care should be exercised
so that the correct delivery clause is used, then the question of liability in other cases it may be different
than you imagined and secured for themselves.
The seller must always be at your own expense, provide the documents required for goods to be taken
care of by the customer or a carrier.
For all trade terms except for road transport means clauses FOR / FOT the seller must provide all
documents for the exit. In addition, the seller is always required to help provide all documents required
for import on the buyer's expense unless it is already clear from the delivery condition that the seller
must also respond to this charge.
Examples of other costs that must be considered and, where appropriate, be included in the calculation
of the price are:
1. export and import documents
2. Packaging
3. forwarding expenses
4. port charges
5. Transport Insurance
6. freight
7. port charges, rent of warehouse in the port, the insurance
8. duties
9. loading and unloading costs
10. cost of payment
11. credit costs, including the risk of credit loss
In some cases this may involve considerable work to obtain the correct export documentation. Some
countries require proof of their own forms that must be purchased at the embassy or consulate.
Inspection and testing of the goods may need to be done to ensure that licenses are issued, with
substantial costs for competent surveyor may arise.
Shipping charges are often substantial. The freight forwarder may assume the entire administration of
transportation, including certificates, insurance etc, and will naturally get paid for their work. It is
therefore important to carefully specify the forwarding company's commitment and contribution.
Shipping costs can consist of many different elements depends on the transport route. The most difficult
is usually land transport in the host country. Shippers can submit price in advance. Whoever procures
transportation cheapest seller or buyer depends on who has the best negotiating position. It may be
appropriate to ask the buyer to procure the shipment, even if the seller pays the freight.
As regards the port charges and terminal costs are considerable caution is necessary. It can take
considerable time before the carrier the buyer has recourse to collect the goods until the buyer or
resolve them at delivery against the documents. Meanwhile, they kept on a quay or in port warehouses,
which is perhaps incumbent upon the seller to pay. The estimate of the cost of course then becomes
impossible. It is not unusual for port charges after two to four months' storage in developing countries
exceeds the value of goods and the goods are sold at auction by the port. The buyer may then be the
importer of the goods may be cheaper than if he had tripped them under the terms of the agreement.

Payments within a country can usually be done quickly and safely, while those in international affairs
might cause problems and cause additional costs. It also occurs in the major industrial countries like the
United States that payments may take considerable time depending on the one hand the law, and
banking system.
Payment is regarded as normal to have occurred when a check for the amount submitted. It may take a
considerable time before the amount can be credited to their account, the bank does not want to do it
before the amount is transferred from the bank on which it learned. That the payment terms carefully
specify where and how payment should be made is therefore necessary in order to avoid unnecessary
delay and consequent loss of interest.
In international affairs there are also three main types of risks that could delay or, at worst, cause the
payment is not received:
1. commercial risks
2. currency risks
3. political risk
In all of these risks can be in varying degrees, sure. For Swedish exports, it is usually EKN, EKN, used
by businesses, but also both Swedish and foreign insurance companies offer to take out insurance. It
may be worthwhile to explore various options.
The cost is usually 1 to 5 percent depending on the country and the extent of protection. The protection
is usually not more than 80 to 90 percent of order value, why is some risk remains.
For sale to the conditions in which a cash payment and the credit risk is minimal it may be more
important to take a remburs specification, particularly if the goods are made after customer
specification or is an unusually large supply. Remburs costs are well reasoned and so important that
they should be included in the price calculation is usually 0.5 to 1 percent of commodity value and a
fixed part.
Warranty costs can be substantial, depending partly by mandatory legislation in the purchasing country,
partly due to travel to remedy the defects can be long and many of the local service available. The
biggest problem is the U.S. product liability, which is expensive to insure. Minimum premium of 50
000 to SEK 100 000 per annum mentioned. But even the cost of bank guarantees of completion of
delivery can be costly when the customer requires delivery guarantees.
The costs of guarantees and insurance for warranty costs can be considerable and in extreme cases so
large that they make it impossible to export to some countries.
Of the statement shows that it can be difficult to predict and calculate all the costs that might arise in
exports. By the right format for the agreement with the client, some costs, although eliminated, but the
customer is usually self-ask quote, according to some delivery and payment terms in order to compare
different suppliers' offers.
6.4 Answers to the questions at the beginning of Chapter 6
1.Vilka rules, domestic and international, may need to be limits into consideration when pricing?
National rules may price freeze, or otherwise have the lowest price taken into consideration. There may
be rules about the price of a given country should apply in the factory or port of importation and that all
freight within the country shall be borne by the local buyer.
Internationally, there are rules about dumping must be considered.
2. The company has the freedom to put whatever price they want on a new export market independently
of the prices they charge in other markets?
In principle, so the company can bring the price they want, but the international rules on dumping, as
well as the risks to customers buying in other markets need to be considered.
3. Are there opportunities to protect themselves against commodity price changes on the victims?
The benefits normally available to the company selling it with tiered pricing - it can also apply for
international pricing?
Yes, it is possible to enter the price adjustment clauses with respect to both commodities that wage
growth associated with a particular currency to an index even in the quotation.
4. The benefits normally available to the company selling it with tiered pricing may also apply for

international pricing?
Yes, but consider that the show could occur in several countries which could affect the design of pries
differentiation.
5. If the Company Is Able To obtain some form of financial aid in a country where in one of its
factories manufactures a product may have implications for the pricing of its products?
Yes, the consequences could be large. If the competitors in the country that imports goods from the
company notifying the company of low prices to their country's authorities, the anti-dumping duties be
levied after the government investigation. That through the WTO have such anti dumping fee removed
can take time. The WTO can, at worst, to find anti-dumping duty is justified, and also require that
prices be raised before the antidumping duty is removed.
6. Is the adjustment of domestic prices in a global company a good method of transferring profits to the
company selling it?
Hardly, even if it would work. Both tax authorities and customs authorities may conduct investigations
and decide on the tax and tariff adjustments with reference to the adjusted transfer prices. Great caution
in the use of the method is to prevail.
7th Why can not a global company always price their goods in one currency, eg U.S. $ or euro?
Customers usually want to obtain a price in their local currency in order to compare prices and avoid
efforts to protect the currency fluctuations. For some products are world market prices in one of the
major currencies and it is within these product areas are rational to follow the practice in most cases.

7 Customer Credits
The goal of Chapter 7 is that it should be possible to answer the following questions:
1. For what products, goods and services, it is especially important to be able to offer credit in
connection with the export quotation?
2. Why ask for buyer credit from a supplier?
3. Are there any rules governing the possibilities to provide credit for exports?
4. What are the risks of providing credit in international trade?
5. Globalization has increased or decreased need for and risks of international trade in credit?
6. How can a company reduce their risks of credit in international trade?
A few more questions to answer.
Why is a customer loans more risky for the export?
It is desirable to avoid customer credits on exports?
Why does an increase in credit to an increased risk for exports?
How can export credits financed?
How can you protect yourself against currency risks?
7.1 Credit as a competitive tool
Customer credit is sometimes considered as a part of or in addition to the competitive product price. To consider the
customer credit as an integral part of the price and the equate the cost of credit by a change in price is not quite right.
Between competition means price, customer credit is rather significant differences, which are especially prominent in
international trade.
For exporting enterprises, it is important that sales staff have an adequate knowledge of the opportunities and
problems in various situations associated with lending to foreign customers. This is of particular importance, since the
seller's ability to accurately assess the financial implications of different methods of payment entails:
1. one at the bargaining often valuable asset by rapid
clearance can be given to the customer, and
2. less risk of unwittingly unfavorable agreement.
Credit to customers affected by the export of:
1. special risks, including currency risks and restrictions on international transfer payments, and
2. that the ability to protect the company against the risks of traditional part -
thus reducing, among other things, the possibilities are limited, subject to ownership, credit uncertainty and the
guarantees of less value.
In addition, affected the potential to provide credit to the special opportunities offered by the financial market offers
both the exporting and international export. Exports The company is for example, often depend on being able to
refinance themselves and then have a variety of capital markets to choose from, including through credit can be
obtained by more favorable conditions than if only one country's credit is available.
As an example of credit's importance has quotes from a company's financial statements have been included.
AB Volvo's annual report for 2004, page 29:
"The Financial Services continued to develop in a positive outcome, and in 2004 achieved a return on equity of 11.1%
refinancing continued to rise while credit losses were lower in 2004 compared to last year. Financial Services share of
annual results is about 10%."
7.2 Differences between price and customer credit as a competitive tool
Credit has been in international trade has become a very common means of competition, and several countries are
trying to boost exports and help their business by contributing to favorable credit conditions, both by eliminating some

of the credit risk that by offering subsidized interest rates. Buyers in the international market is often aware that
favorable credit can be obtained and include it as a requirement, since they can thereby obtain a more favorable bid
than the cash payment.
An offer of credit customer will not always be perceived by the customers it deserves. In reality, the credit is a "price
cut", ie an additional cost for the seller. In the choice between a change in price or a credit is the credit sometimes
another function for the customer than the seller.
Many times the customer has no real chance to self-finance a purchase is not even a significant drop in prices could
facilitate a purchase. However, a credit often lead to the purchase, even if it takes place at significant cost to the buyer.
This does not necessarily mean that the customer is behaving irrationally. The reason may be, for example to the
customer by the increase in credit may engage in additional projects, which are expected to give a positive future
returns.
For credit to foreign customers are affected also the cost and the ability to obtain credit by credit market situation in
the different markets that are relevant. By the seller and the buyer has access to credit markets with different financing
terms the seller can sometimes borrow the required capital for credit at a lower cost than what the buyer can do,
especially when the government subsidized export credits are available.
7.3 Risks of export credits
For exports to the two main risks in addition to the customer does not pay, namely:
1. currency risks
2. political risks
The usual commercial risk that is perhaps even more by the difficulties in assessing the customer's creditworthiness
and the potential for legally recover outstanding unpaid debts is less.
Currency risk is the risk of exchange rate changes and the political risk is an authority ruling that prevents or impedes
the payment. Strikes and lockouts with a political background or political unrest can also impede and obstruct the
payments.
The possibilities for a company to protect itself from the three different types of credit are many and vary in nature
and involve different costs. A balance between the various methods of protection and their effects is necessary for the
firm to conduct business with profitability in competition with other suppliers.
Currency risk is mainly due to the risk of devaluation of the agreement to use the currency against the Swedish krona.
A revaluation is also a risk, but a positive one, because a greater amount in dollars will be received. By contrast, new
business is hampered by a revaluation of the currency contract if the exporter did not want to lower the price of new
business.
Risks of customer loss due to currency, political and commercial reasons arise as soon as a binding offer made or the
contract entered into with a customer. The risk is, until full payment is received. The opportunities to protect the
company against credit risk is often limited until the billing occurred. The protection can be obtained almost always
implies that the company stands for its own risk for a particular part of the order value.
7.4 Opportunities for credit protection
The first possibility, as always, is to make cash transactions, ie not to grant credit. Any customer credit, currency and
political risk arises not subject to the stocks of goods sold. For special designs arising from a risk in that the
production started and personnel and materials involved. Advance is then a commonly used method to eliminate the
risk of default.
Currency risk can be eliminated by the contract is made up of the currency in which the seller ultimately wish to
receive proceeds in Sweden is the Swedish krona. But the buyer may wish to avoid currency risk and would rather pay
in their own currency. To achieve comparable and sometimes because a commonly used currency is the description of
the products are chosen that third currency, usually U.S. $ and now also increasingly the euro.
The customer takes a risk by paying in advance and therefore usually require the customer warranties in advance,
resulting in warranty costs. Cash payment is reduced customer risk for loss or incorrect delivery, and often reduced
both the seller as buyer's risk by paying the following requirements, cash on delivery or credit. This means that goods
are not allowed to be released before settlement is made. COD used for freight transport by car, train or plane, cash on
delivery for mail forwarding and letter of credit in ship transport. COD and COD is often overlooked in terms of

payment in international trade, particularly for smaller deliveries, they may be advantageous to use. Credit where
seller and buyer bank involvement is a common form of payment for deliveries to new customers outside of Europe.
Currency and political risks remain in the post requirements, COD and letters of credit. The political risk is low at the
requirements and cash on delivery, but remains at the Letter of Credit. The goods can be after they arrived in the host
country to stay there even if payment is not paid. The carrier or the bank can sometimes execute a payment while the
clients get paid, depending on political decisions.
Currency risk can be limited by forward for credit of up to six months, possibly a year, as well as cash transactions for
currencies where there is a futures market. For most industrial countries 'currencies, there is a futures market, although
it may be limited to less industrialized countries' currencies. For non-convertible currencies is no futures market.
Risk-taking can also be limited by factoring as further elaborated in section 7.6 Alternative funding opportunities.
Insurance to cover emerging risks for export sales and credit to a customer is a supplement to try to avoid and reduce
risks by making the contract. Chapter 6 Pricing treated EKN's ability to process through an insurance cover both
commercial, currency and political risks.
Since an excess always remains under EKN-conditions, there is still reason to limit the risks by contract design and
hedging.
The possibility of obtaining insurance of credit risk depends on both their company's financial position and ability,
both the buyer and the buyer country's financial position. EKN well as other government and private insurance can
always refuse to take out warranty insurance. Companies can have different large part of their risks in different
countries, so that it can happen to any company willing to take out insurance when the other would not. Exporting
companies which insure all their transactions, or any transactions with certain size, can at EKN sign so-called global
agreement, the protection may also include deliveries to countries where it would otherwise be impossible to take out
separate insurance. Several companies have signed a global insurance, while others try to take good risks themselves
and make sure only the bad. What method of risk protection the individual company should choose to be analyzed
according to the volume of exports to various countries as well as premium costs and other options to protect the
company against customer credit losses.
The commercial customer credit losses may, in some countries be covered more cheaply by local credit insurance. Any
currency or political risk which is not covered by insurance. Currency risk can perhaps be met more cheaply through
futures or pooling. Settlement of claims may also be done with various high speed with different insurers. EKN uses
four to six months to settle a damage while it may be faster or take more time for other insurers.
Formation of the contract, EKN guarantees and other guarantees of the insurance companies, foreign buyers
governments, banks, etc. facilitate the process of obtaining funding for the credit. At larger stores, it is not uncommon
to have assurances from several agencies and insurance-/guarantee issuer in purchasing and supplier country for that
credit must be prepared to finance the deal.
International leasing can sometimes be a good platform for the seller to reduce its commitment or eliminate it.
Reasons for international lease is otherwise as soon as the credit situation and the tax consequences, and yet difficult
markets such as dictatorships or economically weak countries, or the remaining state-trading countries.
7.5 Credit depends on different markets
In international marketing, there is often significant differences between sellers and buyers various financing options.
Credit market is different in different countries and variations are possible on both loans, the amount of credit
conditions and interest amortization and purpose for which the borrowing takes place.
Competition between credit institutions may also affect the funding opportunities. Some banks and credit institutions
operating in several countries and can sometimes have conditions other than the credit company that works nationally.
Exchange controls means that it can be difficult for companies to exploit funding opportunities in markets other than
its own home market.
For exports and imports may be possible to benefit from both the international market and the various national
markets that are otherwise closed.
In situations where the seller can obtain a cheaper loan than the customer is a customer credit an interesting
competition means that both sellers and buyers can benefit from using.
In countries that offer their exporting firms export is almost always some form of credit support, resulting in greater
competitiveness in terms of offering customer credits; in Sweden is Swedish Export Credit Corporation, U.S..
International companies with manufacturing operations in several countries, the delivery of supplies to some extent,
usually less than 70 percent, comes from the makers of the country, use the credits to state aid that are available in
guaranteeing the country. In the Nordic countries is a partnership that will enable even smaller proportion of goods

from their own country, 60 percent, but with a significant proportion of goods from one or more Nordic countries
receive a state credit support for exports.
Typically, however, that each installment from the various countries involved in the delivery, the credit afforded in the
country on government export credit guarantee is desired. Insurance companies and other credit companies are free
from national bias, and can cover the risk independently of the delivery of origin.
It also appears that companies either because of competition or its own cash position themselves finance customer
credit. The buyer can evaluate the different offers by:
1. make a calculation adjustment of the price
2. compare various sellers of credit offers.
The buyer sometimes finds that his own funding opportunities are better, why the customer credit is not attractive, but
cash purchases are more favorable. To eliminate the negative effects of overly favorable credit terms have two
different international agreements reached: first, the so-called Berne Union, International Union of Credit and
Investment Insurers, and The Arrangement.
Berne agreement means that we have agreed to maximize customer credit hours in international trade up to:
a. six months of supplies
b. two years for power supplies
c. five years for facilities and vessels
The application has been developed so that no longer credit periods to be acceptable, particularly for exports to
developing countries and taking into account that the boundary between what is a machine and a holding may be
unclear.
Arrangement whereby the state-subsidized interest rates may not fall below an internationally agreed level.
Periodically, the consensus-level of interest rates resulted in a significantly lower than market rate. Through
discussions and negotiations, consensus interest rate adjusted upwards so that the years 1986 and 1987 did not offer
any advantage over what was available on the international credit market. Application of the Arrangement will vary
between countries and it appears that the state-subsidized interest rates, sometimes below the consensus for the urgent
export to certain customers. In Sweden, as a rule, slightly higher than the rate applied in the Arrangement permits.
Swedish export companies facing competition from credit companies that have government export financing to their
offerings may, by special request to the Swedish Export Credit Corporation, ABSEK, offering the same rate as their
competitors in other countries, if it is deemed necessary to the Swedish exporters to compete on equal terms. This
adjustment of the Swedish conditions termed matching and occurs even in respect of credit insurance by EKN.
For larger supplies of plant and machinery, it is not uncommon for the provider actively involved in finding a bank
that can directly give the customer a credit, and providers receive both the advance payment in full upon delivery.
Depending on the amount of credit, credit providers and credit market situation, both Swedish and international banks
involved in this type of credit. Sometimes there will be lending is done by a bond issued on the market with the
freedom to choose the currency increases. The advantage of issuing a bond to fund the customer's credit is among
other things, interest expense, foreign currency risk and that the bonds can be put. Credit may therefore ultimately be
placed with insurers and other investors and are not charged to the participating banks' credit facility for a long time.
7.6 Alternative financing options
Finance Companies that offer leasing and factoring services can be an interesting option for international business. By
financing companies have operations in several countries, they can match assets and liabilities denominated in the
currencies in which they have customers. By financing companies sometimes can work in several countries, and
sometimes even in those where foreign banks can not engage in or find it interesting to carry on business, finance
companies may be able to fund and ensure payment at shops in a large number of small and weak countries of
payment. Finance Companies, through its direct presence in the countries they work is usually good local knowledge
and can undertake the financing and payment even when the credit can be difficult to obtain and banks to refrain from
helping. The financial firm might have the client on the foreign market as a customer and know the situation well. The
difficulty with the use of financial institutions is that they often are relatively small and many. For most shops, it is
more profitable to use the company's normal banking relationship.
Financing and payment can sometimes be obtained through other export business participation. Several companies

may need to place a temporary liquidity and also to obtain depreciation base. Funding of major capital goods exports,
which ships and aircraft through leasing contracts funded by such companies exist. Although funding in foreign
countries through the use of temporary liquidity to other businesses liquidity exists.
7.7 Answers to the questions at the beginning of Chapter 7
1. For what products, goods and services, it is especially important to be able to offer credit in connection with the
export quotation?
Being able to offer credit is particularly important when an offer of investment products and the design of facilities
and industries. Especially important is what happens when the buyer is a newly established, have no access to the
national or global credit market.
2. Why ask for buyer credit from a supplier?
Because they have insufficient credit on the traditional credit markets or plans to implement an investment deemed
risky by the credit market. Interest rates may be different, the seller may be able to offer loans at lower interest rates
and in other respects more favorable terms than its own borrowing.
3. Are there any rules governing the possibilities to provide credit for exports?
Yes, there are international agreements to eliminate "harmful" credit competition between countries, known as the
Berne Union.
4. What are the risks of providing credit in international trade?
The risks are: changes in exchange rates, countries in default, nationalization of property and the buyer's credit ratings
coupled with the possibilities to enforce seizure of other countries.
5. Globalization has increased or decreased need for and risks of international trade in credit?
A total of urgent needs have increased with the increase in international trade, although in some commercial areas,
including the capital market through the introduction of the euro currency, the conditions for direct loan financing
capped between countries and hence for European businesses.
6. How can a company reduce their risks of credit in international trade?
Companies can reduce their risk by signing the credit insurance, often through one of the exporting state-owned
institution. In Sweden, the Export Credits Guarantee Board, EKN.
TasksS
1. What are the current costs of export credit insurance with EKN? The data is available on EKN's website.
2nd Export credit insurance can be made at a lower cost of a global company if exports are from another country?
Management: search for export tariffs on other guarantee issuers websites, such as the U.S. Export-Import Bank.
Case studies
IMFA, Indian Metals and Ferro Alloys. Internship The case deals with a major Swedish export of a coal-fired power
plants.

8 Product development and monitoring of innovations
The goal is that the following questions should be answered when you read Chapter 8:
1.Way is it important to technology development and new products in the global economy?
2. How are the causes of product development is stimulated in the global economy?
3. How can one explain that traditional commodity and agricultural countries like Australia have been so innovative,
with many new products?
4. How can companies benefit from research and education in different countries?
5. What is most important to buyers of goods: country of manufacture or the manufacturing company and brand?
6. What this mean for the buyer that the manufacturer complies with a certain international standard?
A few more questions to answer.
Which products should you invest in the product?
How can the market for innovations are monitored so that it does not become
surprised?
On the markets, new products first launched?
How does the choice of export market product development?
The company can get ideas for product development through international activities?
Where, how and when you get a new product approved in different countries?
8.1 Description of the exchange on the international market
The largest commodity group in international trade are now manufactured goods. Until the late 1980s was the
international exchange of goods primarily of raw materials and intermediate goods. The proportion of finished
products and advanced industrial products of all kinds continues to increase sharply. For many industrialized countries
constitute the bulk of manufactured goods exports. Oil, minerals and grain are still important products in international
trade. Even for some large industrial countries like the United States is cereals and other major agricultural export
commodities, and even Sweden are important raw materials exports. Sweden is responsible for forest products for
13.4 percent of exports in 2003 compared with 16.9 percent of exports in 1985.
International trade takes place primarily between developed industrial countries, which is natural. Developed countries
have of course an advanced industrial production and an industry for its maintenance and its further development
requires advanced specialized products, equipment and knowledge of various kinds. Knowledge and opportunities to
use almost every time at the optimal solutions is an important prerequisite for the production and distribution. By
actively taking advantage of knowledge and knowledge-intensive products increases the industrialized countries of its
economic efficiency and growth.
Less developed countries are not as great need, nor as much ability to use advanced, specialized industrial products.
They rarely produce such and when it occurs the most often find a market for this equipment in developed countries,
yet in other developing countries. Developing countries 'industrial products face intense competition in the industrial
countries' products are often more suited to market requirements, so they may compete with low price. The textile
industry which has expanded in many developing countries whose growth is now constrained by quotas on imports in
developed countries is the most prominent example of the difficulties that developing countries' industrialization face.
To quotas is contrary to WTO rules and specific agreements on fiber products has therefore drawn up, which accepts
quotas.
The movement range will cover more and more advanced products are fully in line with modern marketing strategy. In
order to avoid price competition, refine and improve it continuously their product.
Through product development, the product is so unique and useful to the customer is willing to pay a higher price than
the equivalent, not as sophisticated or market-based products. This process is being used more and more, leading to a
harder specialization. It is not just the physical part, the product, but also the service component of the product to
product to evolve and adapt to customer needs and requirements. The developed world's companies will present an
even narrower range of products with increasing technological and commercial quality. Through product changes and
specialization makes it possible to rationalize and to exploit economies of scale. This structure rationalization process

is now also international and affecting international trade in the direction of greater exchange of goods, service
component is often produced locally. International trade in services increases, and a not insignificant part of the
increase is integrated with the increased trade in goods.
8.2 Products with new properties
Improved processing makes it possible to more or less customize a product for a special need whether it now exists
only in a single customer or a few customers. Products with very specific properties for specific tasks or situations,
however, often a limited outlet. For the advanced technology to be exploited and not instead involve disadvantages, it
is necessary to have a greater contact among clients. At the same time, of course, also the requirements on the
customer's ability to assimilate technical features and other advantages of the product.
Almost all products can be instilled specific properties through further development, precise determination of quality
standards, etc. This can cheapen or simplify subsequent processes to refine the product. It is therefore possible that
even for materials impart such properties through standardization, for example in the form of more consistent quality,
so that the customer is willing to pay a higher price. Processing industries can require long and arduous fine-tuning to
the desired quality and operating economy will be achieved, due to the uneven quality of the raw material. The
advantages of avoiding an adjustment of the production equipment may justify a higher price for the raw material
used.
Services of various kinds which can be offered to the customer with the product can mean that the customer can obtain
the knowledge to use the product in a new and better ways a prerequisite to the customer will dare to risk buying a
product which he had previously not considered to need.
Within the product development of everything from commodities to high-tech goods may be the service component is
crucial. Complex products and installations requiring service and maintenance and reliable supply of spare parts.
Instructions and manuals are often not enough, but customers often require the supplier to train customer's staff,
appointments with service personnel for repairs and adjustments on short notice or to safeguard the availability of the
equipment to the specified level. Customer demands may mean that the supplier guarantees and the bank guarantee or
other security for those guarantees of performance and service availability. The manufacturer, who himself knows his
products may make the assessment that these guarantees are totally risk-free in any case as long as his own staff
responsible for operation and maintenance, while the customer may experience a significant risk that not everything
should work as intended. The inclusion of services in the form of operational responsibilities and availability can often
be of such great value to strengthening competitiveness while achieving greater profits for the store.
For commodities, it can similarly be possible, by providing advanced knowledge to analyze the customer's production
and propose appropriate corrective measures, giving the customer a higher exchange, quality, volume or lower cost
when using the company's raw materials compared to other commodities.
Examples are that a large Swedish mining companies through to bind itself to experts in many countries been an
interesting and effective addition to its iron ore products that enhanced the company's competitiveness. For other raw
material suppliers would often be possible to similarly integrate the knowledge components of its raw materials,
thereby providing an interesting product.
Another form of additional service that can be developed is the financial services, which are already addressed in
Chapter 7. A supplement must be made here. It can for example be possible to undertake not to supply air
compressors, but well. It then means that the compressors are used, the operation is run and the financing arranged by
the supplier who receive their compensation in the form of payment for the delivered quantity of air given the agreed
quality is a far-reaching example of the sale of services.
Services software is an equally interesting part of the product to the physical hardware.
8.3 Monitoring of new ideas
Product development is an economic venture. Often need large sums spent to develop a new viable product.
Thereafter, the product is often produced in larger series and marketed. The product will provide such financial
exchanges, that the generally very high development costs are covered. Preferably, the profit also arise for the
companies that have invested in the product.
In the increasingly fierce international competition is a plane-rate-driven product development in various markets. To
not bet on wrong projects or for a low technical level of ambition must be able to get an overview of developments in
other countries and know what's going on there. While this in itself may not generate new ideas for their own
development, so give it at least evidence of the strength of its own ideas. One can thus evaluate their own ideas more
objectively than if only their own domestic market is used as the base. Although the development of products which it
intends to market only in the domestic market, it is appropriate to take account of developments in the international

market. Competition in the domestic market can be hard, if foreign companies come up with better products than what
they themselves have succeeded in producing the corresponding needs.
In planning the product development process, it is necessary to:
1. takes into account time-scale and carefully
2. assesses global developments
The timetable for development should therefore allow for market research and testing in major markets and evaluation
of product reception in these markets.
8.4 Sources of product ideas
Sources of product development are:
1. users whose use is on modifications that would make the product better (advanced customers with self-
development)
2. competitor monitoring
3. Research and Development
4. manufacturer's or licensee
8.4 1 as sources of new product ideas
Global Marketing is the presence in many different markets with different demands on the product. It involves
automatic requirement for adaptation and modification of desired functions and to satisfy customer needs for product.
Customers, dealers and others who come into contact with the product, can be the basis of their knowledge and values
to come up with ideas and sometimes modify the product for them to obtain the function and the satisfaction they
desire or that they recognize the need for the product to be sold with higher profitability.
It is above all the strange physical environment climate, geographical conditions and infrastructure, skills and values
that encourage users to demand and expect different characteristics of the product. At the international operations
increases the diversity of changes and adjustments, if vigilance is, could make valuable changes and impetus for
further development are obtained and new models or completely new products that give the company more
competitive. Companies are looking increasingly to forge alliances with suppliers and customers in this way to
organize a network in which they have access to customer demands as well as sub-contractors' expertise in
development work. Development work can be perceived as a learning process where learning takes place in different
forms of interaction with other firms, customers and suppliers and with trainers, consultants and researchers. Hakan
Hakansson and Jan Johanson has reported a number of such studies in a book entitled Business Network Learning,
2001.
Example
The existence of various forms of viruses and bacteria and diseases caused by them are different in different parts of
the world. Through promoting and test preparations in areas where the need is especially great for fast practical
experience obtained from their effects, which allows for increased knowledge to diagnose and prescribe the use of the
preparations.
Development of procedures and methods of a product's use can be made more effective by users, which has a large
and regular need of the product. Pharmacia has eg through the clinical use of Heilon, a product used in eye surgery,
could reduce the time and many times to increase the experience of the product by allowing doctors in an area with
high incidence of eye injuries actively participate in the evaluation process. The success of the product may be partly
attributed to the practical evaluation of the physician's experience.
8.4.2 Competitor watch
Only by himself being on the market for a good coverage of the competitors received. The information contained in
the trade press, daily newspapers adverts and pricing in stores provides only limited information about competitors'
activities and work with new products.
Much more information can be obtained by their sellers who visit key customers. They can often obtain information
and by asking customers if the company has its own similar product in the pipeline, and by telling customers about

competitors' innovations. Sometimes sellers or service to see competitor products in trial operation during the visit out
of the customers and they can obtain more information about the rival product, its performance, economy and how
some key elements of the rival product designed. This can sometimes be possible long before the rival product is
ready for launch and to the press present. That this information can be very important is obvious but it is almost only
possible to obtain it through their own active market presence, unless one does not want to engage in industrial
espionage by placing its own personnel in eg competitor.
An example is reproduced here briefly to show how a ski weekend gave Nestlé great success in the market for instant
coffee in U.S. and Europe.
Example
Some employees from Nestlé was in the late 1960s on a business trip in the U.S. and decided to go into the mountains
for a weekend of skiing. On one occasion they were invited for coffee and noticed that there was anything new with
the coffee that they were treated to. They asked for coffee, but I realized that it was a test sale to General Foods
undertook an instant coffee made with a new manufacturing method. Instant coffee could be bought in stores in the
small town up in Appalachia.
Back home in Lausanne, were analyzed by the coffee and it turned out that it's probably been produced by a freeze-
drying method. Nestlé had during World War II used a freeze-drying method to produce surrogate coffee when coffee
imports not worked. General Foods had not yet fully developed the new freeze-dried coffee, but Nestlé's staff could
quickly produce a finished coffee with improved properties by the knowledge that the staff had been through the
process of coffee substitutes during the war.
Nestlé faced the question now was how to exploit the advantage that it had: a finished product, but no manufacturing,
knowledge of competitor market testing with a non-finished product and a competitor that still probably did not know
that Nestlé had the new product is technically ready. Nestlé's strategy was, through dummy corporations to build a
full-scale plant outside Hamburg, the abandonment that it was a detergent factory, packaging design, branding and
advertising materials without testing it, only a few people were working on the project. Land was purchased in the
U.S. to build plants there.
When production is underway, which was at record speed, a lot was shipped to New York. While the shipment was en
route flown more parties to the United States and a major market started. Television and the press room had been
booked with the requirements of confidentiality in order not to reveal the intentions. The introduction was a complete
success.
After two years, Nestlé over 50 percent of the U.S. coffee market, coffee accounted for about 3 / 4 of U.S. coffee
consumption. General Foods was taken by surprise and forced over three years account for the loss of the entire
company.
This example teaches us that the market surveillance albeit by chance, but there could be planned coverage can
provide invaluable information about competitors' plans and activities. Nestlé could follow the General Foods market
tests and actual learning from them for developing their own launch.
System for competitor monitoring may be necessary in markets with intense competition, while in other product areas
can become a burden and it may be better to rely on informal communication and coincidences. Advanced systems for
monitoring the market, where data are collected and made available to the people in the company who need them, take
now as databases with access over the Internet. Vendors, service personnel and others who regularly receives new
information from the market, such as retailers, are trained to routinely be able to enter certain types of data about
competitors. Through such systems, changes of products and prices as well as arguments or other market measures as
competitors for practically anywhere in the world quickly recognized by the central competent staffs and market their
own actions are planned.
To not be charged to its own staff, it is common practice in the field of consumer goods to specific research company
hired for data collection. Most famous is perhaps AC Nielsen, which carry out measurements of the sale by going
through the sales trend for a very large number of goods at high frequency in retail businesses and shops. AC Nielsen
found in virtually all industrialized countries with their activities and work with several different types of market
research, measurement of sales is the area that made the company famous.
Studies of competitors' sites, annual reports, staff notices and job advertisements may also provide valuable
information about the new development as they work with.
8.4.3 Research and Development

Research leading to new knowledge provides an opportunity to improve existing and develop new products. Research
conducted both within many companies at universities and research institutions. In connection with the research
reveals a wealth of ideas and hypotheses, of which only a portion will be documented and published. Researchers
often have intentions and goals of their research and are therefore waiting to publish until they reached what they seek.
The results achieved during the current work can be valuable in the ongoing development of business and only
hypotheses and research focus can sometimes lead to a university that companies will find its own momentum for
development, which eventually leads to new products. To get good contact with researchers and be able to obtain
preliminary results and ideas and also obtain additional information about the results published, it is necessary to
establish personal contacts by having its own research staff to participate in congresses and symposia. Several
Swedish companies co-finance research projects at universities in several locations outside of Sweden. They also
subscribe to special report series by being recipients of research at universities as they deem interesting. This is
sufficient but not always, but only by conducting its own research in the same location as the successful institutions, a
deeper and more trusting cooperation eventually developed.
Seev Hirsch. (Location of Industry and International Competitiveness, Oxford, 1967) has in his study gave examples
of how the Swiss pharmaceutical industry monitored the innovations. By locating development companies to various
countries in the vicinity of the university, where research and development underway in the medical field, they have
quickly been able to take advantage of new discoveries and insights, and thus able to assert its position in world
markets.
Ciba and Sandoz is a pharmaceutical company that quickly gained access to the latest ideas from different research
centers. They have also been able to employ staff who have previously worked in research institutions and who has
good contacts with researchers in various fields.
Although it's been good for the Swiss pharmaceutical company, however, show a different study, by Lawrence Franco
(The European Business, 1971), that means all bets on the development companies in other countries and continents
has been successful, not least for the European companies who have gone in to get product ideas from the United
States. But even an unsuccessful attempt at taking an idea might be useful. If more successful ideas can not be traced,
facilitating the evaluation of the ideas you already have or get from other sources.
Monitoring of research and development is of great benefit to companies that need to be among the leaders in their
product to defend its competitive position. International cooperation in research and development is not only
something that big pharmaceutical companies engaged in but also the small high-tech companies, called emerging
companies, often work closely with researchers in other parts of the world.
8.4.4 Manufacturers
Manufacturers can either their own subsidiaries or licensors, be a source of impetus for the development of new and
improved products.
A conflict between local adaptation and standardization exists. For standardization of spare parts can be supplied
independently of the factory which manufacture occurred. Standardization can reduce the incentive for local initiatives
for product development, but if the impulses and proposals received be utilized in a systematic way, it can stimulate
new developments and to take advantage of experiences from different countries, while the standardization
requirements.
Countries' ability to creative innovative product development work can change quickly. Australia is one example of
this. From being a country that built its relatively strong economy on exports of minerals, metals and coal, and
efficient agriculture including the export of wool, meat and sugar, has over the past 15 years, from 1987 to 2003, a
rapid conversion occurred. This shift has occurred because of or due to several factors: a rapid migration which led to
a doubling of population from 10 to over 20 million inhabitants since the 1960s, a worsening economy for many
metals on world markets and partially also for agricultural products. Agriculture has therefore streamlined and less
people earn their living by it. Through education and promotion of migrants' knowledge and cultural preferences are
an innovative dynamic environment created to bear on all areas of society: architecture, art, design and industrial
development. The Economist shows in a statement to Australia in 2003 was ranked as the fifth most innovative
country in the world, including in Sweden. Not to monitor developments in Australia may soon prove to be a mistake.
General Motors has had its factory in Australia to develop a new six-cylinder car engine, which among other things,
installed in the Opel and Saab cars, this is just one example of the creative business environment in Australia.
8.5 Standard requirements in different countries

The standard requirements contained in the products in different parts of the world market is a serious handicap in all
product development and in any advertisement. Not least, this is prominent in the automobile industry, where cars
need to be equipped with various security features. In some cases, are also in different countries completely
contradictory. To the cars must be approved in several countries, the production spread over several smaller series.
Usually also need additional work done in the different countries, to which cars are exported.
In order to be as much as possible to satisfy multiple markets with standard products, we must carefully study the
standard requirements in different countries. They may perhaps even be possible to devise a standard product, which
can be accepted by countries with different standard requirements. Computerized production control systems with a
flexible production has sometimes been shown to provide such flexibility to changing product requirements can be
satisfied by a rational series production.
A follow-up and careful monitoring of various regulations is extremely difficult to administer. Only in such a small
country like Sweden is a very large number of authorities issuing regulations often independently of one product.
There is no central register of all existing regulations and recommendations that authorities issue, for example on the
right that in general use product, which is very important for the marketing of products.
Examples of other areas that need to be investigated may be the ability to obtain insurance or to use the product as a
deposit at the lending when it might be devalued, which can complicate a sale, if the customer's credit is limited.
As a result of the great interest in environmental issues is constantly new research presented on various harmful
substances and additives. Some countries show taking a greater zeal to quickly restrict or prohibit the use of certain
additives. Other countries may focus on another area with regard to the nature of additives in food. Such collisions
complicate the manufacture and marketing of products for an international market.
Manufacturer and seller's liability for that product causes injury in the U.S. by mandatory law expanded to include
responsibility for both producer and consumer goods. Cause product damage, liability may be imposed on the multi-
millions. It is important to note that the damages can be imposed even if the product is flawless. The user has not
warned or instructions for use are unclear, it may be reason enough to damages shall be imposed in the United States
of strict liability. In Europe, the former only negligence and guarantee agreement was due for damages, a change is
under way and within a few years, strict liability to apply in most countries in Europe.
The manufacturer must demonstrate that all that could reasonably be required have been made to eliminate damage
during its use and this both in product development, material selection and manufacturing as the repair and overhaul,
and the instructions and advertising. Has the manufacturer failed in any respect that might not directly related to the
damage it may be a factor that hampers the defense at a trial product. It is the manufacturer must demonstrate that the
product has not contributed to the damage by any failure by the manufacturer.
Test Report from product development, manufacturing and material purchasing needs to be saved and the production
to be so organized that different production runs can be distinguished from each other. Will the new research, new
standards or are otherwise familiar knowledge that can enhance safety, it must be documented that the knowledge into
account and that the modifications made to enhance safety.
It is important to be aware that even if all precautions taken, warnings and instructions are adequate and clear, can not
prevent an action for product liability brought before U.S. courts. The cost of defending a "sure" thing can be
significant, and when the U.S. system is based on a jury proceeding can never be really sure of the outcome in court.
In product development it is important to consider all standards, both in their own country as in the U.S., if the product
is marketed in the United States.
It is important to document that the standard requirements are considered and that the product is tested as required, the
test protocol is drawn up, of course, that any flaw or defect that could cause injury to person or property addressed and
that this is also documented.
The documentation is important to facilitate the defense of the company in a dispute if, after all, an injury would occur
later. Rules on product contributes to product development by the great burden imposed on the manufacturer. It may
reasonably be argued that all tests and checks seem expensive but also involves the collection of standard regulations
and safety regulations in countries where it intends to market the product in the future, that knowledge is obtained that
can contribute to a better and above all safer product development. The cost to make sure delete product liability are
often so large that smaller volumes of exports to the United States may be uninteresting. Only if a substantial and
long-term market forecast, it may justify a revision of the product and the cost to possibly take out product liability
insurance covering the United States.
Insurance premiums start at 50 00 -100 000 per year. Larger companies can take out so-called corporate liability
insurance with the addition of various products and the subsidiary, which distributes the cost of the group and allows
affiliates to get a guard to a more reasonable cost. Smaller companies can often forced to renounce their deliveries to
the U.S. because of the high risks, which you can not get away by doing the importers or dealers responsible for

product safety. Although enforced not currently a U.S. Court of product safety in Sweden, but future marketing in the
U.S. can be stopped by a conviction, as well as to travel in the U.S. may pose a risk of action against the company's
staff and owners. Some countries in the Middle East, including Israel, have a more severe punishment scale than the
U.S., prison is where a supplement to liability.
It is not uncommon in the United States to the injured claimant receives compensation in the settlement even when
there is nothing to load the manufacturer. It is simply cheaper to by compromise to reach a settlement than take all the
costs of a trial even if they would win it. Skills of defense lawyers in the United States is said to be to be able to
negotiate the lowest possible payment to reach settlement - and it quickly so that lawyers' fees not accumulate.
It is argued in various quarters that the protection of their domestic industry as various safety is more or less
consciously exploited by various countries to support their domestic industries in international competition. It denotes
the standard requirements of the "new" non-tariff barriers. This also applies to the U.S. product safety legislation and
in particular the substantial damages imposed. And legislators in various countries are not having any more energy to
coordinate and approve each other's product requirements and rules. Discussions have taken place in UNCTAD and
the EU to achieve harmonization, but new security requirements will be presented at a faster rate than the settlement.
The most effective way to overcome the obstacles that standards and safety requirements mean is likely that
companies with new products quickly establishes its own standards in those markets that are of interest. Companies
that operate internationally perceived sometimes different standards in different countries as an advantage that
facilitates differential pricing and make it difficult for new competitors to enter the markets. At the conference on the
decommissioning and harmonization happens because the same company seeking influence his country's
representative to preserve certain distinctive standards and settle other standards depending on their competitiveness
and production situation.
8.6 The customer's preferences for different characteristics
The customer's preference for one product over another is affected at the international marketing not only of product
characteristics, price, brand, advertising and distribution shape. Even the fact that a product is foreign or domestic,
must be considered.
Several countries have argued that "the purchase Swedish goods", "buy English Goods" and "buy American", etc. have
been common especially during recessions. Common is also the origin of imported goods arises in connection with the
recession that the country's consumers to know which products they buy.
Foreign goods are sometimes associated with worse service. It is therefore of imported goods to be essential to stress
that the service exists.
Among major international companies can sometimes lead to the fact that companies are looking to maintain a local
profile and not to highlight his foreign origin. For large groups of customers likely proximity to the manufacturer and
a national production (a national enterprises) with good and reliable service to be the key to the choice of goods.
While there are groups of customers, some of the same people, but for different products, which may find imported
goods more exclusive. It may be true that the quality and design is better on goods from certain countries or
manufacturers and there are customers who want to show their good taste, knowledge etc by buying imported goods.
Several countries have attempted to exploit this by launching the symbols or labels attached to export products to
enhance the marketing of its products. In Sweden, various experiments with Sweden marks made by export companies
could use on their products. Turnout has been weak. The strong and well-established overseas companies often have
little or no need to emphasize its origin as soon as possible to conceal it. New exporters and small businesses with
sometimes not fully market-oriented products like to use the mark and they can then pull down the successful impact
of the brand through the product is not perceived as adequate by the customer.
SWEDISH QUALITY
Figure 8.1 Some examples of Swedish quality brands used.
The customer may be different from the crowd by purchasing an imported product that has a smaller share of the
market. This relationship can be used for imported products, which are manufactured in countries that are known
specialists in this product.
By contrast, sales of quality is often not enough even for Swedish products. Several other countries are also known for
its quality.
For some groups of customers is the fact that a product is used worldwide as an indication of its quality, and these
customers would be happy to use it frequently to show their worldly. Advertising sometimes takes up this relationship

and shows how the product is used in different countries.
Foreign products in general often have a disability but has nevertheless been strongly represented in certain situations.
This is particularly true of industrial products. In many developing countries to buy any of the art equipment from
developed countries. Reasons can be many. To developing countries has often been exported outdated production
equipment, which do not meet the requirements. It is not uncommon for developing countries are used as appropriate
"waste places" for less salable lots or leftover quantities of the outgoing model. National pride may be another motive.
The buyer wants to show that the requirements of the product is lower because the buyer has a developing country of
nationality.
In the book The Fortune at the Bottom of the Pyramid, 2005, CK Prahalad shows that in the globalized world of
mobile phones and the internet is not possible to distant lands as "waste places" for less salable products world is now
global, even the poorest people in all markets are part of and contribute to the global information flow. Information on
bad products is spreading rapidly to all markets.
8.7 Continuous product protection?
In a fierce competition is the prompt implementation of the process of product development and launch of new
products, a prerequisite for a wide range of businesses to survive. Development of products takes place in an
increasingly intense and faster pace. Concurrent engineering, namely the simultaneous construction of various parts of
a new product and its production, has become very common. It is time to market counts. To further reduce time in
development allows you sometimes run around the clock by letting R & D units in different time zones working on the
development project. Videoconferencing and CAD systems with communication over the Internet has increased their
opportunities. It may take some work to be doubled and problems arise with different culture and different values of
the designers of the different teams but at the same time there is a reconciliation with the likely user requirements in
different environments.
Several companies in the more dynamic developing regions have now left the patent stage behind him, so until they
put it in the middle av1980 century. The arguments were as follows: they are not interested in obtaining patent and
assumes that copying is by competing firms. Instead, they intensify their efforts to constantly develop and market new
products. When competitors are ready to break into the market, the innovative company already new and more
advanced products. In particular, it is the major advanced industrial countries and companies that have the ability to
mobilize capital and resources needed to rapidly and on a large scale deal with product development work.
Applies to the above-described marketing philosophy, it is also necessary to quickly cover the world market with a
new product. It will not do that until a few years after the introduction start marketing it in more distant markets. It
may well be that a competitor which already had time to copy the product. The philosophy of a short product cycle
therefore requires that the marketing organization is so careful tuning of the product can be quickly distributed on the
world market. This also places extreme demands on an otherwise flexible organization. Vendors, service personnel and
other employees who come into contact with the new product, need to be rapidly re-educated or trained for it. It is also
necessary that the marks and names of the products tested, so they do not collide with the market already occurring
trademarks and / or product names.
Pharmaceutical companies have always been careful to protect their new drugs with patents and trademarks, but over
the past decade, patent protection even among engineering and electronics companies and computer companies have a
greater concern. Several companies indicate how many current patents they have, such as Ericsson and 16,000
Sandvik 3 700, (sources of corporate websites).
Example
The rapid product development and launch of new deodorants in new packaging with the change of labels and printing
on the packages, which are an essential part of marketing in developed countries will require advertising and
marketing efforts to attract buyers.
The company Bristol-Myers, which manufactured and marketed MUM deodorant in Sweden also supplied the markets
of the Middle East from the Swedish manufacturing unit.
At the usual change of the product and its design of the packaging it happened once that a delivery to Jordan arrived
with the new product, but the importer was informed. The importer hyped, it was not the product which he
incorporated. Customers knew not recognize it. It was impossible to sell the new product in Jordan and the product
was already with custom duty paid at a rate in 100 per cent, the duty could not be refunded when returned. What could
be done?
This is an example of how important it is to coordinate and coordinate the development of new products with different

market conditions. There are great demands on both product development and marketing of innovative international
companies so that conditions in different markets into account.
8.8 Pace of innovation
Pace of development varies from market to market. Deviations are often larger within countries than between some
countries. There are areas, such as metropolitan areas or in certain industries where the pace of development is high,
virtually worldwide. Rural and less profitable industries, by contrast come after.
A product's lifetime can be extended, if one uses knowledge about the pace of development in different markets. In
some markets, old products or ideas are introduced even as news. So, for example, has been in Germany for a few
years ago with a clamping screw for toothpaste, which was common in Sweden in 1940 - and 1950s. In Sweden,
perhaps now a relaunch can be successful. The pace of innovation in a market is an important factor to consider, but
also the fact that some old products can be re-launched as news.
One challenge is that markets are more advanced and have a higher innovation and pace of change than their own
domestic market. In many product areas, the U.S. has such a relationship to the Swedish market and it may be one
reason that Swedish companies often find it difficult to meet the requirements of the U.S. market down.
8.9 Answers to questions at the beginning of Chapter 8
1.Way it is important to technology development and new products in the global economy?
Because the global economy is innovative. Developing new products with better quality is the main instrument of
competition and the companies that do not take advantage of the technological possibilities will soon be following.
2.Vilka are the causes of product development is stimulated in the global economy?
Stimulation occurs in several ways. Different requirements on the product, depending on geography, climate and
culture require adjustments to the product and thus is also such changes / improvements that could be attractive at the
origin market.
3. How can one explain that traditional commodity and agricultural countries like Australia have been so innovative,
with many new products?
The great migration that led to different cultural and other experiences and values are broken against one another have
stimulated creativity and innovation, and increased competition in the markets for agricultural products and raw
materials, which forced a new focus of the Australian economy.
The domestic market is large enough to provide an outlet for new products, in each case as a test market before
exports start of the new products.
4th How can companies benefit from research and education in different countries?
By reading research reports, but particularly by establishing its own research and development close to major
universities with relevant research wherever they are in the world.
5th What is most important to buyers of goods: country of manufacture or the manufacturing company and brand?
Previously, the country is very important now is a trend towards the increasing number of commodity groups is the
manufacturer's label which means more. Country of manufacture of a product can be difficult to detect.
6.What does itS mean for the buyer that the manufacturer complies with a certain international standard?
There are differences between industrial buyers and consumers. Industrial buyers often requires that a set of standards
to be followed in terms of product design and international standards in the manufacture of quality, environment and
ethics have been followed. Conscious consumers are looking primarily for certification that product safety, and
environmental and safety standards have been followed.
Tasks
1. Give current examples of products developed or improved in cooperation with companies abroad. Management:
study such as Electrolux Annual Report. This usually every year there are examples of products jointly developed by
different companies in different countries within the group.
2nd Give examples of companies established in Sweden in order to gain access to Swedish research and Swedish ideas
into their product. Management: search information including the Invest in Sweden website.
Case study
Hans Dahlberg's safe factory AB. Internship The case deals with, among other things how a new product developed
and marketed in the old sales channel disappeared.

9 Property rights for products and knowledge
Questions to answer when you read this chapter:
1. Why is it important that a company protects its brand, its name and its technology?
2nd Is it worth the cost of protecting their brands in many countries in the global business?
3rd Can different ways to protect a company's intellectual property rights linked to better protection is obtained?
4th Where do I apply for international patents?
5th With the introduction of new domain names on the Internet, companies need to monitor this?
6th Requires some form of activity in order to retain the right to a trademark or an internet address?
Additional questions to answer.
How can the unique skills and knowledge protected?
Differences in patent protection against copying in different countries?
Why give the brand the best protection?
How are domain names on the Internet?
What other possibilities are there for the protection of knowledge than the patent and trademark?
A company's knowledge, know-how, patents, trademarks, designs, models, company name and internet addresses are
non-tangible assets that have significant value in marketing the company and its products and services. The need for
international regulatory system to protect these intellectual property rights has increasingly attracted attention and the
World Intellectual Property Organization (WIPO) is the UN body that deals with these issues in order to achieve a
system of rules intended to facilitate the effective protection and reasonable certainty for right holders in order to
promote quality and good living conditions and to create increased value for the countries. WIPO is one of the UN's
16 specialized agents with 182 member countries.
9.1 product that anyone can copy is worth nothing
Even if the assertion in the title is exaggerated, so is a product value is largely contingent upon the ability of the
product has been contributing to company profits. A product for which there is strong competition, often small
margins. At an international scale with large distances are often local producers more opportunities to make the
detailed changes in the product needed to adapt to each market, provided it does not encounter any technical
difficulties and the demands on long runs are not too high. When the product life cycle is longer also increases the risk
that other companies may copy the product and market entry, and discard potential profits while the company that
developed the product may be less deserving.
To protect and to secure exclusive rights to a product is as important as developing new products. Of the various types
of property rights for products and knowledge that a company can use the patent and trademark protection key. While
other protection rights, among them mainly designs and copyright. The various protection law is a different format and
their scope is more or less extensive, both as to the requirements of the products on the characteristics of different
countries.
Trademark and patent policy is particularly relevant for products with long life. For those product areas where it
considers that the development is so fast that the product has a short lifetime, it pays not to seek patents.
The protection of domain names on the internet is certainly no statutory right yet, but when it comes to protecting a
company against abuse of trademark and to give it the "exclusive right" to his name, internet domain name registration
is an important measure to be considered in this chapter. WIPO is working to create internationally accepted and
applied rules for Internet domain names with the International Corporation for Assigned Names and Numbers
(ICANN).
For knowledge documented in drawings, manuals and computer programs for copyright protection apply. With
computer technology becoming increasingly spreading information stored in computer media, and more important to
protect. Computer technology has led to information that previously only existed in some individuals in the company
now is documented in the computer media. It has advantages for internal communication but also increases the risk of
unauthorized use. Privacy and security has been given a greater importance than before to protect it against
unauthorized use of company knowledge.

9.2 Protection of the company's unique expertise
For a company in their marketing to make themselves known, requires that the company is able to adequately
distinguish itself from other competitors. This is usually done by using a particular firm and / or trademark and to
register the mark against infringement.
However, there are many examples where international working company brands copied and tried to do imitations,
plagiarism. Many businesses put down because of high costs to monitor the intrusion and abuse will be prosecuted.
Is the international business major, it will be difficult to carry out surveillance. Patent offices undertake Although this
work, but costs are high. Furthermore, it is not possible to guard against the intrusion of all kinds of brands, such as
family names are very difficult to protect using trademark law. Other people can not be prevented from using his own
name for their own company or its activities. Similarly, words or symbols have a casual or more general importance in
other countries and therefore be useless there.
Trademark law is perhaps one of the main forms of property rights in the company's operations. Patent law is more
limited. It applies only to a particular product or industry practice. Auditors are often limited in time and also valid
only if the patent is upheld. Almost always, certain annual fees paid to the respective patent offices.
The other protective rights of design protection and copyright are simpler in nature and has a partially different
protective effect. Design rights provide for the registration card lasting protection for a few years and usually requires
a small registration fee. It can normally not be extended. Copyright protections may, depending on the type of works
created, broken down somewhat.
Artistic and literary works are automatically a guard that extends to 50 years after his death. There is a degree of
protection which come into effect automatically in most countries. An important exception is in most countries with
Islamic legal tradition, where the copyright will not provide any protection against copying and reproduction. Strength
of protection varies.
In Sweden, copying books and other copyright works in practice, quite freely, without penalty, depending on who
owns the copyright to these works do not have the interest or financial ability to protect their works. An exception is
the music where STIM carefully monitors that copying and public construction is not done without fee. For textbooks,
there are an almost free copy, even though it violates a copyright, and are subject to public prosecution. Many
publishers and authors have agreed to remove the copyright text books to some limited extent, but it has led many
schools interpret it as a free-. The tightening is, however, and perhaps will also have a conviction. The U.S. is
controlling the application of copyright law enforcement far more rigorous than in Sweden. U.S. Customs intervention
such as the import of all forms of copyrighted works, where the necessary permits and agreements for publishing yet
exist.
The protection of photographic images are also covered by copyright law and are regulated in Sweden by a special
law. Design of products, manuals and instructions can sometimes get close to the border when a copyright protection
can be invoked. Could it be that product design is so creative and artistic product that is considered to be a sculpture or
manual, a literary work that the copyright for these parts of the product or manual, but not for function and substance.
To protect themselves against the employee who creates a literary work requires an agreement between the company
and the employee. In other cases, copyright may be claimed by the employee against the company. Photographers
usually retains the right to their images even when they are employed by a newspaper through contracts. The
copyright of the photographic image is 25 years but for images of artistic and scientific value for 50 years after his
death.
The rules vary in different countries and it may sometimes need to take steps to protect their interest. The most
common is that the protection invoked when displaying and publishing by putting out a symbol, eg c (copyright) or r
(registered trademark), to mark the respective copyright registration of a trademark case. In Sweden, the registration
of Patents and Registration Office PRV often through the use of patent agency.
9.3 Patents
In virtually all countries, it is possible to obtain patent protection for a product or method and it can usually also be
obtained by foreign persons. This also applies to countries where private property is usually restricted, such as
socialist states.
That a patent is granted is not always possible to exploit the patent, as it may conflict with or require the use of other
patents. In the latter case must be agreed with the patent holders who have other patents, the use of which are required
for a patent to be exploited.

9.3.1 Rights of prior use reduces the patent value
Other people or companies may already have used the technology or the methods that the patent covers. This so-called
rights of prior use and reduce therefore the patent value.
Provisions relating to rights of prior use of the patent or patented invention in several countries, including the Nordic
countries, and in the Netherlands, Switzerland, Germany and Austria. However, there is not in the U.S., where the
patent only to be the truly first inventor, and there is no need for rights of prior use.
9.3.2 A compulsory license may be granted if the patent is not used
Often the patent associated with the requirement that a patent is exploited, ie the patent loses its value if not used. This
gives the opportunity to grant a compulsory license. The companies that want to use the patent may, following
consultation with the courts to obtain access rights, if a patent is not exploited. Often, the courts have interpreted it as
the manufacture under the patent must be done in that country, in other cases, a compulsory license is granted.
9.3.3 patent protection varies
Patent protection varies usually between 15 and 20 years. It is not enough merely that the patent granted in one
country, the patent so that it is valid in other countries. It is therefore necessary also the patent in other countries where
it is relevant to the protection of the invention. We talk sometimes about the world of patents. Such a thing does not
exist, but what is intended is to be protected in all major countries. Thus, companies typically need to make patent
applications in all the countries where they want to protect their rights, during 1960-1980-figures are usually about 20
countries. With the globalization that has taken place with increased skills and standards of living in a very large
number of countries, the situation has drastically changed, perhaps for now about 40-50 countries in all continents for
full protection.
Through the establishment of a European customs authority which has its offices in Munich, it is now possible through
an application to obtain a European patent covering the EU and the contractually affiliated EFTA countries. National
patents in Europe has not had its day because it costs less and does not require the application documents in foreign
languages. Particularly on protection is needed only in one or more countries within the European national patent may
be preferable.
9.3.4 The cost of a patent can be large
The costs of seeking a patent is usually 20 000 - SEK 25 000 and is therefore not insurmountable in a country. But
when a company needs to protect its patents in several countries, perhaps 10-20 or more countries, costs are often very
large.
If individuals or companies to protect a patentable invention need to apply for patents in some twenty countries, the
cost can quickly approach the hundreds of thousands of crowns, and this even before the marketing of the product
shown what the product actually goes on, because you usually can only be patentable new inventions.
Does the product or invention already become known, it is too late to patent it. The requirement of novelty complicate
thus test marketing, and similar evaluation procedures before the patent has been applied. A certain margin of time
given, however. Patents need not be sought simultaneously in all countries where protection is desired, but only within
six months in some countries up to one year after the first patent obtained.
9.3.5 The patent provides protection
It often takes considerable time before the first patent granted. Protection of a patent is obtained, however, in that
patent application is filed for the product or method. In the meantime, until the patent is granted, the product can be
tested, marketed, etc., and the need for patent protection assessed.
While any reading of the first patent application usually takes one to three years need patent application is not filed in
other countries. If the market testing during the application period shows that it is not necessary or useful to protect
the product requires the company did not have any cost for applications in several countries.
With regard to patent protection effects need to be considered that in some countries, patents are granted only after
careful examination of the Patent Office. Patent owner can be pretty sure that a granted patent is valid and that the
exclusive rights to the invention is. In other countries, among others in France, however, is only the registration of
EPO. Any patent search is not done and it can very soon turn out that other companies have already done and use the

invention. The patent then becomes more or less useless in the worst case is not completely worthless.
In some countries there are also a variant of the latter type of patent protection, namely the German
"Gebrauchsmuster, sometimes referred to as" the small patent ". The invention is not checked and it is possible to also
obtain protection for lesser qualified inventions. Gebrauchsmuster similar to the type of action or the patent protection
available in France.
9.4 Trademark protection
Trademark protection can be obtained in most countries. The requirement is that the brand has a name that
distinguishes the product from other products.
General commercial names, which is used by several companies, can not be protected. It may even happen that
trademarks were protected becomes too well known and is associated in many countries with a product, for example,
Kodak for cameras, for Singer sewing machines, the Vespa scooter and Electrolux vacuum cleaners. When a brand
degenerate in this way, there is the risk that the protection of the mark may cease. Companies that realize that there is
a risk that the brand becomes ubiquitous for the product can either launch one or more competing brands on the
market or advertise, where it is clear what is the product name and what is the brand, such as "The most reliable
vacuum cleaners manufactured by Electrolux."
Trademark protection is obtained by registration or incorporation. The action that provides protection varies by
country. Sometimes it requires both registration as their incorporation of trademark protection.
Application for registration must be renewed, usually every ten years in Sweden, it must be done every five years and
in the U.S. every twenty years.
Through protection prevents other companies from the partial or total use of the mark. The protection is usually
limited to one country or a few commodity groups, other companies can thus use it for other product categories.
For the enlargement of the EU found it not reasonable that firms would lose their brand or that some companies would
have to change the brand or company name. It was introduced as a rule that already use the trademarks and company
names would be valid throughout the new EU. No major problems have been marked by this, because firms with the
same brand still had different logo and worked in various product areas.
In countries where only one is required, you can protect the brand long before the marketing begins. There will even
be less scrupulous people blocking the trademarks by registering internationally renowned brands. The waiting since
firms to introduce their products into the country, so that they can request a hefty compensation for lease "their"
brands. Incorporation or registration, plus incorporation must therefore start early, so that no other companies are
blocking mark.
9.4.1 Choice of brand
A trademark must be easily recognizable, easy to pronounce and may not give unpleasant connotation. The brand
should be in all the countries and all the places where it is used as a symbol of a particular product, make a direct
positive associations with the product it represents.
Potential for use of a brand internationally is strongly limited by language, local customs and practices. That of an
internationally operating companies to quickly find and develop new and appropriate brand is difficult. Some
companies have therefore systematically put up special register of trademarks and registered them for possible use in
the future, when they develop new products that they wish to advertise.
9.4.2 Designing Trade
Some brands have been launched with great success and become viable in many countries. The possibilities of using
the international media increases in marketing, on a single brand can be used even if it is limited to a certain number
of countries. Although the benefits of being able to use the same packaging as well as to distribute and stock the
products to different markets is increasing, on a single brand can be used in multiple markets.
It is increasingly difficult to build new brands. The simplest combination is already occupied by other companies.
Constructing trademarks are viable in all countries, is probably almost impossible due to conflicts with local brands,
and because of the brand is inappropriate from a linguistic and / or cultural point of view.
9.4.3 Domain name extension of the brand
Domain names are now an important part of the company's brand strategy. Domain names are obtained through

registration with the domain responsible organizations.
Domain names are part of a domain structure with top-level domains and domain names. TLDs are administered by
ICANN, which cooperate with WIPO on the registration of domain names in different TLDs.
Top-level domains are essentially three categories; ccTLDs such as. Com. No for Sweden, Norway, respectively, top-
level domains with restrictions on the use of. Aero,. Coop and. Museums and top-level domains that are open.
Top-level domains are administered by the national domain by any authority or any national organization. Exceptions
occur where a country has awarded the management of a company that does not need to be active in the country. Top-
level domains with restrictions often administered by an organization that verifies that the person wishing to register a
domain name belongs to the industry, activities such as air traffic for. Aero, and that the recording has the right to the
mark, etc. that registration. Open the top-level domains is usually administered by a unit within WIPO.
Domain Registration in the different domains have different rules for different domains. Usually requires some form
of documentation of the rights of the employee's name or trademark is usually a registration certificate from the
concerned authority. Since it is relatively easy to record both the companies and brands in most countries in the name
that has not previously been used in the country proposed for people registering domain names which they believe will
later be of interest to large companies wishing to establish a local presence in the country.
Several companies often work under the same acronym, and then apply to the first company to sign an acronym has
the right to the domain name.
Example
Www.sas.com domain name owned by the company Statistical Analysis System, Inc. is a privately owned large
software companies headquartered in the United States. The Scandinavian airline Scandinavian Airline Systems using
the domain name www.sas.se / no / dk but not with the domain name com. The likelihood of confusion is small, but
customers of the airline may be making several attempts to find the right domain.
The right to command a domain name registration fee and an annual fee. Not paid the annual fee shall extinguish all
rights to the domain name. Because there are many second-level domains, if a company wants to protect itself against
confusion register on many domains and do it before everyone else. WIPO is working to provide recommendations on
how and on what grounds a domain owner can be forced to give up a domain name which only registered in order to
mislead Internet users or to receive payment from the rightful trademark holders. At the creation of new SLDs has
successfully a "Sunrise period" used in which a simplified procedure for dealing with complaints concerning improper
registration of domain names used. Certain types of domain names has not been authorized, such generic names as
health, games and money . The number of objections to the registrations for the introduction of new SLDs have been
over 80 000th Many companies want to protect their name and brand were among the first to register domain names in
new TLDs.
Although the registration fee low for the registration of a domain name but with regard to the number of TLDs, and
other national, is the considerable amount that must be invested in protecting your company name and brand names.
Moreover, although similar acronyms may need to be protected in order to obtain adequate protection. This is also
done by many companies. WIPO has a center where objections and complaints can be addressed with regard to
improper use of domain names.
9.5 Designs
Design rights to the product's appearance and shape. For the protection required, however, an "artistic" designs. It is
therefore not a technically perfect and functional solution. The product needs to have a special design or other
aesthetic values.
Most products can of course be designed with a different
design. But it has succeeded in producing an attractive and in all respects, market driven product, design protection is
no less interesting for companies and designers such as patents for the inventor.
The right to a pattern or design can sometimes be the only way to protect a product. Often the design protection is a
useful complement to patent protection. In some respects, the design right up to superior. Design rights are also
usually both cheaper and easier to administer than patent protection.
9.6 Confidentiality
Confidentiality is certainly no legal protection but are sometimes superior to safeguard and it is always a prerequisite

for preparing the documents necessary to obtain other means of protection and an excellent complement to his right.
By restricting the dissemination of such information is only needed internally in the company and not by customers of
its use can be a valuable protection obtained. Staff who need information should not be in the company can be using
confidentiality agreements to be made aware that information and knowledge not being circulated.
Agents, importers and retailers and their staff can similarly by confidentiality agreements are motivated to not pass on
this information. Effect of non-disclosure agreement can sometimes be legally strong and damages can be deleted by
significant amounts. But the standard is that it does not have any major impact because the injury must be proved,
which can be difficult. More common is already the confidentiality agreement stipulate an amount to be paid for
breach of confidentiality rules.
Individuals may, in most countries, yet deprived of their livelihood opportunity and the knowledge it can not be
prevented from using in their professional activities. A leak of knowledge arises even if it is not as great as if the
knowledge was recorded and sold freely.
Privacy has been in many companies proven to work for a long time. Production methods and recipes have been
preserved and to assure businesses that have succeeded in continuing competitive advantage. Confidentiality may,
experience shows, be of more value than patents, which the security expires.
9.7 Answers to questions at the beginning of Chapter 9
1. Why is it important that a company protects its brand, its name and its technology?
Because otherwise the other companies trying to register for these technologies, these brands and names as his. This
may mean that it loses its rights, or at least not hinder competition.
2. Is it worth the cost of protecting their brands in many countries in the global business?
It depends on how far their ambitions are, in how many countries you want to sell their products and the risk that it
loses the right to their own brand by any other company will dominate with this brand in the international media in a
way that the local protection as it has in a single country will be relatively useless.
3. Can different ways to protect a company's intellectual property rights linked to better protection is obtained?
Yes, an excellent example is the patent that can be "given a large protective effect"
4. Where do I apply for international patents?
There is no such a patent without the patent applications in a large number of individual countries.
5. With the introduction of new domain names on the Internet, companies need to monitor this?
Yes, companies need to monitor this and apply for registration in the new domains, if they consider that they may
suffer otherwise.
6. Requires some form of activity in order to retain the right to a trademark or an internet address?
Yes, it requires periodic fee paid for the domain name usually every year and marks the varying time intervals, in
Sweden, it is every five years.
Tasks
1. How common it would seem that a company register its name / brand on multiple domains? Management: Select a
few different business names / trade marks and test about 20 domains.
2. Is the same material, eg pictures and text, in various national domains that a company uses? Look at any large
company websites, like corporations resident in different countries.

10th International marketing
Questions to answer when you read Chapter 10
1. Can the same ads and the same argument used in Sweden for global marketing?
2. Is there advertising agencies who can take overall responsibility for effective marketing communication?
3. What factors are needed in the design of advertisements in different countries?
4. Internet advertising can be equal, regardless of the country?
5. Are there economic advantages to coordinate the artwork used in Internet advertising?
6. There are customers who travel frequently, affect the design of advertising?
Additional questions to answer.
Is there any difference between the commercial communication at national and international marketing?
What are the possibilities for economies of scale by coordinating marketing activities in multiple markets?
What factors should be taken into account when dividing the market into different segments, for which various
commercial activities are planned?
What can be done by coordinating efforts to communicate its message to the market?
Consider the advantages of coordinating commercial activities or commercial communication should be done locally?
10.1 commercial communications scope and purpose
Marketing Communications aims to make the company and its products known and to keep awareness of the company
and its products current with customers and other people who make important decisions for the company.
The commercial communication is addressed generally to all customers and potential customers, but the international
business it is sometimes the case that other groups of importance to the company's ongoing and planned activities are
the key audience for the communication of that undertaking. Such commercial communications can be directed to
politicians, union representatives, administrators in the state and municipalities, financial institutions and equity
investors. Tailor the message especially after what has the greatest effect on a specific audience in a country, the
communication when it reaches the other populations have a negative effect. Are the differences in the message too
large, felt this as an annoying and can sometimes cause direct harm. Messages intended to influence asset managers to
invest in a company's shares or bonds are often other content, and communicated via other media than the message
intended to influence consumers or other purchasers and users of a company's products.
In all communications to the market independent of the submarkets, outlets, purchasing, capital and labor for
companies striving to achieve efficiency. Would be desirable if the same message could provide a good
communication power with the desired effect in all or most audiences in several countries simultaneously, mens, it is
almost never.
Design and planning of marketing communication is complicated by the variety of situations in different countries and
different sub-markets. Knowledge of the markets, which is important to have a functioning commercial with, must
therefore exist. The central charge of the commercial communication must have access to data to assess when it is
required that they make use of expertise and need to be extra sensitive to complaints from the company's
representatives in the various markets. It may be true that organize the commercial communication so that local
representatives and the company's own subsidiaries can influence and ultimately have a veto right with respect to
advertising, SP and PR activities, the format and content of its market. Coordination and economies of commercial
communication in terms of campaign design can bring significant cost advantages on the same material, images and
arguments can be used. Efforts to develop a common material, however, requires more extensive planning and long
term. Although the time and costs will be multiple calls may be true in situations where the original development and
production costs, providing significant economies of scale.
In different countries and in different submarkets can the knowledge of the company and its products may be different.
In addition, the products are in various stages of the life curve. Knowledge of how and why the product is used can
also be linked to the product's place in life. See Figure 1.2. Often obtained better results in the commercial
communication adapting to local conditions and circumstances are carried out despite double or multiple duplication
of development and production costs.
Although the distribution of commercial communications efforts during the year affected by local market conditions,
for example, of the seasons, in the case of seasonal products. Cultural and social conditions can affect how and why a

product is purchased - as a gift or for your own needs - as well as buying time, eg for some weekends or holiday
periods.
10.2 Different target groups for commercial
Different target groups can be, for example:
1. users
2. media
3. funders
4. personnel, labor
5. suppliers
The main target group is usually the users, be they consumers or businesses. Companies in the supply chain as well as
opinion leaders is also important.
Communication with the media is important. A large multiplier can be obtained if the media take up and deal with it in
the editorial, its products, shops and activities.
Funders are often crucial to a company's growth and profitability. The donors either for the purchase of new capital,
borrowing or making sure credit is easier to take a stand if they know anything about it, before making an application
or presenting an offer aktie-/obligationsteckning. This is true even when the financiers will finance a customer who
buys a new facility or a new system. Bank of the customer's country may not know about the selling company or its
product excellence. Export financing or the seller's bank enters and gives the customer the credit can be a workable
solution until the awareness among the financiers of the selling company and its products increased. To maintain a
share price developed positively also important. This makes it possible to expand at a lower cost by paying the
acquiring company's shares. Before a purchase is implemented in a country where it is not yet operational, might be
important to timely make it known through direct and purposeful communication efforts.
With regard to personnel and labor, it is important that staff with the right skills and with good motivation can be
recruited to affordability. That the company is known as a good employer is important. It is especially important that
the company has good relations with the unions in the countries where they are strong. In markets where unions are
weak, a balance having to be done so that it is perceived as union-friendly so that it damages relations with companies
in the local market, be they customers, suppliers or competitors.
In what follows, this chapter mainly be devoted to such a commercial designed to promote sales of its products.
10.3 Coordination of resources and local adaptation
Market conditions vary considerably. It is therefore necessary to ensure that local expertise in various markets will be
jointly responsible for the commercial communication design.
The central coordination of the initiative and to the commercial communication is usually from the parent, where the
marketing department has central responsibility for sales and communication objectives. The planning of commercial
communication, size, message, time, and the media must take into account all the characteristics of local markets
require. At the same time the central marketing department take the initiative and responsibility for the long term
strategy for company growth and profitability.
It can, and sometimes both right and necessary to implement market measures that are not supported by the local
subsidiaries and representatives. But before any decision on commercial account is an advantage if the central
marketing department and those responsible know why and have good reasons to pursue actions that are not locally
owned.
Figure 10.1 shows the principle of how a good local support can be achieved when an advertising agency hired to
assist in the coordination of the international commercial communication. Of course, there are alternative ways to
achieve such coordination. This example is presented only to give greater weight to the argument that coordination
needs to happen and that when deviations are taken, to be aware of this.
FIG
Figure 10.1 The figure shows the organization of work in planning and implementation of an international advertising

campaign.
The planning of an international campaign that has been the central marketing department as principal may be
organized as shown. Advertising agency, is assigned to coordinate and develop the commercial communication and
uses its own subsidiary firms / cooperative agencies for local contact with the principal's subsidiaries or
representatives. Several tasks related to the implementation of a campaign can usefully be given to the local
advertising agency. During the planning involved the local advertising agency with comments on the campaign's
desirability, arguments, scope, schedule, media, etc. The local agency may, through their experience with commercial
on the local market to effectively complement the selling company's own representation in the market, either now so
that local firms have the same or a different view towards the client's marketing department or the lead advertising
agency. By two local partners with various clients is to comment on and further develop the intentions coming from
the central marketing department and the lead advertising agency, the local parties and probably better understand
each other and easier and clearer than just the local corporate representation to justify and explain their demands for
local adaptation in different ways.
The likelihood increases that the central marketing department and the lead agency takes better account of the
requirements for adjustment and that a total of more well-planned and successful marketing campaign is obtained,
either for a joint campaign and local campaigns with a common theme, if warranted.
10.4 Adjustment of different parts of the commercial communication
To market communication will work best to require that all elements interacted. The message, its sender, the choice of
media and brand creative design and the message must be sensitive to culture and values, and the media's
technological capabilities. In addition, market communications in such a way as to reach the target, requiring
adjustment of the communication budget to the situation in the market.
10.4.1 Text and layout
The message of the commercial communication is expressed in words and images. A common measure to coordinate
the commercial communication is to use the same images and layout and to change the text between different
languages. The message is nevertheless a whole, not an image and a text portion, and it is important that the text and
image work together effectively. Despite this knowledge, it is common that even relatively large firms translate a text
that is designed for the domestic market and the same artwork, often in color, accompanied by text in the target
language.
To translate text advertising is a highly skilled work. Strong language skills are not enough. It is also necessary to
know the language and the fashion terms and phrases the target group is currently using. The person doing the
translation need not only know the language to make a translation that is understandable, but must also be sensitive to
the current target group language therapy in order to design the text so that it is perceived as intended and do not seem
childish, archaic, vulgar, pompous, etc. People with never so good language skills, even if they are native speakers,
comes after a period of time in a foreign country to lose the daily contact with their own language and this is
particularly the case in the jargon of technology develop rapidly or teenage jargon. A translation to be good also
requires the language nuances and messages tailored to the current situation of the target group. This may mean that
some arguments in the original text may be abolished and that the other arguments and appeals have formulated and
put into the text.
Personnel in its subsidiary and of Representative can sometimes do a good job of proofreading and translation, but
usually lack the time and training in this area. The local advertising agency, as its advertising agency working with the
foreign market, can often do a good job if it has experience working with international clients. Although the layout
and image material can be adapted to local conditions. While local adaptation may have normally operated so far,
there is evidence that foreign language and image elements of the ads can be effective, but this is usually
communication directed at minority segments that have distinct preferences for the foreign country / language.
10.4.2 Brands
To market a product under the common brand might be regarded as an obvious measure. Discrepancies are mainly
dictated by the brand you normally use is listed on the local market, or so much like an established brand that the risk
of confusion. Trademarks may also contain symbols or parts of symbols and geometric shapes that can be confused

with religious symbols, which can be negative in some countries and among followers of some religions. A company
that has such a trademark is sometimes forced to change the brand to at all be able to market their products and in
other cases it may be a profitable operation despite all the consequences in the future.
Companies that have grown through acquisitions of companies may have many brand names. Some of these brands
may have a very strong position in local markets. It can be advantageous to maintain these marks for two reasons:
first, it provides better customer contact than a new brand, and there is the risk that competitors for some time can start
using the closed "brand" if it is not protected, eg through continued use of countries where the use is a requirement for
trademark protection.
In order to eventually coordinate the trademarks of a company that has grown through acquisitions, a strategy of dual
brands of products as an effective way to teach customers the new "global" brand.
10.4.3 Selection of media
The choice of media is intimately related to the situation in the market. The Internet has since the first programs to
surfing the Internet Mosaic, Netscape and HTML was introduced in the early 1990s, quickly conquered the world and
is now an obvious medium for marketing communication in global marketing. Traditional media still has a dominant
position when it comes to communicating with the market and often complements traditional media and internet
together. What is the media and which media are effective in communicating with different audiences? Conditions in
individual markets may vary considerably. Especially for Swedish companies that only limited access to radio and
television commercials can be big changes at the introduction of products into new markets. Advertising message can
also be adapted to the local media and their normal language and image culture. This can also be a question of
adapting to the technical quality of the media. Media Consultants can assist in the selection of media and particularly
the international trade press is good media consultants in Sweden. Communications with consumers, it may however
be necessary to employ local media experts, either directly or through advertising.
10.4.4 Advertising message
That a single advertising message is hardly possible in all markets we have seen before. Fairly simple message of a
fundamental nature, such as to quench thirst, and satisfy the basic needs, can often be used together. Examples of
companies that have used and use the uniform advertising in many countries is Coca-Cola and Exxon. That companies
use a common message, however, no evidence that it is the most effective strategy.
Swedish companies often work with standard arguments in several countries. Ikea has drawn on its Swedish origin,
using variations on that theme in several countries and with success. Volvo has taken up the safety and use this as a
theme for their cars in different markets, even if the design in detail is locally adapted and media choice. Ikea's main
media is Ikea catalog and department stores. Ikea catalog has essentially the same form irrespective of market
different versions of the catalog, but in the same format. Essentially, only the text that varied in Ikea catalog, the
world's largest printed with an annual circulation of several million copies. To a common layout and common images
provide cost advantages are obvious and this is especially for the smaller language areas. Department stores are also a
medium for marketing communication, where IKEA seeks a measure of uniformity worldwide.
10.5 Internet as a channel for commercial
The design of advertising messages on the Internet are subject to the same requirements for local adaptation as any
other advertising, but the possibilities are many difficulties and partly different. All open Internet pages are available
everywhere. This means that advertising your readers if they wish to take advantage of advertising for a different
market from where they operate. Several advertising message that is well-formed for a market can, if they are read in
parallel, possibly perceived as contradictory. Images that provide a positive experience of the product and its use in
another market seem repulsive, so due to different culture and religion. Quotes can also be embarrassing when
customers quickly get an idea of the price of the product in different markets. The simplicity of using a database of
information to be published on the website makes it easy to publish Web pages in different versions for different
languages, and to customize information for different markets' needs and purchasing power.
By allowing customers to register themselves at the first sign, possibly by also giving them their own user ID and
passport code, it is then possible to track customers' reading different pages on the site and to customize information
for them. All according to a registered customer profile, and language and culture and religion.
One of the major Swedish companies use global including Procter & Gamble's website for diapers as inspiration for
their own development of the site.

10.6 The effectiveness of the international commercial communications
Commercial communication in a global company are normally conducted on the respective subsidiaries and those
responsible for different product groups according to their own budgets.
Example
CEO of Samsung, Mr. Eric Kim, who observed that it was the way of Samsung, with sales in over 200 countries and
more than 14 different product groups, decided to try to improve the efficiency of commercial communications by
setting the goal of any cost for commercial would give as good returns.
The work was carried out in the Samsung can serve as an inspiration for most companies with international sales, and
are reported by Marcel Corstjens and Jeffery Merrihue in Harvard Business Revue October 2003. In short, the work
consisted of identifying markets in accordance with the following criteria:
1. Population size and population of the target group
2. Purchasing power per capita
3. Individual purchases within the product group
4. Market share within the product group
5. Overall growth in the product group
6. Market share of companies within the group
7. The cost of advertising media
8. Earlier marketing costs
9. Product group profitability
10. Competitor Information
When this was done was that for all product groups in all countries to estimate the increase in sales as it would be
possible to achieve a given cost. Subsequently approved marketing costs down when it expected sales growth was low
and when the expected sales increase was large. Money Marketing was transferred between countries and groups of
products to the markets and countries where yields would be highest. This work has given Samsung a good overall
sales growth, although in individual markets occurred that market share may have declined. Study like this article in
its entirety.
10.7 Concluding comments
Marketing communication is the key to success in global marketing. There is need to adapt to different market
segments and different sub-markets is the main criterion for global and domestic marketing. At the same time
alignment and no shades of commercial communication, which is perhaps the biggest and most challenging part of
global marketing. Although the countries united by common markets persist for a long time cultural and linguistic
differences that allow a suitable commercial can provide decisive advantages in the competition between companies.
10.8 Answers to the questions at the beginning of Chapter 10
1. Can the same ads and the same argument used in Sweden for global marketing?
Only in exceptional cases. The possibilities are far greater in terms of industrial goods than for consumer goods. It
always applies to commercial communications must be adapted to the target and the target audience both knowledge
and practice to use a particular product as a linguistic and cultural adaptation.
2. Is there advertising agencies who can take overall responsibility for effective marketing communication?
Hardly, there are certainly those who think they can do it, but check in this case carefully.
3. What factors are needed in the design of advertisements in different countries?
What needs to be considered are culture, language, and variations in language, the product's location in the product
lifecycle as well as purchasing power and in the case of consumer products including family structure.
4. Internet advertising can be equal, regardless of the country?
No, even advertising on the internet are great benefits to local adaptation.
5. Are there economic advantages to coordinate the artwork used in Internet advertising?
Yes, for certain groups of countries can be an economic advantage, but the effect will be better if customers recognize
its position in the images presented on the local internet pages.
6. There are customers who travel frequently, affect the design of advertising?

Yes, "global" customers and not least vacationers traveling to another country may be affected if they see that the
product is marketed in a different way than "home". If it is positive or negative needs to be analyzed, it can be both.
Tasks
1. Write a list of products commonly purchased by the Swedes at the overseas trip and then used in Sweden.
Complete the list of what you think is the reason why the Swedish tourists buy these products at a trip abroad.
2. Try to find products that are marketed in Sweden with a call to buy them on a trip abroad. Make a list.

11 Organizing global marketing
Questions you can answer after reading chapter 11
1. SWay it is necessary with the local sales organizations in various markets in the global marketplace is becoming
more obvious?
2. How can it be that major global companies use different forms of distribution network in various local markets?
3. Can a global company's products and services sold in different countries through the same kind of distribution
channel?
4. What are the implications of the new opportunities to organize and carry out distribution work as Internet and
mobile phones mean?
5. Is there a case for transferring some of the functions of a global company from the local distribution and marketing
organizations to regional or global level?
6. Will in the future, more goods and services to be marketed and shipped from a centrally located office rather than
through a distribution network with offices in many countries?
Additional questions to answer.
Distribution should be uniform or different design in different markets?
How does the product choice of distribution channel?
How does the product's place in the life choice of distribution channel?
The distribution channel provides the greatest freedom of action?
Is there a distribution channel is best?
1.11 Different types of distribution channels
When marketing on the domestic market, companies often employ no more than one or at most a couple of different
channels of distribution by product. Distribution channel can consist of wholesalers and retailers in a particular
product area, such as groceries, food, radio, television or engine parts.
In global marketing, it may however be necessary to use multiple distribution channels. Across countries may in the
established distribution channels and product structure have significant differences. Products in a country is distributed
through a channel can be in a different distributed through multiple parallel channels and a third through a channel not
used in the first or second country. Use of the product can also vary between different markets depending on local
conditions so that the number of purchasers and the quantities purchased may vary significantly across countries.
The requirements for a sales and marketing organization is to act effectively and reach the customers you want to
achieve with the product. This requires the international marketing of the principle that the conditions for distribution
and marketing continuously identified, analyzed and that the channels are used that are deemed to work best in each
market in the current market. Too many different solutions, however, mean that it becomes difficult to coordinate and
control the marketing activities of the various markets. A compromise may be necessary for home organization should
not have to be too extensive and costly.
Transport costs and trade restrictions of various kinds may lead to even local manufacture all or part of the product is
justified, something that also affects marketing and distribution organization.
Distribution and marketing organization consists of two steps:
1. export / import and
2. distribution and marketing in the local market
These two steps are often intimately linked. The choice of solution for the first step is often critical to the design of the
second. It is therefore important to study the conditions for the second step, prior agreements and linkages are
established in the first step. Sometimes there may be freedom in the second stage design and organize the local
distribution and marketing without the solution of the first stage is affected.
For export and import function, usually the following types of distribution methods exist:
1. licensing or joint venture agreement
2. trading houses and agents

3. foreign importers
4. direct sales to local wholesalers and retailers
5. wholly or partly owned subsidiaries
6. Export conjunction with other companies
Direct export to the final customer is not an unusual occurrence, particularly for producer goods which are used by a
few producers in some countries. An increase in direct imports of consumers have also occurred since internet trading
became possible. To engage an intermediary in situations with very few customers will often be more expensive
marketing and distribution.
The choice of distribution channel in the first step involves not only a channel to physically distribute the goods and to
transfer title.
It also means different opportunities to work effectively market, to continuously obtain information about customer
needs of consumers and industrial buyers and their attitudes, as well as the same information on competitors, and to
convey payments.
Figure 11.1 Overview of the degree of influence by the parent at different design of the marketing organization.
The choice of distribution channel (s) also affects the design of the central organization to coordinate:
1. design and adaptation of product
2. planning and execution of marketing activities
3. service and warranty obligations
Opportunities to influence and direct marketing activities is obviously greater in the central part of the supply chain. In
situations with high demands on the direct control options may be necessary to the exporting company itself owns the
companies that carry both import and wholesale operation, and sometimes even the retail function. The service
function is owned by the exporter is not uncommon for companies selling products with new technology, which
established service is not available.
Figure 11.2 Profiles of the establishment of forms of representation have changed over time of two Swedish
companies with extensive international operations, Sandvik AB and Facit. Remarkable is how the early expatriation
active Sandvik undergone a number of development stages and it took quite a long time to build up foreign operations.
To sum up, the establishment has been relatively fast and concentrated. Figures are taken from the book Vahlne
(1972).
Construction of a new distribution network requires a major investment and a relatively long time. To achieve the
sales targets are control and motivation of key aspects in the design of the organization. Intermediaries can provide an
established organization that also offers the advantages of a wide range can provide.
Marketing can start faster and initially provide a better sales performance of product, price and market measures are
right and the staff motivated.
Development of an international market is nothing, other than in exceptional cases, occurs after a pre-prepared plan,
but a process where the market after the market opened and the choice of channel, perhaps as often happens at the
instigation of a foreign intermediary. To build a sales and marketing organization is now faster than before, including
the Swedish software companies an example, Intentia International AB, Telelogic AB, which is more quickly
established itself in many markets and even in remote such as Australia and India.
Altitun was a company formed in 1997 related to the Royal Institute of Technology, KTH and research at the Institute
of micro-electrical center, IMC (now Acreo). The company worked directly on the international market both in selling
their products, recruit staff, board and obtaining venture capital. Altitun sold after five years at the Minneapolis-based
company ADC of 8 billion Swedish kronor. The market for the company's products were primarily the global fiber
optic networks in which their product, a tunable laser, was a key component.
11.2 Long-and short-term consequences
Any construction or modification of an organization is an investment, for which the requirement for viability. The
economic life of various investments in a marketing organization varies between different options. Although the
revenue side is different for different types of investments.
A certain type of construction or modification of the distribution channel may require a relatively low investment, but

it can in return provide a low turnover or a bad result. Another type may require a larger investment and longer
payback, but it may in turn lead to better results.
The biggest problem in the choice of distribution channel is often to assess the outcome of sales and the running costs
of each option.
In addition to requirements for profitability must also take into account the need for flexibility in terms of the future is
to extend an existing investment or to recover any of the invested capital upon dissolution. The possibility of
recovering the capital invested in the settlement of a sales organization is usually very small. In contrast, the choice of
distribution channel for the initial response to a foreign market become critical to the company's ability to expand or
dismantle the distribution channel.
Figure 11.3 Before deciding to use a particular distribution channel for a new market, opportunities should be given to
different periods to adjust the distribution channel to the demands of the market down.
Regarding the need for flexibility, one should consider the following stages in the development of a market:
1. initialization
2. development
3. stabilization
4. settlement or the expansion
Regardless of how proactive a company is in the choice of distribution channel in a foreign market, it always occurs
sooner or later demands for change. The causes can be multiple and involve both expansion and shrinkage of the
business. The figure shows that in the fourth development phase. When the market demands and increase the size, or
fold, it's usually easy to align efforts in their own subsidiaries.
When middlemen hired, legal ties to them significantly complicate a revision or a change in the distribution channel.
Some possibility exists, however, that already at the first choice of distribution channel through various measures to
retain certain discretion.
Measures that can facilitate further development of supply chains can be:
1. to agree on a development where the intermediary is an attractive task in eg a future subsidiary or joint venture, and
2nd agreeing to the intermediary at a future reorganization shall retain an attractive återförsäljardistrikt (the best
district).
The need for flexibility often makes multiple distribution channels employed in parallel, both in the first stage in the
second. At one market, it is sometimes advisable for certain product groups and major customers or processing market
directly. The observation of them can possibly be done through an agent, whose market is limited to certain named
customers. For the processing of small retail customers and hired its own subsidiaries or importers who organize
distribution through one or more stockholders.
Different agents and importers in different parts of the exporter's product range and brands are common in the major
exporting companies. Rationalization and restructuring of the national distribution during 1970 - and 1980 undertaken
a number of Swedish export companies' markets. To preserve and enhance the competitiveness of the market has been
above all a need for a more efficient organization in which the distribution function is divided into two stages. This
has sometimes resulted in significant staff reductions in the sales companies that focused on being responsible for key
customers. Independent distributors have been given responsibility for small customers and they have proven to be
able to do so as effectively to the market share of exporting firms' products increased. Examples of this successful
development is by including Sandvik, Atlas Copco and SKF.
11.3 Cooperation between the home organization and distribution channel
Collaboration between sales organization and the parent must be organized so that it can function effectively and
contribute to positive development. It can be difficult to interact with independent companies who clearly is seeking to
develop their own activities. Even in its own sales companies, there may be elements of independent goals and
intentions, which may conflict with the parent organization's goals and aspirations. In order to achieve success and
growth relies on a mutual ability to understand the various conditions and to establish good relations, so that the
various parties' ability to and interest in the interaction develops. It may be easier in smaller organizations take into
account the various markets needs and requirements of adaptation and individual contracts.

Large organizations operating in multiple markets must consider how to coordinate efforts. The choice of distribution
channels in different markets must be made so as to facilitate the management and coordination, and limited domestic
organization's costs.
The various markets are, however, differ in size and require more or less comprehensive development of the various
organizations. The degree of centralization and decentralization of decision-making will depend on how big the sales
organization is, its design, market practice and individuals' preferences and abilities.
The requirements for home organization should be considered in any choice of distribution channel respectively for
future expansion of a local organization.
The choice of form of distribution is often dependent on the availability of intermediaries. Appropriate intermediaries,
such agents and trading houses, perhaps lacking in the market. Restrictions or even ban the establishment of own
subsidiaries may also occur. In most cases, it is possible to select distribution channel.
11.4 Direct or indirect advertising
When choosing a distribution channel that provides opportunities for a strong and solid market contact, it is customary
to speak of direct marketing. Their own local organization in the form of a subsidiary or a branch, usually leaving a
large and secure interface.
For indirect marketing is direct contact with the market generally weak and almost non-existent. Thus, if we rely on an
importer or a trading house in the local market, will contact the surface relatively small and uncertain.
The user product manufacturer
Indirect marketing-friendly product consumption, not Small business
Mass Produced occasional use several products
Low well-known spatial user density Low export share
General quality of poorly developed countries scattered export
Weak low-value commercial structures, several uses of the product
No service requirement
Anonymous commodity, commodity
Direct Marketing
Special good production be big business
Individually designed Regular use Few products
Instruction Requirements High user density High export share
High Quality Used in advanced countries, concentrated export market
Service Requirements
Brand to be completed in the trade organization Few uses of the product
Figure 11.4 The figure shows schematic relation between the distribution channel structure and the indirect or direct
contact with the market depending on supply, manufacturing and user characteristics.
The best contact is achieved if the manufacturing company has direct contact with the customer. The more
intermediaries entering between the manufacturing company and the customer, the more indirect your marketing
becomes.
The need for contact with the market varies from company to company. One large company which produces a special
product, which turns to a few producers on a small, well-functioning market, usually have a strong need for a great
and safe interface. A company that produces a mass-produced and well-known article of low value in a country with a
low density use and multiple use of the product, has less need of a great and safe interface.
In direct and indirect marketing can therefore certain features can be distinguished on the product, user and
manufacturer. These factors are often crucial to the choice of distribution channel.
11.5 Swedish large company's choice of distribution channel
Swedish companies have in 1900s and especially after World War II internationalized to a large extent. Virtually all
manufacturing corporations now have a number of its own sales subsidiaries and a number of manufacturing
subsidiaries abroad. Over the last decade of the 1900s, the internationalization shifted to globalization. Several
companies are now less than 5 percent of sales in Sweden and the expansion of manufacturing is carried out mainly in
other countries.

The degree of internationalization, measured as the percentage of a company's turnover generated abroad, both in the
subsidiary through which exported via other marketing channels or directly, was in the mid-1980s for virtually all of
Sweden's big companies at least 65 percent of sales, see Figure 11.5, which was compiled before the The second
edition of this book.
Group Year Turnover in million Exports in million internationalization Exports to
Total Parent company (MB) and Subsidiary (DB)
Company Turnower in
grope År MSEK Export in MSEKInternationallevelExport to
DB in
in procent
Total MB och DB DB i DB andel Totalt To DB procent of
i n Sweden Abroad in procent abroad Sw. export
1 2 3 4 5 6 7 8
SKF 1965 3 378 348 3 030 89,7 509 406 92,7 79,8
1970 4 758 573 4 185 88,0 735 537 92,1 73,1
1975 6 851 844 6 007 87,7 1 127 801 92,4 71,1
Ericsson 1965 1 991 1 021 970 48,7 471 196 62,5 41,6
1970 3 160 1 442 1 718 54,4 1 087 504 72,8 46,4
1975 7 312 3 110 4 202 57,5 2 973 1 587 76,4 53,4
Volvo 1965 2 793 2 065 728 26,1 1 026 448 46,8 43,7
1970 5 324 2 940 2 384 44,8 2 578 1 495 65,1 58,0
1975 13 692 6 636 7 056 51,5 6 789 4 146 70,8 61,1
Stab 1965 1 323 607 716 54,1 163 91 59,6 55,8
1970 2 184 867 1 317 60,3 232 46 68,8 19,8
1975 4 356 1 254 3 102 71,2 608 130 82,2 21,4
Atlas-Copco 1965 830 193 637 76,7 262 198 84,5 75,6
1970 1542 170 1 372 89,0 408 322 94,6 78,9
1975 3385 338 3 047 90,0 991 506 104,3 51,1
Electrolux 1965 1 585 744 841 53,1 331 171 63,2 51,7
1970 2 872 1 162 1 710 59,5 694 443 68,3 63,8
1975 6 425 1 900 4 525 70,4 1 158 598 79,1 51,6

Alfa-Laval 1965 1 143 526 617 54,0 221 109 63,8 49,3
1970 1 533 462 1 071 69,9 458 237 84,3 51,7
1975 3 541 1 255 2 286 64,6 1 142 486 83,1 42,6
Asea 1965 2 324 1 766 558 24,0 531 211 37,8 39,7
1970 3 690 2 750 940 25,5 1 022 349 43,7 34,1
1975 7 863 5 509 2 354 29,9 2 455 889 49,9 36,2
Aga 1965 735 326 409 55,6 37 18 58,2 48,6
1970 1 058 399 659 62,3 83 50 65,4 60,2
1975 2 215 920 1 295 58,5 277 145 64,4 52,3
Saab-Scania 1965 2 385 2 175 210 8,8 351 115 18,7 32,8
1970 3 509 2 935 574 16,4 1 249 292 43,6 23,4
1975 7 900 5 876 2 024 25,6 2 604 1 160 43,9 44,5
Fläktfabriken 1965 409 209 200 48,9 66 42 54,8 63,6
1970 773 370 403 52,1 116 79 56,9 68,1
1975 2 207 490 1717 77,8 429 116 92,0 27,0
Kamyr 1965 201 14 187 93,0 14 0 100,0 0,0
1970 135 54 81 60,0 54 0 100,0 0,0
1975 117 46 71 60,7 46 0 100,0 0,0
Esab 1965 300 122 178 59,3 53 33 66,0 62,3
1970 462 152 310 67,1 115 62 78,6 53,9
1975 1 137 411 726 63,9 367 172 81,0 46,9
Astra 1965 370 252 118 31,9 23 13 34,6 56,5
1970 634 387 247 39,0 59 28 43,8 47,5
1975 1 275 677 598 46,9 94 91 47,1 96,8
Uddeholm 1965 818 705 113 13,8 372 74 50,2 19,9
1970 1 292 1047 245 19,0 621 151 55,3 24,3

1975 2 104 1467 637 30,3 1 031 373 61,5 36,2
Summa 1965 20 585 11073 9 512 46,2 4 430 2 125 57,4 48,0
1970 32 926 15710 17 216 52,3 9 511 4 595 67,2 48,3
1975 70 380 30733 39 647 56,322 091 11 200 71,8 50,7
Table 11.1 The table shows the major Swedish export companies' degree of internationalization in 1965, 1970 and
1975. MB, parent, DB, subsidiary.
Some of them had a degree of internationalization of over 90 percent. There were examples of that sales of foreign
affiliates account for more than 1 000 per cent (10 times) of exports from the parent company in Sweden to the
subsidiaries abroad. A significant portion of the output and value added can thus be attributed to the foreign
subsidiaries, whether they be manufacturing or merely promotional. When it is claimed that Sweden's world market
share decline has therefore no correction made for the increasing value that is attributable to foreign subsidiaries,
Swedish companies have often increased as soon as its market share in those segments where they are active.
The 25 largest Swedish companies in 1985 accounted for over 50 percent of Swedish exports and the 512 largest
exporters of 82.7 percent of exports. Given that the 25 largest Swedish companies are increasing their foreign
operations are significantly faster than its domestic business has probably at least half of Swedish exports from these
companies is at least twice the annual increase in foreign sales were made as shown in the export statistics. The
Swedish corporate market may even have increased more rapidly than is the case for the average of OECD countries'
enterprises. Statistics on market shares for various multinational companies (MNEs) by country of origin is not
available. To illustrate the internationalization development shows the growth years 1965, 1970 and 1975 in Table
11.1. The development has since continued at an accelerating pace for. Most of the companies included in the table.
The subsidiaries are the main distribution channel for large Swedish companies shows quite clearly from this table,
even if all other channels of distribution are still relevant and used in small and distant markets and for products that
have a low share of total business turnover as well as for customer groups that differ from the largest.
For markets and submarkets in which specific business practices and long-term business relations are of great
importance within the same country can be agents or intermediaries used in parallel with its own sales companies.
Bribes for exports the subject of discussion in the Swedish mass media from time to time since anyone accused of a
company to have used the method for export sales. That Swedish companies to refrain from exposing their employees
to the risks it would entail the use of bribery as a business practice is or should be obvious. Employees who for years
have trained and trained for skilled jobs in international marketing wants to maintain the skilled work for as long as
possible. To implement business which jeopardizes firms and employees would no serious major Swedish companies.
Local representatives such as agents and consultants, are sometimes able to use commercial practices that are of such
a nature that no Swedish companies would like to apply them. Whether the contact is broken with intermediaries who
use illegal or unethical business practices is partly because the relationship can be interrupted, and whether you may
know, or just get the feeling that business ethics is not compatible with the standard to one stands for.
11.6 Business Ethics in the global business
The development has been radically over the past 30 years in business ethics and the requirements for good conduct of
business in its operations both domestically and in foreign markets. There is still much change process before it goes
without saying that companies should behave in a manner that contributes to a sustainable society and treat and
respect other countries' laws, tax and ethical standards fully.
The environmental movement has had a major impact on companies' awareness of environmental issues through
consumer boycotts in the global market. Unions have supported the public opinion to enforce standards on child labor
and "unfair" working conditions, and various forms of discrimination in employment, both of the companies
themselves and their subcontractors.
The previous standard for international companies to be a "good" citizens as habits and practices in the various
countries where the activities took place, has been replaced by that global companies should live up to the highest

standards as regards the environment, law-abiding, tax morale and to conduct its activities without any form of
discrimination. Studying also the example of Sandvik's Code of Conduct Code of Conduct "at the end of chapter 11.
11.6.1 Doing business without violating good conduct
Doing business means sometimes the transactions involved, the report can not be implemented without the conflict
with the law, morality and ethics.
In international affairs, there is a diversity of rules and values, and it is not uncommon for rules of different countries
are conflicting. The working internationally to come into conflict with both his home and his business partner
country's regulatory system. Therefore, it is easier to do business in countries with a culture and a judicial system
which is similar to their own country.
To whatsoever to do business internationally is always knowledge of the client's way of doing business. It can often be
easier to let the customer come to buy than to take on any work it does to sell.
Swedish exports during the past century, mostly made by foreign buyers or representatives of foreign buyers, come
here and bought. They then had to adapt to our way of doing business. In a significant foreign businessmen have also
conveyed the business they have worked as agents. Swedish timber exporters and foreign importers through mediation
agents made contact with each other and been able to do business. This system has worked for more than one hundred
years and still works.
Even today there is a significant part of Swedish exports via foreign agents working on commission basis. Nearly 30
to 40procent of total Swedish exports was provided by independent agents or importers in the mid-1980s.
There are also Swedish-owned subsidiaries, importers and trading houses, which normally buys goods from Sweden
to the author, conveys individual business and receiving compensation in the form of commission. It is then either
unusual shops, or large business that you do not want to bear the economic risk of the subsidiary. Shops conveyed can
also consist of goods that it does not usually advertise. Although licensees can participate in similar situations to shops
on commission.
Commission is a normal way to pay the agents. A study by Bo Strömbom 1964 shows normal rates of commission for
agents in different production areas. Commission rates of 2-10 percent are common exceptionally lower or higher.
Swedish firms have foreign sales over the 1900s has undergone a development towards ever greater commitment from
businesses to establish themselves a good contact with buyers and end users. In order to obtain good cooperation with
customers, it was necessary to establish its own sales and also manufacturing companies. The good customer relations
has allowed greater involvement in the sales process, knowledge of product adaptation to customer needs and an
increased ability to take business risks compared with agents and importers have been able to.
In large companies with many different product areas, a mixed representation occur in a single foreign market.
Different products have different requirements of market presence, complementary products and full service. A
Swedish group may therefore be in the same country have several subsidiaries, while being represented by importers
and agents, but for different products and possibly also to different groups of customers who buy the same product
(but in different degrees).
Bribes are banned in most industrialized countries in Europe and America are in some other countries, some of the
social system. United States introduced legislation in the early 1970s, which banned U.S. companies or their
subsidiaries and agents to pay bribes to obtain business. Sweden has a still-standing business practices that make it not
only allowed to pay bribes, but the cost of bribery is also a tax deductible expense. Of course, bribery is forbidden in
Sweden for sales to Swedish customers. That for a company with a Swedish base pay bribes abroad sometimes
involve negative headlines for the company and a change in Swedish law is unlikely. Companies almost always waive
the payment of bribes but transferring the whole affair to an agent if you want to do business where it is probably
necessary bribes. An indirect form of what might be seen as a bribe is that the companies support a club, is sponsoring
a school or other activity that they know are of interest for the person who decides to purchase or licensing of a factory
establishment.
11.6.2 Environmental considerations in marketing
Environmental considerations in the production and use of goods and services has come to occupy a prominent
position both nationally and internationally.
That the products, goods and services sold should not have adverse environmental consequences have become obvious
in many countries. It is not possible to completely avoid such negative consequences, and a regime of limits and
economic incentives to reduce environmental impact have been introduced in several countries, but far from all
countries. For a global company, it is important to live up to the strictest environmental requirements for all products

regardless of their country. Consumer reactions everywhere can be substantial if the products are harmful to the
environment even in distant countries.
The manufacture of products is often an environmental impact throughout the production chain. Low or nonexistent
local environmental requirements may constitute a significant cost advantage in manufacturing, which individual
countries are using as an argument for attracting businesses. Not just environmental groups are critical of both
countries engaged in such a policy but also against companies that manufacture their products in such a way that
environmental impact increases.
A company that sells or wants to sell their products everywhere need to make use of manufacturing as far as possible
to avoid burdening the environment or at least does not give greater environmental impact than in countries with the
most stringent requirements.
Competing company also monitors its competitors in terms of negative environmental impacts. No company would be
forced to higher production costs than competitors and this has led to the use of environmentally damaging production
processes or waste products are subject to negotiations in the WTO. Progressive global companies are looking to be
rules and laws in order to avoid negative publicity, "consumer boycotts" and expensive rebuilding of factories.
A recent survey of various environmental and social action groups in order to increase business requirements into
account environmental and social requirements can be found in a book by Stefan Schaltegger, etc. The book also
includes a variety of useful models, diagrams and other information for persons responsible for product development,
marketing and accounting.
Environmental regulation of trade in goods will also be complications in the open international exchange of goods.
WTO working on the design rules of various kinds for the various environmental regulations imposed shall not
constitute new barriers to trade. The National Board representing Sweden in the ongoing Doha negotiations have
drawn up a letter in which various aspects of miljöregleringars introduction addressed.
11.7 Multinationals
Distribution channels have been taken over by own sales and also manufacturing established abroad, described the
companies as multinationals. It may therefore be appropriate to mention some of these multinationals.
Perhaps the most cited study of multinational corporations have been conducted at the Harvard Business School in
Boston, USA, under the direction of Raymond Vernon (Sovereignty at Bay: The Multinational Spread of U.S.
Enterprise, Boston, 1971). By the definition is applied which requires the company to be included on Fortune
magazine list of the 500 largest companies, to qualify as multinational. The sample we worked with are the companies
that were on the list in 1966 and that year had been manufacturing subsidiaries in more than six countries. In their
studies, Vernon Group worked by 187 U.S. companies which meet these criteria.
Poor information about non-US companies and other smaller international companies have strongly influenced the
perception of multinational corporations and large U.S. companies and the debate on the MNF has somewhat become
distorted. Several European countries including Sweden, Netherlands and Switzerland have in relation to
innevånarantalet MNF significantly more than the U.S..
The majority of the companies working with multi-national or global approach to its market development is not
included on Fortune's lists of the largest companies, as they do not meet the above criteria for the size and distribution.
Despite this, these subsidiaries in several countries and apply strategies that allow them to qualify as multinational or
global.
Söderman gives in the book business development, four examples of the development of local Swedish companies to
globally active companies. Examination of these examples are interesting and provide stimulating perspectives on the
change process that companies have gone through.
Attempts have also been made to classify companies as multinationals, international and trans-national management
strategy for the company that administers. Howard Perle nut (after a lecture at the Center d Etudes Industrielles,
Geneva, 1986) grouping the companies as follows:
1. ethnocentric
2nd polycentric
3rd geocentric
The ethnocentric companies are characterized by the fact that management is centered in home organization. There is
a belief in these companies to the citizens from their own country are superior and that the responsibility and authority
should belong to them. Company management believe that their way is the right thing. The polycentric firms are

characterized by a high level of confidence in the foreign country. The organization is decentralized. The company's
management at the parent company recognizes more accurate way and think that only those persons working in each
country can deal with the questions correctly.
The geocentric firms are characterized by the whole world into account. Company management does not believe in the
superiority of the parent or the complete freedom for their foreign subsidiaries. It tries instead to resolve its problems
on every site in the world in a way that best uses the company's total capacity and meet the common goal.
Among the Swedish companies with international operations, it can be observed that the management's perception of
Swedish excellence, national preference or international diversity varies over time. Experience seems to characterize
many companies is that a community should exist between the central and the subsidiary's management. This means
that the ethnocentric reflection mode in the 1980s was all the companies in the 1970s tried to work with a management
philosophy that corresponds to the polycentric or geocentric described above. These companies return to the
ethnocentric reflection mode is perhaps because they were well early with trying to be global in its values and its
behavior. Now in recent years probably has a more stable business as values and behavior that correspond to the
geocentric management strategy re-asserted itself in the company that works everywhere. Changes will obviously take
place within firms in this regard in the future.
Sandvik AB has developed a company policy which takes into account: the company is multinational, it raises
questions such as: uniform treatment of employees, business ethics, safety and environmental issues.
The example Sandvik
Several companies have taken in these standards in their company policy. Source: The Sandvik World 2004/2005,
page 30.
Sandviks Code of Conduct.
Sandvik intends to comply with the Code of Corporate Governance prepared by the Ethics and Trust Commission in
Sweden. A fundamental requirement for Sandviks operations is that the Group meets the OECD Guidelines for
Multinational Enterprises. The Guidelines consists of recommendations relating to international and external business
conduct and ethics. This can apply to employer employee relations, attitude towards child labor, bribes or other
corruption, and to environment considerations and sustainable development.
Uniform behavior
To ensure that the company acts in a responsible and correct manner in its operations, Sandvik has established a Code
of Conduct that applies to all units and all employees. The Code of Conduct is included in The Power of Sandvik and
sets out rules and guidelines concerning finance and accounting, business ethics, working conditions and
environmental and social responsibilities. The Code of Conduct serves as a basis for Sandviks management systems,
and continual improvements and financial, environmental and social performance. The Group also requires its
suppliers to work in accordance with the Code of Conduct.
Business ethics principles
Sandvik must conduct and document its business in a professional manner and in accordance with current regulations.
This applies to each individual unit within the Group regardless of geographical location. Each employee must
actively ensure that Sandvik always conducts business efficiently.
Sandviks products and services are to be marketed and sold on the basis of their performance and customer value.
Business shall be conducted in accordance with international and national business ethics. These principles must also
be applied when assessing and selecting subcontractors to the Group.
Secure working environment
Sandvik shall offer a safe and environmentally friendly work environment where all necessary measures have been
taken to prevent accidents and injuries. Relations between employees are to be characterized by dignity and respect.
The Sandvik Group applies equal opportunities for all employees, regardless of age, race, skin color, nationality,
religion, gender or disability.
Wages and salaries pertaining to the Groups operations worldwide are to correspond at a minimum to the levels
governed by legislation or collective agreements. Normal working hours must not exceed 48 hours per week. All
employees have the right to join a trade union and Sandvik respects the right of all trade union members to negotiate
collectively.
Clear environmental thinking

Issues relating to the environment, health and safety form an integrated part of Sandviks overall operations. Sandvik
promotes long-term and sustainable development. This means that we strive to achieve high efficiency in the
utilization of energy and natural resources, develop systems for materials recovery and recycling and prevent and limit
pollution. We shall fulfill environmental demands mandated by law, regulations and international agreements. Sandvik
believes that uniform and environmentally effective requirements and standards should be established at the
international level.
In pace with society Sandvik´ operations are global. All units in the Group are required to maintain favorable relations
with the local community in the countries in which they operate.
11.8 Answers to the questions at the beginning of chapter 11
The changes in technological opportunities as well as in the political systems globally, regionally and nationally is
likely to affect developments in another direction than that which has been the standard in the last 50 years. Trends
that public opinion wants to see a different trend is, but how strong are they? The answers are based on that trend
continues as the trend has been the past 50 years.
1.Varför it is necessary with the local sales organizations in various markets in the global marketplace is becoming
more obvious?
There are still major benefits to local marketing and sales staff as customers are close to, they can meet frequently.
Catalog function as distributors and retailers carry allows the customer to buy more goods at the same time and get
advice on use and care of products. The sellers speak the customer's local language and belong to the same cultural
community is also important.
2nd How can it be that major global companies use different forms of distribution network in various local markets?
Some types of distributors can be lacking in some markets. Customers are accustomed to the range is different and
wants to continue to buy as they are accustomed. It costs to change systems, it is easier to adapt to the local situation,
unless the benefits are enormous to establish a new commercial structure or to introduce a parallel market channel.
3rd Can a global company's products and services sold in different countries through the same kind of distribution
channel?
No, globalization has not reached a stage name.
4th What are the implications of the new opportunities to organize and carry out distribution work as Internet and
mobile phones mean?
For many companies, it means that the marketing world can be made for new principles: direct sales with the high
level of service to the "qualified" customers, the company chose as its target audience. It may be well-qualified goods
and services within the business to business to private clients with special needs or special interests.
5th Is there reason to transfer some of the functions of a global company from the local distribution and marketing
organizations to regional or global level?
It can be considered, particularly with regard to advertising on the Internet and international media. Spare Parts
Supply and manuals for operation and repair can advantageously also be distributed, updated via a central unit for the
Internet and call center operations. Not least, the time difference makes it possible to give customers service around
the clock without the cost of overtime and shifts.
6th in the future, more goods and services to be marketed and shipped from a centrally located office rather than
through a distribution network with offices in many countries?
In some product areas, it is so now and in future, in each case to products with few customers in various parts of the
world dierktförsäljning become more common. But each company on different products to consider how to organize
activities.
Information:
Information appropriate to be solved by teamwork.
1. How has the company structured its global operations? Study the five companies, the information available on
corporate websites in two ways, both in financial statements or other business description, and indirectly, the
expression of corporate marketing with a breakdown by product categories or groups of countries which are
coordinated under a regional management. In which countries are subsidiaries and in which countries the company is
represented in any other way? (Adds detail, which can be severe: in which countries have no representation?)
2nd In which countries have established local manufacturing companies? Why and when? Analyze and discuss the
corresponding establishment of manufacturing would be present again during the precondition of the current trade
rules? Choose five companies to study. Information Sources: Trade Offices and Chambers of Commerce websites with

list of Swedish companies in their respective countries and companies' financial statements.
Practical cases that may be useful
Centrifugator AB
Albin Marin AB
Telelogic AB
Intentia International AB
Altitun AB Chapter 9 of the book Global faulting. Jörnmark and Ramberg, 2005.

12 License Sales
Questions that you should be able to answer after reading chapter 12:
1. Can production and sales licenses sold to multiple license purchasers at once?
2. How can you engage in acquiring a license to contribute to the product or technology, further development?
3. Is there a simple standard that can be used whenever a licensing agreement to be concluded?
4. There is a risk that the licensee becomes a serious competitor?
5. Is it possible within a trading bloc such as the EU to give a buyer the exclusive right to license a product?
6. May license vendors and licensed buyers in a license agree on tie-ins and royalty levels, but that authorities have no
objections?
Additional questions to answer.
How could licensing used in the market?
How could licensing provide capital for continued product development?
When the product life cycle, it is appropriate to sell licenses?
Might otherwise closed markets processed through licensing?
12.1 License sales spot in market planning
License sales are an alternative distribution channel both interesting and difficult to use. Licensing means that
knowledge is transferred to the license buyer who can then use this knowledge to build competing activities. The
licensing also means that the markets for which the licensee receives exclusive rights will be closed to the licensed
seller and the potential to directly influence and act in the market can go totally lost. Since the law on the licensing
basis, eg, patents and industrial designs, lost its legal protection effect may be that it is the licensee who first use of a
possibility then arises to expand into previously closed markets. Licensee becomes thus a competitor globally.
License sales is significant risk that the license buyers receive benefits or could use the knowledge they obtain in
competition with the licensor. At the same time gives license rights-managed large sales opportunities and can
sometimes be the only alternative to the limited capital investment quickly exploit a new product or technology.
License Sales also offers opportunities for an additional channel for the repatriation of the financial results that are
produced abroad. Licensing to own subsidiaries and affiliated companies constitute the bulk of the licensing
agreements. Up to 80 percent of the license agreement that U.S. firms have with foreign companies, according to data
to be learning from its own subsidiaries.
Knowledge of conditions and the various pitfalls of international commercial license is an important prerequisite for
the right to manage licensing deals. Changes in legislation as well as negligence to maintain license agreements may
mean that once a well-written contract will later prove less favorable. However, this should not prevent the use of the
opportunities for business as license offer.
License sales should be an obvious option in various forms and methods of foreign establishment is considered.
12.2 Types of licenses
Anyone who has an intellectual property right, such as patents, industrial designs, trademarks, copyright in a literary
work or works of art, may by agreement, license, lease and right to use this right to another, natural or legal person.
Licensing is an agreement whereby the use of intellectual property right granted to another person for consideration.
Leasing can be more or less extensive and often formalized in an agreement. The following forms of licensing are
common:
1. exclusive license
2. single license
3. under license
4. sales license
5. manufacturing license
6. User License
Licenses can be granted with or without restrictions to the territory and / or use. In addition, granting of the license

time-limited.
An exclusive license gives the licensee the right to use license object within a defined territory, and application area
without competition from other licensees and the licensor. Some differences are, however, the case law between
different countries. It may therefore be necessary that the licensee's right to self-use and exploit their rights in the
license territory and area explicitly regulated in the agreement.
A single license allows the licensee the right to use license object within a defined territory and use. Licensee may
grant more licenses to exploit the license in the same territory and use. For the non-exclusive license the licensee must
reckon with the possibility of competition from other licensees.
A sub-license means that the licensee has received or is receiving the licensor's consent to grant licenses to other
licensees in the licensed area. During the license can be simple or exclusive, provided that the main license is
exclusive. Otherwise, the license is only simple.
A marketing license means that the licensee obtains the right to sell but not to manufacture products in accordance
with the license agreement. The licensee would then be forced to buy goods from a licensed manufacturer or licensor.
Sales License can often be updated when there is a trade mark granted or when the marketing and servicing of the
product requires special skills and training of personnel working with the product.
A production license is a lease of the right to produce but not sell the product other than to licensees with sales license.
A production license can be issued in relation to manufacturing processes or when the product is manufactured under
the license will be part of a larger machine or plant and are not sold independently.
User License has become common for sales of computer software and other knowledge transfer to end users. For
single-user license is hiring a regular payment, but also a combination of annual license fee and a fee to get the first
software delivery occurs. For the buyer means that the granting of the license rights to use the software only applies
within the limits license allows. Often requires the efficient use of the software that the buyer has access to updates
and bug reports from the vendor. The possibility of obtaining such information is subject to the license fee paid and
that the jurisdiction granted to share the information that the vendor provides. The buyer also has the opportunity to
ask questions about problems with the use and help with resolving problems with, so-called support agreement.
12.3 Grounds for licensing
That a person or a company chooses to lease licenses due to the various reasons deemed more favorable than self-
knowledge and exploit the rights through the production and marketing through other distribution channels such as
subsidiaries and distributors.
The four main reasons why a license is happening is that:
1. license the object's value is so large that the intrusion and plagiarism will be done and license the object's owner has
no power to protect themselves.
2. License object probably has a short lifespan. The challenge is to bring home the financial results before the
improved methods developed.
3. license the object's owner does not have the human and financial resources to develop and exploit the license object.
4. License object depends on the system is built up on the market in which the license is included object.
This requires that many manufacturers / users are jointly working on the system.
Inventions and the knowledge of so great value that is revolutionizing the production technology in a field or radically
alter the behavior of buyers in a market can not be accepted by the competitors. May not be competitors access to such
revolutionary knowledge in a legal manner at a reasonable cost, it will be used despite patent protection. Only if patent
owner is a market leader with good economic conditions should be some opportunity to maintain exclusivity. Usually,
however, major market leaders, already cross-licensing agreement, which involves an exchange of new inventions and
discoveries of a number of companies in the industry.
An assessment of the life of a new invention will soon be doing that it is state to bring home the economic benefit,
while the market there. This is particularly true designs and design, where fashion naturally leads to a limitation in
longevity.
For new technology as early as next generation of solutions to be on the road, eg in electronics, which is developing
rapidly and the knowledge that new solutions will be as common property. Licensing can be a way to quickly build up
the manufacturing and marketing capabilities in several markets. By offering many licensees the right to license to
implement such a strategy quickly and it is possible to obtain good profitability for licensors and licensees before the
new technology had time to become obsolete.

The owner of the license object has its own personnel or financial resources to build the organizational and industrial
capacities needed for the life of the product build and exploit their knowledge is not uncommon. Licensing becomes
an option to sell the right or let it remain undeveloped.
To license the object is dependent on the system is built up in the market exists in many areas. Often, such new
inventions or products of little use because enough dominant firms rarely own them. One option might be to license
the use of such low compensation to substantial agreement can be obtained to establish a de facto standard in the
market. A good case in point is the ordinary cassette tapes of the Philips design. By Philips GRANTED use right
cheap to include a Japanese manufacturer of tape recorders became Philips cassette an actual standard, which defeated
rival music cassette system, although some of them had technical merit.
The example shows that it can sometimes be advantageous to grant a right to lay perhaps a very low fee to obtain
broad market acceptance and quickly establish the standard. Only the system becomes standard will be able to
maintain a market.
These four general motives for licensing also applies internationally. At the international marketing will be a number
of reasons that justify the use of licensing in alternative distribution channels.
Barriers to trade tariffs and non tariff requirements can be a motive for the licensing of international trade.
Cultural differences can be difficult to detect but a local licensees are probably more able to intuitively take them into
account in product design. This implies that if the license allows local product adaptation, the product is probably a
form in which the market does not object to the cultural reasons.
The costs of transport and local production may be such that local manufacturing is preferred, as is sometimes best be
done on a local licensees will take care of the production. Duties and customs bureaucracy may increase the benefits
of local production as compared to exports.
License Manufacturing can also be an option when the product's principal markets outside of its own domestic market
or in the manufacturing and transportation costs make production cheaper at a market other than their own domestic
market. This is a fairly common condition, especially for the manufacture of electronics in East Asia of goods destined
for the U.S. and Europe.
License, he may be offered to one or more license to buy part or all of the product. Product Patent can be part
manufacturing and knowledge of a second part, and mark a third part.
It may also be appropriate to combine the various elements of a contract or to separately regulate the relations among
the various license agreements. Licensing can also be used to complement the Representative Agreement for importers
and retailers, as well as joint ventures and their subsidiaries.
By the licensee to know the local market and can bring the product to cultural and legal barriers in the form of product
requirements and standards met more easily than if the goods to be exported to the market. Licensee's financial
capacity and established contacts in the market can also be used, which contributes to a successful market
introduction, and it can sometimes be a prerequisite for market introduction.
License Agreement in the relationship between Swedish parent companies and their foreign affiliates have been the
exception, while US-based parent company of almost routinely transfers in trademark and knowledge to its
subsidiaries under a license agreement. The benefits can be significant in the nationalization and restrictions on profit
transfer law, as well as the changes in corporate tax and double taxation agreements.
Although Swedish companies will probably continue to make greater use of leasing various IPR to its subsidiaries
under formal license agreements registered with the authorities when necessary. It has not been as relevant as ever for
Swedish companies to license to the subsidiaries, probably because Swedish companies have low profit transfer
through the pricing of domestic supplies used more as your business grows. In addition, the entire profit and tax issues
had a freshness that allows customs and tax authorities monitor deviations attention.
Since licensing agreements with affiliates must be as thorough as contracts with independent license buyers to have
the intended effect, treated in the future licensing of the counterparty is an independent company.
12.4 Reasons for not giving license
New knowledge and new products can, if they are not manifestly endanger the existence of competing companies, and
require a longer time for introduction, giving the opportunity to build a significant industrial capacity and market. The
examples are many, not least among the major Swedish companies operating internationally.
On their own to exploit an invention or new construction will likely return both greater overall profitability status,
employment, incentives and opportunities for further development of technology and commercial activities. License
Sales with higher rates of return on invested capital than their own exploitation, but the overall profitability will be
lower as risk taking.

The short-term benefits of license and service sales should not prevent the possibility of setting up industrial and
marketable skills that are essential to long term profitability.
Although in most cases where licensing under consideration does not apply to such large and important knowledge
and products above mentioned, there is still reason to consider the negative effects of the licensor in its own
manufacturing and marketing may not be able to come up to such volumes that economies of scale in a reasonable
amount can be seized. Nor is it good if the licensor is excluded from that participate in its work in markets that lead
the development of the technology or product. The drawbacks can in a number of years mean that the licensees have
both better quality and lower manufacturing costs than the licensor, and when the protection expires on the license the
licensees are serious competitors.
Example 1
The company Svedala-Arbrå bought early a license from Allis-Chalmers in the production of grain crusher for
crushing stone. During 1960 - and 1970s came Svedala up in production volumes far exceeding the Allis-Chalmers'
own volume of these crushers and with better quality. Svedala-Arbrå also developed other products in the crushing
and milling area, which led to the Allis-Chalmers in order to maintain its strong position in this product bought
Svedala-Arbrå to a "high" cost.
Example 2
Mecman, the company began operations as a distributor and licensed manufacturer of hydraulic and pneumatic
cylinders for a British company. Through self-development and engineering of new products is now Mecman one of
the better-known companies on the Swedish market for hydraulic and pneumatic cylinders and the former licensor
relatively unknown.
Licensor may by "nurture" their licensees, and continuously develop their own expertise to maintain such an
advantage that the licensees have exchange to continue to cooperate and not take over the competitors and market
leaders.
12.5 Selling intellectual property and to conclude licensing
To sell a property right will require a much larger and more extensive preparation than in the case of selling a product
which is going to show up and forward.
This applies both to determine the target audience, selection and negotiation with the appropriate license buyers down
the conditions for which the license in each case can be granted.
12.5.1 Setting the target
The number of possible buyers of intellectual property is far fewer than the goods. To identify which buyers are can be
difficult, but when they are identified remains as a rule, only a few, so that marketing can be adapted to each situation.
Buyers of knowledge, patents, designs, trademarks, etc. are usually commercial reasons for their interest and prepare
from the beginning to get in a good negotiating position. Something the prior market price or contract terms are not
given but the final agreement must be negotiated individually with each license buyer.
Finding the most appropriate buyers and get them interested then well the interesting group of buyers identified can
sometimes be difficult, but in other cases, buyers are queuing up to get the license.
12.5.2 Searching and selecting licensees
In order to find suitable licensees may use different methods, depending on conditions. Only to publicize the fact that
new technologies developed or that a new product developed for a spontaneous crowd of license buyers get in touch.
To license the vendor must be able to obtain a good negotiating position, however, in most cases need to be licensed
before the start of negotiations has gained good references in the form of examples of practical use of the licensed
item and be happy that there is a generated test market and that there is a product to be manufactured and sold at a
broad market. It is only when we can show that the product to be licensed has produced a good and profitable outlets
that can make an informed estimate of the license object.
By the licensor itself committed to developing one or more test markets also obtained knowledge of the market size
and possible price levels for different uses. The determination of both which are the most appropriate license buyers to
the requirements that apply to them becomes much more substantiated by test marketing. It also required that a
sufficiently well-founded market research carried out in the market for the relevant requirements and expectations to

guide the negotiations with prospective licensees.
Reality is another. Usually it is the licensee who has an advantage. It is the licensee who is their market and thus the
licensee can obtain a more favorable contract than the seller is willing to agree, but the lack of market knowledge
often agree.
The companies that are interested in buying the license has not always motivated to undertake a profitable expansion
of its operations based on the license. The motives may be quite different, including obtaining an additional product
that some customers want, to build in the licensed product in its own plant and machinery or to exclude a competitor
by itself to control the marketing of the new challenge of competing product.
It is important that when searching by licensees to evaluate their motives for purchase of license. Perhaps it is fine to
restrict use and to sell a single license for the same consideration as an exclusive to cover all uses.
12.6 Preparing for negotiations
When one or better still a number of potential license buyers expressed an interest in acquiring a license, certain
preparations are made before negotiations can start.
Since, during the negotiations often becomes necessary to enter the license to be used and provide both important
knowledge about patent strength as the skills necessary for exploitation of the patent should be an agreement of
confidentiality made before negotiations start.
12.6.1 Agreement on secrecy
An agreement of confidentiality should not only include only the prospective contractor, but also the personnel
involved in the negotiations nor the party support in the negotiations, such as lawyers, technical and other experts. It
may be that each person writes on an agreement of confidentiality, particularly in the case of the grant of licenses for
such knowledge can not be protected otherwise against the spread. The agreement of confidentiality should also
include a relatively high level of negotiating fees accruing to the license seller, even if no agreement is reached.
Moreover, it is appropriate to stipulate a penalty for breaching the confidentiality agreement. Confidentiality
Agreement should be designed so that the entire time span during which it is assessed that the knowledge has a market
value then several years in the future, not only during the negotiation period.
Negotiating fee can, to make it more easily accepted, be deducted against future royalties. License buyer pays
therefore no additional condition that an agreement is reached.
The agreement of confidentiality is important. Otherwise the license buyer to cancel the negotiations as soon as he got
some of the critical information that he had to start without license.
The agreement of confidentiality does not include things that has long been known by the recipient, nor what is
commonly known. Of course, no agreement on confidentiality go so far that no customers can be informed about how
the product is used and does not include such information must be communicated to subcontractors if it is normal to
hire them.
It is considered so important that subcontracting should not be done, it should be particularly taken with the agreement
of confidentiality, how and in what forms of production may take place. Information that the licensee subsequently
acquires or may have access to are not covered by the agreement.
An agreement of confidentiality binds license buyer substantial extent, and it is not uncommon, especially in the USA,
to license buyers presents its own agreement of confidentiality whose main task is to exclude them from all liability
for information disseminated on. Such an agreement is from the license seller's point of view, worse than doing
nothing. (There is one for the Swedish legal tradition somewhat unusual procedure intended to "fool" the other party.)
For an agreement about confidentiality should be of little value, it is also important that the documented when and
how the information provided. It may be a technical and commercial documents and prototypes.
12.6.2 Negotiating fees and options contracts
One advantage of early demand a negotiated fee that the licensee is forced into a position, it is worth going for the
method or product covered by the agreement. Rogue "licensees" screened out early. Licensee may often want to make
additional technical studies and market studies before a definite decision on the purchase of the license. These
investigations can take time. In order to protect their interests tend to license the purchaser to ask for an option to meet
a licensing agreement with some content for the time he deems necessary for these studies. This can be done by either
a letter of intent, letter of intent, or an option contract.
A letter of intent is not legally binding and may be waived by both parties if they so wish. It must be stated in the letter
that it is not binding. This can be done for example by stipulating that specified compensation to be paid to the

counterparty of the party fail to follow the intent and hits a licensing agreement.
An option contract is perhaps a better way to regulate the compensation of reflection the license granted subject to the
buyer. The compensation paid for the option most often in advance and can be counted against the license fee. A
deadline set at the outset. The option agreement prevents the licensor to enter into agreements with other licensees
within the specified territory, and application area as long as the option lasts. To save time it can be to negotiate with
other companies who wish to do so, but subject to agreement can only come about if the option is not exercised. This
is less common.
12.6.3 Licensee's expertise and common interests
The prospective licensee's financial, human and other conditions must be controlled and who it is that the agreement
will be concluded with. It is not just the company name if ever so well known. Official registration number must be
checked and listed in both the non-disclosure agreement as the final agreement. Company name can be easily
changed, but not registration. Equally important is to verify the person is authorized signatories and authorized to
represent the company. This may need to be done several times if negotiations drag on.
Licensee's investor relations needs to be checked so that there is a competitor that occurs through a dummy. This can
be very difficult. The owners of an independent company which receives a substantial license may discover that the
license is the company's greatest asset if they sell the company to a competitor. Such transactions occur. If it is thus
knowledge which could not be competitors to some it may be necessary that the shareholders can sign a pre-emption
clause to the licensor or contracts with penalty subject if they do sell to a competitor without obtaining the licensor's
prior written consent.
Regulatory regime of the license buyer's country also needs to be checked. Are there enforcement authorities and / or
central banks must approve the agreement before it becomes valid? Can the license transferred to foreign countries?
Sometimes it requires the approval of several bodies. Contracts negotiated may be wholly or partially rejected, and
important information has already been disclosed, sometimes complete documentation, prior to the completion of
negotiated agreement approved or rejected by the authority. The licensee may have made investments to exploit the
license and is pursuing naturally when its part of the project without being able to pay royalties. Preparation for
licensing negotiations can therefore be both comprehensive as time consuming but is essential for the protection of the
seller acquired important knowledge and rights.
12.7 License Building value
The value of a license determined by the scope of the / those CEDED intellectual property. Patents, industrial designs,
copyrights and trademarks may be of varying attractiveness. It is almost always possible to bypass or do imitations
without infringing the intellectual property rights. In cases where it is not possible or is costly to circumvent the
author's right becomes the value greater.
Market demand for a product or service that requires access to the right of the license is based is crucial for the license
value.
Patents and Designs coverage ends after a time, 5 - 20 years, and then terminated most of the license's value. For
copyright term is considerably longer, in Sweden 50 years after his death, while the trademark and trade name has a
protective value as long as they are used. The value of a brand typically increases with use and their value increases
with time.
The license agreement can therefore have a value that increases with time:
1. on various intellectual property rights are brought together in an agreement or contract packages, or
2nd the licensor's skill increases, so that new and important knowledge can be offered continuously.
12.7.1 Coordination of various rights
Coordination of the various rights to a package of agreements is common, but requires that the licensee is obliged to
incorporate the licensor's trademark for the duration of a patent or other right has its greatest value. When these
temporary rights decreases in the value of the brand has been incorporated and has a value that allows the licensee
continues to pay a license fee.
Licensee's incorporation of a trademark requires the carefully regulated when and how the brand is listed on the
product, prints and ads, only with the licensor's trademark and trade name or trademark and the licensee's brand and
business, and if so, the relationship of size, shape and color between licensors and licensees' brands and trade names.

Example
U.S. firm Bulow Inc., the world's largest manufacturer of watches for 35 years ago among other watches had after
several years of success with their design Accutron begun to challenge it in Europe's leading company Omega, who
needed access to the U.S. company's technology to produce less accurate clocks. Omega got a license but Bulow took
the contract to Omega must enter into advertising and promotion to the bells which included Accutronurverk was
manufactured under license from Bulow Inc., USA. How did Omega too, but it took a magnifying glass to read the
text on the edge of the ads on the clock in the display clock was manufactured under license from Bulow Inc.
Clearly angered that senior management at Fortune, but what could it do?
The coupling of a brand name of a licensed product requires that a rule that the licensor can ensure that a minimum
level of quality is maintained. This often implies that both the quality of procedures prescribed in the license that the
control procedures established to enable the licensor to control and to propose measures to ensure this level of quality.
12.7.2 Additional supplies, (tie-ins)
A common method to verify the licensee is to maintain control over a vital part of the product to be manufactured.
Licensee offered to buy it / the vital parts (read: forced). With these key elements will make it possible both to monitor
the licensee's volume of production to avoid the licensee to start their own rival production. In addition, eliminates the
risk that third parties inappropriately to assume greater use of the knowledge about the product as disclosed in
connection with the license agreement. To provide obligation to buy, tie-ins, is fairly common. In several countries,
involving mandatory purchasing nullity of the whole contract so it is not very appropriate to use this type of clause in
the contract without first checking license buying country provisions of this paragraph. Many developing countries
have a clearly negative attitude towards the tie-ins, including India.
If, however, is that some components are offered at a relatively reasonable price and license buyer chooses to
voluntarily purchase some components are no problem.
12.7.3 Methods to increase the licensor's skill
Licensor may in various ways to increase their skills in order to maintain its position as an interesting partner.
Continued R & D activities can be such a possibility. Own production and sales is another way to obtain new
knowledge about the applications and to further develop the product.
By all licensees systematically collect and store information about applications and operating results as an incentive
for improvement and further development can be a significant experience in banking built up. The availability of
information from this experience the bank may be that the licensees after a while the most value to. As long as the
information bank developed and working effectively, there may be reasons for licensees to continue to pay license fees
as well as a separate fee to access the information. Licensor is responsible for informing the bank will thus have a
continuing strong position.
12.7.4 License fees
The license fee is determined by the merpris or increased profitability as a result of use of the license of the licensee.
The profit that a use of the certificate shall be shared between the licensor and licensee. It may not be too great an
imbalance in the relationship. Then the risk is that the aggrieved party may tire of cooperation. The risks of failure are
greatest where the licensee for a period of time consider themselves disadvantaged, and therefore no effort is entirely
in order to increase the sales and use.
Profit sharing with 1 / 3 of the licensor and 2 / 3 of the licensee might be reasonable. What it means in money depends
on the license's value.
The fee shall often in the form of both a lump sum down payment and a variable part, royalties.
It is common for a one-time fee charged to cover all of the licensor's costs for negotiations and transfer of license
knowledge, documents, prototypes, templates, fixtures, etc.
The variable fee, royalty, usually based in a small percentage, 2 -10 (15) the higher amounts less frequently and
usually with 4 to 8 percent. What percentage chosen depends on the license's value and what value it is calculated.
A low percentage is often borne out when the base price for example, larger machines and the licensed entity
represents only a small proportion of total supply. It may then be appropriate to levy tax on the entire supply to avoid
discussions and suspicions of a deliberate distortion of pricing.

Royalty is calculated on the volume produced or sold, there is every reason to use the sales volume in cases where the
incorporation of a mark sought. A possible minimum royalties should refer to "sold out" volume (regardless of what is
actually sold). There are examples where licensees are not only manufactured and sold an agreed minimum quantity.
No incorporation of the mark where've not done, which of course was one of the purposes of license. There are
reasons to sometimes completely waive the sum. Licensee may need the money that is available to start the business -
that when charging a lump sum complicates and delays the sole licensee's activities and may reduce future royalties.
Sometimes when the currency or control difficulties, there may instead be appropriate to charge the full license fee in
one installment. This has previously been common for sales to Eastern Europe and the Soviet Union.
Supplies and tie-ins, can be an alternative option to charge for the license and also a control option in respect of the
licensee's production volume.
In situations where it is difficult to arrive at a value but the license buyer has interesting technology to replace with
used instead often a process of cross-license payment.
Payment in the form of supplies are also licenses to the payment of weak countries, but will not reduce the problem of
finding the right price ratio for the license.
For the pricing of licenses you need to also take into account both the tax consequences of transfer rules. Higher
license compensation can go to get out of the proceeds into local currency may need to be collected for future use in
the licensee's country.
By letting the license agreement concluded with a special company set up in the appropriate country for the total tax
burden at times reduced the licensing fees that are transferred to the licensor's parent company. Not least, the latter is
common for brand licenses, which among other countries as the Bahamas and the Channel Islands tend to be used
depending on favorable double tax rules.
The value of a license may be difficult to determine, where vendors and buyers may have different views on the
license's value. One possibility is then to enter into a fixed-term contract or a contract can be renegotiated after a
number of years.
Example
At the time of the beer before the introduction in Sweden examined a German brewery to mark Löwenbräu a licensee
in Sweden. Spendrups was contacted and was able to license the right to Löwenbräu medium strength. But the
contract term was three years. When the contract extension requested and received the German brewer has a much
higher royalty than for the first three years.
The question to be asked is if not Spendrups from the beginning should get a longer contract. Had Löwenbräu
transfers in the license unless the possibility existed for a renegotiation and price adjustment? Responses are of less
interest but it may be important to try to get the short duration of the contract respectively, depending on the market
success can be judged likely to affect their bargaining power at the next hearing.
12.8 Responsibility for the product
Licensor assumes a greater or lesser responsibility for the product, when sold, meets the safety and the quality that the
customer has reason to expect. Particular issue will be whether the marketing is done with the use of the licensor's
trademark.
In cases where the product causes injury can blame be placed on the licensor for defects in development or testing of
the product and for negligence to communicate such deficiencies or limitations on use that may be warranted because
of recent experience. Licensor may, according to the values of the United States never completely exclude his liability
for any damage as a licensed manufactured product has caused. The risks to the licensor shall be sentenced reduced on
the license granted without the brand switching and without quality commitments and quality controls from the
licensor.
Product liability legislation has been tightened in several countries, including the EU, so some caution may be
warranted for licensing.
12.9 Transfer of knowledge and technology
When licensing negotiations are completed, all the knowledge and technology covered by the agreement and
necessary for the licensee to be able to start the agreed activities are transferred from the licensor to the licensee. This
part of the process can take several years and is often so extensive that the company realized some of the problems,
has decided not to sell the license on such a complex technology and knowledge that they are using successfully. A

company has often developed their skills over a long time and considerable amounts of tacit knowledge that different
people possess and transfer by train replacements and new employees.
The latter has also not saying all the knowledge needed for making and using the technology they work with. A lot of
component manufacturing and supporting services are purchased from suppliers, whose skills can not easily be
covered by a license. For a licensee to use the license may be necessary to conduct parallel negotiations with a number
of subcontractors. This is particularly true of licensing to countries with less developed industrial structure.
Much of the tacit knowledge must be transferred through education and training of the licensee's staff at the licensor's
facilities and by operating personnel of the licensor for a time working with the licensee, at least at fine-tuning and
production startup.
The work required to transfer knowledge can be so disruptive to the normal work that licensors do not want to repeat
the problems despite the considerable experience built up which could be used for future licensing deals. A not
insignificant and contributed to the difficulties is that the business license can not be planned and organized as a
regular part of the business. In cases where a company believes that the licensing of a technology can be made at
several markets over a longer period of time, a working group or any individuals assigned to licensed shops and the
internal costs are distributed over a larger number of licensing agreements.
It is only if such an organizational design is possible as it becomes feasible to systematically document their own
activities so that knowledge can thereby be transferred to the licensee at a reasonable cost.
12.10 Response to questions at the beginning of chapter 12
1. Can production and sales licenses sold to multiple license purchasers at once?
Yes, if the license is simple, it can be sold to multiple buyers simultaneously. A prerequisite for a good future
cooperation with the license buyer is to sell information about its intentions to sell licenses to several companies.
2. How can you engage in acquiring a license to contribute to the product and the ongoing march of technology?
By contract and by continuing to work actively with myself to further develop and license the object to make this
information available only to those licensees who reported the improvements they make or receive from their
customers.
3. Is the simple model that can be used when a license agreement to be concluded?
No, each license situation is unique. Both sellers and buyers must develop a strategy for how they want this
cooperation to develop and formulate an agreement and then also consider what happens if either party ceases to exist
or change ownership.
4. There is a risk that the licensee becomes a serious competitor?
Yes, the risk is great. Sometimes it's what you want to achieve and then it's no problem. If it would be very unfortunate
if a competitor was created, perhaps it might be wise to also consider other alternatives to licensing.
5. Is it possible within a trading bloc such as the EU to give a buyer the exclusive right to license a product?
No, not in the EU. Europe is a market with free movement of goods and services. However, you can give a licensee
the exclusive right to the EU provided that they themselves are not as license vendors produce and sell the product in
Europe.
6. Can licensed vendors and licensed buyers in a license agree on tie-ins and royalty levels, but that authorities have
no objections?
Yes, in many countries is that, while several countries have rules on how much royalty should be the maximum and it
must be approved by the authority to be valid, eg, central bank or finance ministry. The laws of some countries do
with licensing tie-ins directly illegal. Has licensed the purchaser had the information they want when they invoke the
tie-in paragraph that makes the contract void as there is no legal basis to require any payment or to demand that
knowledge should not be used.
Tasks
1. Make a list with information on products manufactured under license from any other company. To resolve this task
by reading the packaging and user manuals. Choose a happy food products in the kitchen. Try to analyze the causes
may be the company chosen to manufacture under license and has not developed an equivalent product itself.
2nd What examples have you found where a firm in various newspapers ads that mention the products manufactured
under license by another company? Please use the two weeks for this task and also read the ads in magazines and
journals. Analyze and attempt to explain why the companies mentioned licensor of names in the ads you found.
Appropriate practical cases

Svedala Arbrå AB
Scandsam AB
A common method to verify the licensee is to maintain control over a vital part of the product to be manufactured.
Licensee offered to buy it / the vital parts (read: forced). With these key elements will make it possible both to monitor
the licensee's volume of production to avoid the licensee to start their own rival production. In addition, eliminates the
risk that third parties inappropriately to assume greater use of the knowledge about the product as disclosed in
connection with the license agreement. To provide köpplikt in licensing, tie-ins, is fairly common. In several countries,
involving köpplikt nullity of the whole contract so it is not very appropriate to use this type of clause in the contract
without first checking licensköparlandets provisions of this paragraph. Many developing countries have a clearly
negative attitude towards the tie-ins, including India.
If, however, is that some components are offered at a relatively reasonable price and license buyer chooses to
voluntarily purchase some components are no problem.
12.7.3 Methods to increase the licensor's skill
Licensor may in various ways to increase their skills in order to maintain its position as an interesting partner.
Continued R & D activities can be such a possibility. Own production and sales is another way to obtain new
knowledge about the applications and to further develop the product.
By all licensees systematically collect and store information about applications and operating results as an incentive
for improvement and further development can be a significant experience in banking built up. The availability of
information from this experience the bank may be that the licensees after a while the most value to. As long as the
information bank developed and working effectively, there may be reasons for licensees to continue to pay license fees
as well as a separate fee to access the information. Licensor is responsible for informing the bank will thus have a
continuing strong position.
12.7.4 License fees
The license fee is determined by the premium price or increased profitability as a result of use of the license of the
licensee.
The profit that a use of the certificate shall be shared between the licensor and licensee. It may not be too great an
imbalance in the relationship. Then the risk is that the aggrieved party may tire of cooperation. The risks of failure are
greatest where the licensee for a period of time consider themselves disadvantaged, and therefore no effort is entirely
in order to increase the sales and use.
Profit sharing with 1 / 3 of the licensor and 2 / 3 of the licensee might be reasonable. What it means in money depends
on the license's value.
The fee shall often in the form of both a lump sum down payment and a variable part, royalties.
It is common for a one-time fee charged to cover all of the licensor's costs for negotiations and transfer of license
knowledge, documents, prototypes, templates, fixtures, etc.
The variable fee, royalty, usually based in a small percentage, 2 -10 (15) the higher amounts less frequently and
usually with 4 to 8 percent. What percentage chosen depends on the license's value and what value it is calculated.
A low percentage is often borne out when the base price for example, larger machines and the licensed entity
represents only a small proportion of total supply. It may then be appropriate to levy tax on the entire supply to avoid
discussions and suspicions of a deliberate distortion of pricing.
Royalty is calculated on the volume produced or sold, there is every reason to use the sales volume in cases where the
incorporation of a mark sought. A possible minimum royalties should refer to "sold out" volume (regardless of what is
actually sold). There are examples where licensees are not only manufactured and sold an agreed minimum quantity.
No incorporation of the mark where've not done, which of course was one of the purposes of license. There are
reasons to sometimes completely waive the sum. Licensee may need the money that is available to start the business -
that when charging a lump sum complicates and delays the sole licensee's activities and may reduce future royalties.
Sometimes when the currency or control difficulties, there may instead be appropriate to charge the full license fee in
one installment. This has previously been common for sales to Eastern Europe and the Soviet Union.
Supplies and tie-ins, can be an alternative option to charge for the license and also a control option in respect of the
licensee's production volume.
In situations where it is difficult to arrive at a value but the license buyer has interesting technology to replace with
used instead often a process of cross-license payment.
Payment in the form of supplies are also licenses to the payment of weak countries, but will not reduce the problem of

finding the right price ratio for the license.
For the pricing of licenses you need to also take into account both the tax consequences of transfer rules. Higher
license compensation can go to get out of the proceeds into local currency may need to be collected for future use in
the licensee's country.
By letting the license agreement concluded with a special company set up in the appropriate country for the total tax
burden at times reduced the licensing fees that are transferred to the licensor's parent company. Not least, the latter is
common for brand licenses, which among other countries as the Bahamas and the Channel Islands tend to be used
depending on favorable double tax rules.
The value of a license may be difficult to determine, where vendors and buyers may have different views on the
license's value. One possibility is then to enter into a fixed-term contract or a contract can be renegotiated after a
number of years.
Example
At the time of the beer before the introduction in Sweden examined a German brewery to mark Löwenbräu a licensee
in Sweden. Spendrups was contacted and was able to license the right to Löwenbräu medium strength. But the
contract term was three years. When the contract extension requested and received the German brewer has a much
higher royalty than for the first three years.
The question to be asked is if not Spendrups from the beginning should get a longer contract. Had Löwenbräu
transfers in the license unless the possibility existed for a renegotiation and price adjustment? Responses are of less
interest but it may be important to try to get the short duration of the contract respectively, depending on the market
success can be judged likely to affect their bargaining power at the next hearing.
12.8 Responsibility for the product
Licensor assumes a greater or lesser responsibility for the product, when sold, meets the safety and the quality that the
customer has reason to expect. Particular issue will be whether the marketing is done with the use of the licensor's
trademark.
In cases where the product causes injury can blame be placed on the licensor for defects in development or testing of
the product and for negligence to communicate such deficiencies or limitations on use that may be warranted because
of recent experience. Licensor may, according to the values of the United States never completely exclude his liability
for any damage as a licensed manufactured product has caused. The risks to the licensor shall be sentenced reduced on
the license granted without the brand switching and without quality commitments and quality controls from the
licensor.
Product liability legislation has been tightened in several countries, including the EU, so some caution may be
warranted for licensing.
12.9 Transfer of knowledge and technology
When licensing negotiations are completed, all the knowledge and technology covered by the agreement and
necessary for the licensee to be able to start the agreed activities are transferred from the licensor to the licensee. This
part of the process can take several years and is often so extensive that the company realized some of the problems,
has decided not to sell the license on such a complex technology and knowledge that they are using successfully. A
company has often developed their skills over a long time and considerable amounts of tacit knowledge that different
people possess and transfer by train replacements and new employees.
The latter has also not saying all the knowledge needed for making and using the technology they work with. A lot of
component manufacturing and supporting services are purchased from suppliers, whose skills can not easily be
covered by a license. For a licensee to use the license may be necessary to conduct parallel negotiations with a number
of subcontractors. This is particularly true of licensing to countries with less developed industrial structure.
Much of the tacit knowledge must be transferred through education and training of the licensee's staff at the licensor's
facilities and by operating personnel of the licensor for a time working with the licensee, at least at fine-tuning and
production startup.
The work required to transfer knowledge can be so disruptive to the normal work that licensors do not want to repeat
the problems despite the considerable experience built up which could be used for future licensing deals. A not
insignificant and contributed to the difficulties is that the business license can not be planned and organized as a
regular part of the business. In cases where a company believes that the licensing of a technology can be made at

several markets over a longer period of time, a working group or any individuals assigned to licensed shops and the
internal costs are distributed over a larger number of licensing agreements.
It is only if such an organizational design is possible as it becomes feasible to systematically document their own
activities so that knowledge can thereby be transferred to the licensee at a reasonable cost.
12.10 Response to questions at the beginning of chapter 12
1. Can production and sales licenses sold to multiple license purchasers at once?
Yes, if the license is simple, it can be sold to multiple buyers simultaneously. A prerequisite for a good future
cooperation with the license buyer is to sell information about its intentions to sell licenses to several companies.
2. How can you engage in acquiring a license to contribute to the product and the ongoing march of technology?
By contract and by continuing to work actively with myself to further develop and license the object to make this
information available only to those licensees who reported the improvements they make or receive from their
customers.
3. Is the simple model that can be used when a license agreement to be concluded?
No, each license situation is unique. Both sellers and buyers must develop a strategy for how they want this
cooperation to develop and formulate an agreement and then also consider what happens if either party ceases to exist
or change ownership.
4. There is a risk that the licensee becomes a serious competitor?
Yes, the risk is great. Sometimes it's what you want to achieve and then it's no problem. If it would be very unfortunate
if a competitor was created, perhaps it might be wise to also consider other alternatives to licensing.
5.S Is it possible within a trading bloc such as the EU to give a buyer the exclusive right to license a product?
No, not in the EU. Europe is a market with free movement of goods and services. However, you can give a licensee
the exclusive right to the EU provided that they themselves are not as license vendors produce and sell the product in
Europe.
6. Can licensed vendors and licensed buyers in a license agree on tie-ins and royalty levels, but that authorities have
no objections?
Yes, in many countries is that, while several countries have rules on how much royalty should be the maximum and it
must be approved by the authority to be valid, eg, central bank or finance ministry. The laws of some countries do
with licensing tie-ins directly illegal. Has licensed the purchaser had the information they want when they invoke the
tie-in paragraph that makes the contract void as there is no legal basis to require any payment or to demand that
knowledge should not be used.
Tasks
1. Make a list with information on products manufactured under license from any other company. To resolve this task
by reading the packaging and user manuals. Choose a happy food products in the kitchen. Try to analyze the causes
may be the company chosen to manufacture under license and has not developed an equivalent product itself.
2nd What examples have you found where a firm in various newspapers ads that mention the products manufactured
under license by another company? Please use the two weeks for this task and also read the ads in magazines and
journals. Analyze and attempt to explain why the companies mentioned licensor of names in the ads you found.
Appropriate practical cases
Svedala Arbrå AB
Scandsam AB

13 Agents and other forms of representation
Questions to answer after the chapter on agents studied:
1. Have agents as a distribution channel had its day in the global marketplace?
2. What do you estimate the cost to search and sign an agreement with an agent?
3. How to get an agent to become an effective marketer and seller?
4. Is it possible to replace agents who are not performing according to the expectations you have?
5. What is meant by health care agent?
6. The agent can make legitimate claims for reimbursement of agency relationship is interrupted by the principal?
Additional issues.
What is an agent?
What other forms of representation are there?
How can one find a good agent?
Which representation form is appropriate?
What discretion does the agent under a contract?
When and how can an agent relationship end?
13.1 The representative will facilitate contact with the buyer
Representatives often engaged, as it believes that they can perform certain tasks in the distribution more efficiently
than sellers or buyers themselves could do. Representatives effectiveness and benefits of engaging them in the sales
and distribution process is not self-evident but depends on a variety of circumstances. It may be representative of
knowledge and experience or the distance between seller and buyers, product complexity, buyer behavior and buyer
country business culture, the buyers' needs and motives for the purchase, the number of buyers and the competitive
situation and the range significance for the purchase.
In international trade is increasing both the number of sellers and buyers, and the distance between buyers and sellers.
Purchasing habits and buying motives may also vary from country to country depending on the business culture and
technical and economic conditions. All these factors increase the need for intermediaries to create contact between the
seller and all potential buyers. The seller may limit the market by selecting only such a large market that can be
handled without recourse to intermediaries, but it is often too small a market. Opportunities for further business is on
the intermediaries are used.
Through its direct connection to the customer market, a local intermediary with a good knowledge of customer needs
shape the business more effectively and build a catalog that provides good market conditions.
Representative, where he works as a "purchasing agent" to build trust among their customers that allows him to further
strengthen customer relationships and introduce new products that customers need. A company that sells small
volumes to a distant market are difficult to cultivate and maintain good customer relations needed to be competitive
and to constantly be aware of customer needs that competitors may not act undisturbed.
In international trade is often engaged several different types of intermediaries, depending on market situation and
tasks in the distribution.
Among all the forms of intermediaries engaged the agent is the most common, but other forms as commissioner,
trading house, importer, distributor, wholesaler and broker engaged in large scale.
Any kind of intermediary has its advantages and is especially suitable in specific situations where they may be
preferable. Under strict legal terminology, the number of types of agents or intermediaries somewhat more limited.
The relationship between intermediaries and the client is regulated by law. A brief review of the legal procedures are
therefore necessary, before the selection of and cooperation with representatives addressed.
13.2 What is an agent?
With the agent referred to in everyday speech, almost a representative holding an office of a principal. How the
relationship between the agent and his customer is legally regulated, however, often overlooked in the general
language.
Legally is an agent of a person who carries out a mission on behalf and in his name. At one end is therefore the

principal and third party legally bound to each other, while the agent is bound.
In most countries, in Sweden only with EU membership, and then with a relatively low protection of agents is a law
created to protect the agent's interest. Agent Company which are small and economically weak have been assessed
need of protection by mandatory law.
Usually, the law gives the right to a commission in lieu of notice and compensation for the generated market at the end
of time contracts, known as a severance payment, which can be between 1 and 3 years of normal commissions.
Terminated the contract between principal and agent, without respect of notice periods or in other circumstances
which are contrary to good business practice, there may be rules also give the agent the right to compensation
equivalent to damages or a few years of lost commission.
It can therefore be associated with significant costs to settle an agent who performed his duties. Agent has
mismanaged the settlement can be made at lower cost.
The agreement between principal and agent thus needs to be clear on a number of points to complications arising. If
this has been written several books and the examples are many.
The following reasons support the use of agents:
1. Small market
2. Commercial practices which it takes time to learn.
3. The agent has established and good contacts and it is cheaper than training their own staff.
4. There may be a "requirement" that an agent is used, previously common Eastern countries.
If the agents in their business in the local market using accepted business practices which in Sweden is rare or not
accepted in most cases impossible for the owner to decide. It can be an advantage not to be overly interested in how
the agent performs his work as long as the good results obtained and not the principal activities of the other injured.
Although other types of intermediaries such as consultants, inspection and testing firms can act as channels to a
sometimes unduly influence the buyer or the buyer's staff.
Financial assistance to the buyer keen political, religious or organizational activities can have as much power as
personal advantages for decision makers in purchasing situations. Contributions to eg political parties is also accepted
in many developed countries, but not in Sweden. In cases in which contributions can be paid lawfully and in order to
improperly influence a person in the purchasing situation should be great caution exercised by a foreign company that
knows the situation.
In all situations where it can be assumed that what the country needed to do business in conflict with Swedish law and
business ethics, a form of distribution chosen, where the Swedish company and its subsidiaries do not contribute to
such transactions that may harm the company.
Business ethics and the law is changing and competitive environment. With these changes, it is important that the
distribution arrangements be amended so that individual employees will not be tempted to make a "light" means
secure a deal.
The word agent is used, however, on a wide range of intermediaries, such as the general agent and purchasing agent,
which is not always the agents in the legal sense.
Some agent related and legally distinct forms of intermediaries, the distributor, sole vendor, and the Commissioner.
Figure 13.1 shows how some different forms of representation is related to the respective third party owner.
Figure 13.1 The relationship to third parties or to the principal varies with the representation form.
Legally related forms of intermediaries is thus the agent, dealer, and the Commissioner.
Agent carrying out functions on behalf of and receives a commission for their work.
In most countries, the agent is protected by legislation that ensures protection against unfair commercial conditions.
The main rule is that the agent is guaranteed compensation for the market cost incurred. Within the EU contribution is
usually a one-year commission. This condition can not be derogated from by the Agent unfavorable conditions
included in an agreement, but it may however be extended.
The provisions on the protection agent is not automatic if a larger company is an agent. In most countries, the
agreement then becomes an important document. For the independent representative who works as an agent is
considered an agreement to have come to the work as an agent has been initiated. Has the export company sent
Representative such information and other documents that he can start work as an agent is considered an agency

agreement have been reached unless it has expressly said that this is not the intention.
Extreme caution should be exercised when dealing with individuals and companies who want to become agents, so
that no accidental agreement. At unreasonable dismissal, there may be agents in addition to compensation for goodwill
generated also may be entitled to damages. The rules vary by country. In Sweden, an agent protecting weak - almost
non-existent and it is not usually treated in courses in civil law given to economists, hence the relatively big news for
many when they first come in contact with the law of agency protection.
The dealer will often lonely salesman by the agreement with the principal is guaranteed the exclusive right to a
specified country. Solo seller buys the fixed account from the principal and then sells on to an appropriate price. That
price alone determines the seller himself. The allowance represents the difference of buying and selling.
Commissioner receives its compensation either by commission or as the difference of buying and selling. The
Commissioner does not assume ownership of the goods without reporting to the owner when the sale occurred.
The "General agents, which occurs in eg automotive sector, are only exceptionally agents but instead lonely salesman.
Dealers can be considered a generic term for trading, importer, distributor and wholesaler. Common to them is that
they usually work on legal conditions that closely connects to the exclusive dealer in relations to the principal and
client. Typically, the wholesaler and distributor are not exclusive to the product but this can vary and must be
governed by contracts between principal and agent. This can sometimes be implied by wholesalers and distributors is
well aware that other wholesale distributors respectively obtained the right to distribute the product in question or the
principal's products.
Trading normally performs a more extensive work, and in particular the financial commitment can be far reaching.
Trading houses can often buy the seller's country and take care of shipping and warehousing, and respond to economic
and financial data and risk taking.
Retailers of all kinds can also operate in parallel as agents for the same owner, for example for large deliveries or
specific product groups or to certain specified groups of customers. It may also be that they act as commissioners in
particular if they are economically weak relative to the stock that may be motivated by competition.
Companies wishing to act as brokers, however, before details of buyers resp supplier forwarded negotiate an
agreement which will give the commission. Brokerage commissions may indeed be the practice, but the seller or the
customer can always fail to pay and claim that defendant was already known and that the broker did not add anything.
13.3 Election of Representatives
Freestanding representatives are an important distribution channel for exports, although their sales and direct sales
account for the bulk of Swedish exports. Particularly important are independent representatives of small businesses
and small and distant markets. This means that representatives are the dominant entertainment form of the many
markets where its own permanent establishment can not be profitable.
The foundation for a good and evolving cooperation between principal and representative established already in the
choice of representative. The company's export market knowledge and experience to collaborate with representatives
of various kinds may thus contribute strongly to the selection of and negotiations until agreement on cooperation will
be so thoroughly carried out to the target platform for a successful cooperation is established. The export situation of
the company and its prospects as the proposed representatives' abilities and future plans need to be studied and
evaluated before you can make an informed recommendation of a suitable partner. Personal relationships within and
between the two companies is very important especially at the interaction between small businesses.
13.3.1 Renegotiation and reform of the representation
Market developments, new products and a wide range of other conditions can motivate change of marketing focus,
design and activity. Already in the first agreement with the Representative to the possibilities and modalities for
renegotiation and revision into account and included in the talks and the agreement for representation.
Properly designed, the conditions for changes of co-operation contribute to increased motivation of Representative.
The absence of discussion on how representation in the future be changed in different situations can make
Representative unnecessarily cautious and ensure that he is taking various measures to protect its position in a way
that leads to lower sales than on the design changes from the beginning governed the contract.
Representative can only be expected to follow the principal's intentions, if this improves the Representative's own
position. It is therefore important to choose a representative with such business principles and intentions that at the
outset are synergistic goals. It facilitates the subsequent management and justification of the Representative to carry
out the market action as needed.
13.3.2 Applying for a representative
Applying for a representative can be in many different ways. The success of the cooperation is established depends on
whether the election is right. Through a well-conducted search and selection process increases the chances of a

successful partnership for both parties. Regardless of the search method and selection procedure for the election result
in both success as failure. The absence of an objective record makes the subjective assessments of whether a
partnership is working well or poorly to be used in the evaluation, unless there are several dealers in the same market
which can be compared.
Four main methods for selecting representative presented here. They can of course be combined and used more or less
ambitious. Over 50 percent of the elections is perhaps the Representative's initiative, any statistics or reliable research
is not, but it is more common to refuse a representation but to himself seek a representative.
Methods for selecting and searching of Representatives, with a more detailed description below:
1. establish a requirements profile of the needs and requirements
2. Recommendation of the customer
3. marketing plan method
4. put yourself first - then choose the method
1. Establish a requirements profile of the needs and requirements
This method means that for each market as an export company to process the grade requirements for HR. By then
enter these variable values in a chart obtained a job specification. An example is shown in Figure 13.2.
Figure 13.2 The figure shows an example of how a job specification can be formulated and the corresponding values
for the two candidates to be evaluated.
A similar profile can then be designed for each of the companies that are potential representatives. The graphs can
then be compared and the company has a profile curve that best align to the requirements of the profile is in
accordance with this method the most appropriate representative.
The method has many advantages: it is routine, highly detailed work can be delegated, and all companies that are
interested will be included in the selection and analysis. The drawbacks is that, when the seemingly objective
assessment ignores the subjective selection of variables to establish requirements and profile of the valuation of the
various companies' ability according to established criteria. There is potential for significant degree of subjectivity
which is hidden by the practice. For consultants, the method, however, a great advantage. It goes to show how closely
they worked with the client's behalf!
What requirements should be placed on a representative can be settled only if there is a detailed knowledge of the
market country, its culture and the specific product market. Such knowledge does not usually export company but
must be purchased by a consultant. The other methods take more account of market conditions.
2. Recommendation of the customer
By accessing important potential customers can market reactions to company products and market potential and
requirements for market adjustment of product, price, discounts and other promotional activities to be mapped and
analyzed. While it is possible to find out which companies are customers buying competing and complementary
products as well as the provider they prefer and why. The information thus obtained leads to a good idea of what the
best dealerships are. One of them should be a good representative. Used method of systematically and selected a
representative sample of customers so should positive results be achieved with the method. A disadvantage may be
that the appropriate representatives may believe that they have a strong bargaining position and impose stricter rules
on the terms of the contract than the other methods if they understand why they are contacted and invited to become
representatives.
3. Marketing Plan Approach
The method starts with the company seeking representative makes a brief description of their products, their use and
the expectations it has on exports to a particular market. Then hire the company trade offices, chambers of commerce
and other contacts for suggestions on companies that may be appropriate representatives. Then you sort out the 5 to 10
most suitable according to the criteria we think are important for the market and visit these companies.
We began by visiting them in order of "bottom" so that the mistakes they make in their work should not destroy the
relationship when you get closer to top the list. By discussing market conditions and terms of the various business
leaders how they intend to engage in market work, what are their main competitors, their sales successes and
difficulties as well as the advantages and disadvantages they believe that their company would have on the market,
one can obtain a better view partly on the market, and about the various corporate fitness and ability to represent the
export company in the market. The first agent contacts are thus a form of thorough market research.

One advantage of these visits are preceded by a letter, which also ask the prospective companies prepare some
questions. More information about the market can thus be obtained. This information can then be used to specify the
details of the appropriate sales volume and commission rates and the extent of the sales support provided by the
exporter needs to answer for, eg, advertising, participation in some exhibitions, warehouse, and special treatment of
certain key customers.
4. Sell yourself first - then choose the method.
In situations where the product is new and an established market does not exist, it may be difficult to find an interested
and appropriate representative who has the potential for and interest in implementing the market work required.
Extensive work is often a prerequisite for the successful marketing of new products, where technical and economic
performance must be presented and the product may also be tested and evaluated in the customer's own business,
before a decision can be made. The time from when the market starts working until a decision can be long the
commission or the future price margin may be too small to justify the Representative to make the necessary market
work. Once the product is proven to work and a market established for the subsequent sale be conducted with less
work, while demands for local service and spare parts is increasing. Coordination can be managed more rationally by
a local representative.
In such a market situation may "sell first, then select 'method to be effective in selling the product and find the first
reference customers and simultaneously exposing the export company and product, so that potential representatives
will be interested. The market knowledge and reference customers gained may be crucial for the right terms and
conditions shall be made at the subsequent negotiations with a prospective agent.
Work to implement the mission work required to dedicate a new product may need to be done in a branch-account or
by a separate subsidiary to a sufficiently credible market presence to be exposed to customers. It may therefore be
necessary to temporarily open a branch office or establish a subsidiary. Branch office respectively subsidiary can then
be phased out when a suitable representative starting their business.
13.4 Agreement with Representative
The feasibility of different market activities, both as representative as in other ways are heavily influenced by how the
agreement with Representative edited. Various requests for flexibility in various aspects should be addressed during
the contract provides. There are market considerations that should guide the design of the contract. Since the requests
down it becomes a matter of law to regulate them in the agreement text. The requirements for contract completeness
and format varies by case law in different countries. Generally speaking, the agreements with U.S. companies are
often far more extensive and need to regulate more questions, because there is no law that complement the areas
where the agreement provides no guidance. Time and money are used to discuss both the business as the legal part of
the agreement, before the final reading, is usually well known to use then what can be expected in various respects.
Agents and commissions paid representatives' willingness to invest in the marketing of the principal's products due to
the compensation and long-term safety to retain representation. Both the replacement of the required size of the
security can be representative without the possibility to control the market action is reduced.
The agreement should contain provisions for joint budgeting for next year, and market goals should be formulated in
the formulation of the budget. Requirements for minimum sales should be adjustable, and the contract should the
principal have the right to break the contract if this volume is not reached.
It is important that these goals are not specified exactly at the conclusion of the contract but that they discussed each
year so they can be fixed in relation to market development and sales results. Otherwise, they quickly become totally
unrealistic too low or too high relative to the market. It may be important to regulate in detail how representative the
man and organize sales activities for the principal product, so that appropriate and motivated staff receive the support
and the conditions necessary for a good job. If the agreement allows the owner can give himself Representative sellers
the opportunity to participate in sales contests and bonuses to collect in relation to the sales results so that an extra
stimulus is given in addition to the salary paid by the representative. Selling product and other training should be
governed by the scale and costs are allocated between principal and agent.
The scale and design of market measures need to be regulated on advertising and participation in fairs and exhibitions.
Methods exist to actively involve representatives of budgeting and planning of such sales activities that may be
important for the success not only at his market, but also in other markets. Marketing activities that may have a
significant impact on sales performance in other markets and in which the agent needs to participate may be, for
example international trade fairs, promotional activities, sports competitions, etc. The planning, implementation and
cost-sharing in such cases shall be done should be regulated in a manner that provides sufficient freedom of action and

motivation for both parties.
Representative's right to engage retailers and to promote other products competing and complementary should also be
regulated. As Representative motivated primarily by the profitability of different parts of his catalog offers, it is
important that the principal has a clear understanding of the role of their product to play in the Representative's
catalog: the profitable product that has a high profile or a marginal product is only sold when customers ask after.
Design of commissions, sales aids and sales training must adapt to the product's role in the assortment.
Principal's sales support in the form of storage, speed and reliability of supply, opportunities for demonstration,
financing, advertising and promotional support are important for the Representative's profitability and motivation.
For the commission to the Representative, it is important to determine who will bear the credit risk. It is common for
this responsibility to some extent imposed on Representative. At the agency agreement the agent can be part credere-
responsibility and the commission is not paid before the customer paid.
Alternatively, the agent under the agreement be made liable for the entire loan commitment to the customer. The agent
has not normally afford to do so to take such credit, but he can protect themselves by ensuring their commitment. It is
sometimes possible to obtain credit insurance at a local market at significantly lower premiums and better settlement
terms than EKN offers. Exchange rate risk can, however, typically are not protected at the local insurance. However,
the customer shall pay the SEC, and the local insurance company accepts it, there is no exchange rate risk.
Representative tries often have exclusive contracts. That means the exclusive right to sell the principal's products in a
given area. In an exclusive representative agreement is also entitled to a commission for the sales in his area that other
agents or the principal himself is doing.
Exclusive contract can obviously justify Representative for a major. Have not representative capacity or ability to
under exclusive agreements and other market activities may be delayed. To provide a representative commission for
products that did not sell may be costly. Already in the contract should be regulated if such commission shall be
deleted and to what extent.
It is also important to specify the representation of product types so that any new products for which the principal
addresses are not automatically covered by contractual agreements. Completely different market channels might be
more appropriate for them than they are already established. By failing to provide exclusive representative for the
operator itself and without breaking the contract to enter the market or to appoint other representatives. To protect the
brand, it may be necessary that the principal himself engaged in an active working of the market through advertising
and sales at the same time representative, even if the agreement is regulated that the representative has the right to use
the mark and the mark, when the contract ends, must belong to / return to principal without pay. While on such a point
of agreement is usually well protected, but because the brand in some countries can only be recorded by the user, is
the mark Representative. At unreasonable dismissal or dispute can mark the time of return may be delayed by legal
challenge. Has the owner himself registered and used the mark during the entire term of the contract can, however, no
ambiguity hardly arises.
Within the EU, a representative is not given exclusivity for certain country. It is contrary to the Treaty of Rome. For
very small businesses, where the principal's and Representative's combined turnover is below a certain size, is the
exclusive agreement permitted. To motivate the representatives and partially protect them against intrusion from other
agents, the extent and spread of market measures such as advertising, sales trips, etc. is limited to certain territory until
the market for established market objectives were achieved. It tends to be a sufficiently effective constraint to
motivation is not adversely affected.
The most important elements of any agreement are the resulting disputes to be resolved and what the penalties of
breach of contract should be. Usually, arbitration is preferred because it is a convenient and rapid procedure. But
agency law can not be eliminated and if the award would make it, the agent can probably still go to court.
Arbitration Panel or judgments may need to be enforced by forcible means. Other party could ignore the rulings to the
detriment of the force were not available. The possibility of international assistance to obtain the executive is not as
obvious as in a country. When it comes to enforcement of a decision, in which parties in different countries are
involved, the arbitration is preferable, there is an international agreement on assistance in arbitration awards. However
there is no broader agreement in respect of court rulings from the courts and can not always be helped to implement
them in other countries.
13.5 Stimulation and support
Representative need the same support and commitment from the principal as a subsidiary. The reason that a
representative is chosen is often the owner does not have the resources to start their own subsidiaries or the market is
too small and that the Representative is already a good market knowledge.
Representative despite initially better placed than a subsidiary need for ongoing communication with the principal.
Representative need a discussion partner and the impetus it means to be able to discuss with sellers and marketing

managers in other markets to take part and talk about their difficulties and successes. Representative and the person
selling the principal's products need to have the same incentives as their own sales people and feel the fellowship and
inspiration as an active sales support means.
Regular visits are needed to plan for next season or year and to evaluate the past year. Combined sales training and
access to experience, banks are now possibly on the computer with direct access to representative - can be incentives
Representative and strengthen motivation.
Involving representatives meet and discuss common issues can obviously be risky, if there is significant dissatisfaction
with the principal's behavior. On the other hand, such signals arrive on time and deficiencies to be corrected while it
might appear that dissatisfaction may be due to conditions that Representative is responsible for. Other representatives
can help and show how they solved the corresponding situations.
Representatives need of education and good communications between the principal and the representative is often
overlooked. There is much to be done to improve relations. So simple measures to respond quickly to letters, faxes
and e-mail and to have the office staffed for incoming phone calls during normal working hours for Representative are
important for cooperation to function smoothly. The working hours of the day may have shifted to the personnel of the
operator who handles contacts with the representatives, including the organization of holidays and weekend leave.
13.6 Settlement of Representative
At the settlement of the Representative, it is important that the new organization can act as soon Representative job
ends. This problem can be difficult to resolve, if the representative has the exclusive right under a contract for sale
even during the period of notice. Another problem is that the representative can obtain the representation of competing
products, once the mission ended. In this way, Representative become a serious competitor.
The decommissioning of the Representative's role should be in agreement.
He can for instance be invited to become members of a sales and / or manufacturing companies. In this way a large
part of Representative's market knowledge transferred to the joint venture. It is an advantage if the agent is already at
the arrival of their mission has been discussed through various opportunities for future changes in the distribution
system. Perhaps even a sense of agency agreement that participation in future sales company must be a possibility.
In Sweden there are currently no special protective legislation for agents. The special problems in an agency law in
other countries is therefore particularly taken by Swedish exporters. It has for example happened to Representative
since the mission ended proved to be the principal brand. If not all interactions are regulated at the same time, the
principal in addition to the cost of any compensation and severance pay to the agent for the loss of agency caused
additional costs for example, releasing his own brand and regulate other interactions afterwards.
13.7 Trading houses
Trading houses are a special form of representation. These differ from other representatives of their size and the fact
that they normally account for both imports and exports. Trading houses are often so large that they have their own
offices, branches or subsidiaries in several countries abroad. In countries where they have their own offices, they have
representatives, sometimes several.
By trading houses engaged in both exporting and importing business for the balance of payments flows, and partly to
act as their own bank. The answer thus a significant part of the price risks that normally arise, and also set-off liquidity
for various supplies, instead of transferring payment. Opportunities for groupage and return shipping is also available
for commercial buildings. These are by their size, thus well placed to effectively implement the international trade
volume of goods. In the case of specialized products that require high skills of vendors and service personnel, they
have found it difficult to assert itself. A change in progress, however, and there are examples of trading in parallel with
staple goods stores specialize in certain technologies and certain product areas, where high technical skills required.
Being able to provide even exporters of high technology products, the market support they need to market success is
what many trading houses want to accomplish and certainly also will be able to offer in increasing quantities.
Trading Houses strengths in logistics, finance and market knowledge can always be combined with the export
company's product knowledge, on its own staff placed on trading house's offices abroad. Conditions for such
agreements exist and sometimes they can be an effective solution not only to the introduction of a new market but also
for a long time, if sales volumes are not attained to justify its own subsidiary.
In Western Europe and U.S. trading houses have a smaller role, while in Japan has a very important role. In Japan,
secured the bulk of foreign trade through the involvement of commercial houses, and every major conglomerates have
their own trading. Trading houses in Japan have shown the flexibility needed to maintain a strong export despite an
increasing proportion of qualified products.
In Sweden there are about fifty trading houses, some of considerable size, and often specialized in certain product

areas and regions. Elof Hansson, Gadelius & Co., Ekman & Co. and Kjell's successors are some of the best known.
The Swedish trading houses, has restructured its operations from primarily acting in the export of Swedish raw
materials to conduct more and more qualified technical marketing of plant and machinery. In some cases there are also
examples of local manufacturing in collaboration with the principal.
13.8 A draft response to questions at the beginning of the chapter on agents
1. Have agents as a distribution channel had its day in the global marketplace?
No, they do not. Many companies prefer while working through their own subsidiaries. To cover all countries with
own sales organizations become too large investment for many companies. Startup companies need to come out in the
global market faster than before, and then making use of established sales organizations a method that is both fast as
relatively cost effective.
2. What do you estimate the cost to search and sign an agreement with an agent?
The cost is estimated at about one month's own work, consultant services for the agency increase about 1 week, legal
help to write the agreement if it is relatively easy 1 to 2 days. Travel expenses to visit the agent.
Overall, somewhere between 100 000 and SEK 200 000 for the whole thing goes without any major problems.
3. How to get an agent to become an effective marketer and seller?
By offering agent products can be sold with good profit for the agent. It may require a significant investment in
advertising and other marketing activities primarily in the start of the agency relationship so that the agent will in time,
but also long term, so that measures are taken to the agent should be able to operate a profitable business.
4. Is it possible to replace agents who are not performing according to the expectations you have?
Yes, but at a cost that can sometimes be high. It will lower costs if we can show that the agent does not fulfill its
contract, for example, has fallen short of the agreed sales levels.
5. What is meant by health care agent?
To agent training, the agent feels involved in global marketing, among other things, by the agent may participate in
sales conferences, and access to information as quickly and efficiently as their own selling subsidiaries.
6. The agent can make legitimate claims for reimbursement of agency relationship is interrupted by the principal?
Yes, there is a protective agent that provides some protection against layoffs taking place without good reason.
Task
How common are agents for foreign companies in Sweden?
The task can be solved among others by studying the Swedish Trade Stuff on the Internet that contains information on
Swedish commercial agents.
Appropriate placement cases
AB Hans Dahlberg safe factory, dealer

14th Own sales Subsidiary
Questions to answer in the chapter on sales studied.
1. Why is it increasingly common for companies setting up operations in new markets by acquiring a suitable business
than to start with a start-up of a company?
2. At the start of a sales company, it is common for a person already working in the company appointed as CEO. What
could the reasons be?
3. Are there any obstacles to the establishment of sales subsidiaries?
4. Are there any positions in the subsidiary which is an advantage to have local staff or the parent company's
nationality?
5. There may be reasons to work with various organizations in the country for various products in its catalog?
6. Will an agent visit as president of the establishment of a subsidiary in a country?
A few more questions.
Why are their sales so common?
When is it appropriate to establish its own sales companies?
How can an own sales company established?
Justify selling the company the high cost?
14.1 Is own sales, the most effective distribution channel?
Right-utilized form own sales probably the most effective channel to promote a company's products on a foreign
market. The case, although not in all market situations and in every market but for a large number of companies have
still, in most cases own sales proved the most effective distribution channel. Although many studies of the company's
international marketing has shown that this additional benefit is having its own sales companies that may be
considered the general view: Eddy (1964), Engdahl (1970) and Moberg (1990).
The reason that their sales have proved so successful is because they can adapt to changing situations and that such a
restructuring can take place even greater extent than in other distribution channels. In the case of other distribution
channels, it is in disagreement with the result that frequent replacement distributor than to conduct a restructuring.
The main advantage of its own sales companies is that they offer a more direct and tangible opportunity for the parent
to control, monitor and reorganize marketing on the market.
Interest and commitment to achieve a perspective from the parent company success is usually greater than in other
types of intermediaries. Although parent management has often focused more of its own prestige, not to speak of
equity in the subsidiary's development.
This contributes to the problems faced by the subsidiary on the market even more effective in taking the necessary
actions in the parent company. Independent distributors may have difficulty in gaining acceptance for necessary
change in the principal's home organization, and then select other products and market segments as an alternative for
their own development.
Sometimes it may be that the intermediary has an interest in allowing other parts of their business expansion or has
reached a sufficient size or profit and do not want to expand further. Own sales only (usually) a principal and an
opportunity to expand that is by achieving success in the marketing of the Group / Parent Company's products.
The number of foreign affiliates has increased substantially, this is particularly true for Swedish companies. Foreign
subsidiaries often have functions other than as sales companies, but most of them are sales companies. Of the total
Swedish exports now carry the foreign subsidiaries of approximately 60 percent of export value. In the major OECD
markets, using the large exporting companies (20 companies account for 70 percent of Swedish exports under Export
Council statistics) almost always owned subsidiaries as a distribution channel. In other markets, which account for less
than 20 percent of Swedish exports, the choice of distribution channel more varied.
14.2 FSC's functions
The foreign sales companies often have functions other than the parent company to market products. All marketing
functions tend to be included: market monitoring, market research, PR, SP, advertising, sales, collection of payments

and assistance with stocking, delivery testing, installation and service. This is, of course functions as well as other
distributors often do.
In addition to its own subsidiaries often complement or complete the mount from the Group delivered products. Such
final assembly is often a prelude to the local manufacture of any kind.
The subsidiary monitors are also common market for the purchase of components and accessories and can provide
information to the parent company for possible cost savings in purchasing the whole company on its subsidiary's
market.
Coverage and sales to other countries from the subsidiary's market can be sometimes due to historical or political ties
or export commitments may be more appropriate than from home. The subsidiary can thus be a task that extends
beyond their country of establishment.
Subsidiaries starts sometimes with the task to act as a purchasing office or coordination functions in different parts of
a company's operations. It may include research and development, market monitoring, financial transactions and
borrowing, or staff development. The most common after sales functions is the production of the subsidiary.
The information to the foreign subsidiary is intended to engage in influencing both the form as a method of
establishment and location. Selling subsidiaries do not always work with the sales activity to end customers. It is
instead, the sales companies often import and distributor functions and uses a number of retailers or wholesalers for
the direct customer contact in the market.
The need for additional selection as well as small orders often makes it necessary to work through cost-effective
distribution channels to reach the large number of small and medium-sized customers. Large customers can, however,
are handled directly by its own återförsäljarbolag or by the subsidiary. To separate out large customers and establish a
direct contact with them is common, if there is a need for technical customer service or for other reasons, for example,
to get momentum for our own product.
Its subsidiaries can be a communication link between the importers, retailers and parents within a region, eg LAFTA,
to facilitate mutual understanding and communication, and stimulate product adaptation and sales efforts. Subsidiary
do not have to deal with goods and cash flows in order to fulfill an important promotional role. Such an institutional
solution used Hadak AB for a few years with an office in Belgium. This resulted in large säljfamgångar.
14.3 Establishment of subsidiaries
Establishment of a subsidiary can be done in several ways. The most common is the establishment by the formation,
purchase of the former representative, the purchase of other suitable companies, such as a competitor.
For all the subsidiary formations and acquisitions abroad requires both home and host country authorities give their
permission. The purpose of the formation and acquisition could affect government positions of both countries, so it
may be advisable to check the rules and the practices prior to application. Certain activities may be restricted to their
own country's companies and in other cases, the requirement for local ownership occur for establishment shall be
permitted.
For Swedish companies, there is now no longer any restrictions on bringing money for the establishment or
acquisition of businesses or other property.
In Sweden, before the right to establish and acquire companies abroad through the National Bank set called Höganäs
conditions. Höganäs conditions imposed by a major foreign acquisitions by Hoganas Company carried out in 1939.
The conditions were:
1. that not without the Riksbank's consent to transfer shares in the foreign company
2. to not let fondera earnings of subsidiaries to a greater extent than was reasonable in the light of the Riksbank stated
the nature of the company, and
3. to regularly submit balance sheets and profit and loss accounts for the company to the Riksbank.
Only Swedish legal entity, such as limited liability company, was granted permission to set up or acquire companies
abroad. Individuals could not get permission.
Over a period has been an additional condition that the investment abroad would be completely financed by foreign
borrowing.
Exchange controls administered by the National Bank put further conditions on the relationship between Swedish
parent companies and foreign subsidiaries. The most important thing was that the Swedish parent company but not the
Riksbank's consent was included guarantee for its foreign subsidiaries. In practice it would not be a problem to get
permission to set bail, if the investment promote Swedish exports.
With the liberalization of capital movements in preparation for the Swedish EU membership was enticed many
companies to rapidly increase their investments outside of Sweden and in this connection was made a number of

erroneous investment, not least in the real estate sector, which later led to great losses and sometimes even bankruptcy.
The moral is that when new markets are opened, it is important to understand the new markets.
14.3.1 Establishment by Formation
By initially establish and register a new company obtained the full freedom to build an organization and to crew and
locate it in the way that is most appropriate.
The formal, legal incorporation can be done relatively quickly in many countries. It is often used instead of
recruitment and employment of personnel and acquisition of local technology, telecommunications and other
equipment that takes time as well as to bring about a viable organization. The subsidiary's usually narrow capital base
also allows that it may take time to work up the confidence and acceptance by both customers and suppliers as other
creditors.
An alternative to a formation may therefore be to establish a branch, which means that part of the parent company
located abroad. The advantages are that the entire parent company's financial capital and goodwill are at the branch's
disposition. Some tax benefits is also available. Since the branch is part of the parent company for the entire cost of
creating a branch as a cost borne by the parent.
At a formation can be set up costs for tax purposes are not treated as a cost to the parent company. In cases where the
subsidiary is a sales establishment cost can be considered as a sales charge. The parent company may then assume the
cost including sales tax as an expense during the first years (1 to 1 1 / 2 years).
An establishment of a subsidiary may often require supplements for 2 to 4 years before breakeven is reached, the
resulting tax benefits to first establish a branch.
The branch has no own funds branch is part of the parent company and the branch's commitments responsible parent.
The Swedish tax on profits of which might be an advantage.
An obvious disadvantage is the fact that some countries want to tax the parent company for the portion of the parent
company's profit equal to the branch's share of group earnings, calculated after any pro rata share, and usually with
turnover base for distribution.
Establishment of a branch may sometimes be possible in countries that do not allow the establishment of wholly
owned subsidiaries.
14.3.2 Types of companies
The choice of corporate form is often of less interest, but a large number of options may exist to choose from.
Especially important to know is that between the form of partnerships and limited liability companies which are in
Europe and also in some other countries. In Germany, for example, Gesellschaft mit beschrenkter Haftung (GmbH) of
such a corporate structure. This form is characterized by a smaller board and less capital than a corporation, has the
disadvantage that the manager assume personal responsibility, which can mean both-as disadvantages. Business leader
might be more justified but it may be difficult to recruit the right person, unless the salary includes a
kompensationsdel of personal responsibility.
The benefits in terms of lower capital investment, smaller board and the relatively risk-free activity as it does to sell
the parent company's products in the export market, means that many Swedish companies are choosing this somewhat
simpler corporate structure.
14.3.3 Registration of Company
In order to form a limited liability company required a number of founders, directors, auditors and the capital. In many
countries, founders and directors to be foreigners, and it is sufficient to hire a lawyer for the formation and to appoint
an auditor. Neither general meetings or board meetings need to be in general the country. A subsidiary can then be
recorded relatively easily with people from the Swedish parent company of the Board and interim CEO. In return
other countries, including the Nordic, requires that certain minimum number of directors has established the country's
nationality or, in any case, is domiciled in country, which may also apply to the CEO. At such an establishment need
for new Board members elected and offered a place on the Board. It is not uncommon for one or more board seats
filled by lawyers from the attorney office that arranges registration. Then they can subsequently be replaced by
directors who are able to contribute with other skills to the company.
The election of directors and CEO can often prove crucial to the company's start-up and success. The search of
directors may therefore be reason to devote time and care about. Carefully selecting the right CEO is more natural and

perhaps more important. Consultants are often involved in the recruitment of CEO.
In a new formation of a company is a large choice of location and create the profile that you want for it. The first
registration address for the company can be an address temporarily borrowed by a lawyer's office or other business
pending acquisition of own premises, telephone, etc.
14.3.4 Acquisition of businesses
Establishment of own sales companies through the acquisition of suitable companies, former representative, agent or
competitor can provide great benefits. Already when the acquisition is complete, there is a functioning organization.
Restructuring and rationalization may need to be implemented, but the premises, communications and staff and
sometimes a dealer there. Is there a former representative business purchased is also established product and customer
contacts. The Company may make a profit and if the outgoing management remains on or available for some time and
is in favor of the change can be relatively quickly a considerable improvement of sales performance should be
possible.
Is it a competitor purchased the competitor's customer contacts and market knowledge to benefit the company.
Training and introduction of new products may take some time while it is important to give the former customers good
service for the former competitor's products.
Opportunities to purchase the agents, distributors or competitors' activities are often large, if the right opportunity
exploited. To do this you have to be prepared. Relationships with agents and distributors should be handled by people
within the company who has the power and should ideally be used to buy companies and make major decisions. It is
only when these people are well prepared as a quick decision can be made, when the opportunity comes. Exports
Sellers and other staff who regularly visit agents and distributors have another job, but some may report on the
possibility exists for the acquisition.
To be prepared to buy competitors may be more difficult number of firms is larger and the preparatory work must be
based more on analysis of financial statements and other information than by direct contact.
The preparation should be so thorough that the relatively well-known takeover candidates' market development,
profitability and financial position. Ownership structure and succession opportunities in family-owned businesses is
important to know that an interesting bid to be added as information comes to interest in selling there. Although the
ability to analyze other events that affect the ownership structure of a company is a takeover candidate, it is of interest
to access.
14.4 Time for establishment
With the establishment of its own sales companies will be implemented to provide a profitable addition, it is difficult
to give any general recommendations. Crucial in the long run is that there is a market for the products it intends to sell
in the foreign market. To make reliable market research is often in practical activities proved difficult. The times that
the company had other motives for the establishment of subsidiaries as the market investigation has become too
optimistic. By launching the sales job market is given a more definitive test on product demand. Self-establishment
may be necessary when no other alternatives exist, or when the market investment that must precede a sales success is
considered so great that no representative would respond to them. It is well documented that a separate establishment
of companies increase customer confidence in the company and its products. There is no self-establishment, it is
sometimes with some justice be regarded as the reason why customers bought instead of the competitors who were
established on the market.
A self-establishment can therefore sometimes be necessary even at the start of a market. The less risky way is to let an
agent or other representative only work up a market and when sales volumes increase up its own subsidiary. The total
establishment cost may thus be lower and an initial volume is allowing sales company can achieve positive results in
the first year.
Costs to settle an agent can be high and even if element already included in the contract with the agent, it may seem
demoralizing to other agents if the takeover occurs too early.
Self-establishment may also be a way to prove the product's potential and then seek appropriate representatives with
sufficient resources to take care of product marketing.
Conditions that may affect the timing of a subsidiary established after the introductory period is passed to the
achievement of sales volume could be disposed at a lower cost in your own organization, market changes mean that
new forms of distribution must be introduced, situations where the sales representative must change or management or
owners, and that the Representative may liquidity or profitability problems.

Changes in their range can also be an important factor. If it is extended, it can sometimes require a different
organization, which may be difficult to persuade or motivate reps to build up. A self-establishment is then naturally
this was one of the reasons for Sandvik's establishment of its own sales companies in connection with the Coromant
products introduced in the 50s.
14.5 Acquisition of companies
Acquiring a company that has a business within the product and market area where you want to expand, can often be
done faster and at lower cost than if they themselves must build the equivalent activity.
For the acquisition to be implemented requires that management and the Board has prepared before contacting suitable
candidates. A business is usually a relatively large transaction and associated risks and financial commitments.
14.5.1 Planning for acquisition
Does not management have prepared themselves carefully and the owners / board is a large possibility that the deal
not lose because of too long decision time, and doubt. Companies that are for sale are usually due to changes of
various kinds. It may be a change in management or ownership group in connection with the succession of changes
planned, but often still rapidly developing profitability problems, misguided or short-term liquidity difficulties,
stockpiling, low demand, restructuring of an enterprise group, etc.
Most of the changes means that a company is for sale is rapidly developing, even if they have been foreseen for some
time. Since the seller usually has a more or less urgent need to implement a change relatively quickly, the work must
be done quickly. The solution could be to appoint a new senior management, taking in a new partner, possibly through
the IPO, the liquidation of the business or selling the entire company. The fact that the seller and the Board of
Directors of the company selling it is often necessary to work relatively quickly to get a change to a position also
means that any buyer must have the ability to work quickly when a suitable business is for sale.
The purchasing company's management needs to be defined early on which companies may be targeted for purchase
in:
1. size of the market / country
2. product activity
3. Trade and / or manufacturing
4. assets
5. Financial Situation
6. profitability, positive or negative
7. restructuring and rationalization opportunities
Further discussion needs to be made on how to work in respect of subsidiaries. Subsidiary must be wholly owned or
minority members can be maintained? Maybe you want the seller to remain with a higher percentage, eg 40 to 60
percent of the company.
Are there any special requests about staff composition of senior management after the takeover?
How will the payment be made by cash payment or by payment in the form of private placement, or a combination?
What are the tax consequences for sellers and buyers?
By the prior penetrated these questions and more can be time saved by allowing people to refrain from analyzing and
negotiating with companies that fall outside the framework. At the same time, more energy and time used to take
quick decisions when the right time for purchase offered.
Such companies as it is fairly obvious interest in buying if they are for sale, should be to save time regularly
monitored and analyzed so that they are not purchased by competitors because the negotiations and the analysis takes
too long. It may be a current representative or importer, licensees, retailers and major competitor in the market, agents
and producers.
14.5.2 Financing of acquisitions
The financing of an acquisition may need to be made with the purchasing company's cash resources or by borrowing.
Are banks and other financiers willing to set up?
Are the assets of the acquired firm, which can be disposed to contribute to the funding? What can such a sale to

contribute? By disposing of such activities that do not fall under the business activity of interest can sometimes
substantial amounts released, leading to a net value of what was of interest will be low. The possibilities for such a
sale can often be crucial in order to finance and make a purchase worthwhile.
However, this requires a good knowledge of different markets and it is often difficult to quickly make such an analysis
without the help of professional business brokers, investment banks, etc.
14.6 Assumption of the purchased company
Already during the negotiations is usually the issue of staff and especially management's continued participation in the
company after the acquisition is discussed in each case internally in the purchasing company. It is important that even
then knowing how to act and why. What employees want to keep and what would you not have left after the
acquisition?
This is important so that no false promises given, and so that the takeover is prepared properly. The manager who
needs to be replaced should be informed as soon as possible, preferably already at the takeover and the new personnel
while deployed. The capacity to do so may be limited to acquiring smaller companies, but allows for that from day
one characterize the acquired business as it wishes.
Speculation and uncertainty can be avoided. Especially if you want to retain the old corporate management in a
profitable company, it is important to know that keeping the old leadership and a trusted partnership can be created
and operate.
Major changes are usually always the result of a takeover of changes in the catalog and business direction needs to be
implemented. The changes must be justified and training on the new products must be implemented.
Collaborative relationships within the new group needs to be established at different levels and this can be done faster
and with less trial and error, if it is planned. The budget for travel and visits by staff of the respective parent company
recently acquired businesses need to be generous it is profitable in the long run.
14.7 Answer the questions in the beginning of chapter 14
1. Why is it increasingly common for companies setting up operations in new markets by acquiring a suitable business
than to start with a start-up of a company?
In an increasingly globalized world with rapid communications and transportation has become increasingly important
to quickly gain market share when demand increases. It often applies to quickly gain control of an efficient
distribution network and it may take too long to build one from scratch.
2. At the start of a sales company, it is common for a person already working in the company appointed as CEO. What
could the reasons be?
It is always important to know people in various key positions in the parent company and other companies with which
collaboration must be established. It is quicker for a person who already has a number of contacts in the parent than
for a brand new employee. Knowledge of the local business system can sometimes be more important. Preferably,
selected a person in the organization who have experience in the relevant market for start-up.
3. Are there any obstacles to the establishment of sales subsidiaries?
Yes, there are still countries where there may be some state and where there is a requirement for local ownership,
sometimes by more than 50 percent of the equity. In addition, a variety of bureaucratic and practical obstacles that it
may take many months, sometimes years, before a new company is operational.
4. Are there any positions in the subsidiary which is an advantage to have local staff or the parent company's
nationality?
Not generally, but depending on the product and the need for intimate interaction with the various features of the
parent company can be an advantage with staff who are well acquainted with the parent organization and the culture in
certain positions, such as service and economy. Good local support is important in other positions such as sales and
service staff, including CEO's position from the start.
Nationality has no great significance in the relationship with the parent but can be important for local contacts.
5. There may be reasons to work with various organizations in the country for various products in its catalog?
It may be easier to create an effective sales organization with respect to various products that appeal to different
customer groups. Subsidiaries also are working with different names and brands may be even greater benefits on wage
levels and other personnel benefits are different in different industries.
6. Will an agent visit as president of the establishment of a subsidiary in a country?
Yes, it is not unusual and can work very well, as contacts are maintained.

Tasks
1. Examine how many Swedish companies have subsidiaries in a given country. The task can be solved by searching
the Internet. Trade Council office in the country have often this task. Information may also be available on the
Swedish Chambers of Commerce web sites or corporate websites.
2nd Is there any explanation for that in some countries there are many Swedish subsidiary and in other countries,
almost no Swedish subsidiary at all?

15 Manufacturing Subsidiaries
After reading chapter 15 which deals with manufacturing subsidiaries as part of marketing strategy, you
should be able to answer the following questions:
1. Describe at least two reasons for the establishment of local manufacturing may be promotional in the
local market!
2. How can companies avoid getting less efficient factories at the local manufacture of any country to
which export takes place?
3rd Would it be possible for companies with Sweden as its home market to have as much sales as they
are everywhere, but production in other countries?
4th How big is the risk that the company's brand is damaged by the fact that everything we sell is
manufactured in Sweden with the Swedish tradition of quality?
5th Outsourcing can be an alternative to their own local manufacturing?
Additional issues.
When can local manufacture as a selling point?
Could it be true that investing in local production in order to maintain a market?
Does not a divided output to increased production costs?
Is it possible to use factors of production to lower costs in other countries?
15.1 Manufacture of other countries
That in a book about international marketing deal with manufacturing in countries other than the home
market may seem somewhat surprising. Is it not by making the parent company and sell on the export
of profits generated? Typically, as companies begin its international operations by exporting. But if the
products are sought after and the market is growing rapidly are incentives for local firms to copy the
product and start local production. It is often difficult to prevent this, and impossible for a patent or
other adequate protection against copying is missing. By establishing local manufacture in sufficient
quantities for the formation of the pirates may be delayed. This may be one reason for setting up
production facilities abroad. The reasons for local production can be many, and sometimes they
interact. It is therefore difficult to give any direct reason to start production. It is the result of the overall
assessment that is important.
The advertising is only one of its functions. Initiative to manufacture abroad can come from other
functions, such as the purchasing department, which found it to be more profitable and perhaps only
way to quickly get a sufficient and safe supply of key raw materials and components. The ability to
provide the organization with the goods and services produced in other countries has increased rapidly
during the late 1900s and early 2000s. Outsourcing is relevant not only for data services but also to
produce. The key driver of globalization is perhaps no longer selling, but buying the business. More
and more Swedish companies setting up manufacturing in countries like the Baltic States, China, India
and Vietnam, primarily to reduce their manufacturing costs.
In this chapter, the interest paid to the causes that exist for marketing purposes in order to establish
local manufacturing:
1. National Security
a. Production must exist so that deliveries can occur even when eg war.
b. Information on new technology or weapons may not be served suppliers abroad.
c. Manufacture of some products provide national prestige.
d. Some utilities have to be operated with its own goods.
2nd Safety and trust

e-contracting with local production is considered more reliable, eg for servicing.
f. Local manufacturers have shown confidence in the country.
3rd Economic reasons.
g. Local manufacturers may also be customers, and therefore the easier to sell.
h. Local manufacturers create jobs and therefore the easier to sell.
i. Locally manufactured products may have lower production costs.
j. Locally manufactured products not burdened with import tariffs and transport costs.
k. Locally manufactured products can be better adapted to local requirements.
15.2 National forced investments
National account for any reason give rise to increases in import tariffs and restrictions of various kinds,
which makes imports.
Procurement can be significant benefits to companies with local manufacturing is given. Price Benefits
of up to between 20 and 30 percent occur among others in the U.S., but also in other countries.
Sometimes these restrictions are imposed with the avowed purpose of encouraging foreign firms to
establish local manufacturing. Various incentives for investment in new industries can be linked to tariff
increases. Other institutional frameworks, such as through the formation of customs unions, may have
the same effect. The formation of FTAs will normally have no tariff increase, but a larger market for
products manufactured within the FTA and meet the strict rules of origin.
At the change of customs and institutional arrangements can sometimes be quite necessary to move
from exporting to the countries that in some way partly or wholly manufacture the products in the
country / group of countries. For Swedish industry has a lot of foreign manufacture their causes in the
forms of market changes as outlined above. The two perhaps most significant examples of
manufacturing subsidiaries in Swedish industry is the establishment in the EU and in Brazil. The
formation of the European Communities and the introduction of exemption resulted in 60 - and 70
centuries in a significant activity in relation to the establishment of manufacturing companies in the
Swedish group. Similarly, the creation of the EU internal market, a new significant establishment and
takeover activity. Many Swedish companies estimate they need to obtain a significant local production
within the EU to defend and further develop their market shares. In Brazil, was likewise the Swedish
start-ups based on the desire to maintain and increase market share to changes in industry and foreign
trade policy.
Latin America was soon to become a market for Swedish industrial products. When Brazil decided to
quickly build up its industry during the 50th century was a method that was that the tariff increases
greatly hamper the importation of such products as the country's planning authorities thought could be
produced in the country. Foreign manufacturers were invited to establish production on favorable terms.
Brazil chose to invite a few companies in each product area in order to thus obtain a market with
competition and get a reasonable efficiency and to thus avoid monopolies.
Establishment in Brazil was motivated by the fact that an already profitable and rapidly expanding
market in danger of disappearing, the establishment of manufacturing did not happen. The population
of Brazil has since the 1960s to the early 2000s has increased from 80 to 160 million inhabitants. By
their own market needs were indicative and not the objective of achieving an internationally
competitive production, so have many of the companies established in Brazil failed to contribute to
increased exports from Brazil. On the contrary, many of these companies continued to import of
machinery, tools and components, which helps to Brazil still has deficits in its foreign trade, although
export subsidies of various kinds.
Several Swedish companies with marketing in Brazil, through its own sales subsidiaries or through
intermediaries, were faced with the changed situation, the new Brazilian policy entailed. Since Brazil
was considered a large and expanding market, chose most of the Swedish companies to set up
subsidiaries in the 1950s - and 60s instead of being excluded from the market. The magnitude of these
investments concentrated in the Sao Paulo area, have made Sao Paulo to the Swedish industry's largest
industrial city in terms of number of employees (in the 1980s, Sweden's third largest industrial city).
Not all of these investments has been quite successful, and companies have from time to time have had
serious problems with the massive inflation and fluctuations in economic policy. A significant market

has anyway been obtained and a contribution to corporate research and development from the sale in
Brazil.
Several other countries have tried and are trying to apply the same methods used by Brazil. In many
cases, countries are too small or is deemed not likely to get the growth needed to Swedish companies
are interested. The main reason is often that of the invited companies do not have an accrued market to
defend not so perceived threat of being excluded from the market just as tangible as a profitable and
growing sales already established in a growing market.
Several large countries are concerned for the future and trying the same methods as Brazil, but often
with demands for participation in the form of joint ventures, see Chapter 16. Such countries including
India, China and the Soviet Union. For those countries still majority of Swedish companies have shown
a cautious attitude, which might prove a loss of markets and market shares.
Example
When Brazil were invited to the establishment of manufacturing in the 1950s och1960 centuries was,
among other things SKF and Volvo such invitations. Both companies declined. They took no market big
enough, nor they expected a soaring demand for its products.
When no other ball manufacturers established in Brazil and also Volkswagen, which already in 1967
produced over 100 000 cars, SKF found that this was not possible to give competitors undisturbed. SKF
established its own production in Brazil in the mid-60s, unable to get the benefits in terms of duty-free
import of machinery and equipment that could have been if you were among the first to establish
themselves as producers of ball bearings.
Volvo found only in the 70's that it could not allow the two largest competitors, Saab-Scania and
Mercedes-Benz undisturbed on the relatively large Brazilian market, but established the manufacture of
trucks. For passenger cars have not been established but at times has been reported that representatives
of Volvo thought that the invitation should be received prompted a different decision.
15.3 Beginning of the additional assembly and service
The establishment of manufacturing in connection with the sale of devices that require servicing, repair
and maintenance, and sometimes additional mounting of eg safety equipment, requires consideration of
market and competition for this work is done in a smooth and efficient manner. Many representatives
may have their own workshops or hire a company performing this work. Own sales tend to do the same
way, but sooner or later there is disagreement about the cost, burden or other reasons for the FSC to
take over these tasks. When an establishment has been to the local assembly and service expansion and
the gain is large for the local assembly operations, it will expand quite rapidly. After a time it needs to
be organized in more permanent forms. Some parts can be purchased locally and gives subsidiary
improved profitability, and they will then also be purchased locally. Customers may also wish to some
standard features such as electric motors, switches, connectors, etc. shall be of the market commonly
used machinery. An adaptation to customer requirements is then usually best when local assembly.
This form of gradual establishment of a small manufacturing eventually gives relatively good
experience of local manufacture. A strong subsidiary leadership wishing to expand may be good
arguments for establishing production on a larger scale. Is it profitable and the company's total
production capacity still needs to be expanded, usually a manufacturing establishment happen.
The local production can, if it is cost effective, also provide opportunities to supply other markets with
supplies. The local subsidiary manager is usually also able to develop arguments that the whole
company can provide better service through reduced vulnerability to disruptions in production in the
manufacturing parent company.
This form of the establishment of production abroad has been significant for Swedish companies.
Commodity composition of the Swedish export industry is such that the requirements of service,
additional assembly and installation are important, this contributes to the establishment of limited local
production. No study has been carried out showing the extent to which limited local production has led
to "large scale" production at the same level as the parent.
15.4 The local production as part of the purchase of market

In connection with the acquisition of the company to quickly penetrate and rapidly increasing market
shares, the production that followed with the acquired companies remain in the new subsidiaries.
Sometimes this is obviously the purchase of companies primarily to overcome production capacity,
product or production technology. Reasons for buying companies can be and are often based on several
factors and is considered in its entirety within the confines of one's own business strategy.
When the market is the primary motivation and labor come with several options: to maintain
manufacturing, selling it, that otherwise liquidate the production, streamlining and integrating them into
the group's total production capacity.
To liquidate a production obtained at a bolagsköp often involve consequences for staff, which may
damage its goodwill. Solutions which continued production, albeit in reduced scale is often perceived
as beneficial and there are opportunities that they are safeguarded. Ideally, such change can be
implemented so that the overall strengthening competitiveness. It provides significant public relations
and goodwill effects, which also offers advantages in marketing.
During the past 20 years has made significant acquisitions of Swedish companies abroad, often for
market reasons. Not least, Electrolux has thus built up its market share in several product areas, which
internationally is increasingly closer to an oligopolistic structure, where Electrolux is the leading
company. Many other companies have had similar strategic thinking behind their acquisition of market
share. Swedish acquisitions of foreign affiliates have nearly tenfold between 1965 and 1985 from about
2.5 million per year to 25 million per year. Since currency regulations mixture Elimination lack of
comparable figures because even manufacturing companies, real estate companies and companies with
other activities increasingly have acquired. The amount invested has risen sharply.
15.5 Effects of local production for marketing
In addition to the direct effects of being able to maintain a market by local production, it means even
more opportunities to obtain an efficient production and to exploit technological advances in production
around the world. The possibility of early contact with new technologies in this product is also growing
through their own local manufacturing.
Companies with production in several different markets, if the unit production costs and production,
finding that the effectiveness varies for different parts of the production in the different companies. This
knowledge can be exploited within the group as a whole through knowledge transfer between the
manufacturing companies, but also by product separation and concentration are of different products to
the various factories and countries where it is possible to effectively supply each market with supplies.
Significant cost advantages in production has been obtained by systematic analysis of production costs
and production methods at different factories.
The cost benefits associated with different production factor costs in different countries, the company
can also benefit from the separation and relocation of production to factories, where production can
take place at the lowest cost.
For Swedish industry has been a significant increase in competitiveness made by production volumes
could be increased significantly by an international marketing and by the reductions in manufacturing
costs have been possible in a relatively large extent to be taken. For the 100 largest Swedish industrial
companies were (1988), almost half of the production outside Sweden. No less than 360 000 people
were employed outside of Sweden against 375 000 in Sweden by these companies. The corresponding
figures are probably much higher now, but no previous large Swedish companies are now no longer
Swedish. The international operating company receives a significant portion of their profits and money
for R & D work from foreign operations. Operations abroad is higher than in Sweden. It would not
have been possible for most of these companies to maintain and strengthen their competitiveness if they
are not engaged in manufacturing abroad.
15.6 Answers to questions at the beginning of chapter 15
This provided some suggestions for answers to the initial questions, the answers are not exhaustive but
serve as a guide when you formulate your answers.
1. Describe at least two reasons for the establishment of local manufacturing may be promotional in the

local market!
That production takes place in the local market may be a requirement in government procurement,
particularly in military equipment. This runs true to WTO rules but present nonetheless.
Manufacturing companies may require that production takes place in their facilities to enable rapid
delivery and short lead times. Car manufacturers now often require that suppliers have their production
facilities at short distances from bilmonteringsbandet.
2nd How can companies avoid getting less efficient factories at the local manufacture of any country to
which export takes place?
By transferring all production of some components or some of its products will disappear, not the
economies of scale in production.
3rd Would it be possible for companies with Sweden as its home market to have as much sales as they
are everywhere, but production in other countries?
No, hardly, the production volume is so large that it would not have been possible without a strong
labor. (Theoretical calculation example: Swedish company employs in the manufacture abroad of
several hundred thousand people. It would require a population that was a few million more than what
it is and it had hardly been a realistic policy, either on business or for the country's politicians.)
4th How big is the risk that the company's brand is damaged by the fact that everything we sell is
manufactured in Sweden with the Swedish tradition of quality?
There is an obvious risk that products manufactured in other countries, particularly low-wage countries
may have negative experiences with products of lower quality, as was the relationship in the past.
Knowledge of keeping quality standards have improved and done it now hardly exists such a risk.
Instead, it is confidence in the company's brand determines.
5th Outsourcing can be an alternative to their own local manufacturing?
Outsourcing is hardly an option when it's important to show the local presence, and clearly show how
much the company contributes to the local economy. Own staff and a large number of locally employed
staff then fills an important function.
Data
1. Examine the extent of the foreign production of a Swedish company and try to understand how the
various non-manufacturing units reached. Management: Look at corporate websites and in press
releases as well as libraries in historical accounts of the companies selected.
2nd Try to find information on production costs in different countries. Such summaries and analysis is
performed regularly by a number of organizations.
Praktikfall
Kanthal, India, Pty.. Internship The case deals with the extension of product range with a new product

16 Exports Alliances and Joint Ventures
Questions that you should be able to answer after reading chapter 16:
1. What are the major advantages of participating in an export liaison group?
2. What is Piggy-back. Give an example of the success of such activities.
3. What type of export cartel, the cartel that Saab and BEA (British Aerospace Enterprises) are engaged in selling Jas
Gripen?
4. Which is why most export cooperation project has a relatively short life span?
Additional issues.
Are there special advantages in working together for the export and marketing in new markets?
How many partners, it should be for the export cartel?
Can collaboration with foreign partners provide benefits?
Which added brands will be incorporated in the interaction?
Should be collaboration with partners at home or in the host country?
16.1 Collaboration makes business impossible possible
Collaboration enables a business or a project bringing together the various business opportunities and the skills and
resources of all cooperative enterprises. This can lead to such deals as each of the interlocking companies would not
be able to implement now becomes possible and also with good profitability if not competing companies themselves
have the necessary business contacts, resources or ability to formulate equally effective collaboration project.
Examples of different types of partnership are:
1. interaction between exporting firms in a country to export to one or a number of export markets where the size,
scale and range can be important as well as access to government export subsidies,
2nd collusion between firms in different exporting countries, which might involve a broader knowledge and skills and
access to market contacts that are different and not at least one financial backing of two or more national capital and
state export systems, and
3rd collaboration with partners in the export market, which can open many doors and provide access to local resources
that might not be available to foreign companies.
The first two examples can be accommodated under the export cartel. Export Alliances can be designed according to
the needs and opportunities available in the market. The third form of interaction is often referred to joint venture and
will often relate to interaction between companies in the exporting countries and partners in the export market. In what
follows, the two forms of collaboration to be treated separately. Common is that interaction pursued when firms are
unable to independently carry out a transaction or when the rewards of working together are so great that a waiver of
sovereignty will be accepted. Common is also the interaction includes not only a marginal share of total activity.
Interaction would tend to be so large that sovereignty is in danger, so
1. interrupted interaction,
2. takes either party command, or
3. Carried out a merger in any form.
16.2 What is the export cartel?
Export Alliances are an example of a form of cooperation which means that more companies in whole or in part in its
international marketing co-operate in some markets.
A definition of the export cartel is:

Export Alliances are a form of cooperation between the economically and legally independent industrial enterprises,
indicating that for some time set aside and / or promote the sale of its products to one or more markets outside the
domestic market.
Other examples of cooperative forms of international marketing, export companies, piggy-back and co-operation
between companies in a group.
Exports The company differs from the shape export cartel by the parent company has supervision over its subsidiaries'
export efforts, and can exert pressure on them to take advantage of the benefits of collusion in export issues involved.
Above all there is in a group relationship a parent company, which can settle disputes. The reason for the dispute may
be multiple and they can often lead to problems in the export cartel groups.
Industrial Companies Craft
Group Restricted Detached
Equivalent relationships between companies Export Alliances
Exportgemeinschaft (ty) Export Group
Export Gruppe (ty)
Unequal relationships between companies Export Company
Export Gesellschaft (ty)
Exports Company (eng) Piggy-back
Combination Export Manager, ECM
Agent and Handelshus
Figure 16.1 The relationship between different degrees of periodicity and ägar-/intressegemenskap between firms in
the export cartel groups.
Piggy-back is usually a major international company to help one or more small businesses from their home country by
representing it or them in one or more markets. No real interaction, it is not the question of when the smaller company
is entirely dependent on the larger company's willingness to meet its commitments.
Exports combination Manager (ECM) can be likened to either an export liaison group, which leader is usually an
Executive Director himself spends about half the share capital, or an agency business, where the owner also injected
capital to fund the agent's activities.
In addition to the export cartel mentioned in Figure 16.1 also occur following forms of cooperation at the international
establishment:
1. Joint venture involving the two companies cooperate in the form of a
jointly formed company.
2. Global Industrial Systems Constellations (GISC). This term was created by Howard Perlmutter (1967) and relates
most closely the interaction between large multinational companies - a form of collaboration which has grown in
scope.
16.2.1 Export Cooperative extent
Only a small proportion of world trade and of Sweden's exports via export cartel groups. For Sweden, however, the
proportion was high during the period of ore exports was significant. LKAB and Grängesberg company had for a long
time a joint export company, AB Ore Exports, which accounted for the two companies' joint export of ore, not only
from the Swedish mines, but also of ore from Lamco in Liberia.
There are no statistics on the number of export cartel groups and their size. There are, however details of that in
Europe would be 300 to 500 groups, of which about 25 in Sweden.
Is this task in relation to a group usually comprises five to six companies, is still the number of companies using this
distribution channel is significant.
There is also synergy groups with extremely high membership of hundreds of members. They are admittedly few and
not always work as intensively and with the same methods that groups with lower membership.
Initiatives for the export cartel has been taken by Volvo and Saab-Scania would be a part of their Swedish
subcontractors shall be further developed and therefore need larger volumes and a greater number of customers for its
development. Volvo and Saab-Scania has initiated and supported such suppliers with information and market contacts
to stimulate growth and increased exports.

16.2.2 Export Alliances an alternative
Export Alliances results for the participating companies to the cost of export sales is borne by them together and they
will be lower than if each company will work independently.
In addition to cost benefits can also be significant competitive advantages obtained by a powerful catalog creation.
The biggest advantage is achieved if companies with competing products work together. Dominate the market, price
competition can be avoided.
Ability to achieve the potential benefits of the export cartel may have all companies both large and small. The limited
by the possibilities of creating synergy groups, where cooperation can be conducted in a trusting way and without
excessive coordination problems arise.
In Figure 16.2 are shown schematically the various key factors influencing the possibilities of exporting cartel.
The checklist contained in annex shows some advantages and disadvantages of the export cartel against the agent or
trading house:
1. Market advantages including catalog
2. Reducing costs through the exploitation of economies of
Figure 16.2 The figure shows two groups of factors argue for the export cartel and the two factors that militate against
the export cartel.
16.2.3 Cost-Benefit
Most costs for exports, in per unit, can be reduced when the volume of exports increased. However, this requires a
certain uniformity of the goods exported and the destination.
Collaboration to exploit cost advantages exist for a wide range of individual activities in the marketing and
distribution as well as combinations of them.
Market research, search for representatives, joint shipping, common service representative, marketing efforts through
advertising as well as personal processing, sales management in the exporting country and / or importing country are
some of the main activities in which the export co-operation exists. Joint trade fair and certain joint advertising occurs
frequently. How much savings can be achieved in collaboration on various activities in marketing, due to the
interaction group catalog and market structure. Often, interaction in various activities of marketing profitable self-
promotion costs as much as common activities. Even when the direct market processing, significant cost benefits
obtained, but the value of a full-fledged effort is difficult to estimate and compare cost savings.
16.2.4 Difficulties in coordinating the export cartel
The difficulty of coordinating the work of an export liaison group has been considered by several authors and is
widely attested. It starts with the creation of a group, the search for suitable partners and the formulation of a common
policy.
Several ideas for the export cartel groups will never move beyond the first tentative attempts. The various potential
companies can not get to speak to one another or talking past one another. During the negotiations continue to emerge
new situations that require decisions.
Different opinions about the solution that best leads to contradictions between parterna.Anledningarna the
contradictions are numerous and appropriate methods of avoiding them have been identified in the literature. By
following such advice can be a lot of difficulties avoided, but followed all the advice given, it will be probably no
interaction. A prerequisite for cooperation stocks is that the parties can resolve the problems that arise continuously,
thereby creating a continuing basis for further development of interaction, without having to record every detail of a
cooperation agreement which is then not working.
There are large gains to be made through collaboration, often difficulties in cost-sharing, unequal distribution of
export sales between group members, various interest that contribute to product development, etc. do not give rise to
conflict, and it makes the contrast of the outcome of the interaction is small or negative.
The result of the interaction in each case measured in economic terms is usually negative in the first years. This period
is also difficult for many agencies.
To help businesses in vulnerable positions to improve its exports have been made and efforts are being made from

various quarters (including Trade Council, the state, municipalities, banks, business associations and suppliers) in
order to stimulate exports interaction groups. By helping companies with an appropriate range of interaction,
collaboration can significantly stimulated, and the group can overcome the initial difficulties.
Figure 16.3 The technological and market change would require adaptation and innovation of products and inventory.
These requirements vary from market to market and affect the member companies of varying degrees. There is thus
call for the parties' ability to trusting cooperation, when it comes to adapt to various changes and to coordinate various
activities.
16.2.5 Advantages of the export cartel
The benefits companies can receive is the increased range and wider market and better market penetration than
independent intermediaries generally may be motivated to implement.
Export Collaboration can establish its own sales companies in different markets and hiring local staff, whose work the
cooperating companies can control, if they exploit the opportunities.
There is no competitive advantage to be gained by collusion in the market is likely to cost benefits in the long run is
not enough incentive to hold together an export liaison group.
16.2.6 Disadvantages of the export cartel
Through its collaboration with companies with complementary products, can the individual company get harder to sell
to the company itself manufactures or markets products, which compete with the complementary products. Flexibility
is limited and the way in which temporary deviations from normal conditions of sale to receive an order, thereby
partially obstructed.
Difficulties in addressing new products and marketing them through the export liaison group may be related to the
disadvantages of switching distribution channel.
16.2.7 Export Cooperative dynamics
For all its consequence of technological developments and changing market demands for accommodation. Through
export agreements in international marketing, companies can implement these measures at a lower cost than what
other channels can. One possibility that the export cartel is offering to sell complete installations in the form of
turnkey deliveries. For the interaction of supply or turnkey system deliveries, they also often called, however, requires
detailed knowledge of the production to be carried out in the finished plant. Often included because consultants as
members of a liaison group for turnkey installations.
Opportunities to develop detailed agreement decreases, if the requirements for accommodation is high. A functional
cooperation is not dependent primarily on formal agreements but by the ability to trust and interaction among
members. A prerequisite for success in the export cartel is of course that member companies are aware of the
cooperation opportunities and their ability to cooperate even when its composition changes. Good personal
relationships between people at different levels of the interacting firms is obviously of great importance.
The perception of collusion as a failure if it does not survive for long periods is common. Two consultants will present
a vision of collaboration in the Harvard Business Review, where they believe that conspiracies are usually too stable
for that interaction will be the tool for dynamic adaptation in a changing world where just collaboration has great
potential. They also give some advice for how the interaction should be addressed to improve the potential to be
tapped.
16.3 Collaboration with foreign companies
Collaboration with foreign manufacturing companies to the effect that the cooperative enterprises in their home
market also to sell the foreign company's products are not entirely unusual form of interaction. This interaction can
sometimes be expanded to encompass common of exports to third markets.
Such interaction can lead to all companies receive complementary products, providing both a sale of other products to
increase sales of their products by range expansion and customer needs can be better met than with only their own
products.
Although the exchange of knowledge about technology and manufacturing processes can take place between the two

companies as well as information on the appropriate subcontractors.
Within the EU, special efforts were made to stimulate and encourage this form of interaction between small
businesses.
Alliances between companies with a limited common circulation is not contrary to EU competition rules.
16.4 Joint ventures
Establishment abroad to seek collaboration with local partners for both exports and local production has proved to be a
business method that provides significant advantages in certain situations. The choice of local partner or several
partners is important so that it becomes a partner who has the ability to add such as export company itself is not
capable of. Joint ventures can have significant benefits in all countries but mainly in countries with a strong link
between business and the state apparatus as joint ventures is almost a prerequisite for success in business.
Joint ventures have all the advantages and disadvantages of the export cartel and has more to do so depending on the
choice of partners and the business to be accommodated within the joint venture company.
Joint venture cooperation in countries with a traditional social system, ie a social system as described in the following
two figures the modern Western social system is described as new and different examples of countries where it is
important that the interaction partner can bring the company good political relations.
The price to attract people or companies with good political relationships so that they can influence the conditions of
establishment, regulation and government procurement is that these people receive a significant share of the equity in
the joint venture company. Usually, they pay their share of capital investment, but expect both growth and good
profitability on its equity. They contribute to the healthy profitability through reduced competition or absent in the
market.
Figure 16.4 Two different social systems of government relations and business, both traditional, and western (new and
dissenting).
Established large companies may also in western society have such a strong position to try to work with them is a wise
strategy, before its own initiative is implemented in a market. This interaction can for instance be in the form of a joint
venture.
Among the Swedish companies that used the joint venture form in countries with traditional social system marked
Nitro Nobel particularly well.
The company has, through the establishment of joint venture company with 40 percent minority ownership and the
right local partner who was responsible for the remainder of the capital, were able to establish several highly
profitable manufacturing joint ventures in countries like Saudi Arabia, India, Panama, the Philippines and Peru. The
causes of Nitro Nobel's great success is not just the chosen business strategy of joint ventures but also that the
company has offered them a technology and knowledge that they wished to acquire and where other manufacturers
have been reluctant to invest in them, they probably understood the risky countries. Another reason is that the
company had a management that had the ability to create and maintain the contacts required to implement the chosen
strategy.
Other companies likely to eventually follow the same strategy and Norsk Data's efforts in India and Brazil are
interesting parallels to Nitro Nobel's strategy.
Both companies have apparently realized that 40 percent of high profits are more than 100 percent of a normal low-
profit.
16.5 Joint ventures in market economies
Collaboration and cooperation among enterprises tends to increase, perhaps not least in terms of the number of large
and risky projects, where only a few companies themselves want to go in and take full responsibility. Alliances
between firms are necessarily often international, because it may just remain a single company in many countries by
technology area. Differences in skills and access to the various home countries' government credit and guarantee
facilities for parts of the project may make it easier to obtain financing and / or guarantees for international projects
than if they were to be implemented on a national market. Often involving collusion is not in the firms' core business,
but more peripheral parts of their business. So it has often been, but here too is undergoing a change. Central and
important technology or component areas may be subject to joint development and production company. More
examples are found in the European automotive industry, such as Volvo's collaboration with Renault and Peugeot on

engine manufacturing. Another is communication ODETTE that European car companies and their subcontractors are
building together in order to control the material flows better in the future.
16.6 Response alternatives to the questions at the beginning of the chapter
1. What are the major advantages of participating in an export liaison group?
A thorough 'market research' through real attempt to sell products made in the export market and this at a lower cost
than if each company would have the same sales work independently.
2nd What is Piggy-back? Give an example of the success of such activities.
Piggy-back means that a successful export company agrees to sell another company's products in its own sales
organization. It can be effective when it is the same audience that buys the two firms' products. One of the best
examples is Ikea, which bring with them a number of Swedish food products placed on exports and sells them in his
furniture store. Ikea has thus become the single largest market channel for processed foods in Swedish exports.
3rd What type of export cartel, the cartel that Saab and BEA (British Aerospace Enterprises) are engaged in selling Jas
Gripen?
This cooperation is a good example of the export cartel where the participating companies each contributing with their
skills and market contacts in various markets. For more information see www.gripen.com.
4th Which is why most of the export cartel projects have a relatively short life span?
To share benefits and costs over a long period requires the cooperation agreement be renegotiated and that the
conditions changed between the parties. Such change is always difficult and it has one of the parties has grown so that
they get along well without the cooperation, it is often more efficient to continue on their own.

17th Staff of international marketing
Questions to answer when you read Chapter 17:
1. What is culture shock?
2. Why reduce the need for expatriate staff of foreign subsidiaries, a few years after its inception?
3. Family situation has no effect when a person is up to date on service abroad?
4. What is the outlook for the company to help staff adapt to living and working in a foreign country?
5. Is there reason to take out extra insurance for example, health care and pension at the foreign service? Who will
then pay the insurance premiums?
6. Staff can offer stimulating work when they return home?
Additional issues.
What special requirements are there for staff to work with
international marketing?
Why do we need staff who work in other countries in international marketing?
What motivates employees to work in foreign countries?
How can staff be sent out prepared for the new working and living situation?
What are the differences between being a traveling sales people and be a resident in a foreign market?
17.1 Recruitment of international business
The demands placed on people to be able to work with international business are many and changing. There is often
no apparent difference in their education and personal qualities in relation to staff for operations at home in addition to
foreign language skills. Recruitment is usually not specific to international operations, but the staff within the
company also uses its international operations when the need arises. To the extent that specific recruitment of
international activity occurs, is already in the recruitment of personnel, suitability for international work into account.
In companies where the international activities already received such an extent that staff involvement can also be
expected abroad often involved foreign service already in recruitment. Recruitment of personnel for international
business can be considered as any other recruitment with the addition of specific requirements and take account of the
requirements for international operations.
Figure 17.1 Factors affecting the functional description and specification in the selection of managers for overseas
service.
Organizational and staff are exposed to different and greater demands for foreign operations, such as loyalty conflicts
between parent and subsidiary, between home and the new country of work, absences from the company and former
coworkers, friends and family, personal financial hardship due to exchange rate fluctuations, the physical strain on
because of climate and living situations in addition to the conversion and the burden it entails.
The recruitment of personnel for overseas service is affected by:
1. in which country the business is conducted and the environment in which businesses and individuals that may
experience
2. business strategy and objectives with business
3. individual's motives, family situation and past experience of working abroad.
Figure 17.1 has an attempt been made to summarize the three main areas that need to be considered in the recruitment
and selection of managers for overseas service. The figure has been compiled by Leif Lindblom for many years been
the staff director of Jakko Poyry Oy, a consulting firm with extensive international operations.
Before the demands placed on staff dealt with more extensively may first be noted that the stresses and conflicts of
loyalty to a foreign manager faces many times can be significantly greater than for the same post at home.

17.1.1 Pressures for overseas service
At the foreign service personnel face a new and different business environment, a new social structure and political
values. Of course, foreign staff to learn enough about the key differences. In addition, it may be important to learn and
understand a lot of detail to be able to act with certainty and without insult or irritate colleagues, business partners or
friends in the foreign country. Loyalty Conflicts between staff values and the requirements the employer may be
greater than when working at home for a domestic company.
17.1.2 Company
The company's business concept, which often proved successful in the domestic market and other markets, together
with the company's needs and goals to expand and achieve profitable operations, the primary reason that staff
recruited to implement the strategy. Expatriation Staff can often find it difficult to implement this strategy. To
formulate an alternative strategy and suggest that the parent can be difficult. Understanding of foreign markets,
customers and business partners' needs and motives are perhaps not in his own company in the same way as for
national customers in the domestic market.
17.1.3 International Head
The motives which govern an individual to seek or accept an offer of overseas service may be more. Career, good
condition and knowledge are few. Often the individual does not take into account the impact on families and their
social situation as a foreign mission entails.
Traveling time becomes more and you can not come home to family on weekends and holidays, sometimes for
considerable periods of time. Posting may be necessary for business can be finalized and implemented. It requires the
ability to live and thrive in sometimes considerably different circumstances than in the traditional home environment.
For the employee, it means that the distance from colleagues can be great. The requirements for self-motivation and
ability to make their own decisions and to carry out tasks that normally is never present in the domestic market, for
example, to represent the company official, to manage its banking relationships and contacts with authorities of
various kinds.
For the accompanying family, it means that as a rule touch with former friends and colleagues completely broken
letters and phone available, but still and all-new relationships must be built up in a foreign environment. It is part of
the challenge and excitement, but it makes great demands on the family and it must be done almost entirely without
the involvement of the family member who took the initiative to stay abroad.
These are some of the problems that staff working internationally are faced with and which is already in the
recruitment of staff should take into account and also inform applicants.
17.2 The need for personnel for overseas service
The foregoing description of the limited part of the problems that overseas service is apparent that it might be better to
use local staff wherever possible.
There is also a conclusion that most companies come to. The proportion of Swedish citizens working in Swedish
companies abroad tends to decrease relative to the foreign operation's scale and in many even in absolute terms despite
the fact that foreign operations are expanding.
The need for personnel for overseas service varies between different companies and can also be adapted to the
conditions that exist in different markets and in foreign subsidiaries. In the Swedish companies with foreign
operations, there is a tendency to hire local staff in large numbers. It is only for certain key positions with special skills
or as part of the managerial and personal development of staff for longer located abroad. The reason for this is the
difficulty and costs involved to station personnel abroad. Local staff performs most adequate or better job, why the
additional costs of staff abroad can not be justified.
For companies that are at the beginning of an international expansion, it is first important to build up a group of
employees with international experience acquired through overseas service, and lack of local personnel with
experience of the company and its business concept, strategy and products. For these companies, it is common to the
beginning of the internationalization have a relatively large number of Swedish managers invested abroad. Individual
acquires a more tangible way and through their own experiences of experience in both business, social and political
climate in the host country than in business travel. Managers who will later have its own staff working abroad are of
great benefit to themselves for a period, having worked abroad.

The need for expatriate staff are generally strongest for the creation of subsidiaries or in connection with new
technologies and methods to be transferred to the foreign organization. Although the acquisition of a company in one
country can be a relatively strong need for expatriate staff available, depending on the company's situation and how it
is integrated into the business.
It is generally management and professional staff who need to be deployed, other staff can in most cases are recruited
locally or from third countries.
17.3 Provision of personnel for overseas service
Recruitment of personnel for overseas service may take place in two main ways: internally and externally.
Internal recruitment is most common for two reasons:
1. The company needs to regularly staff with established contacts in the organization, especially when it is so
important tasks that the stationing time comes for a long time.
2. It is with the current net salary level in Sweden, many, especially young, who wish to foreign missions in order to
save some money and live a little more spending, and life and it is relatively easy to find in larger companies who
want to go out.
External recruitment is used when the appropriate person / personnel missing in the organization itself often in smaller
companies and in great need of personnel for major international projects including the building and construction
activities.
Initiative for recruitment is often due to business events and personnel changes within the international business
events that have not been anticipated and planned, so that the line managers are looking to resolve on the Board as
quickly and efficiently they are able. Staff and recruitment managers will not always enter into the discussion, before
recruitment occurred, but may be more engage in caring for the practical task of finding the pay and compensation
forms, social safety nets, and solve housing, family and other issues in connection with the posting. At a planned
recruitment, staff and recruiting managers in much earlier and may be early development of the information is
important for the person and family who will be affected by the foreign mission. The work can then be undertaken in a
more systematic and proper persons and their family situation can be assessed and given necessary information, prior
to recruitment decisions.
17.3.1 family status, work and schools
It is often the situation for the family, spouse and children, which can be difficult to solve and which attract large cost
to the company. Work permits can in most countries are not counted upon for the family. Schools can be very
expensive, such as college and university in the United States. Boarding schools in Sweden and travel can be a less
expensive option, but it divides the family.
17.3.2 Remuneration and
The person who takes overseas service are often interested in the work because it provides an opportunity to save
some money. Appears when the accompanying spouse income losses are not large net. To compensate all the loss in
revenue will in most cases too expensive for the company. To put the staff in the correct pay level, many companies
are using what is known as SKF-system or the further-developed variant of this as Business International applies for
job classification. With the help of a uniform classification system for various services will be possible to compare the
pay levels between companies. SAF's department of foreign service can assist member companies with wages and the
major engineering companies in Sweden work together in terms of wages and employment of foreign personnel by the
staff representatives have established informal contacts with each other.
Since most expect to return home after two-three years, it is important that the amount saved can be taken home,
which is not always safe, especially from non-convertible currency. To the nest-egg to be appropriated for the foreign
mission completed, may require that a portion of salary paid in Sweden or in another European country, which may
conflict with fiscal and monetary rules in the country of employment. Human resource managers may be here in the
best way to solve difficult problems. The expatriate person's income and tax situation needs to be pierced, before
agreement on the posting for meet. Depending on the tax rules in Sweden and the country of employment and possible
double taxation treaties can the outcome of different design of the pay and other allowances to give different net
effects depending on the property and possession of real property / house in Sweden. The effort to obtain a more

favorable tax may be necessary to sell such property that allows for permanent housing. But what does it cost then to
buy back an equivalent dwelling when they return home? Pension and insurance payments and other social protection
can be relatively expensive and not least to maintain such protection even for accompanying family members during
service abroad.
Housing and bilkostnader may be substantially higher than in Sweden and the company also hopes that the staff has
sent out live fairly representative. It is therefore plain that the company pays home and sometimes a company car,
practice varies between different companies. In countries with high crime and / or severe penalties may be necessary
for staff coverage. Dwelling may be needed to guard and night watchman. Should the company or the employee to pay
for this? For the company car driver can be included, especially in countries where Europeans do not drive a car, for
example due to chaotic traffic and / or penalties in the event of an accident.
Companies often apply different systems and generous salary and remuneration conditions for their staff. When
personnel from different Swedish companies meet and spend time abroad, they begin to compare their conditions and
significant disappointments may occur in previously satisfied individuals and families, when they find that the other
Swedes and other Europeans have better conditions. It is for example common for the Swedish car companies give
their staff a new Swedish car company car even when not needed at work. A similar car finds a majority of Swedes too
expensive to buy and use in many countries. Dwelling Standard, the number of trips home and the children's school
expenses are other areas where benefits can vary and cause significant irritation.
Human resource managers have this great and important tasks to develop and maintain a policy of the company for
foreign service. For the interested manager who has international staff are perhaps some 10 000 crowns more or less
not so important what is important is that the work to be done gets done. For the firm and the relations between the
Swedish companies, it is important that the benefits beyond salary is kept within a similar framework.
17.3.3 Renegotiations under the current contract
When personnel stationed abroad are employed in most cases either by the local subsidiary or a specific company
personnel abroad. They are not providing the Swedish organization, and can no longer rely on the Swedish laws and
regulations for their job security and compensation. This means that they may negotiate themselves on their salary and
their compensation. At the foreign service occurs relatively frequently to exchange rate fluctuations, inflation in local
currency and the Swedish currency means that the cost of living can increase violent, with the ability to save is
reduced. Villa prices could increase so sharply in Sweden that despite a saved amount can not be re-purchase similar
villa on the contract expired. Any legal opportunity to renegotiate the contract and receive better pay to compensate
for those changes to pay and compensation is usually not. But a company that wants to keep up motivation and
efficiency of expatriate staff should be obvious and immediate offset such cost changes that increase the cost of living.
As regards price developments for housing in Sweden may be more difficult to compensate for this, here it is common
for the company seeks to give the employee the opportunity for a private economic consulting with banking and tax
experts, so that they can invest the proceeds in residential sales and savings funds in a good way before exit.
17.4 Pressures for overseas service
Meeting with a new culture and new living conditions involve initially very stimulating and exciting discoveries. After
a time, increasing demands from the local environment. It is expected that the newcomer to adapt to some extent in all
cases, while the newcomer feel that some things in the new environment should be changed and is not acceptable. This
is the beginning of what is known as culture shock. Sometimes these pressures can be so great that the foreign service
must be stopped, and the accompanying personal defeat and economic consequences for individuals and businesses.
Culture shock affects accompanying family members are often tougher than the employee, this is largely a factor in
that the employee has been busy with meaningful and important tasks and therefore do not experience loneliness,
idleness, monotony or threats in the environment and society in the same way as family members. These are also often
more widely referred to the local community, while the staff in their work meets more of a European industrial and
corporate culture that is familiar.
Culture shock often leads to different flight or accommodation for the individual, who can help for now but eventually
harm both individuals and businesses. Such a drain can be extravagant shopping, alcohol or other abuse, blame and
slander of the host country's culture, customs and social system, increasingly likely to hamper good relations with the
local community.
Unrest usually peak four to eight months after arrival in a new culture. Human resource managers and other managers
should do what is possible in this period can be closed. A more positive and more developmental period usually follow

after the initial period of frustration. Is this more positive period in order to achieve and stay abroad continued and
possibly extended, if necessary, are of this, it is important that the employee and his family may help to bridge the
critical time when the culture shock usually occur.
Culture shock is generally highest during the first employment abroad and the decline since the new service abroad.
Staff who formerly lived and worked successfully in a foreign land can easily be expected to adapt to a new foreign
service than those who never had this experience. They also know what they are letting themselves in for and it may
be harder to negotiate pay and conditions than those who go out for the first time. But at the same time are more likely
to adapt and work performance should improve.
Many companies are making considerable investments to both the employee that the family will come to enjoy and
work well in the new situation. A number of consultancies and the Swedish Employers' Confederation (SAF) are
working to help with planning and training of personnel and their families in foreign service.
Common elements of such programs is visiting the country for both the employee as a spouse, before deciding
whether to accept foreign service, and educational activities in which knowledge of the country, its culture and living
conditions mediated. Meetings arranged, where those who opted for or are planning to go out get to meet newly
families mowing home. It establishes some form of mentoring family systems at the new place, either within the
company or at another Swedish company. The airline SAS has in his own consulting company established in such a
mentoring system, where companies can buy this service.
SAS've own staff in a very large number of places, so that almost all SAS destinations can get a sponsor family that
takes care of newcomers Scandinavians.
As important as it is to prevent and cope with culture shock when relocation is to return home as free of problems as it
can reasonably be made. Many returnees are unhappy with a lot in Sweden, not least the work.
17.5 To return from overseas service
On his return to his country after a longer or shorter service abroad is the case of a major rehabilitation. Swedish
society has not stood still but has changed over the years in foreign service lasted. Very large changes may have
occurred during a few years, such as the introduction of MBL and other changes in employment legislation. Even with
regard to school systems and child care have been major changes implemented relatively quickly, and major changes
are expected in the tax system.
The changes that occurred during the years abroad can be so extensive that the returnees can not operate in a normal
and expected way, if they do not inskolas in Swedish society, and these deficiencies often. Individuals and families
have not realized that they face new challenges and they get no help as the exodus.
A number of stories circulating about returning co-workers who become ghosts corridor, where families who have
problems with divorce as a result, children who have not kept pace with home, etc. Of these stories that can give
problems to return to Sweden to be significant and it would perhaps be unless businesses and individuals preparing for
re-entry into the Swedish society.
Measures to facilitate reintegration into the Swedish society and the company can and should start in the exodus. The
company and its staff responsible for this do much to:
a. do staff and families aware of the problems and propose such self-activity that facilitates re-entry into the Swedish
society,
b. ensure that foreign personnel interests in
foreign service, and
c. assist in some administrative procedures for contact with
authorities and housing issues are resolved on his return.
The first point is important, and costs relatively little. It takes up such things as reading and keep up with the Swedish
daily newspapers throughout the stay abroad, not just the first and last month, although the interest in Sweden
decreases for a longer stay.
Family members should read these journals addressing their professions to make them comply with and do not lack
information on key developments within their profession and work. Touch with friends, classmates and colleagues
should be maintained through letters, e-mail and telephone, and meetings during holidays. Many who work abroad
would instead travel to Sweden may place your holiday into something more exciting country to get the most out of
international years. It appears that some companies allow staff to switch return ticket to the ticket to another
destination, but it hardly facilitates the rehabilitation of Sweden at a later hemflytt tion. Some companies have opted
for that reason does not compensate families and staff for unused free trips home during the foreign service.
To safeguard the interests of the staff in the foreign service has been a large undertaking for a system with a sponsor in

Sweden, a colleague who has an almost formal authority to act for the posted internally within the company and given
the task to monitor career opportunities, development, training, etc. for the envoy. When it works best tends
sometimes take the form of a family mentoring, where the dependent family also monitors such as the emitted family
may be interested. Sponsorship position in the domestic organization is clear and everyone knows that the person has
the mandate to monitor the emitted interests. To sponsor the system functions necessary to the posted and godfather
know each other fairly well, and that contacts between them operates continuously during the time abroad.
In addition to mentoring system, which is perhaps more common, companies may in time allow a foreign bank or
another manage the contact with Swedish authorities, such declaration, payment of various bills in Sweden, etc. The
advantage of this, beyond that it is managed well, is that the employee do not have to deal with unresolved
misunderstandings with Swedish authorities on their return.
The company's own activities on his return for all that the employee needs to have a bureau and meaningful work, and
preferably also företags-/leasingbil on returning to Sweden from the first day. For some, it happens that no one wants
to recognize a returning colleague who themselves may find their way to finally find that no formal employment is not
in the company. The engagement of the parent company ceased with the appointment of the subsidiary began.
Frustration can be great. May be usefully in international investment contract, or in particular agreements with the
parent, a return guarantee included. Then you need the returnees in any case not be worried about the salary, but
meaningful opportunities can still be a problem.
Several of the companies that have a relatively high proportion of Swedes abroad in relation to its activities in Sweden
has been very difficult to accept the Swedes who want to return to Sweden and some of these companies provide no
guarantee of work in Sweden when the contract expires. At best, a guarantee is issued on the continuing work of the
Group, anywhere in the world. Then it's up to the facts if it is possible to return to Sweden without changing employer.
Most people who have worked abroad have subsequently found that it was one of the more exciting and challenging
periods in work and life that they often come back to and talk about. Overseas service provides perhaps the largest
exchange in terms of the experience obtained over time and no one should renounce the benefit to that over a period of
life to live and work in another country.
17.6 Personnel policy in the global firm
It can be difficult to completely treat people from different countries in a company befordringsarbete. Can fit people
reach the positions they have earned without discrimination in any way? Issues of this nature are easy to make but
difficult to answer. Therefore, given any policy statements that show how a forward-looking peronalpolitik can be
designed.
Example
1. From Volvo Annual Report for 2004, page 26.
A positive work environment promotes personal development. The efforts and commitment of more than 81,000
employees around the world are crucial for the Group to maintain and further strengthen its position in world markets.
Targeting is a central concept in the global corporate culture as we strive to achieve. Guidelines for our culture are
described in The Volvo Way, which has been introduced throughout the Group in order to develop the business. The
basic idea is that every individual should be able to contribute their knowledge, experience and commitment in order
to help achieve common goals, seek improvements, while also promoting their personal development. This gives great
individual freedom as much as it places high demands on managers and employees' ability to cooperate.
We believe that diversity leads to innovation and contributes to international competitiveness and profitability. People
of different nationalities, age, gender, ethnic background and culture gives the Group critical knowledge and
experience. Our employees and their different talents and ideas are the most important asset in our pursuit of
becoming more responsive to customer requirements and further develop our business. /.../
Volvo's decentralized organization also opens up considerable freedom for local initiatives.
17.7 Answers to the questions at the beginning of Chapter 17
1. What is culture shock?
This means that people who move to another country for a period likely to be in an emotionally difficult situation.
They experience the new environment difficult.
2nd Why reduce the need for expatriate staff of foreign subsidiaries, a few years after its inception?
The local staff have had time to learn what is expected and can often do as good or better job because they know local
conditions better.
3rd Family situation has no effect when a person is up to date on service abroad?
Yes, the family situation is of great importance, and firms with experience in posting staff abroad, always taking into

account family circumstances.
4th What is the outlook for the company to help staff adapt to living and working in a foreign country?
There are many possibilities: education, prior to departure, mentoring in the new country (this service can be
purchased including the airline SAS, and the Trade Council in a number of countries), help the employee and family
may be a local area network by paying a membership fee in a suitable club, and paid for trips home during the time of
posting that can not be exchanged for local holidays.
5th Is there reason to take out extra insurance for example, health care and pension at the foreign service? Who will
then pay the insurance premiums?
Yes, there is. The Swedish insurance does not cover individuals abroad during the period and the need to review the
situation so that no staff when they discover shortcomings feel cheated. Within the EU there is a coordination of
public insurance protection, but a check of that insurance coverage is reasonably necessary in each case.
6th Will it be possible to have encouraging work task for personnel that returns home from foreign assignments? The
experience that that is not always the case.
In a foreign assignments the persons have larger amount o freedom to act independently and to be creative and to
implement those solutions. When retuning to home much of the freedom is limited. Tasks,
1. Prepare a list of living conditions in countries to which the company is planning to send personell.
2. Invest in Sweden (www.isa.se) gives information about the living conditions in Sweden for foreig personell, what
about Ukraine?

Copyright
Carl-Axel Engdahl
cae@kth.se
Checklist for decision on foreign establishment
1. PRODUCT OR SERVICE
Is the product fully developed for export?
Has the product or service in a market outside the Swedish market?
What major changes should be made to
- The product should be interesting for another market?
- The package will work in another market?
2. BARRIERS TO EXPORT-IMPORT
a. Imports
Is proof of their origin, labeling or manufacturing process that prevents the
introduction of the current market?
There are import quotas?
Are discriminatory rules in the market for imported products?
b. Export
Is there some sort of barrier to exports for the product?
- Weapons
- The dual-use product, with a military?
- The product may be used for development of
- Military Equipment
- Chemical or biological weapons.
Contains product
- Nuclear material?
- Electronics or computer programs that may not be disseminated?
3. Intellectual PROTECTION
Are there any patent, registered design or trademark to prevent sales to the
intended market?
Can we use our domain name within the main domains that we desire?
4. PROFITABILITY
Is the product profitable?
, The product will be profitable even after adjustment for export?
There are economies of scale in manufacturing, which means lower production
costs at higher volumes?
Can the increased cost of packaging and freight charged by the new customers?
5th FINANCIAL STRENGTH
Company can finance the investment it means to start exporting?
Company can finance the increased credit hours for a customer for exports?
6th COMPETITIVE SITUATION
How do the competitors in the export effort? Consider the following groups of

competitors.
- Competitors in the domestic market
- Competitors in the new market
- Other competitors.
7th RESPONSE TO START EXPORT
Delaying other important measures of the company due to lack of capacity, eg
- Product development?
- Investment in manufacturing?
- Market measures in the domestic market?
8th STAFF
Are staff able to implement foreign investment?
Is it possible to recruit such staff?
Have other staff involved in the necessary conditions such as
- Language skills?
- Knowledge of export packaging?
- Knowledge of export documents?
- Knowledge of billing and payment procedures?
Checklist for licensing
1. Benefits of licensed production overseas are:
a. Obtains additional revenue of know-how and service
b. spreading the cost of research and development
c. Maximizes return on research and comprehensive know-how
d. Retains markets that surrounded or threatened by trade restrictions
e. When the new markets that are not available for export from the current
facilities
b. Will quickly enter or expand in foreign markets with minimum effort or risk
g. Winner cost and other benefits of local manufacture without committing
capital abroad
h. discourage intrusion on protected patents, trademarks and designs, which
otherwise could lead to deterioration or loss of rights
i. paves the way for future investment
j. Obtains the corresponding contributions from foreign know-how, research and
technical services
2nd Disadvantages of licensed production overseas are:
a. You do not want to relinquish sole control of the market resulting from the
foreign company owns an exclusive license
b. It is concerned that quality can not be exercised
c. Limited profit potential
d. It would not create a potential future competitor abroad
3rd What can we sell?
a. The right to the use of:
b. Patent
c. brand
D. Marks
e know-how
b. Domain Name

g, and a combination of these
4th How do we find the appropriate license buyers?
a. The licensed brokers
b. The Swedish or foreign institutions
c. By Offers
d. By inviting suitable persons
e. The travel out and ask
b. By advertising
5th How do we get compensation?
a.-off compensation
-Royalty
-Combination of lump sum and royalties
b. Cross-icenser (Accept a license from the buyer)
c. Will the profit be taken home?
d. Can we accept shares in the acquiring company license?
e. What are the tax consequences of various options?
6th What license terms should we choose?
a. Exclusive
b. Single License
c. Under License
d. Sales License
7th What is required to transfer knowledge about the license object?
Only one or a combination of the following points:
a. Drawings and descriptions
b. Education of the licensee's staff
c. Acclimatization of staff and monitoring of the licensee's production
d. Hardware and Tools supplies
e. Responsibility for local adaptation of product
8th Marketing
a. Can an exclusive agreement to come into conflict with competition law?
b. Allows for competition law that the licensee is excluded from certain market?
c. Are special know-how, marketing, and it can be transferred to the license buyer?
d. Who is responsible for servicing?
e. Can the market knowledge reversed by cross-licenser?
9th Can settlement be made on licensee's performance does not meet expectations?
a. The contract termination?
b. By its own competing sales?
c. The takeover of the licensee's business?
10th How can we expand?
a. Through its own direct establishment of market
b. Enhancement of cooperation with the licensee
c. More licensees
Checklist for sale by agent

1. Legal Aspects
a. "Agent Protection"
c. Brand
D. Patents
e. The right to the goods
f. Payment liability (delcredere)
g. Taxes
h. Duties
2nd Choice of agent
a. Type of agent
b. Properties of the agent
-företagets/personens age
Size
Development
-solidity
-image
-profitability
-profitability
skills
business-ethics
communication skills
c. Geographical location in the country
3rd Marketing and distribution problems
a. Sales Form
b. Service Area
c. clientele
d. Client Processing
e. Selection, possibly competing products in the range
f. Storage facilities
g. Service Facilities
4th Administrative problems
a. Command and control of agent
b. Advertising messages through the agent or directly to the consumer
c. Market information through the agent or directly from the market
d. Planning
-how to run the agent
-settlement agent
-remuneration of the agent in the settlement
5th Financing
a. Customer Credit
b. Payment Transfers
c. Commissions
d. Pricing
e. The replacement of the agent in the settlement
Checklist for personal sales
1. Benefits of sales
A. In relation to the agent

a. More control options
b. Increased goodwill towards customers
b. Improved direct contact with customers
d. Intensified marketing
e. Service facilities to the authorities
B. In relation to manufacturing companies
a. Less capital
b. Facilities to test the market before the production company established
c. Swedish-made products deemed to have high quality
d. Swedish-made products have the wrong image
2 Disadvantages of sales
a. Engineered for their own financial resources
b. Increases the risk-taking in relation to other
-up options
currency risks
-nationalization risk
c. Increases the requirements for parent command and control resources
3rd Personnel Issues
a. The supply of labor
b. Labor Quality
c. The need for internal training
d. The general staff morale level in country
e. Salaries
b. Social security costs
4th Organizational problems
a. The Company Management
b. Cooperation (joint venture)
c. command from headquarters
d. Reporting
e. The number of sales offices
5th Market Problems
a. Expansion Possibilities
b. Goal and sales development
c. Sales Area
d. The competitive situation
e. Marketing Issues
6th Institutional relationships
a. Duties
b. Infrastructure, development
c. Staff Legislation
d. Social legislation
e. Tax Legislation
f. Miscellaneous legislation
7th Political conditions
a. What is the general mood in the country to foreign companies and foreigners in general?
b. Are kalamitetsrisker?
c. How will the relationship between home and the establishment of the country that affect the company's sales

activity?
8th Funding Issues
a. Self-financing
b. Funding
c. Loans
d. Export Funding opportunities at home
e. Fiscal policy
Checklist own production company
1. Benefits of manufacturing companies compared to sales
a. Negative attitudes towards foreign products can be avoided and a national character is obtained
b. labor-intensive parts of the Group's production can be located in countries with low wages.
c. Proximity to market can provide better contact, perhaps most importantly, with other producers.
d. Ability to get inside a TARIFF WALL and avoid trade barriers.
e. Lower transportation costs.
b. Forced establishment "establishment of just selling subsidiaries not allowed.
g. Ability to manage the investment benefits the country's exports to third countries.
h. Improving the ability to deliver investment to the country's authorities. (Delivery is often linked to domestic
production.)
i. The best way to fully take advantage of unique expertise. (patent protects only a certain number of years, so that a
license contract effectiveness is limited.)
2nd Disadvantages of own production company
a. A financial commitment may expose the company to great stress.
b. Fragmentation of productive resources.
c. Increased co-ordination and steering difficulty.
3rd Legal and institutional conditions
a. Allows the parent country and host country laws exporting and importing of capital for investment?
b. Are special barriers to entry for foreign companies, such as prohibiting the possession of real property, a ban on
wholly owned foreign companies and similar substances?
c. Applies to special conditions for foreign companies? (For example: A certain part or the entire board must be
composed of nationals, and some of the workforce must be domestic.)
d. What are the tax situation in the country of investment?
e. Are there double taxation agreements?
b. Is the infrastructure developed in the form of railways, airports, roads, telecommunications and schools, so we do
not need to do some follow-up investments?
g. Social Legislation (potential for redundancy, social security and pension schemes)?
h. Duties based partly on materials and for finished products. (If the tariffs are an obstacle to our export sales, they
should be well protected against our competitors in other countries.)
i. Are there specific benefits to, for example, commodity subsidies, tax relief, localization support?
j. Transfer Barriers to interest rates and profits?
k. patent laws?
4th Political conditions
a. Is there a risk of nationalization?
b. Are hostile alien atmosphere, so that there is a risk of damage during riots, revolutions and similar substances?
c. general political stability. Will the current system to continue?
d. The home Member State relations with their country of establishment?
E. Financing and ownership
a. Should the company be owned, or is some form of joint venture to be preferred?
b. Should the parent company to account for all long-term funding or are there opportunities to borrow, --

- On the Swedish market?
- In the local market?
- On the international market?
c. Will it be easier to obtain long-term foreign capital, the company is based on the joint venture?
d. Is it appropriate from a safety point of a joint venture?
e. Are there any differences on the resulting profits are home or if they reinvested?
f. Do you have to do fund foreign operations under the Companies Act?
6th Organization
a. Legal form.
b. Channels of contact with the parent.
c. Management. The entire senior management to be the country of the parent, only part or none at all?
d. accounting system. This should be adjusted so as to compare production costs for various units within the Group.
e. Reporting System, ERP systems can work together?
b. Control Command balance between centralization and decentralization to the parent company for manufacturing
companies.
g. Cooperation with local companies.
7th Personnel Issues
a. Availability of labor
- Trained
- Unskilled
b. wage levels for different categories of staff.
c. Social security costs.
d. The general work ethic.
e. Personnel.
b. Trade union and industrial disputes.
g. Transfer of know-how. Train technicians locally or use staff from the parent company.
h. Internal or external training.
8th Market Conditions
a. Provides manufacturing companies no demonstrable advantages over sales? (Preferences for domestically produced
goods and competitor reactions.)
b. What effect does the establishment of manufacturing companies to our current export? What are the implications of
this for production at other factories?
c. Can all of the production allocated locally or to cover the company's manufacturing capacity more markets?
d. procurement of raw materials. May plant materials locally or have them imported?
(Sales aspects have been included in the checklist for sales.)

Checklist for export cartel
BENEFITS
1. Market Information
a. General: better contact with the staff in export organization.
b. For the company: easier to obtain specific information on the market for its products.
c. For the customer: easier to pay attention to the company's products in the group's limited product range.
2nd Client Processing
a. For the enterprise: greater attention to bringing out the company's products.
b. For the client: greater knowledge of the seller.
3rd Delivery and service
a. For the enterprise: greater control of delivery and service. Increased knowledge of customer problems.
b. For the customer, the supplier has a stronger incentive to satisfy customers' needs.
4th Liquid
a. For the company: whether trading should not exist, there is opportunity for risk diversification in the group.
b. For the customer: less work proceeds of the Liaison Group catalog allows more concentrated purchases.
5th Capital for expansion
For the company greater influence on the expansion rate and direction.
DISADVANTAGES
1. Market Information
a. If the trading house or agent has its own office in the local market can provide better market contact.
b. It takes longer and may be associated with higher costs to obtain general information.
c. It becomes harder to find the right vendors in a large organization.
2nd Client Processing
a. trading houses and agents focus on the most profitable products, and strive not so single-mindedly to bring the
company's products.
b. More difficult, if necessary, quickly get in touch with sellers.
3rd Delivery and service
Not possible to always have staff available to service the other hand, more specialized personnel.
4th Liquid
a. Trading House takes over a customer and currency risks. Cash settlement and the possibility of bartering. (Agent is
not usually that option.)
b. Trading House has often better credit capacity, the agent is usually worse.
5th Capital for expansion
Capital is tied up, which could be used among other things, product development or increased production.
Checklist when buying a business
This checklist is drawn primarily to cover the issues and problems that may be associated with the purchase of small
businesses.
ISSUES FOR BUYERS
Grounds for buyers and sellers
- What do we want to purchase?
- Contributes to the purchase of realizing the company's own business?
- What options are available to purchase?

- What are the benefits of coordination can be counted upon?
- What are the disadvantages of coordination can be counted upon?
- Is it possible to appreciate these advantages and disadvantages?
- Why is the company for sale? Could it be a sham motives?
- What options does the vendor?
- How is the seller's situation?
- Does the vendor have a rush to the store to take place? Why?
- Will the vendor have done their business attractive? In what way?
- What resources do you as a buyer at their disposal?
- What are the strengths / weaknesses have as buyers?
- What can you bring to the company? What say you are right buyer?
General questions for the first survey
- How the company is working today?
- The company's current business?
- What market positions the company?
- What are the company for resources for their activities?
- Number of employees, functions and age structure?
- Financial results in recent years, according to accounts?
- Dependence on the customers and suppliers?
- The company's customer structure?
- What are the company's biggest competitors?
- The company's biggest weaknesses?
- Could the company have a bad reputation among key stakeholders?
- How will the company's stakeholders to react to a sale?
- Has the company a functioning reporting system?
- What is the relative size between buyer and seller organization?
Assumptions about external threats and opportunities
- Expected availability of skilled workers?
- How will the development of the wage bill?
- Of competitors and competitor countries, wage costs?
- Risk of currency fluctuations?
- Will the new trade barriers or restrictions on imports to come?
- What growth opportunities exist?
- What about capacity and productivity in the industry?
- How will taxes be developed?
- What support and charges can be expected by society? Price's hot?
- Relationships and dependencies?
- Business Development?
Distribution, market and competitive
- How the products are distributed today?
- Can the new forms of distribution become available in the industry?
- Demand for the moment?
- The expected development of demand?
- What new types of customer and sub-markets may be relevant?
- How is the market towards the end products and users?
- What are the needs and consumption changes can be expected?
- How is the company's competitive position today?
- Future of strong competitors?
- Historical development in relation to its competitors on the market?
- What competition means the company is working with?
- What are the company's main clients?
- Will the customers to stay after a transfer of ownership?

- Is the company's client relationships stable?
- What opportunities have to set their own prices? Controlling the market price?
- Is the price realistic goal?
- Are sales goal realistic?
- Sales organization effectiveness?
Suppliers and supplies
- What are the current suppliers?
- Future suppliers?
- How can the (crude) prices of the goods developed?
- What dependencies exist for individual providers?
- Purchase Price The volume depends?
Production, technology and product development
- What are productive resources? Included in the purchase or are they hired?
- The machine age, usability and reliability?
- How is development around the customer's technology?
- Risks for new designs or materials?
- What options does the company to keep up with technological developments?
- The extent to which research and development?
- Can the equipment used for manufacturing other than the present?
Products
- Location of the products of the life cycle?
- What substitutes exist or might be?
- The rights given to patent, trademark, or the like, and domain name? Who owns the rights? Will they be included in
the purchase?
- New requirements, product specifications?
- Providing much needed "around the system" for products (eg, support from consultants, service outlets, positive
support from opinion leaders)?
Premises
- Meet local current and future work environmental and technological requirements? Who owns the premises? Will
they be included in the purchase or are we bound by long leases?
- Are there alternative uses for the premises?
- Are unnecessary services possible to separate?
Management, administration and staff
- Who will be the company's new leader?
- What connection will the previous owner / managers to have this company?
- How long do former leader to be associated with the company?
- Staff composition, functions and age?
- How much have you been absent?
- Sales of labor?
- Are the personnel qualified for a possible new direction the company's activities?
- What effect, any layoffs?
- What are the various wills will stand against each other?
- Can the tray be an active team-mates? Although the union to purchase the item?
- What are the relationships we have to support?
- Which business systems using the company?
Can these ERP systems are coordinated with our business?
Staff can without much difficulty to start using the same ERP system that we use?
Economy and finance
- Has the turnover changed?

- Have there been changes in the result as a percentage of turnover? If so, why?
- How does the value added or gross profits changed?
- How has working capital changed?
- Accounts receivable turnover?
- What customer losses can be expected?
- What products make a positive contribution to the business?
- How has the cash liquidity, balance sheet liquidity and solvency is developed?
- To what extent has self-financed activities?
- How is the relationship between fixed and variable costs?
- What are the future cash flows can be expected?
- Does the asset turnover ratio has been declining?
- How has the total assets, return changed?
- How has the equity returns has changed?
- What sources of capital available and what might be available?
- What is the development of interest rates can be expected?
- What are the safety requirements may be made from the financiers' side?
- How does purchasing a company's own cash?
- Alternative uses for the capital tied?
Assessment of historical results
- What are the extraordinary and moving foreign revenues and expenses have been?
- Have you made fictitious abnormal gains on the liquidation of stocks?
- Changes in stocks reserve?
- Has been the market jacks pay?
- What is the difference between accounting and management costs?
- Is there an opportunity for future monetary losses?
- Have you had abnormal costs for marketing, research and product development?
- What are the obligations may exist that are not apparent from the closing documents?
- Is the prospective new leader evaluated and sockets?
- If the former leader to stay, how to maintain motivation?
- How quickly can changes be implemented?
- Is it realistic that the change can go so fast?
- Suitable for corporate cultures together?
- What information must be communicated to stakeholders and when will this happen?
- What agreements exist, they can be sustained or interrupted, if necessary?
Negotiating The structure
- Who needs to have knowledge of the negotiations?
- Is it necessary to keep secret negotiations?
- What external help is needed?
- Is agreement in principle in place?
- How long can negotiations take?
- Have a strategy for negotiations?
- What kind of reputation does the negotiating with, kept agreements?
Synergies
- Are double posts that can be rationalized away?
- Is the joint production that can be rationalized under the same umbrella?
- What common denominator can be coordinated?
- What are the disadvantages of coordination can be counted upon? Great management?
Tax Consequences
- What are the tax consequences of the deal for buyers and sellers?
- How can taxes affect the pricing and payment options?
- Tax expert?

Contract Design
- Hire a lawyer?
Annex 2 Table of en
Useful internet addresses
Trade Council: www.swedishtrade.se, and www.swedishtrade.com.
Trade Council funding guide: http://finansieringsguide.swedishtrade.se.
Food and Agriculture Organization of the United Nations: http://fao.org
Association for Swedes in the World: www.sviv.se.
Information on entry and hemflytt tion and much else that involves foreign residence.
Human Development in the World, Saman addressed by Hans Rosling, has been very useful statistics and analysis
tools: www.gapminder.org.
Inspectorate of Strategic Products
www.isp.se
International Organization for Standardization, www.iso.org
International organizations and statistics found on this website www.exxun.com.
Internet Corporation for Assigned Names and Numbers: http://icann.org.
Invest in Sweden. www.isa.se.
Environment, information about some of the various environmental and social standards, visit the following web-sites
Euro Flower eco-label, http://europa.eu.int/comm/environment/ecolabel
The Blue Angel; see www.blauer-engel.de
Social Accountability International, www.cepaa.org
Forest Stewardship Council, www.fscoax.org
Marine Stewardship Council, www.msc.org
SA 8000 standard, www.sgsgroup.com
Report, www.rapport.nu excellent source to search Swedish companies' financial statements.
Parliament www.riksdagen.se
Statistics and much more public pressure can be found through this link.
Confederation of Swedish Enterprise. http://svensktnaringsliv.se.
Sveriges Riksbank www.riksbank.se, exchange rates and statistics on international payments.
UNCTAD, www.unctad.org, Much statistical material including Statistics on FDI.
United Nations Statistics Division - Commodity Trade Statistics Database (COMTRADE)
http://unstats.un.org/unsd/comtrade

The World Bank, www.worldbank.org.
World Trade Organization (WTO), www.wto.int
World Intellectual Property Organization, WIPO, http://wipo.int