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Bontimel, bernadette joy s. international marketing (1)

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  • 1. Bicol University Tabaco campus Tayhi, Tabaco City Power Point Presentation in International Marketing Bernadette Joy S. Bontimel BS Entrepreneurship II
  • 2. International marketing (IM) or global marketing refers to marketing carried out by companies overseas or across national borderlines. This strategy uses an extension of the techniques used in the home country of a firm. It refers to the firm-level marketing practices across the border including market identification and targeting, entry mode selection, marketing mix, and strategic decisions to compete in international markets.
  • 3. International marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. It is the performance of business activities designed to plan, price, promote and direct the flow of a company‟s goods and services to consumers or users in more than one nation for a profit.
  • 4. Controllable Definition Elements 1. Price Is the quantity of payment or compensation given by one party to another in return of goods or services 2. Product An item that ideally satisfies a market‟s want or need Examples Philippines imported products which are of lower price compared to other countries. Avon cosmetics are of great quality compared to other cosmetics so buyers will patronize products which are well-known.
  • 5. 3. 4. Promotion It‟s the communication link Companies promote between sellers and buyers products for the purpose of through advertisements influencing, informing, or in order to persuading a potential be recognize by buyer‟s purchasing decision individuals. Channel of It is the transport of goods distribution or services in a particular place Company A exports their products in other countries through channel of distributions.
  • 6. Domestic and foreignenvironment Definition Examples (Uncontrollable Elements) 1. Political and legal Forces Forces in the marketing environment that are shaped by government laws affecting business. These are very similar to political forces. Once laws are enacted they are usually very difficult to change. The Coca-Cola Company wants to extend their business ventures in India but the government of India made them two choices whether to give them the secret formula of coke or to leave the country. But the company chose to leave the country.
  • 7. 2. Economic climate Pertains to the regulation of the household affairs. Company considered the country who has a great number of people living there as well as the status of living they have. China is the most populous country in the world so some countries want to put business in China.
  • 8. 3. Competitive Structure Encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services. For example, Apple Computer has been known to make innovative products that are very stylish, although somewhat more expensive than other computer manufactures. They have a successful niche in the computer and electronic gadget market.
  • 9. 4. Level of technology Defined as the capacity of technology in its usage. Japan is well-known as industrial country because of the level of technology they used. Some modernized countries like America will not permit Japan to put business in their country that will affect some of their business engaging in industrial exports.
  • 10. 5. Cultural forces That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man person as a member of society. Red symbolizes luck in China while in the Philippines it symbolizes war. 6. Geography and infrastructure Refers to the physical structures or features. China put up business in some of the neighboring countries to avoid difficulties in distributing the products they have produced.
  • 11. Adaptation is a conscious effort on the part of the International Marketing to anticipate the influences of both foreign and domestic uncontrollable factors on a marketing Mix and then to adjust the marketing mix to minimize the effects. To adjust and adapt the marketing program to foreign market, marketers must be able to interpret effectively the influence and impact of each of the uncontrollable environmental elements on the marketing plan for each for each foreign market.
  • 12. Why Do Companies Go International? Companies go international for a variety of reasons, but the goal is typically company growth or expansion. Whether a company hires international employees or searches for new markets abroad, an international strategy can help diversify and expand a business.
  • 13. Growth Many companies look to international markets for growth. Introducing new products internationally can expand a company's customer base, sales and revenue. For example, after Coca-Cola dominated the U.S. market, it expanded their business globally starting in 1926 to increase sales and profits. Employees Companies go international to find alternative sources of labor. Some companies look to international countries for lower-cost manufacturing, technology assistance and other services in order to maintain a competitive advantage.
  • 14. Resources Some companies go international to locate resources that are difficult to obtain in their home markets, or that can be obtained at a better price internationally. Ideas Companies go international to broaden their work force and obtain new ideas. A work force comprised of different backgrounds and cultural differences can bring fresh ideas and concepts to help a company grow.
  • 15. Diversification Some companies go international to diversify. Selling products and services in multiple countries reduces the company's exposure to possible economic and political instability in a single country.
  • 16. Domestic Market Extension Concept This orientation is illustrated by the domestic company seeking sales extension of its domestic products into foreign markets. The firms orientation is to market to foreign customers in the same manner the company markets to domestic customers. It seeks markets where demand is similar to the home market and its domestic product will be acceptable.
  • 17. Multi-domestic Market Concept A company guided by this concept has a strong sense that country markets are vastly different(and they may be ,depending on the product) and that market success requires an almost independent program for each country. Firms with this orientation market on a countryby-country basis, with separate marketing strategies for each country.
  • 18. Global Marketing Concept A company guided by this orientation or philosophy is generally referred to as a global company, its marketing activity is global marketing, and its market coverage is the world. Its concept views an entire set of country markets identifying groups of prospective buyers with similar needs and desires.
  • 19. The global business environment can be defined as the environment in different sovereign countries, with factors exogenous to the home environment of the organization, influencing decision making on resource use and capabilities. The global business environment can be classified into the external environment and the internal environment . The external environment includes the social, political, economic, regulatory, tax, cultural, legal, and technological environments.
  • 20. To function effectively and efficiently, companies operating internationally must understand the social environment of the host country they are operating in. Today there are thousands of MNCs which operate in many parts of the globe. Such companies should acquaint themselves with the language and culture of the country in which they are operating.
  • 21. Balance of payments (BoP) accounts are an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods services, financial capital and financial transfer. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus items.
  • 22. Balance of Payments Statement Three(3) Accounts: 1. Current Account 2. Capital account/Financial account 3. Official reserves account
  • 23. The Current Account The current account is used to mark the inflow and outflow of goods and services into a country. Earnings on investments, both public and private, are also put into the current account.
  • 24. The Capital Account The capital account is where all international capital transfers are recorded. This refers to the acquisition or disposal of non-financial assets (for example, a physical asset such as land) and non-produced assets, which are needed for production but have not been produced, like a mine used for the extraction of diamonds.
  • 25. The Financial Account In the financial account, international monetary flows related to investment in business, real estate, bonds and stocks are documented. Also included are government-owned assets such as foreign reserves, gold, special drawing rights (SDRs) held with the International Monetary Fund, private assets held abroad, and direct foreign investment. Assets owned by foreigners, private and official, are also recorded in the financial account.
  • 26. Policy of protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other handicaps placed on imports. The chief protectionist measures, government-levied tariffs, raise the price of imported articles, making them less attractive to consumers than cheaper domestic products. Import quotas, which limit the quantities of goods that can be imported, are another protectionist device. Wars and economic depressions historically have resulted in increases in protectionism, while peace and prosperity have tended to encourage free trade.
  • 27. Protectionist policies Tariffs are imposed on imported goods. Tariff rates usually vary according to the type of goods imported. Import tariffs will increase the cost to importers, and increase the price of imported goods in the local markets, thus lowering the quantity of goods imported, to favor local
  • 28. Import quotas To reduce the quantity and therefore increase the market price of imported goods. The economic effects of an import quota is similar to that of a tariff, except that the tax revenue gain from a tariff will instead be distributed to those who receive import licenses Administrative barriers Countries are sometimes accused of using their various administrative rules (e.g. regarding food safety environmental standards, electrical safety, etc.) as a way to introduce barriers to imports.
  • 29. Direct subsidies: Government subsidies are sometimes given to local firms that cannot compete well against imports. These subsidies are purported to "protect" local jobs, and to help local firms adjust to the world markets. Export subsidies: Export subsidies are often used by governments to increase exports. Export subsidies are the opposite of export tariffs, exporters are paid a percentage of the value of their exports. Export subsidies increase the amount of trade, and in a country with floating exchange rates, have effects similar to import subsidies.
  • 30. Exchange rate manipulation: A government may intervene in the foreign exchange market to lower the value of its currency by selling its currency in the foreign exchange market. Doing so will raise the cost of imports and lower the cost of exports, leading to an improvement in its trade balance. International patent systems: There is an argument for viewing national patent systems as a cloak for protectionist trade policies at a national level
  • 31. Functions: To shield a country‟s markets from intrusion by foreign competition and imports. To ensure that foreign nations do not subsidize exports. To guarantee that foreign firms do not dump their exports in a predatory fashion.
  • 32. Countless reasons to maintain government restrictions on trade are espoused by protectionists, but essentially all arguments can be classified as follows: (1) protection of an infant industry, (2) protection of the home market, (3) need to keep money at home, (4) encouragement of capital accumulation, (5) maintenance of the standard of living and real wages, (6) conservation of natural resources, (7) industrialization of a low wage nation, (8) maintenance of employment and reduction of unemployment, (9) national defense, (10) increase of business size, and (11) retaliation and bargaining.
  • 33. Arguments for Protectionism include: 1. Maintain employment and reduce unemployment 2. Increase of business size 3. Retaliation and bargaining 4. Protection of the home market 5. Need to keep money at home 6. Encouragement of capital accumulation 7. Maintenance of the standard of living and real wages 8. Conservation of natural resources 9. Protection of an infant industry 10. Industrialization of a low-wage nation 11. National defense
  • 34. In general, protectionism contributes to industrial inefficiency and makes a nation uncompetitive Protectionism is implemented through the imposition of trade barriers, which include tariff barriers and non-tariff barriers
  • 35. Trade Barrier is an artificial restriction on the trade of goods and/or services between two countries. It is the result of protectionism. However, the term is controversial because what one part may see as a trade restriction another may see as a way to protect consumers from inferior, harmful or dangerous products. For instance Germany required the production of beer to adhere to its purity law.
  • 36. Government imposed restriction on the free international exchange of goods or servic es They are a way for a government to protect it's nation's industries and businesses. The goal of trade barriers is to put a limit on how much of a certain good or service that can be imported into a country so that the local firms have a opportunity to compete in that market, even though the local firms may not be as apt to compete if the market were open to all competitors.
  • 37. Classified as: 1) import policies reflected in tariffs and other import charges, quotas, import licensing, customs practices 2) standards, testing, labeling, and various types of certification 3) direct procurement by government 4) subsidies for local exporters 5) lack of copyright protection 6) restrictions on franchising, licensing, technology transfer 7) restrictions on foreign direct investment, etc.
  • 38. Types Of Trade Barriers 1. Tariffs 2. Import Quotas
  • 39. 1. Tariffs is a tax on imported goods. This increases the cost of imports in the domestic market, making domestic production relatively less costly than it would be without the tariff. This will decrease imports and increase domestic production in a protected industry. The existence of imports in an industry is an indication that at the current level of domestic demand, foreign production is more efficient than domestic production. With a tariff restricting imports, the domestic consumer will have to pay a higher price, and receive a smaller level of output. The domestic producers in the protected industry will gain from a tariff because it will allow them to increase prices and output.
  • 40. 2. Import Quotas- Import quotas restrict the amount of imports to a specific level. Once that level is reached, additional domestic demand will have to be met by domestic producers. This will mean that if demand increases, domestic consumers will not have the benefit of the cheaper world price (the world price would be cheaper for an import quota to be effective). All of the additional production to meet an increase in demand will be met by domestic producers. Winners and losers with import quotas are similar to the situation with tariffs, except that import quotas do not provide revenue for the government.
  • 41. Trade restrictions generally refer to the various barriers to free trade (imports and exports) imposed by governments. they are an artificial restriction on the trade of goods and/or services between two countries. It is the result of protectionism. However, the term is controversial because what one part may see as a trade restriction another may see as a way to protect consumers from inferior, harmful or dangerous products. For instance Germany required the production of beer to adhere to its purity law.
  • 42. Reasons For Restricting Trade 1. National Security Governments often determine that restricting the export or import of specific products is in the national best interest. A nation that produces weapons systems may want to prohibit those systems from being sold to potential enemies of the state. Some products may be deemed to be vital to the well-being of the country. The government doesn't want to rely on imports for a significant portion of the nation's supply, even if imports are less expensive than domestic production.
  • 43. 2. Infant Industry Sometimes governments believe that specific industries which are less efficient than foreign competition would become more efficient if given time to develop without being undermined by cheaper foreign prices. This is based on the idea that new industries tend to have high startup costs, but the costs will decrease if the industry has time to develop. Without restrictions, these companies cannot survive long enough to realize such cost savings.
  • 44. 3. Retaliation The argument for this is that "if they impose restrictions on us, we should impose restrictions on them in order to level the playing field, in order to make trade more fair". 4. Protecting Jobs If jobs are "shipped overseas", then domestic unemployment increases. Evidence shows that trade restrictions to protect jobs can increase employment in protected industries, but will not increase employment in the overall economy. The job gains in the protected industries would be offset by job losses in perhaps more efficient industries (specialization & trade).
  • 45. 5. Low Foreign Wages Countries with a lower standard of living tend to pay lower wages. This is often true when comparing developing nations with established industrialized nations. Some countries have few laws to protect workers, such as minimum wage, working conditions, and child labor laws. With lower labor costs, businesses, especially manufacturing businesses, will be able to produce more efficiently if they produce in a foreign country. One offsetting argument to this is that efficiency may not be real if the foreign workers are less productive than the domestic workers, who may be more educated, better trained, etc.
  • 46. 6. Politics Politicians may find it desirable to bow to pressure from special interests, and protect specific industries located in their districts. This protection wouldn't necessarily be based on national security, infant industry, or other arguments. It would, however, give special treatment to specific industries over other industries.
  • 47. General Agreement on Tariffs and Trade It is an activities made by United States and 22 other countries to reduce tariffs and created an agency to serve as watchdog over world trade. It is the first multilateral, legally enforceable agreement covering trade and investment in the service sector.
  • 48. BASIC ELEMENT THAT COVERS AGREEMENT a.) trade shall be conducted on a nondiscriminatory basis b.) protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quota‟s. c.) consultation shall be primarily method used to solve global trade problems.
  • 49. World Trade Organization This is an institution that will set the rules governing trade between it‟s 117 countries member, provide a panel to hear and rule on trade disputes between members. The goal is to help producers of goods and services, exporters, and importers conduct their business. It‟s an organization for liberalizing trade. It‟s a forum for governments to negotiate trade agreements. It‟s a place for them to settle trade disputes. It operates a system of trade rules.
  • 50. PRINCIPLE OF TRADING SYSTEM -Trade without discrimination -Freer trade: gradually, through negotiation -Predictability: through binding and transparency -Promoting fair competition -Encouraging development and economic reform
  • 51. C. International Monetary Fund This was formed among it‟s objective was the stabilization of foreign exchange rates and the establishment of freely convertible currencies. The IMF's fundamental mission is to help ensure stability in the international system. It does so in three ways: 1. keeping track of the global economy and the economies of member countries; 2. lending to countries with balance of payments difficulties; and 3. Giving practical help to members.
  • 52. A. Global versus International Marketing Management The only distinction between global marketing management and international marketing management is orientation.
  • 53. Global marketing management is guided by the global marketing concept which views the world as one market and is based on identifying and targeting cross-cultural similarities in contrary international marketing management is based on the promise of cross-cultural differences and is guided by the belief that each foreign market requires its own culturally adapted marketing strategy. There are at least three points that help define a global approach to international marketing: (1) the world is viewed as the market; (2) homogenous market segments are sought across country market sets; (3) standardization of the marketing mix is sought wherever possible but adapted whenever culturally necessary.
  • 54. THE SIMILARITIES AND DIFFERENCES BETWEEN INTERNATIONAL MARKETING AND GLOBAL MARKETING SYSTEM SIMILARITIES International Marketing 1. Create exchanges and Global that satisfy individual Marketing and Organizational Objective. 2. Marketing focuses upon leveraging a company’s assets, experience and product globally. DIFFERENCES 1. The performance of business activities that flow of a goods and services to consumers or users in more than one nation for a profit. 2. In International Marketing, they know
  • 55. 3. Companies want to sees what is the need of the people, in order to increase their marketing sales. 4. Marketing goes beyond the export Marketer and becomes more involved in marketing environment in the countries. what the need of the people in one country is. While in the global marketing, Utilize a country-bycountry multi domestic strategy. 3. They conceptualize and conveying a final product or services worldwide. 4. International Marketing focuses upon the need of its own country while Global
  • 56. 5. Country sees the world to its market place. Marketing focuses not only in one country but also in other countries. 5. Creates different strategies to increase the demand of the product.
  • 57. B. ALTERNATIVE MARKET-ENTRY STRATEGIES 1. 2. 3. 4. 5. 6. 7. 8. 9. Exporting The Internet Direct Sales Contractual Agreement Licensing Joint Ventures Franchising Consortia Manufacturing
  • 58. Exporting To carry or send, as goods or raw materials, to other countries for sale or trade. A company might decide to enter the international arena by exporting from the home country this mean that a company may transport goods or materials in order to transact business activities outside their country. Exporting can be either direct or indirect. Direct exporting the company sells to a customer in another country. Indirect exporting usually means that the company sells to buyer in the home country, which in turn exports the product.
  • 59. The Internet The internet is becoming increasingly important as a foreign market entry method it focused on domestic sales. How ever, a surprisingly large number of companies started receiving orders from customer in other countries resulting in the concept Direct Sales Establishing an office with local and/ or expatriate managers and staff, depending of course on the size of the market and potential sales revenues.
  • 60. Contractual Agreement Are long term, non equity associations between a company and another in a foreign market. It generally involve the transfer of technology, processes, trademarks and/or human skills. In short, they serve as a means of transfer of knowledge rather than equity. Licensing A legal basis or permit to operate a business transaction outside or inside the country, it is also the rights to use for the company to protect patents and trademarks against cancellation of the business contract a company has agreed upon in there meetings.
  • 61. JOINT VENTURES A joint venture can be attractive to an international marketer. 1.When it enables a company to utilize the specialized skills of a local partner. 2.When it allows the marketer to gain access to a partner‟s local distribution system. 3.When a company seeks to enter a market where wholly-owned activities are prohibited. 4.When it provides access to markets protected by tariffs or quotas. 5.When the firm lacks the or personnel capabilities to expand its international activities.
  • 62. FRANCHISING Rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. The combination of skills permits flexibility in dealing with local market conditions and yet provides the parent firm with a reasonable degree of control.
  • 63. CONSORTIA The consortium and syndicate are similar to the joint venture could be classified as such except for two unique characteristics: 1.They typically involve a large number of participants, and 2.They frequently operate in country or market in which none of the participants is currently active. Often , huge construction projects are built under a consortium arrangement in which major contractors with different specialties form a separate company specifically to negotiate for and produce one job.
  • 64. MANUFACTURING A company may manufacture locally to capitalize on low-cost labor, to avoid high import taxes, to reduce the high costs of transportation to market, to gain access to raw materials, and or as a means of gaining market entry. A hallmark of global companies today is the establishment of manufacturing operations throughout the world.
  • 65. Regulations of Exporting & Importing Export Regulations -can be designed to conserve scarce goods for home consumption or to control the flow of strategic goods to actual or potential enemies. Import regulations -may be imposed to protect health, conserve foreign exchange, serve as economic repricals, protect home industry, or provide revenue in the form of tariffs.
  • 66. Types of Licenses General Licenses- permits exportation of certain commodities with nothing more than a declaration of the type of product, its value and its destination. Validated License-issued only on formal application. Formal Application- is a specific document authorizing exportation within specific limitations.
  • 67. Commerce Control List -classifies the product according to availability for export. Other Documents - in addition to a validated license & anti-diversion clause, certain shipments must be supported by documents supplied by the prospective purchaser or the government of the country of destination. International Import Certificate certifies that the exported products will be disposed of responsibly in the designated country.
  • 68. Statement of Ultimate Consignee a Purchaser -written assurance that the foreign purchaser of the goods will not resell or dispose of the goods in a manner contrary to the terms of the export license under which the goods were originally exported.
  • 69. To acquire Export License: ELAIN(Export license Application & Information Network) : if once exporters have authorization, they will be able to submit license applications electronically to ELAIN. STELA(System for Tracking Export License Application) : provides exporters instant status updates on export license applications by use of a touch-tone telephone.
  • 70. Import Restrictions 1. 2. 3. 4. 5. 6. Tariffs Quotas Import license Packaging and Shipping Boycott The proper packaging of Standards products is vitally important, Other Restrictions particularly when shipments are bound for ports with inadequate handling and storage facilities. Export
  • 71. Import Restrictions 1. 2. 3. 4. 5. 6. Tariffs Quotas Import license Boycott Standards Other Restrictions
  • 72. Customs-Privileged Facilities Products are brought into an in-bond area, manipulated(processed, repackaged, assembled), and re-exported to country where products originated Low tariffs assessed only on value-added processing that took place in the zone Limits on products imported to encourage re-exporting
  • 73. Customs- privileged areas- Areas where goods can be imported for storage and/or processing with tariffs & quota limits postponed until the products leave the designated areas. Types of Customs-Privileged Facilities 1. Foreign trade zones/ free-trade zones 2. Free ports 3. In-bond arrangements Foreign-Trade zones- The number of countries with foreign trade zones (FTZ’s) has increased as trade liberalization has spread through Africa, Latin America, Eastern Europe, & other parts of Europe & Asia. Most FTZ’s function in a similar manner regardless of the host country.
  • 74. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 75. EXPORT DOCUMENTS DEFINITION EXPORT DECLARATION -customs form completed and submitted by an exporter at the port of export -includes information about the shipping company and the receiving company -explains the commodity, nature, weight and value of the shipped goods PURPOSE -to provide information on amount, nature and value of exports to the statistical office for compilation of foreign trade data -to serve as an export control document
  • 76. OF -is a contract to carry the goods to the said destination based on which seller can claim consideration and buyer can take delivery of the goods -as a contract for shipment between the carrier and shipper -as a receipt from the carrier for shipment -as a certificate of ownership or title to the goods COMMERCIAL -a bill of statement for INVOICE the goods sold -is used as a customs declaration provided by the person or corporation that is exporting an item across international orders -some countries require a copy for customs clearance -one of the financial documents required in international commercial payments BILL LADING
  • 77. INSURANCE -is a contract between POLICY or the insurer and the CERTIFICATE insured, known as the policy holder, which determines the claims which the insurer is legally required to pay -to meet specific needs and thus have many features not found in many other types of contracts -are the responsibility of LICENSES IMPORT the importer and vary LICENSE depending upon destination and product -is a government EXPORT document that authorizes LICENSE the export of specific goods in specific quantities to a particular destination -are the responsibility of the importer and vary depending upon destination and product -is a government document that authorizes the export of specific goods in specific quantities to a particular destination
  • 78. INSURANCE -is a contract between -to meet specific POLICY or the insurer and the needs and thus have CERTIFICATE Benefits for companies Utilizingmany features not insured, known as the FTZ’s Import Restrictions • Lowerpolicy holder, due to the found in many other insurance costs which greater security determines required in FTZ‟s. the claims types of contracts Tariffs • 1. More which the insurer duties are deferred working capital since is 2.until goods leave the zone. pay Quotas legally required to 3. Import license • -are the to stockpile products when quotas LICENSES The opportunityresponsibility of -are the responsibility 4. Boycott are waiting for the market the IMPORT filled or while and vary ofideal importer and 5. Standards importer LICENSE depending upon vary depending upon 6.conditions. Other Restrictions • Significant savings on product materials rejected, and destination and goods or destination damaged, or scrapped for whichproduct -is a government no duties are assessed. EXPORT document that authorizes -is a government • exemption from of specific on labor LICENSE the export paying duties document & that overhead costs incurred specificFTZ‟s which the export in an authorizes are goods in excluded in determiningparticular of the goods. goods in quantities to a the value of specific destination specific quantities to a particular destination
  • 79. Domestic trade Delivery and payment between a buyer and seller. term agreed International trade These are terms that set out the rights and obligations of buyers and sellers as applicable in the transportation of goods.
  • 80. TERMS OF SALE C&F (cost and freight) DESCRIPTION PURPOSE To named overseas port. The price includes the cost of the goods and transportation cost to the named place of debarkation. The cost of insurance is borne by the buyer. Maritime transport only and insurance for the goods are not included. Insurance is at the cost of the buyer.
  • 81. CIF (cost, insurance, freight) To a named overseas port of import. A CIF quote is more meaningful to the overseas buyer because it includes the cost of gods, insurance and all the transportation and miscellaneous charges to the named of debarkation Exactly the same as C & F except that the seller must in addition procure and play for the buyer. Maritime transport only
  • 82. FOB At a named inland (free on board) point of origin; at a name port of exportation; or a named vessel and port of export. The price includes the cost of goods and deliver to the place named Maritime export only but not for multimodal sea transport in containers.
  • 83. FAS (Free alongside ship) At the named US port of export. The price includes cost of goods and charges for delivery of the vessel. The buyer is responsible for the cost of loading onto the vessel, transportation and insurance. Suitable only for maritime transport only but not for multimodal see transport in containers. This term is typically used for heavy lift or bulk cargo.
  • 84. INSURANCE -is a contract between -to meet specific POLICY or the insurer and the needs and thus have CERTIFICATE Benefits for companies Utilizingmany features not insured, known as This FTZ’s EX The price quoted the trade terms Importcosts which greater greatest • Lowerpolicy holder,only to the found in many other insurancecosts due places the security (named port covers Restrictions determines the claims types of required in FTZ‟s. point of responsibility contracts of origin) Tariffs at the on the is 1. More which the insurer duties are deferred • working capital since 2.until goods leave the zone. pay Quotasorigin. All other buyer and minimum legally required to 3. Import charger are the license • -are the to stockpile products when responsibility of -are the quotas LICENSES The opportunityresponsibilityobligations on the 4. Boycott buyer’s concern seller. the market are waiting for It s often used the IMPORT filled or while and vary ofideal importer and 5. Standards importer LICENSE depending upon vary depending upon when making an 6.conditions. Other Restrictions • Significant savings on product materials rejected, and or destination and goods initialdestination for quotation damaged, or scrapped for whichproduct no -is a government sale duties are the of goods assessed. EXPORT document that authorizes -is a government without any cost • exemption from of specific on labor LICENSE the export paying duties document & that included overhead costs incurred specificFTZ‟s which the export in an authorizes are goods in excluded in determiningparticular of the goods. goods in quantities to a the value of specific destination specific quantities to a particular destination
  • 85. Differences of Export Shipping from Import Shipping: a. Goods can be out of the shipper‟s control for a longer period of time. b. More shipping and collections documents are required. c. Packing must be suitable. d. Shipping Insurance coverage is more extensive.
  • 86. Different Shipping or Transportation Modes: 1. Ocean Shipping 2. Air Freight and Air Express 3. Parcel Post
  • 87. Freight Forwarders The details of export shipping are often handled by a „freight forwarder,‟ who acts as an exporter‟s agent when shipping goods overseas. Carriers Three types of ocean carriers ship products overseas. The first are conference lines which consist of an association of ocean carriers providing common rates and services. Individual conference carriers may take independent action and offer shippers lower rates. The second type of carriers are the independents. Independent rates may be higher than other carriers,
  • 88. but they may also be lower when in direct competition with conference carriers. The third type of carrier is the tramp vessel. These carriers generally handle only bulk cargo and are not on regular schedules or trade routes. Terminals Transporting lumber and other forest products through general cargo terminals can be very expensive. Transportation costs can be significantly reduced by using specialized forest products handling facilities at the ports of export and destination, which will result in lower freight rates and landed costs.
  • 89. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 90. Logistics Distribution process including all activities involved in physically moving raw material, in-process inventory, & finished goods inventory from the point of origin to the point of use or consumption. Interdependence of Physical Distribution System. Distribution of goods also includes location of plants warehousing, transportation mode, inventory quantities, & packing. The interdependence of the various activities in the physical distribution mix & total cost.
  • 91. Benefits of Physical Distribution System  Optimal inventory levels  Optimal production capacity  Better delivery service to the market  Readily assessment of operating cost
  • 92. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 93. • provides information & advice on routing and scheduling, rates, & related charges, consular and licensing requirements & export restrictions. • they are independent business that dispatches or transmit shipments & transact exporter for fee. • It guides you in exporting shipments, or products. • Their charges are smaller for the work they do & guidance to the shipments or product extend to you.
  • 94. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 95. Functions and Structure of International Distribution System TYPES OF CHARACTERI FUNCTIONS DISTRIBUTION STICS CHANNELS LONG DISTRIBUTION CHAIN There are many parties or when there is very little known about the market and presence is much consolidated. In the initial phase of market introduction, this solution is more convenience to exporter.
  • 96. SHORT DISTRIBUTION CHAIN There is one of intermediaries. It distribute directly to wholesaler or purchasing centers, the role played by a retailer. The advantages gained are reduction in intermediary commercial margins and closer to the client. DIRECT DISTRIBUTION CHAIN The exporters dealing The avoidance of directly with the end unnecessary clients. intermediaries making the product more expensive and gives absolute control of marketing.
  • 97. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 98. TYPES OF MIDDLEMEN DESCRIPTION ADVANTAGES 1.External Middlemen Differentiated on whether or not they take title to the goods. Elasticity of demand, factors of production, separation of power, scope of work. Represent the principal rather than themselves. Work on commission and arrange sales in the foreign country but do not take title to the merchandise. Maintains the right to establish policy guidelines and prices The manufacturer assumes and to require its trading risks. agents provide sales record and costumer information. Take title to the goods and buy and sell on their own account. Provide a variety of import and export wholesaling functions involved in purchasing for their own account and selling in other Ease of contact, minimized credit risk and elimination of all merchandise handling outside the U.S. Agent Middlemen Merchant Middlemen DISADVANTAGES Assume the trading risk and tend to be less controllable.
  • 99. 2.Home Country Middlemen Located in the producing firm’s country, provide marketing services from a domestic base. Most likely to be used when the marketer is uncertain and/or desire to minimize financial and management investment. Those inexperienced with foreign markets, those not wanting to become immediately involved with the complexities of international marketing and those wanting to sell abroad with minimum financial and management commitment. Export Management Companies May take full or partial responsibility for promotion on the goods credit arrangement, physical handling, market research and information on financial patent and licensing matters, Minimum investment on the part of the company to get into international markets. No company personnel or major expenditure of managerial effort. Can seldom afford to make the kind of market investment needed to establish deep distribution for product because they must have immediate sales payout to survive.
  • 100. Variety of agent middlemen maybe classified simply as buyers for export. Buying Offices Several types of arrangements have been developed in which various manufacturers or producers. Selling Groups Export Sales A sales corporation set up in a foreign country for U.S. possessions that can obtain a corporate tax exemption on a portion of the earnings generated by Their common denominator is a primary function of seeking merchandise on request from principals. Cooperate in a joint attempt to sell their merchandise abroad. They do not provide a selling service.
  • 101. Export merchants Export Jobbers Are essentially domestic merchants operating in foreign market. Deal mostly in commodities. An individual agent Manufacturers Export middleman or an Agent agent middlemen firm providing a selling service for manufacturers. More on domestic wholesaler and take full responsibility for their marketing. More on commodities and they work on a They do not take job basis. physical possession of goods but assume responsibility for transporting. More on selling service. They take risk by doing business on their own names rather than in the name of their client.
  • 102. FOREIGN COUNTRY MIDDLEMEN DESCRIPTION ADVANTAGES -Can provide excellent market coverage for the manufacturer in a certain circumstances -Do not arrange for shipping or for handling and usually do not take physical possession *MANUFACTURERS REPRESENTATIVES -Agent middlemen who take responsibility for a producers goods in a city, regional market area, entire country or several adjacent countries. -An agent who sell goods especially wholesale. -Has exclusive sales rights in a specific country and works in close cooperation with the manufacturer.-Permits the manufacturer a reasonable degree of control over prices, promotional effort, inventory and servicing. -Has a relatively high degree of dependence on the supplier companies and the arrangement are likely to be on a long run, continuous basis. *DISTRIBUTORS DISADVANTAGES
  • 103. -Has strength in having good continuing relationship with customers and providing speedy market coverage at a low cost. -Deals only on the commodities and food products. -Conduct business within a foreign nation under an exclusive contract arrangement with the parent company. Invest in the operation and in most instances operates under a contract with the parent company. -Provides all types of manufactured goods to foreign country. -Invest in the operation and in most instances operates under a contract with the parent company. -An agent who sell industrial goods direct to customer. -They derive a large portion of their sales volume from the products of a single supplies firm. -Has a continuity relationship with a supplier in buying and selling goods. -An independent merchant middlemen but sometimes the supplier company has an equity in its dealers. -An agent who negotiates contracts of purchase and sale. *FOREIGN COUNTRY BROKERS *MANAGING AGENTS @ COMPRADORS *DEALERS
  • 104. *IMPORT JOBBERS, WHOLESALERS, @ RETAILERS GOVERNMENTAFFILIATED MIDDLEMEN *GOVERNMENT PURCHASING OFFICES -Purchase goods directly from the manufacturers and sell to wholesalers and retailers and to industrial customers. -Engage in direct importing for their own outlets and for distribution to smaller middlemen. -Difficult to find a large retailers especially in local shops and dealers. DESCRIPTION ADVANTAGES DISADVANTAGES -Deals with governments in every country of the world. -They procure products, services and commodities for the government own use. -Work at federal, regional and local levels. -The arrangements offer are little control over the selling effort and are generally unsatisfactory.
  • 105. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 106. The international marketer needs a clear understanding of market characteristics and must have established operating policies before beginning the selection of channel middlemen. The following points should be addressed prior to the selection process: 1.) Identify specific target markets within and across countries. 2.) Specify marketing goals in terms of volume, market share, and profit margin requirements. 3.) Specify financial and personnel commitments to the development of international distribution. 4.) Identify control, length of channels terms of sale, and channel ownership.
  • 107. THE SIX C’s OF CHANNEL STRATEGY •The purpose of this is to build an economically effective distribution organization, the following must be examined: •Cost •Capital Requirement •Control •Coverage •Character •Continuity
  • 108. SIX C’s OF CHANNEL STRATEGY DEFINITION HOW DID THIS AFFECT THE CHANNEL DISTRIBUTION 1. COST It accrues when transporting a product from its place of manufacture to its final destination, the customer. It is the total money, time, and resources associated with a purchase or activity. A marketer needs a higher cost to maintain its channel. But some marketers found that they can reduce cost by using shorter channels. 2. CAPITAL REQUIREMENTS Cash or goods used to generate income either by investing in a business or a different income property. It is also the money, property, and other valuables which collectivity represents the wealth of an individual or business. Maximum investment is usually required when a company establishes its own internal channels, that is, its own sales force. Using of dealers may lessen the cash investment. 3. CONTROL Device or mechanism installed or instituted to guide or regulate the activities or operation of an apparatus, machine, person, or system. Companies own sales afford the most control but often at a cost that is not practical. If a company can sell directly to the user, an important middleman should be the marketer can maintain.
  • 109. 4. COVERAGE Estimated number of customers or prospects of a brand or product reached by an advertisement or commercial. It is difficult to develop both in highly develop areas and in sparse market because of heavy competition and inadequate channels. 5. CHARACTER The combination of qualities or features that distinguishes one person, group or thing from another. The channel of distribution selected must fit the character of the company. They cannot assume that once a channel has been developed to fit the character of the company. 6. CONTINUITY The state or quality of being continuous; connectedness; coherence. When one individual retires or move out of a line of business, the company may find it has lost its distribution in that area.
  • 110. TERMS FACTORS AFFECTING LOCATING MIDDLEMEN Locating Middlemen Things to look for: Financial stability, managerial stability, productivity, reputation, etc. Sources to use: Dept. of Commerce, foreign consulates, commercially published directories Selecting Middlemen 1.Screening based on the following criteria: a. reputation b. creditworthiness c. markets served d. products carried e. number of stores f. store size 2. Developing the “Agreement” The agreement that details terms of the contract and the functions to be performed on behalf of the foreign manufacturer.
  • 111. Motivating Middlemen There is clear correlation between the middleman’s motivation and sales volume. Motivational techniques may be grouped into 5 categories: 1. financial rewards 2. psychological rewards 3. communications 4. company support 5. corporate rapport Terminating Middlemen Must consider things such as: 1. legal protection 2. control over middlemen Controlling Middlemen Control over the system (distribution network) Control over the middlemen -Volume of sales, market coverage, services offered, pricing, advertisement, payment of bills and profitability
  • 112. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 113. TERMS Locating Middlemen Selecting Middlemen FACTORS MIDDLEMEN AFFECTING LOCATING Things to look for: Financial stability, managerial stability, productivity, reputation, etc. Sources to use: Dept. of Commerce, foreign consulates, commercially published directories 1.Screening based on the following criteria: A. B. C. D. E. F. reputation creditworthiness markets served products carried number of stores store size 2. Developing the “Agreement” - The agreement that details terms of the contract and the functions to be performed on behalf of the foreign manufacturer.
  • 114. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 115. Stability: Changes in regime, violence and cultural divisions based on language or other factors can lead to a very uncertain environment in which to conduct business. International manager need to understand the significance of political decision-making in the host country that may severely influence its overseas operations. They could beInternational Political Systems And Ideologies Trade embargos and Sanctions Bureaucracy Terrorism, crime and violence
  • 116. Four Main Areas Of Governmental Activities That Affect Foreign Investments And Stability 1. Embargoes or Trade Sanctions 2. Export Controls 3. Import Controls 4. Regulations of international business behavior • Boycotts •Anti trust laws •Bribery and Corruption
  • 117. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 118. If expropriation is a real possibility then the investor should seek to minimize risk by: •relatively rapid depreciation of assets and repatriation of funds by manipulated transfer prices • establish a local supply infrastructure so that any adverse action damages the host economy • raise as much investment capital in the country as possible •retain control of critical inputs and minimise local stocks of these.
  • 119. Domestication- taking steps of host country to transfer foreign investments to national control and ownership. Ultimate Goal of Domestication: To force foreign investors to share more of the ownership and management with nationals. Privatization- transfer of any government function to a private sector. Economic Risk- danger that the economy could turn against your investment.
  • 120. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 121. Products appear are more politically vulnerable than others, in that they receive more government attention, in which this special attention may result in positive or negative actions toward the company. When examining the potential of a foreign market, the marketer should assess the ff: Politically Sensitive Products Products that have an effect upon the environment exchange rates, national, and economic security, and the welfare of the people including those that are publicly visible or subject to public debate.
  • 122. REDUCING POLITICAL VULNERABILITY Good Corporate Citizenship A company can reduce its political vulnerability by being a corporate citizen, with the ff. qualities. *Realize & act as if you were a guest in the country. *Distribute some of the profits back to the foreign market. *Do not try to Americanize the market. *Try to do business in the mother language. *Should try to develop some worthwhile public projects. *Executives should respect the foreign culture. *Staff foreign offices w/competent nationals rather than all US Citizens.
  • 123. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 124. Strategies to Lessen Political Risk •Joint Ventures •Expanding the Investment Base •Control Marketing & Distribution •Licensing •Planned Domestication • Political Payoffs -Pay people in power to intervene on your behalf. -Make sure you spread the money out to all major parties, not just the one currently in power.
  • 125. What It Brings? 1. create employment 2. transfer of technology 3. generate export sales 4. stimulate growth and development of local industry 5. conserve foreign exchange as requirement for market concessions
  • 126. 1. No single, uniform international commercial law governing foreign business transactions exists. 2. International marketers must comply with the laws of each country within which they operate. 3. 4. It is best to get expert legal advice when doing business in another country. The legal systems of different countries are so disparate and complex.
  • 127. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 128. The bases for the majority of the legal systems of the world include: 1) Common law, derived from English law and found in England, the United States, Canada, and other countries once under English influence. 2) Civil or code law, derived from Roman law and found in Germany, Japan, France, and in non-Islamic and non-Marxist countries. 3) Islamic law, derived from the interpretation of the Koran and found in Pakistan, Iran, Saudi Arabia, and other Islamic states. 4) Marxist-Socialist tenets found in the Marxist-socialist economies of Russia and the republics of the former Soviet Union, Eastern Europe, China, whose legal system is based on the economic, political, and social policies of the state.
  • 129. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 130. Determining whose legal system has jurisdiction when a commercial dispute arises is another problem of international marketing. The World Court at The Hague and the International Court of Justice resolve international disputes between sovereign nations of the world rather than between private citizens. Legal Disputes Can Arise In Three Situations: (1) between governments; (2) between a company and a government; (3) between two companies.
  • 131. The World Court can adjudicate disputes between governments, but disputes in situations 2 and 3 must be handled in the courts of the country of one of the parties involved or through arbitration. When international commercial disputes must be settled under the laws of one of the countries concerned, the paramount question in a dispute is: Which law governs?
  • 132. Jurisdiction is Generally Determined In One Of Three Ways: (1) on the basis of jurisdictional clauses included in contracts; (2) on the basis of where a contract was entered into, or; (3) on the basis of where the provisions of the contract were performed;
  • 133. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 134. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 135. International disputes can be resolved by: Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. Arbitration calls for the parties involved to select a disinterested and informed party or parties as referee to determine the merits of the case and make a judgment that both parties agree to honor. Litigation deals with filing a lawsuit to settle commercial disputes.
  • 136. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 137. Commercial law is vague! Derived from the practices of traders. Scholars define it as "body of legal rules that apply to commerce, commercial transactions, and organises merchants' profession." It regulates relations arising from explicit business actions and behaviour. Commercial law is the branch of private law, which applies to business transactions, and to a certain category of people, merchants. Commercial transaction is the core of the legal rules governing business dealings. The most common types of commercial transactions is sale of goods. All commercial transactions have one thing in common: they serve to transmit economic values.
  • 138. Modern Concept of Commercial Law Modern trends in commercial law (reconsider the provisions of commercial law. ) Commercial law is the law of economic or business. This concept, would (cover all topics involve economic activities under commercial law ) Rules of commercial law ( constant evolution ) (changing rapidly ) Progress in the field of industry, trade (new products, markets, tools ) ( new legal versions Commercial law evolves more rapidly than any other branches of law
  • 139. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 140. A country‟s political stability, cultural attributes and geographical characteristics are some of the kinds of information not ordinarily gathered by domestic marketing research departments but which are required for a sound assessment of a foreign market. This broader scope of international marketing research is reflected in Unisys Corporation‟s planning steps, which call for collecting and assessing the following types of information:
  • 141. Economic General data on growth of the economy, inflation, business cycle trends, and the like profitability analysis for the division‟s products; specific industry economic studies, analysis of overseas economies; and key economic indicators for the United States and major foreign countries. Cultural, sociological, and political climate A general non-economic review of conditions affecting the division‟s business. In addition to the more obvious subjects, it covers ecology, safety, and leisure time and their potential impact on the division‟s business.
  • 142. Overview Of Market Conditions A detailed analysis of market conditions that the division faces, by market segment, including international. Summary Of The Technological Environment A summary of the state of the art technology as it relates to the division‟s business, carefully broken down by product segments. Competitive Situation A review of competitors‟ sales revenues methods of market segmentation, products, and apparent strategies on an international scope.
  • 143. Such in depth information is necessary for sound marketing decisions. For the domestic marketer most such information has been acquired after years of experience with a single market but in foreign markets this information must be gathered for each new market. There is a basic difference between information ideally needed and that which is collectible or used. Many firms engaged in foreign marketing do not make decisions with the benefit of the information listed. Cost, time, and human elements are critical variables. Some firms have neither the appreciation for information nor adequate time or money for implementing of research. As a firm becomes more committed to foreign marketing and the cost of possible failure increases, however, greater emphasis is placed on research. Indeed marketing research expenditures reflect the size and growth of markets around the world.
  • 144. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 145. The research process should follow these steps: 1. Define the research problem and establish research objectives 2. Determine the sources of information to fulfill the research objectives 3. Consider the costs and benefits of the research effort 4. Gather the relevant data from secondary or primary sources, or both 5. Analyze, interpret, and summarize the results 6. Effectively communicate the results to decision makers Although the steps in a research program are similar for all countries, variations and problems in implementation occur because of differences in cultural and economic development.
  • 146. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 147. •Availability of data •Most countries simply do not have governmental agencies that collect on a regular basis the kinds of secondary data readily available in the U.S. •Researchers‟ language skills •Reliability of data •Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data. •Comparability of data •In other countries, especially those less developed, data can be many years out of date as well as having been collected on an infrequent and unpredictable schedule. •Too frequently, data are reported in different categories or in categories much too broad to be of specific value.
  • 148. Validating secondary data Questions should be asked to effectively judge the reliability of secondary data sources: Who collected the data? Would there be any reason for purposely misrepresenting the facts? For what purposes were the data collected? How were the data collected? Are the data internally consistent and logical in light of known data sources or market factors? Checking the consistency of one set of secondary data with other data of known validity is an effective and often-used way of judging validity. The availability and accuracy of recorded secondary data increase as the level of economic development increases.
  • 149. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 150. Primary data – Data collected specifically for the particular research project at hand. Quantitative research – Usually a large number of respondents are asked to reply either verbally or in writing to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Toto in Japan Qualitative research – If questions are asked, they are almost always open-ended or in-depth, and unstructured responses that reflect the person‟s thoughts and feelings on the subject are sought. Qualitative research seeks to interpret what the people in the sample are like. Qualitative research is helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses.
  • 151. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 152. Accepting information at face value in foreign markets is imprudent. The foreign market researcher must posses three talents to generate meaningful marketing information. First, the researcher must posses a high degree of cultural understanding of the market in which research is being conducted. Second, a creative talent for adapting research methods is necessary. Third, a skeptical attitude in handling both primary and secondary data is helpful.
  • 153. Analyzing survey data is an important and exciting step in the survey process. It is the time that you may reveal important facts about your customers, uncover trends that you might not otherwise have known existed, or provide irrefutable facts to support your plans. By doing in-depth data comparisons, you can begin to identify relationships between various data that will help you understand more about your respondents, and guide you towards better decisions.
  • 154. Although data analysis is the wrong time to try and rewrite your survey instrument, it is important to remember the scope of your project and stick to it. Many first time surveyors attempt to read "between the lines" while analyzing data. They attempt to answer questions that were not asked by making inferences and assumptions from those that were asked. Doing so amounts to nothing more than guesswork. To avoid this temptation, remember this simple rule: Rule 1: If you did not ask you do not know.
  • 155. Another common mistake that many first time surveyors make is to attempt to change data to compensate for poor question design. For example, if a question asked a respondent to indicate his total household income using a scale of values, a mean and median cannot be calculated. Many people try to get around this by assigning each response a value representing the range. Even if the adjustment is made consistently across all responses, the resulting calculations will be wrong. Similarly, trying to analyze a multiple-choice question as if it was a single-select question will often provide erroneous information. In order to avoid this pitfall, remember this simple rule: Rule 2: Do not alter data to compensate for bad survey design.
  • 156. A second mistake inexperienced surveyors make is to project the findings to an audience that was not either part of the survey population or not adequately represented. For example, if an HR manager conducts a benefits survey and invites all employees to participate, most people would assume that the results represent all employees since everyone had an opportunity to participate. Provided that enough employees participate, the data might be statistically valid, but is it really representative of all employees? The answer is, it depends. If the survey collected data about employee demographics that could be compared to what is known about the company, then the results do reflect the company as a whole. To avoid this temptation, remember this simple rule: Rule 3: Do not project your data to people that did not respond.
  • 157. The earlier you recognize flaws in your survey design and data collection, the more time you will save during analysis. If you questions do not provide the data you need to meet your survey objectives, you'll have to start over. If your questions are vague or ambiguous, you'll have to throw them out. If you do not have an adequate number of responses, you'll have to get more.
  • 158. Data Cleaning - Data often arrives in a messy, disorganized fashion. Data points may be duplicated or improperly entered. It may need to be collated and prepared for entry into a database. Quality of Data Audit - The quality of your data is important if you want to ensure results you can use to better understand your business model. Analysis of Missing Observations - determine what variables may be missing from your data, why they are missing and what effect they might have on the integrity of the analysis. Analysis of Extreme Observations - Outlying data points are important in many ways and they are not ignored when performing analysis of your data. Analysis of Homogeneity - provide comprehensive analysis of data points to find common threads that can help you determine where best to move assets and how best to make key business decisions.
  • 159. •A set of methods and techniques used to obtain information and insights from data •Helps avoid erroneous judgments and conclusions •Can constructively influence the research objectives and the research design
  • 160. •Data editing •Coding •Statistically adjusting the data
  • 161. Data Editing •Identifies omissions, ambiguities, and errors in responses •Conducted in the field by interviewer and field supervisor and by the analyst prior to data analysis Problems Identified With Data Editing •Interviewer Error •Omissions •Ambiguity •Inconsistencies •Lack of Cooperation •Ineligible Respondent
  • 162. Coding •Coding closed-ended questions involves specifying how the responses are to be entered •Open-ended questions are difficult to code •Lengthy list of possible responses is generated
  • 163. Statistically Adjusting the Data + Weighting •Each response is assigned a number according to a prespecified rule •Makes sample data more representative of target population on specific characteristics •Modifies number of cases in the sample that possess certain characteristics •Adjusts the sample so that greater importance is attached to respondents with certain characteristics
  • 164. Statistically Adjusting the Data + Variable Re-specification •Existing data is modified to create new variables •Large number of variables collapsed into fewer variables •Creates variables that are consistent with study objectives •Dummy variables are used (binary, dichotomous, instrumental, quantitative variables) •Use (d-1) dummy variables to specify (d) levels of qualitative variable
  • 165. Statistically Adjusting the Data + Scale Transformation •Scale values are manipulated to ensure comparability with other scales •Standardization allows the researcher to compare variables that have been measured using different types of scales •Variables are forced to have a mean of zero and a standard deviation of one •Can be done only on interval or ratio scaled data
  • 166. Simple Tabulation • Consists of counting the number of cases that fall into various categories Use of Simple Tabulation • Determine empirical distribution (frequency distribution) of the variable in question • Calculate summary statistics, particularly the mean or percentages • Aid in "data cleaning" aspects Marketing Research 8th Edition Aaker, Kumar, Day
  • 167. Frequency Distribution • Reports the number of responses that each question received • Organizes data into classes or groups of values • Shows number of observations that fall into each class • Can be illustrated simply as a number or as a percentage or histogram • Response categories may be combined for many questions • Should result in categories with worthwhile number of respondents Marketing Research 8th Edition Aaker, Kumar, Day
  • 168. Descriptive Statistics • Statistics normally associated with a frequency distribution to help summarize information in the frequency table • Measures of central tendency mean, median and mode • Measures of dispersion (range, standard deviation, and coefficient of variation) • Measures of shape (skewness and kurtosis) Marketing Research 8th Edition Aaker, Kumar, Day
  • 169. Analysis for Various Population Subgroups • Differences between means or percentages of two subgroup responses can provide insights • Difference between means is concerned with the association between two questions • Question upon which means are based are intervally scaled Marketing Research 8th Edition Aaker, Kumar, Day
  • 170. Cross Tabulations • Statistical analysis technique to study the relationships among and between variables • Sample is divided to learn how the dependent variable varies from subgroup to subgroup • Frequency distribution for each subgroup is compared to the frequency distribution for the total sample • The two variables that are analyzed must be nominally scaled Marketing Research 8th Edition Aaker, Kumar, Day
  • 171. Factors Influencing the Choice of Statistical Technique Type of Data – Classification of data involves nominal, ordinal, interval and ratio scales of measurement – Nominal scaling is restricted to the mode as the only measure of central tendency – Both median and mode can be used for ordinal scale – Non-parametric tests can only be run on ordinal data – Mean, median and mode can all be used to measure central tendency for interval and ratio scaled data Marketing Research 8th Edition Aaker, Kumar, Day
  • 172. Research Design – Dependency of observations – Number of observations per object – Number of groups being analyzed – Control exercised over variable of interest Assumptions Underlying the Test Statistic – If assumptions on which a statistical test is based are violated, the test will provide meaningless results Marketing Research 8th Edition Aaker, Kumar, Day
  • 173. Univariate Techniques • Appropriate when there is a single measurement of each of the 'n' sample objects or there are several measurements of each of the `n' observations but each variable is analyzed in isolation • Nonmetric - measured on nominal or ordinal scale • Metric-measured on interval or ratio scale • Determine whether single or multiple samples are involved • For multiple samples, choice of statistical test depends on whether the samples are independent or dependent Marketing Research 8th Edition Aaker, Kumar, Day
  • 174. Multivariate Techniques • A collection of procedures for analyzing association between two or more sets of measurements that have been made on each object in one or more samples of objects • Dependence or interdependence techniques  Dependence Techniques • One or more variables can be identified as dependent variables and the remaining as independent variables • Choice of dependence technique depends on the number of dependent variables involved in analysis Marketing Research 8th Edition Aaker, Kumar, Day
  • 175. Multivariate Techniques (Contd.) Interdependence Techniques • Whole set of interdependent relationships is examined • Further classified as having focus on variable or objects Why Use Multivariate Analysis? • To group variables or people or objects • To improve the ability to predict variables (such as usage) • To understand relationships between variables (such as advertising and sales) Marketing Research 8th Edition Aaker, Kumar, Day
  • 176. Data summarization The process of describing a data matrix by computing a small number of measures that characterize the data set Four functions of data summarization: – Summarizes the data – Applies understandable conceptualizations – Communicates underlying patterns – Generalizes sample findings to the population Ch 15 201
  • 177. Why is Statistical Analysis Used? • Why Use Statistical Analysis? – To summarize data – To show basic patterns in the data – To interpret these patterns – To generalize the patterns to the population Ch 15 202
  • 178. Statistical Analysis Ch 15 203
  • 179. Five Types of Statistical Analysis: 1. Descriptive analysis: used to describe the data set 2. Inferential analysis: used to generate conclusions about the population‟s characteristics based on the sample data 3. Differences analysis: used to compare the mean of the responses of one group to that of another group 4. Associative analysis: determines the strength and direction of relationships between two or more variables 5. Predictive analysis: allows one to make forecasts for future events Ch 15 204
  • 180. Two sets of descriptive measures: • Measures of central tendency: used to report a single piece of information that describes the most typical response to a question • Measures of variability: used to reveal the typical difference between the values in a set of values Ch 15 206
  • 181. Measures of Central Tendency – Mode: the value in a string of numbers that occurs most often – Median: the value whose occurrence lies in the middle of a set of ordered values – Mean: sometimes referred to as the “arithmetic mean”; the average value characterizing a set of numbers Ch 15 207
  • 182. Measures of Variability • Frequency distribution reveals the number (percent) of occurrences of each number or set of numbers • Range identifies the maximum and minimum values in a set of numbers • Standard deviation indicates the degree of variation in a way that can be translated into a bell-shaped curve distribution Ch 15 208
  • 183. After analyzing your survey data, it is time to create a report of your findings. The complexity and detail need to support you conclusions, along with your intended audience, will dictate the format of your report. CEO's require a different level of detail than line managers, so for maximum results consider who is going to receive your report and tailor it to meet their unique needs. Visual reports, such as an HTML document or Microsoft PowerPoint presentation, are best suited for simple findings. These graphical reports are best when they are light on text and heavy on graphs and charts. They are reviewed quickly rather than studied at length, and most conclusions are obvious, so detailed explanations are seldom required. For more complex topics, a detailed report created in Microsoft Word or Adobe Acrobat is often required. Reports created using Word often include much more detailed information, report findings that require significant explanation, are extremely text heavy, and are often studied at great length and in significant detail.
  • 184. Survey analysis is not as easy as downloading results and printing a chart or report. In this report we have learned that good analysis begins with good questions, representative participation, and careful interpretation of the data, in order to produce actionable results. Techniques such as charting, filtering, cross tabulation, and regression analysis all help you spot trends and patterns within your data while helping you meet your survey objective.
  • 185. Benefits for companies Utilizing FTZ’s • • • • • Import Restrictions Lower insurance costs due to the greater security required in FTZ‟s. 1. More working capital since duties are deferred Tariffs 2.until goods leave the zone. Quotas 3. Import license The opportunity to stockpile products when quotas 4. Boycott are filled or while waiting for ideal market 5. Standards 6.conditions. Other Restrictions Significant savings on goods or materials rejected, damaged, or scrapped for which no duties are assessed. exemption from paying duties on labor & overhead costs incurred in an FTZ‟s which are excluded in determining the value of the goods.
  • 186. Two Methods From Forecasting Demand Are Particularly Suitable For International Marketers Expert Opinion And Analogy Expert Opinion For many market estimation problems, particularly in foreign countries that are new to the marketer expert opinion is advisable. In this method, experts are polled for their opinions about market size and growth rates. Such experts may be companies own sales managers or outside consultants and government officials. The key in using opinion to help in forecasting demand is triangulation that is, comparing estimates produced by different sources. One of the tricky parts is how best to combine the different opinions.
  • 187. All the methods for market demand estimation described are no substitute for original market research when it is economically feasible and time permits.