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International Marketing

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International Marketing ­ MKT630
VU
Lesson # 22
MODES OF ENTRY INTO INTERNATIONAL MARKETS
Exporting
Modes of entry into international markets:
·
Exporting
·
International Licensing
·
International Franchising
·
Specialized Modes
·
Foreign Direct Investment
·
Countertrade
Exporting:
· Simple mode of internationalizing a domestic business
· Advantages
­ allows a firm to quickly enter the foreign market
­ often involves less financial exposure
­ permits a firm to enter a foreign market gradually, and in this way allows it to assess local
conditions and fine-tune its products to better suit the needs of the customers in the host country
· Disadvantages
­ little control over marketing and distribution in the host country
­ can quickly lose market to other firms
­ in case of many goods, transportation costs may be high rendering the exported products too
expensive for host markets
Forms of exporting:
Indirect exporting
­ occurs when a firm sells its products to a domestic customer, who in turn exports the product, in
either its original form or a modified form
Direct exporting
­ involves sales to customers - either distributors or end-users - located outside the firm's home
country
Intracorporate transfers
­ is selling of goods / services by a firm in one country to an affiliated firm in another
Export intermediaries:
· Export management companies
­ a firm which acts as a client's export department - an EMC's staff are typically knowledgeable
about the legal, financial and logistical details of exporting and importing.
­ can be commission agents or may take title of goods by profiting from the difference between
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International Marketing ­ MKT630
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local buying price and selling price to the foreign customer
· Enterprise networks
­ a group of companies producing related or complementary products pooling resources together to
form marketing companies
· International trading companies
­ are firms which are directly engaged in importing and exporting a wide variety of goods on their
own account
Export and import management:
Terms of Shipment
· Ex-works (EXW) - at the point of origin
The exporter agrees to deliver the goods at the disposal of the buyer to the specified place on the
­
specified date or within a fixed period. All other charges are borne by the buyer.
· Free Alongside Ship (FAS) - at a named port of export
The exporter quotes a price for the goods, including charges for delivery of the goods alongside a
­
vessel at a port. The seller covers the costs of unloading and wharfage. Loading onto the ship,
ocean transportation, insurance, unloading and wharfage at a port of destination and transport to
the site required by the buyer are on the importer's account.
· Free on Board (FOB) - at a named port of export
In addition to FAS, the exporter undertakes to load the goods on the vessel to be used for ocean
­
transportation and the price quoted by the exporter reflects this cost.
· Cost and Freight (CFR) - to a named overseas port of disembarkation
The exporter quotes a price for the goods, including the cost of transportation to a named
­
overseas port of disembarkation. The cost of insurance and the choice of the insurer are left to the
importer.
· Cost, Insurance and Freight (CIF) - to a named overseas port of disembarkation
The exporter quotes a price including insurance and all transportation and miscellaneous charges
­
to the port of disembarkation from the ship or aircraft. CIF costs are influenced by port charges
(unloading, wharfage, storage, heavy lift, demurrage), documentation charges (certification of
invoice, certification of origin, weight certificate) and other miscellaneous charges (fees of freight
forwarder, insurance premiums).
· Delivery Duty Paid (DDP) - to an overseas buyer's premises
The exporter delivers the goods with import duties paid including inland transportation from the
­
docks to the importer's premises.
Terms of payment of an export transaction:
· Cash with order
Cash payment when order is placed
­
· Confirmed irrevocable letter of credit
A letter of credit issued by the importer's bank and confirmed by a bank, usually in the exporter's
­
country. The obligation of the second bank is added to the obligation of the issuing bank to honor
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International Marketing ­ MKT630
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drafts presented in accordance with the terms of credit.
· Unconfirmed irrevocable letter of credit
A letter of credit issued by the importer's bank. The issuing bank still has an obligation to pay.
­
· Revocable letter of credit
A letter of credit that may be withdrawn from the beneficiary at any time without prior notice to
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the exporter. It does not carry a bank's obligation to pay.
· Sight Draft
­ A draft so drawn as to be payable on presentation to the drawee (usually the buyer).
· Time Draft
­ A draft maturing at a certain fixed time after presentation or acceptance.
· Open Account
­ No draft drawn; transaction payable when specified on invoice.
· Consignment
­ A shipment that is held by the importer until the merchandise has been sold, at which time
payment is made to the exporter.
Other export documents / terms:
· A bill of lading
is a contract between the exporter and the shipper indicating that the shipper has accepted
­
responsibility for the goods and will provide transportation in return for payment.
­ A straight bill of lading is non-negotiable.
­ A shipper's order bill of lading is negotiable; it can be bought, sold or traded while the goods are
still in transit, (title of goods can change hands) - normally the original bill of lading is needed to
take possession of goods.
· Air way bill ­ a contract between the exporter and the air-cargo company.
· Country of origin certificate ­ certifying where the goods were manufactured
· Commercial invoice / Consular invoice from consulate office of importing country in importing
country language
· LC margin ­ a percent of payment of the total import amount paid by the importer to his bank for the
bank to issue a letter of credit for the whole value of the import
· Pre-Shipment inspection ­ inspection of the goods done by or on behalf of the importer before the
shipment
· Export packing list ­ a list in the export documents listing the packaging and items in each packing
· Insurance certificate ­ issued by an insurer for the insurance of the export merchandise
· Export / Import registration ­ required in various countries to allow firms to import or export goods
· Export / Import license ­ a license needed in some countries for specific imports or exports
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International Marketing ­ MKT630
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· Freight forwarder ­ a company involved in packing and shipment of export goods
· Customs / Clearing Agent ­ company involved in dealing with the customs clearance of imported or
exported goods
· Bonded warehouse ­ a designated warehouse where imported goods may be stored prior to the
payment of import duties. Importers pay customs duties when they take the goods out of the bonded
warehouse
· Marking of the shipments ­ markings on the outer packaging of the export consignment for the
purpose of identification
· Marine cargo insurance (special one time / open policy) ­ export goods' insurance for the
transportation
· Containers ­ metal containers ( normally 20 or 40 feet long) for safe transportation of cargo by sea
· Bulk-break ­ normally goods are transported by sea in large metal containers ­ some exporters may
not have enough cargo to fill a container then the cargo companies combine cargos from a number of
exporters to fill a container for shipment to a destination
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Table of Contents:
  1. OVERVIEW OF INTERNATIONAL MARKETING:Domestic marketing, Multinational marketing, Globalization of markets
  2. INETRNATIONAL MARKETING PROCESS:Situation Analysis, Implementation and Control, Relationship
  3. INETRNATIONAL MARKETING PROCESS:The Product Concept, The Societal Marketing Concept
  4. INETRNATIONAL MARKETING PROCESS
  5. ENGAGING IN INETRNATIONAL MARKETS:Expansion of technology, Merchandize export and import
  6. INTERNATIONAL TRADE & INVESTMENT THEORIES:Theory of Comparative Advantage, Country Similarity Theory
  7. INTERNATIONAL TRADE & INVESTMENT THEORIES:Global Strategic Rivalry Theory,
  8. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:Foreign exchange info
  9. INTERNATIONAL MARKETING INFORMATION REQUIREMENTS:The Product
  10. FOREIGN NATIONAL ENVIRONMENTS:Political systems in the world, Political risks in international markets
  11. FOREIGN NATIONAL ENVIRONMENTS:Types of legal systems,
  12. FOREIGN NATIONAL ENVIRONMENTS:Conciliation, Mediation, Global relevance
  13. ROLE OF GOVERNMENTS IN INTERNATIONAL MARKETS:Industry-level needs, Promotion of exports by governments
  14. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:The concept of culture, Attitudes & beliefs,
  15. INTERNATIONAL CULTURAL AND SOCIAL ENVIRONMENTS:Culture is a human medium
  16. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Political Environment
  17. DETERMINING EXPORT POTENTIAL IN INTERNATIONAL MARKETS:Product Potential
  18. INTERNATIONAL MARKETING RESEARCH PROCESS:market structure, Implementing the research plan
  19. INTERNATIONAL MARKETING RESEARCH PROCESS:Identify alternative information sources
  20. INTERNATIONAL MARKETING RESEARCH PROCESS:Issues with primary global research:
  21. INTERNATIONAL MARKETING RESEARCH PROCESS:Problems with data, Comparative Analysis
  22. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Export intermediaries, Export and import management
  23. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Licensing contract, Licensing risks
  24. MODES OF ENTRY INTO INTERNATIONAL MARKETS:The franchiser’s balance,
  25. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Forms of countertrade, Specialized entry modes
  26. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Demand factors, Political factors
  27. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Drivers behind successful joint ventures
  28. MODES OF ENTRY INTO INTERNATIONAL MARKETS:Distribution agreements, Critical mass & optimism traps
  29. INTERNATIONAL STRATEGIC ALLIANCES:Impetus for international alliances, Management of strategic alliances
  30. INTERNATIONAL CONSUMER MARKETS:Model of Consumer BehaviorThe Buyer Decision Process
  31. INTERNATIONAL BUSINESS MARKETS:Nature of buying unit, Major influences on international business buyers
  32. INTERNATIONAL TARGET MARKETING:Market segmentation, Market positioning
  33. INTERNATIONAL MARKET SEGMENTATION:Geographic, Behavioral, Situational factors
  34. INTERNATIONAL MARKET SEGMENTATION:Basis for country segmentation, Stages of economics development
  35. INTERNATIONAL MARKET SEGMENTATION:Cultural Variables,
  36. INTERNATIONAL MARKET SEGMENTATION:Market coverage strategy, Socio-economic variables
  37. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Individual product decisions, Branding
  38. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:
  39. INTERNATIONAL MARKETING MIX - PRODUCT POLICY:Modular Approach
  40. INTERNATIONAL MARKETING MIX – PRODUCT POLICY:Issues in labeling, Pricing, Distribution
  41. INTRODUCING NEW PRODUCTS IN INTERNATIONAL MARKETS:The new product development process
  42. PRICING IN INTERNATIONAL MARKETS:Factors influencing international pricing,
  43. ITERNATIONAL MARKETING CHANNELS:Channel membership, Vertical marketing, Control over distribution
  44. PROMOTING IN INTERNATIONAL MARKETS:Advertising, Direct marketing, Public Relationing
  45. REVISION