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International Marketing > Chapter 8 - Importing, exporting and sourcing > Flashcards

Chapter 8 - Importing, exporting and sourcing Flashcards

1
Q

Compare and contrast export selling and export marketing

A

Export selling:
- selling the same product,
- at the same price,
- with the same promotional tools
- in a different place

Export marketing:
tailors the marketing mix to international customers

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2
Q

Identify the stages a company goes through as it gains experience as an exporter.

A
  1. The firm is unwilling to export; it will not even fill an unsolicited export order.
  2. The firm fills unsolicited export orders but does not pursue unsolicited orders. Such a firm is an export seller.
  3. The firm explores the feasibility of exporting (this stage may bypass Stage 2).
  4. The firm exports to one or more markets on a trial basis.
  5. The firm is an experienced exporter to one or more markets.
  6. The firm pursues country‐ or region‐focused marketing based on certain criteria
  7. The firm evaluates global market potential for the “best” target markets.
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3
Q

Describe the various national policies that pertain (betreffen) to imports and exports.

A
  • Most nations encourage exports and restrict imports
  • In 2014, the total was $2.8 trillion
  • European Union trade, domestic and foreign, is $3 trillion +
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4
Q

Explain the structure of the Harmonized Tariff System

A
  • Developed by the World Customs Organization * Effective January 1989 * Adopted by most trading nations * Importers & Exporters have to determine the classification number for any product moved across borders
  • Import & export numbers are the same on Schedule B
  • Meant to simplify tariff procedures but problems still arise
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5
Q

Describe the various organizations that participate in the export process. (Key Export Participants)

A
  • Foreign purchasing agents
  • Export brokers
  • Export merchants (Händler)
  • Export management companies
  • Manufacturer’s export agent
  • Export commission representative
  • Cooperative exporter
  • Freight (Fracht) forwarders
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6
Q

Identify home‐country export organization considerations (How to handle exports in home country)

A

Exports can be handled
– As a part‐time activity performed by domestic employees
– Through an export partner – Through an export department
– Through an export department within an international division
– For multi‐divisional companies; each possibility exists for each division

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7
Q

Identify market‐country export organization considerations (how to handle exports in market country)

A
  • Direct market representation – Advantages: control and communications
  • Representation by independent intermediaries – Advantages: best for situations with small sales volume
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8
Q

What are the various payment methods that are typically used in trade financing

A
  • Documentary credits (letter of credit)
  • Documentary collections (bill of exchange)
  • Cash in advance
  • Sales on open account
  • Sales on consignment basis
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9
Q

Identify the factors that global marketers consider when making sourcing decisions.

A
  • Management vision
  • Factor costs and conditions
  • Customer needs
  • Logistics
  • Country infrastructure
  • Political risk
  • Exchange rate, availability, and convertibility of local money
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10
Q

What are the requirements of export marketing?

A
  • Understanding of target market environment
  • use of market research & identification of market potential
  • Decisions concerning product design, pricing, distribution and channels, advertising, and communication
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11
Q

Explain the problems a company encounters, as it gains experience as an exporter.

A

Regarding Logistics:
- Arranging transportation
- transport rate determination
- Handling documentation
- Obtaining financial information
- Distribution coordination
- Packaging
- Obtaining insurance
- legal procedures
- Government red tape
- Product liability
- Licensing
- Customs / duty
- Contract
- Agent/distributor agreements

Regarding Servicing Exports:
- Providing parts availability
- Providing repair service
- Providing technical advice
- Providing warehousing
- Sales promotion
- Advertising
- Sales effort
- Marketing information
- Foreign market intelligence
- Locating markets
- Trade restrictions
- Competition overseas

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12
Q

Who were the top 10 clothing exporters in 2011?

A

(in $ billions)

  1. China (153.8 )
    2.Hong Kong (24.5§)
  2. Italy (23.3)
  3. Bangladesh (19.9)
  4. German (19.6)
  5. India (14.4)
  6. Turke (13.9)
  7. Vietnam (13.2)
  8. France (11.0)
  9. Spain (9.2)
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13
Q

Which government programmes support exports?

A
  • Governments that are concerned about trade deficits or economic development should educate firms about possible gains from exporting
  • Done at the national, regional & local levels
    – After WWII, Japan’s trade ministry developed export strategies
    – The China triangle (People’s Republic, Taiwan, & Hong Kong), & the four tigers‐‐Singapore, South Korea, Taiwan, & Hong Kong) learned from Japan and built strong export‐based economies
  • Tax incentives
  • Subsidies
  • Governmental assistance
  • Free trade zones
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14
Q

Name Governmental Actions to Discourage Imports and Block Market Access

A

Tariffs: 3 Rs—rules, rate schedules, & regulations * Import controls * Nontariff barriers (hidden) – Quotas – Discriminatory procurement policies – Restrictive customs procedures – Arbitrary monetary policies – Restrictive administrative & technical regulations

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15
Q

Name examples of trade barriers

A

In EU: 16,5% antidumping tariffs on shoes from China, 10% on shoes from Vietnam; quotas (Kontingente) on Chinese textiles

In China: Tariffs as high as 28% on foreign-made auto parts; expensive, time-consuming procedures for obtaining pharmaceutical import licenses

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16
Q

Explain Single-column and two-column tariff and normal trade Relations (NTR)

A
  • Single‐column tariff – Simplest type of tariff – Schedule of duties in which rate applies to imports from all countries on the same basis
  • Two‐column tariff – General duties plus special duties apply
  • Normal Trade Relations (NTR) means that countries in the WTO apply the Column 1 rates most favorable or lowest rates to all nations (with exceptions). Column 2 rates are for non‐WTO countries
17
Q

Explain the preferential tariff

A
  • Reduced tariff rate applied to imports from certain countries
  • GATT prohibits the use, with three exceptions: – Historical preference arrangements already existed
    – Preference is part of formal economic integration treaty
    – Industrial countries are permitted to grant preferential market access to LDCs
18
Q

Name 3 types of customs duties and shortly explain

A
  • Ad valorem duty – Expressed as percentage of value of goods
  • Specific duty – Expressed as specific amount of currency per unit of weight, volume, length, or other unit of measurement
  • Compound or mixed duties – Apply
19
Q

Name other duties and import charges

A
  • Anti‐dumping Duties – Dumping is the sale of merchandise in export markets at unfair prices
    – Special import charges equal to the dumping margin
  • Countervailing (Ausgleich) Duties offset subsidies (Subventionen) of the exporting country
  • Variable Import Levies (Abgaben) apply to agriculture
  • Temporary Surcharges (Zuschläge) protect local industries and are used to adjust balance of payment deficits
20
Q

Explain the documentary credit-letter of credit

A
  1. Buyer and Seller conclude a pro forma invoice or sales contrac providing for payment by documentary credit
  2. Buer instructs his bank to issue a credit in favour of the seller
  3. Issuing bank asks another bank (usually in country of seller) to advice or confirm the credit
  4. Advising or Confirming Bank informs seller that credit has been issued
  5. As soon as seller receives credit and is satisfied and can meet the T&C, he loads the goods and dispatch them
  6. Seller then sends documents evidencing the shipment to the bank where credit is available
  7. Bank checks the docs. If everything okay, bank will pay according to terms of credit.
  8. Bank sends docs to issuing bank
  9. Issuing bank checks docs and either (a) effects payments in accourdance to the terms of the credit or (b) reimburses (erstatten) in the preagreed manner the confirming bank accepted
21
Q

Explain documentary collections (Sight or time drafts)

A

Documentary Collections (Sight or Time Drafts) use a bill of exchange(draft) which is a negotiable instrument that easily transfers from one party to another
– A Bill of Exchange is a written order from one party (the drawer)directs one party (the drawee) to pay a third party (the payee)
– Different from a L/C in that the bank has no risk
– The exporter‐seller bears all the risk – Fees are lower than L/C so used in low value transactions

22
Q

Explain why using cash in advance (Vorkasse)

A
  • Credit risks abroad are high
  • Exchange restrictions in destination country may delay return of funds for a long time
  • Any other reason the seller will not extend terms
  • Not used if competitive pressures or substitute products exist
23
Q

Explain Sales on Open Account and why it’s used (Verkauf auf offene Rechnung)

A
  • Payment is after delivery
  • Used for intracorporate or subsidiary sales, exchange controls are minimal, or with longstanding customers
  • Can create a legal problem in collection without a tangible obligation
24
Q

Explain how the customs trade partnership against terrorism works

A

Die U.S. Customs and Border Patrol kontrolliert die Fracht
* C-TPAT zielt darauf ab, dass Unternehmen ihre Sicherheit und die ihrer Partner zertifizieren lassen
* Sie erhalten Inspektionspriorität

25
Q

When does it come to duty drawbacks (Zollrückerstattungen), was bewirken sie und wo wurden sie bereits genutzt?

A
  • Refunds of duties paid on imports that are processed or incorporated into other goods AND re‐exported
  • Reduce the price of imported production inputs
  • Used in the U.S. to encourage exports * After NAFTA, U.S. reduced drawbacks on exports to Canada and Mexico
  • China had to reduce drawbacks in order to join the WTO
26
Q

Explain how the management vision affects the sourcing decision

A

Some CEOs want to keep manufacturing at home (Swatch)

Some CEOs focus on high‐value‐added products rather than manufacturing sites (Canon keeps 60% in Japan)

27
Q

Explain how factor costs and conditions affects the sourcing decision

A

*The cost of land, labor & capital costs
*Labor in emerging markets less than $1 hr., But $6‐$12 in developed countries *Sometimes the cost of land, materials, & capital offset each other

28
Q

Explain how customer needs affects the sourcing decision

A

Needs can trump low cost; Dell moved call centers back to U.S. when customers complained about problems with Indian tech support

29
Q

Explain how logistics affects the sourcing decision

A

Improved transportation systems & intermodal services cut time & lower costs

30
Q

Explain how country infrastructure affects the sourcing decision

A

Power, transportation, roads, communications, service & component suppliers, a labor pool, civil order, effective government

31
Q

Explain how political factors affects the sourcing decision

A

– Political risk is higher in less developed countries in Africa, South America or Asia than in the Triad
– Protectionism at the state and federal level
* Senate passed an amendment that would prohibit certain agencies from hiring companies that used offshore call centers

32
Q

Explain how foreign exchange rates affects the sourcing decision

A

Companies try to use global sourcing to limit risk of volatile exchange rates or price levels of commodities

International Marketing (17 decks)

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