IB Chapter 13
contract manufacturing
an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications
manufacturer's representative
an intermediary contracted by the exporter to represent and sell its merchandise or services in a designated country or territory
countertrade
an international business transaction where all or partial payments are made in kind rather than cash
counterpurchase
back-to-back transaction or offset agreement
downstream
customer flows are also called this
indirect exporting
exporting that is accomplished by contracting with intermediaries located in the firm's home market
direct exporting
exporting that is typically achieved by contracting with intermediaries located in a foreign market
letter of credit
a contract between the banks of a buyer and a seller that ensures payment from the buyer to the seller upon receipt of an export shipment
export management company
a domestically based intermediary that acts as an export agent on behalf of a client company
draft
a financial instrument that instructs a bank to pay a precise amount of a specific currency to the bearer on demand or at a future date
foreign distributor
a foreign market-based intermediary that works under contract for an exporter
company owned subsidiary
a representative office of the focal firm that handles marketing, physical distribution, promotion, and customer service activities in the foreign market
front office activities
include downstream, customer-related services such as marketing or technical support
compensation deals
include payment in both goods and cash
back office activities
includes internal, upstream business functions such as payroll and billing
trading company
serves as an intermediary that engages in import and export of various commodities, products, and services
captive sourcing
sourcing from the firm's own production facilities
upstream
supplier flows are also called this
commercial invoice
the actual demand for payment the exporter issues when a sale is made
bill of lading
the basic contract between exporter and shipper
certificate of origin
the birth certificate of the goods being shipped and indicates the country of origin
barter
the direct exchange of goods without any money
global supply chain
the firm's integrate network of sourcing, production, and distribution, organized on a worldwide scale and located in countries where competitive advantage can be maximized
creative destruction
the idea that firms' innovative activities tend to make mature products obsolete over time
documentation
the official forms and other paperwork required in export transactions for shipping and customs procedures
business process outsourcing
the outsourcing to independent suppliers of business service functions such as accounting, payroll, human resource functions, travel services, IT services, customer service, or technical support
configuration of value-adding activity
the pattern or geographic arrangement of locations where the firm carries out value-chain activites
outsourcing
the procurement of selected value-adding activities, including production of intermediate goods or finished products, from external independent suppliers
offshoring
the relocation of a business process or entire manufacturing facility in a foreign country
incoterms
universally accepted terms of sale that specify how the buyer and the seller share the cost of freight and insurance in an international transaction and at which point the buyer takes title to the goods
insurance certificate
used to protect the exported goods against damage, loss, theft, and in some cases, delay
open account
used when the buyer pays the exporter at some future time following receipt of the goods
forfaiting
when the exporter sells its accounts receivable to a specialized financial institution to obtain financing
buy back agreement
when the seller agrees to supply technology or equipment to construct a facility and receives payment in the form of goods the facility produces
