International Marketing Chapter 8

Free Trade Zones or Special Economic Zones

Geographic entities that offer manufactures simplified customs procedures, operational flexibility, and a general environment of relaxed regulations.

Harmonized Tariff System

Importers and exporters have to determine the correct classification number for a given product or service that will cross borders.

Export Selling

Involves selling the same product, at the same price, with the same promotional tools in a different place Exporting without tailoring the product, the price, or the promotional material to suit individual country requirements.

Outsourcing

Shifting production jobs or work assignments to another company to cut costs.

Nontariff trade barrier

any measure other than a tariff that is deterrent or obstacle to the sale of products in a foreign market. Also known as hidden trade barriers. Include quotas, discriminatory procurement policies, restrictive customs procedures, arbitrary monetary policies, and restrictive regulations.

Variable import levies

apply to certain categories of imported agricultural products. The effect of these levies would be to raise the price of imported products to the domestic price level.

Countervailing duties

are additional duties levied to offset subsidies granted in the exporting country.

Freight forwarders

are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules; simply put, they can be thought of as travel agents for freight.

Foreign purchasing agents

are variously referred to as buyer for export, export commission house, or export confirming house. They operate on behalf of, and are compensated by, an overseas customer known as a principal.

Export distributor

assumes financial risk. Usually represents several manufacturers and is therefore sometimes known as a combination export manager.

Export commission representative

assumes no financial risk. the manufacturer assigns some or all foreign markets to the ______.

Bill of exchange

negotiable instrument that is easily transferable from one party to another.

Two-column tariff

"general" duties plus "special" duties indicating reduced rates determined by tariff negotiations with other countries.

Ad valorem Duty

A duty that is expressed as a percentage of value of goods

Trade Show

A gathering of company representatives organized around a product, a group of products, or an industry, at which company personnel can meet with prospective customers and gather competitor intelligence.

Trade Mission

A state- or federally sponsored show outside the home country organized around a product, a group of products, an industry, or an activity at which company personnel can learn about new markets as well as competitors.

Normal Trade Relations

A trading status under WTO rules that entitles a country to have low tariff rates.

Antidumping duties

Duties imposed on products whose prices government officials deem to low.

Duties

Are listed in the schedule of rates. "Taxes that punish individuals for making choices of which their governments disapprove."

Discriminatory procurement policies

Can take the form of government rules and administrative regulations that give local vendors priority.

government assistance

Companies can avail themselves a great deal of government information concerning the location of markets and credit risks. Assistance may also be oriented toward export promotions.

Subsidies

Direct or indirect financial contributions or incentives that benefit producers.

Export Marketing

Exporting using the product offered in the home market as a starting point and modifying it as needed to meet the preferences of international target markets. Tailors the marketing mix to international customers

Specific duty

Expressed as specific amount of currency per unit of weight, volume, length, or other unit of measurement

Common Agricultural Policy

Legislation adopted by European countries after WWII to aid and protect the interests of farmers.

1. The firm is unwilling to export; it will not even fill an unsolicited export order. This may be due to perceived lack of time (too busy to fill the order") or apathy or ignorance. 2. The firm fills unsolicited export orders but does not pursue unsolicited orders. Such a firm is an export sellers. 3. The firm explores the feasibility of exporting 4. The firm exports to one or more markets on a trial basis.

Organizational Export Activities part 1 (4)

5. The firm is an experienced exporter to one or more markets. 6. After this success, the firm pursues country- or foreign-focused marketing based on certain criteria (ex: all countries where english is spoken or all countries where it is not necessary to transport by water). 7. The firm evaluates global market potential before screening for the "best" target markets to include in its marketing strategy and plan. All markets-domestic and international-are regarded as equally worthy of consideration.

Organizational Export Activities part 2 (3)

Foreign Sales Corporation

Provision in the U.S. tax code that allowed American exporters to exclude 15 percent of international sales from reported earnings. Huge tax incentive

Duty Drawback

Refunds of duties paid on imports that are processed or incorporated into other goods and re-exported. Reduce the price of imported production inputs

Export Merchants

Sometimes referred to as jobbers. These are marketing intermediaries that identify market opportunities in one country or region and make purchases in other countries to fill these needs. Ex: a ___ identifies a good source of women's boots in a a factory in China. Then purchases a large quantity of the boots and markets them in the EU or the US for example.

Pro forma invoice

Spells how much, and by what means, the exporter-seller wants to be paid.

Temporary surcharges

Surcharges introduced from time to time to provide additional protection for local industry, and in particular, in response to balance-of-payments deficits.

Tariffs

Three R's of global business: rules, rate schedules (duties), and regulations of individual countries.

Tax incentives, subsidies, export assistance, and free trade zones.

What are four activities that governments use to support and encourage firms that engage in exporting?

Documentary credits(letter of credit), Documentary collections (bill of exchange), Cash in advance, sales on open account, and sales on consignment basis.

What are some methods of exporting financing and methods of payment?

Control and communication

What are the two main advantages to direct representation in a market?

independent intermediaries

What do you use when the situation considers small sales volume?

1. An understanding of the target market environment 2. The use of marketing research and identification of market potential 3. Decisions concerning product design, pricing, distribution and channels, advertising, and communications- the marketing mix.

What does export marketing require?

Manufacturer's export agent

can act as an export distributor or as an export commission representative.

Documentary of Credit (Letter of Credit)

essentially a document stating that a bank has substituted its creditworthiness for that of the import/buyer. Next to cash in advance, this offers the exporter the best assurance of being paid.

Quota

is a government-imposed limit on restriction on the number of units or the total value of a particular product or product category that can be imported. Designed to protect domestic producers.

Documentary colection

is a method of payment that uses a bill of exchange , aka a draft.

Draft

is a payment instrument that transfers all the risk of nonpayment onto the exporter-seller.

Preferential Tariff

is a reduced tariff rate applied to imports form certain countries.

Export Management Company

is an independent marketing intermediary that acts as the export department for two or more manufacturers (principals) whose product lines do not compete with each other.

Transaction Value

is defined as the actual individual transaction price paid by the buyer to seller of the goods being valued.

Dumping

is the sale of merchandise in export markets at unfair prices.

Export Broker

receives a fee for bringing together the seller and the overseas buyer.

Cooperative exporter

sometimes called a mother hen, a piggyback exporter, or an export vendor, is an export organization of a manufacturing company retained by other independent manufacturers to sell their products in foreign markets.

Single -Column tariff

the simplest type of tariff, a schedule of duties in which the rate applies to imports from all countries on the same basis.

management vision, factor costs and conditions, customer needs, logistics, country infrastrucuture, political risk , exchange rate, availability and convertibility of local money.

what are some factors that affect sourcing?

Sourcing Decision

whether a company makes or buys its products as well as where it makes or buys its products.