MKT 360 - Exam 3

What is licensing? What is the difference between a licensor and a licensee?

"A contractual arrangement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation." The party providing the intellectual property is called the licensor while the party receiving the intellectual property is called the licensee

*What is the only requirement an exporter has to fulfill with the U.S. government when shipping goods out of the United States under a General License?

- Declaration of the type of product, its value and its destination - Apply for SED

How do Global companies differ from International companies?

1) Market: - Global→the world - international→ individual country 2) Look For: - Global→ similarities (needs) - International→ differences (needs) 3) Mkt Strategy: - Global→ standardization - International→ adaptation 4) Satisfaction Goal: - Global→ lowest comm. denom. - International→ all needs/wants 5) Satisfaction Level: - Global→ low - International→ high 6) Pricing: - Global→ low - International→ high 7) Costs: - Global→ low (Econ. of scale) - International→ high (mfg/inv/mkt) 8) Image: - Global→ global - International→ local 9) Advantages: - Global→ integration of operations (optimize the value chain) - International→ customization

What are the 2 purposes of an Export Declaration?

1) for statistical purposes: for accounting purposes, so the US gov knows whats being exported to keep track of our economy 2) to comply with the requirements of the General License: fill out the shipper's export declaration and indicate the ECCN number (classification # of the category you are shipping)

What are the buying habits of Japanese consumers?

1)Have Brand Loyalty 2)Prefer Service and Quality Over Price 3)Make Small, Frequent Purchases in Their Neighborhood - However, this is now changing with the introduction of large supermarkets

What is an "ad valorem" duty? A specific duty? A compound duty?

1. (Most Common) Ad valorem duties, which are based on a percentage of the determined value of the imported goods based on a percentage of the determined value of the imported goods 2. Specific duties, a stipulated amount per unit weight or some other measure of quantity, applied on an item-basis; and 3. A compound duty, which combines both specific and ad valorem taxes on a particular item, that is, a tax per pound plus a percentage of value

What are the 3 types of international channel of distribution structures? What are their characteristics?

1. Import Oriented (traditional): A limited number of import middlemen control the channel. They follow a marketing philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. Customers must seek the supply of goods (no mass distribution). Seller's market. Ex. Bahamas is import oriented. Importation of food in the Bahamas is controlled by just a handful of suppliers. A seller's market,therefore food is expensive there. 2. Consumer Oriented (push): no single supplier dominates supply supply can be increased or decreased economies of scale in production buyer's market producers use many distributors to push goods to customers Mass production, economies of scale, and push it into the market 3. Integrated Logistics (pull): Distributors control the channel They use EDI (Electronic Data Interchange) to coordinate all aspects of distribution (inventory control, warehousing, transportation) The process is now one of "management of the supply chain." Ex. Walmart,you have to research

What is a draft or bill of exchange?

A document that resembles a check that you write to yourself Document that triggers the payment in an export transaction

What is a joint venture?

A joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity. Four Characteristics define joint ventures: 1)JVs are established, separate, legal entities 2)The acknowledged intent by the partners to share in the management of the JV 3)There are partnerships between legally incorporated entities such as companies, chartered organizations, or governments, and not between individuals 4)Equity positions are held by each of the partners

A product is more than a physical item; it is a bundle of ___?_____ the buyer receives.

A product is more than a physical item; it is a bundle of benefits (satisfactions) (utilities) that a buyer receives.

What are its advantages and disadvantages of a joint venture?

Advantages of Joint Ventures shared risk combined strengths of partners open doors to countries that favor local companies or prohibit foreign control avoid tariff and quota barriers. Disadvantages of Joint Ventures differences in culture & management philosophies can lead to disagreements among partners and to divorce. control and coordination of the venture can be very costly for the foreign partner. local partners can evolve into strong competitors.

What are 2 advantages and 2 disadvantages of licensing to the licensor?

Advantages to Licensor: little initial investment required attractive return for the life of the contract Disadvantages and Risks to Licensor: limited form of participating in foreign market licensees can turn into competitors in time

What are 2 advantages of exporting as a market entry strategy? What is a major disadvantage?

Advantages: simplicity, minimum financial risk Disadvantage: minimum marketing control

What are the differences between the different forms of communication strategies (advertising, sales promotions, personal selling, and public relations)?

Advertising = paid, non-personal presentation and promotion of ideas, goods, and services by an identified sponsor. Personal Selling = oral presentation in a conversation with one or more prospective purchasers for the purpose of making a sale. Public Relations = obtaining a favorable, positive image for a company, organization, products, or services. Publicity = getting commercial information about your product published in the media in the form of news. Crisis management = managing unfavorable rumors, stories, and events Sales promotions: are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation Sales promotions are short-term efforts directed to the consumer or retailer to achieve such specific objectives as consumer-product trial or immediate purchase

What are some of the legal constraints that advertisers need to overcome in international communications?

Advertising campaigns must comply with legal regulations around the world Comparative advertising is heavily regulated in other parts of the world A variety of restrictions on advertising certain products in certain countries -> pharmaceuticals is restricted in many countries, can't show drinking beer in the US Advertising on television and the time devoted to it is strictly controlled in many countries

What is the difference between an agent middleman and a merchant middleman?

Agent middlemen: represent the principal rather than themselves Works for you, represents you. They need your permission to make a sale. BEST WAY TO CONTROL MARKETING STRATEGY. Easier to control. Merchant middlemen: take title to the goods and buy and sell on their own account Doesn't work for you, works for themselves, buy and sell. More Difficult to control. Provides services to you (Storage, Transportation, Publicity, etc.)

What are the 3 most common uses for Free Trade Zones?

As long as you keep it in free trade zone you don't have to pay duties 1. Distribution 2. Manufacturing 3. Keep them there in bond,the IN-Bound System/Arrangement/warehouse(you intend to bring them in to the market but not right away to finance the duties that way)

What term of sale would be preferred by an exporter's foreign customer (the importer)?

Bank collection Time draft or Open account (CIF) or (C&F)

What problems do language differences create for the international advertiser?

Basic problem is that the meaning of words is many times not the same from one country to the other

What are the 3 purposes of a Bill of Lading?

Bill of Landing: the most important document required for establishing legal ownership & facilitating financial transactions. it is the contract between the shipper and the carrier it is a receipt indicating that the goods have been received by the carrier in good condition it is title to the goods

How disruptive of established consumption patterns is a congruent innovation? Why?

Congruent innovation - actually not an innovation at all because it causes absolutely no disruption of established consumption patterns. Example: cane sugar vs. beet sugar

What term of sale would be preferred by an exporter?

Cash in advance (Ex works) or (fob factory)

What are the usual documents required by a bank in a Letter of Credit?

Clean, On Board, Original Bill of Lading Commercial Invoice Draft / Bill of Exchange Packing List Certificates (Origin, Quality, Inspection, etc.)

What is a Commercial Invoice?

Commercial Invoice = a bill or statement of the goods being sold; it is the actual bill that the customer is going to pay *required for international transactions The bill you are going to get paid on and the one you are going to send your customer a bill that a company will send out with an order form and the charges applied

What are some common problems in Strategic Alliances?

Common problem areas : Partners have different "dreams" Imbalance between partners Differences in management philosophy Not enough people allocated to the alliance

What is "piggybacking?"

Complementary Marketers (piggybacking) - using/borrowing somebody else's distribution channel. Ex. a flash drives company piggybacks a laptop company

What is a Consular Invoice and why do countries require it?

Consular Invoice = It is a commercial invoice that has been stamped/certified by the local representative in your domestic area - obtain by a country's consulate and returned in the language of the country along with the other required documents before certification is granted Reason: Authorities in the foreign country might require it because the council might want to take a look at what is being shipped to the country and pick out stuff that is not allowed. This is only an excuse for making money.

How disruptive is a continuous innovation? What does it almost always involve?

Continuous innovation - least disruptive of consumption patterns; involves the alteration of a product resulting in a perceived improvement. "New and Improved" versions of existing products. Examples: fluoride toothpaste, disposable razors, flavors in coffee creamers.

What is countertrade?

Countertrade is a pricing tool that every international marketer must be ready to employ

What are some of the problems that international marketers face in communicating their product offerings to their target markets?

Cultural Diversity Media Limitations Productions and Cost Limitations Lack of Market Data Direct Mail Internet 1.Cultural Diversity: Ad campaigns and product brand names being communicated may mean different things to different cultures 2.Media Limitations: in some underdeveloped countries, there is a shortage of advertising media such as radio stations, print media (newspapers, magazines), and television stations, cable TV, and satellite TV 3.Production and Cost Limitations: In some markets costs are prohibitive to advertise on conventional advertising media; other countries may have low quality paper to print advertising 4.Coverage: In large, less developed countries advertising media such as television may not be geographically dispersed 5.Lack of Market Data: This makes it difficult to reach specific target markets 6.Direct Mail: Even if direct mail is available, it may not work due to high illiteracy rates in some countries 7. The Internet: Though advertising via the internet is fast increasing, the WWW is not widely available in many countries where computers are considered expensive

What does a Letter of Credit fundamentally change in an international transaction?

Delivery for good to the delivery of transactions(documents) You get paid when you delivered documents that you have deliver the product changes the nature of the transaction: from "delivery of goods" to "delivery of documents"

What kind of information should you obtain about your intended audience before preparing your advertising message?

Demographic information Age, income, gender Needs and wants Media habits Attitude towards your product

What is diffusion of innovations? What are the 3 extraneous variables that affect the rate of diffusion of an object?

Diffusion is the process by which the adoption of an innovation spreads. There are 3 extraneous variables that affect the rate of diffusion of an object: The perceived degree of newness The perceived attributes of the innovation The method used to communicate the idea

What is direct exporting? What is indirect exporting?

Direct exporting - the company sells to a customer in another country. Indirect exporting - the company sells to a buyer (importer or distribution) in the home country, who in turn exports the product.

How disruptive is a Discontinuous innovation?

Discontinuous innovation - involves establishment of new consumption patterns; creation of previously unknown products that fundamentally change the way things are done. Examples: VCR, personal computer, Internet, ATM, microwave ovens, etc.

How disruptive is a dynamically continuous innovation? What is the reaction from the consumers? Why?

Dynamically continuous innovation - some disruption of consumption patterns. Examples: electric toothbrushes, electric hair curlers, central A/C, cellular phones, freeze-dried foods.

*Where will understanding occur in a communication between two different cultures?

Ex. language ​​Where the cultural context of the sender overlaps the cultural context of the receiver

What is an Export Management Company?

Export Management Company (EMC) - becomes an integral part of the marketing operations of their clients, doing business in their name.

*What are some of the reasons why countries impose export regulations?

Export regulations may be designed to conserve scarce goods for home consumption or to control the flow of strategic goods to actual or potential enemies Reasons: 1) To comply with various regulations, the exporter may have to acquire export licenses or permits from the home country 2) To alleviate problems of exporting, the Department of Commerce has published a revised set of export regulations known as the Export Administration Regulations ( EAR)

What is included in the price in each of the following international terms of sale: FOB factory? FAS Port of Export? C&F Foreign Port? CIF Foreign Port?

FOB (free on board) - at a named inland point, at a named port of exportation, or at a named vessel and port of export. The price includes the cost of the goods and delivery to the place named Price: Cost of goods plus cost of placing them "on board" an inland carrier FAS (free alongside) - at a named US port of export. The price includes cost of goods and charges for delivery of the goods alongside the shipping vessel. The buyer is responsible for the cost of loading onto the vessel, transportation, and insurance Price: 1) Cost of goods 2) + plus cost to place them on board the inland carrier 3) plus cost of transporting the goods from the factory to "alongside" the vessel or plane at the port of shipment C&F (Cost and Freight) - to a named overseas port. It includes the cost of the goods and transportation costs to the named place of debarkation. The cost of insurance is borne by the buyer Price: 1) Cost of goods, 2) + plus all costs to transport them to port of shipment 3) + plus cost to load them on vessel or plane 4) + plus cost of freight to deliver them to the foreign port CIF (cost, insurance, freight) - to a named port of import. It includes the costs of goods, insurance, and all transportation and miscellaneous charges to the named place of debarkation includes all in C&F plus insurance

What is the difference between forfaiting and factoring?

Factoring : - When a business actually discounts their promissory notes - when you do this as a form of businesses on a regular basis (frequent) - When you do it all the time Forfaiting: - when you do it once in a while - when you discount your account receivable (your time draft) only once or once and a while (infrequent)

What are some of the services that are provided by foreign freight forwarders?

Foreign freight forwarder= Travel agent for cargo Book your cargo with your carrier Provide warehouse services Provide you with Conciliation(sharing a container so you don't have to pay for a full one of you're only using half of one) Do all your documentation Collect your letter of credit for you arranges for the shipment of goods. an indispensable agent for an exporting firm that cannot afford an in-house specialist. double-checks all assumptions made on the export declaration.

What is the difference between a license and a franchise?

Franchise is: Form of licensing where the franchisor provides a standard package of products, systems, and management services; and the franchisee provides market knowledge, capital, and personal involvement in management. The difference is that in a franchise, the item that is licensed isn't just one product, it's a package. Ex. McDonalds

How would you define innovation from a sociological point of view?

From a sociological point of view, any idea perceived as new by a group of people is an innovation.

What is full-cost pricing? How does it differ from variable-cost pricing?

Full-Cost Pricing: no unit of a similar product is different from any other unit in terms of cost, which must bear its full share of the total fixed and variable cost. Prices are often set on a cost-plus basis, i.e., total costs plus a profit margin Fixed cost = overhead= ex. Salaries, cost of heating, etc Variable-Cost Pricing: firms regard foreign sales as bonus sales and assume that any return over their variable cost makes a contribution to net profit This is a practical approach to pricing when a company has high fixed costs and unused production capacity

*What is a global brand? What advantages does using a global brand have?

Global Brands - a brand you're gonna use everywhere. Ex . apple Advantages: 1)Integration of operations. 2)Use a global brand because of brand equity→ the more global/ recognizable your brand is, the more brand equity you have.

*What are the characteristics of the Japanese distribution system?

High Density of Middlemen Channel Control by Manufacturers Business Philosophy Shaped by a Unique Culture Large-Scale Retail Store Law to Protect the Small Retailer (Daitenho) Changes Effected by the SII (Structural Impediments Initiative)

When would you use a national brand?

If a country is very ethnocentric they are going to prefer a national brand ex. in Peru the #1 cola is Inca Cola, not Coca-Cola. so, if you are Coca-COla your strategy should be to buy Inca Cola and that is what they did

What are some of the document "discrepancies" that could cause delay in payment of letters of credit?

Insufficient documents Wrong description of goods "Foul" Bill of Lading (shows damaged goods) No "On Board" Stamp Letter of Credit expired Stalemated documents (presented more than 21 days after the shipment left)

What is the dual meaning of the INCOTERMS terms of sale abbreviations?

International Commercial Terms: Rules published by the International Chamber of Commerce Abbreviations mean: 1) up to what point are costs included 2) where does title (ownership) transfer

*What are the 4 ways in which Japanese manufacturers maintain control over their channel of distribution?

Inventory Financing to Middlemen 1) carrying inventory is expensive so they finance the inventory like pay me when you sell it Cumulative Rebates to Middlemen 1) if you buy more I will give you cheaper prices Merchandise Returns of Unsold Goods Marketing Assistance to Retailers: 1)In-Store Displays 2)Advertising 3)Financial Assistance for Marketing

What is an irrevocable Letter of Credit?

Irrevocable: cannot be taken back during the period of validity Cannot be canceled or changed once it is opened

*What are some of the satisfactions (or utilities) a buyer receives from a product? Which ones of these are influenced by culture?

Its form, taste, color, odor, and texture How it functions in use The package and label The warranty and service The confidence or prestige enjoyed by the brand The manufacturer's reputation The country of origin, and Any other symbolic utility received from the possession or use of the goods. (All of them are influenced by culture)

What is the least risky term of payment that could be used by an exporter? The highest risk?

LEAST risky terms of payment = cash in advance MOST risky terms of payment = open account (or time draft)

What are some of the ways that exporters can reduce price escalation?

Lowering Cost of Goods: Firms can lower costs by eliminating costly features in products or by manufacturing products in countries where labor costs are cheaper Lowering Tariffs: Firms can lower prices by categorizing products in classifications where the tariffs are lower Lowering Distribution Costs: Firms can design channels that are shorter, have fewer middlemen, and by reducing or eliminating middleman markup Using Foreign Trade Zones: Firms can manufacture products in free trade zones where the incentive offered is the elimination of local taxes, which keep prices down

Name 3 benefits of transfer pricing to a company.

Lowering duty costs by shipping goods into high-tariff countries at minimal transfer prices so that duty base and duty are low Reducing income taxes in high-tax countries by overpricing goods transferred to units in such countries; profits are eliminated and shifted to low-tax countries Facilitating dividend repatriation when dividend repatriation is curtailed by government policy by inflating prices of goods transferred

What is usually the "quid pro quo" of an exclusive territory agreement when negotiating a contract with a middleman?

Middlemen will ask you for exclusive territory and in return you should ask for exclusive representation. Exclusive dealing: If I give you the exclusive of the product, you must only sell my product and not my competitors' products at the same time exclusive dealing = if they will be your exclusive representative then they have to promise that they will only represent your country they want an exclusive terriroty- they want to be your exclusive representative in that country. but IN RETURN you ask for exclusive dealing

What is penetration pricing and what is its objective?

Penetration Pricing: This is used to stimulate market growth and capture market share by deliberately offering products at low prices It is used to acquire and hold share of market

What is a "sight draft"?

Needs to be paid immediately "Sight Draft" = Due and payable at sight (when presented at the bank)- the minute it hits the foreign bank they take the money out of the buyers account and pay your bank - done if your credit isn't good -Looks like a check but you write it to yourself

Is a Letter of Credit a guarantee of payment to the seller?

No, Letter of credit is not guarantee you will be paid, it is only guarantee IF you present the right documents bc of discrepancies, like: insufficient documents, foul bill of lading (indicates damaged goods) stalemated documents (presented more than 21 days after the shipment left)

Is a Letter of Credit a guarantee of delivery of the goods purchased by the buyer?

No, because of fraud

*What is "noise" in the communication channel?

Noise. Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process and affect any or all of the other six steps Anything that interferes with the message

What is gray marketing? What factors contribute to gray marketing?

On account of competition, firms may have to charge different prices from country to country In international marketing, this causes a vexing problem: Parallel Importation or Gray Markets Parallel imports develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer's regular distribution system The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets You can prevent Gray marketing by not giving/distributing excess inventory to your distributor so they can't take their excess to go to another country with it Parallel imports can do long-term damage in the market for trademarked products Customers who unknowingly buy unauthorized imports have no assurance of the quality of the item they buy, of warranty support, or of authorized service or replacement parts If a product fails, the consumer blames the owner of the trademark, and the quality image of the product is sullied Companies can restrict the gray market by policing distribution channels In some countries firms get help from the legal system

What is dumping and how does the WTO punish it?

One approach classifies international shipments as dumped if the products are sold below their cost of production The other approach characterizes dumping as selling goods in a foreign market below the price of the same goods in the home market World Trade Organization (WTO) rules allow for the imposition of a duty when goods are dumped Anti-dumping laws

What are the advantages and disadvantages of Foreign Direct Investment?

Ownership by either acquisition or start-up. Start a subsidiary. Advantages: greater control; avoid communication and conflict of interest problems of partnership higher profits technology transfer access to market; avoidance of tariff or quota barriers; faster expansion in the market very fast entry in the case of an acquisition Disadvantages: acquisitions need to be integrated into the worldwide organization. Expensive (it's the most expensive way to go into a foreign market) requires major commitment of managerial time and energy long-term; may clash with short-term profitability goals

What are some of the factors that lead to price escalation in foreign markets?

Price escalation refers to the added costs incurred as a result of exporting products from one country to another There are several factors that lead to higher prices: Costs of Exporting: the term relates to situations in which ultimate prices are raised by shipping costs, insurance, packing, tariffs, longer channels of distribution, larger middlemen margins, special taxes, administrative costs, and exchange rate fluctuations Taxes, Tariffs, and Administrative Costs: These costs results in higher prices, which are generally passed on to the buyer of the product Inflation: Inflation causes consumer prices to escalate and the consumer is faced with rising prices that eventually exclude many consumers from the market Middleman and Transportation Costs: Longer channel length, performance of marketing functions and higher margins may make it necessary to increase prices Exchange Rate Fluctuations and Varying Currency Values: Currency values swing vis-à-vis other currencies on a daily basis, which may make it necessary to increase prices

What is transfer pricing?

Prices of goods transferred from a company's operations or sales units in one country to its units elsewhere, which refers to intracompany pricing or transfer pricing, may be adjusted to enhance the ultimate profit of the company as a whole Four arrangements for pricing goods for intra company transfer are as follows: 1)Sales at the local manufacturing cost plus a standard markup 2)Sales at the cost of the most efficient producer in the company plus a standard markup 3)Sales at negotiated prices 4)Arm's-length sales using the same prices as quoted to independent customers

*What is a private brand? What are 3 reasons that make private labels formidable competitors?

Private Brand: Brands that belong to distributors, either wholesalers, or retailers. Reasons why private labels are formidable competitors in international markets: 1)They provide the retailer with high margins 2)They receive preferential shelf space and strong in-store promotion 3)They are quality products at low prices

What is a Pro Forma Invoice?

Pro Forma means to inform, not buy; it is a sample invoice that is requested by the person you are going to export to A pro forma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. - invoice is prepared ahead of time FOR FORMALITIES ONLY.→ you don't pay this one, it just gives you an idea of what the final invoice is going to look like - Done for info purposes because buyer needs the info to arrange for importation of goods -you take your regular invoice and write Pro Forma on top which means "don't pay"/"Informed only"

What kind of strategic alternative for geographic expansion does the global launch of the Gillette Sensor shaving system represent?

Product & Communication Extension (Dual Extension) What it is: to sell in world markets exactly the same product, with the same advertising and promotional appeals used in the home market. Successes: PepsiCo, Gillette Sensor ("The Best a Man Can Get" advertising message). The same image everywhere, keep everything the same in every country because their markets are similar around the world.

What kind of strategic alternative for geographic expansion is the development by Hallmark of new greeting cards in Europe with no prepared message and cellophane wrapping?

Product / Communication Adaptation (Dual Adaptation) What it is: local conditions, preferences, function, and receptivity to advertising appeals differ from home country. Successes: Hallmark greeting cards in Europe: no prepared message, card wrapped in cellophane.

What kind of strategic alternative for geographic expansion is the use of different formulations overseas but the same "Put a Tiger in Your Tank" appeal for Exxon gasoline?

Product Adaptation / Communication Extension: What it is: same advertising appeal, but product is adapted to local needs/tastes. Exxon gasoline: different formulations, but same "Put a Tiger in Your Tank" appeal.(same image but not same gas) Kellogg's Mueslix cereal: same health appeal, but different formulation in USA.

What kind of strategic alternative for geographic expansion is the sale of USA bicycles, motor scooters and outboard marine motors in overseas markets? Of USA lawn and garden power equipment? Of Perrier mineral water in the USA?

Product Extension / Communication Adaptation What it is: same physical product as home country, used in the same way, but filling a different need, serving a different function, and used by a different segment. This results in product transformation. uccesses of Product Extension / Communication Adaptation: USA overseas sales of bicycles, motor scooters and outboard marine motors (recreation in USA, basic transportation elsewhere). USA lawn and garden power equipment (as agricultural equipment in LDCs) Perrier mineral water in USA (staple product in Europe vs. chic beverage here)

What kind of strategic alternative for geographic expansion is the development by Colgate of their new global toothpaste Total?

Product Invention What it is: adapted products may work well for multinational markets, but satisfying the needs of global customers may require the creation of an entirely new product , and its promotion through a global advertising campaign. Successes: Colgate's new Total toothpaste for global market (perceived as a global brand).

What are the 3 components of a product? What are the elements that are included in each component?

Products provide benefits at 3 different levels: Core Component(core benefit): the basic benefit provided by the tangible product Ex. Product Platform, Design Features, Functional Features, & Legal. Packaging Component: additional intangible (psychological) benefits. Ex. Trademark, Brand Name, Legal, Price, Quality, Package, & Styling. Support Services Component: additional benefits from services. Ex. Repair and Maintenance, Installation, Instructions, Other Related Services, Deliveries, Warranty, Spare Parts, & Legal.

What are the 5 characteristics of an innovation as perceived by the intended market?

Relative Advantage - the perceived marginal value of the new product relative to the old. Compatibility - with acceptable behavior, norms,values, etc. Complexity - perceived difficulty of use Trialability - the perceived degree of economic or social risk associated with product use. Observability - how easily can product benefits be communicated?

How does a Strategic Alliance differ from a joint venture?

SIA = a business relationship established by two or more companies to cooperate out of mutual need, and to share risk in achieving a common objective - (it is just an agreement to cooperate)- it is not a joint venture and not a license - they are sought out as a way to decrease weaknesses and increase competitive strengths Main Characteristics: -** participants remain independent from each other - relationship is reciprocal; participants share benefits and control - they are ongoing, horizontal contributions in technology, product, and other key strategic areas - the vision and efforts are global

What are consortia? How do they differ from joint ventures?

Similar to a joint venture except: They typically involve a large number of participants, and They frequently operate in a country or market in which none of the participants is currently active Consortia are developed to pool financial and managerial resources and to lessen risks. Examples: Large construction projects Airbus Industrie - France, Germany, Great Britain, Spain Sematech - semiconductor R&D shared by members (IBM, Intel, TI, Motorola, HP, etc.)

What is skimming pricing and what is its objective?

Skimming Pricing: This is used to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for a product

Under the new "Large-scale Retail Store Location Act" in Japan, who is taken out of the approval process?

Structural Impediments Initiative Creates a new "Large Scale Retail Store Location Act" as of June 2000, as follows: takes MITI out of the approval process relaxes restrictions on opening large stores near small shops abolishes restrictions on number of days stores must be closed (i.e., allows stores to be open on Sundays) however, local government has the authority to block construction on environmental grounds (pollution, traffic congestion, noise)

Who is presently mainly responsible for ensuring that EAR regulations are not violated?

The Exporter

What are some of the types of assets that can be licensed?

The licensed asset may be a patent, trade secret, or company name.

*What are the 4 different categories of degree of newness as perceived by a market?

The more innovative a product is perceived to be, the more difficult it is to gain market acceptance(people resist it). A critical factor in the perceived newness of a product is its effect on established patterns of consumption and behavior. On that basis, innovations can then be classified as: Congruent innovations Continuous innovations Dynamically Continuous innovations Discontinuous innovations

What are the 4 different types of countertrade transactions?

There are four distinct transactions in countertrading, which include: Barter: is the direct exchange of goods between two parties in a transaction Compensation deals: is the payment in goods and in cash Counter-purchase or off-set trade: the seller agrees to sell a product at a set price to a buyer and receives payment in cash and may also buy goods from the buyer for the total monetary amount involved in the first contract or for a set percentage of that amount, which will be marketed by the seller in its home market Buy-back: This type of agreement is made the seller agrees to accept as partial payment a certain portion of the output that are produced from the plant or machinery that are sold to the buyer

What happens in a "forfait" transaction?

This is an Accounts receivable (asset, something of value) Discounting the accounts receivable - paying interest to the bank Forfait = A time draft is given to the bank as an asset and the exporter is able to borrow money against it with interest if in need of cash: Generally, the exporter forfaits the receivable at a discount. This improves cash flow but reduces income. if you need money now then you sell the "time draft" before the time is up for them to pay, ie. discounting account receivable

What Department of the U.S. government regulates exports? Where would you find information on the present U.S. licensing requirements for exports?

To alleviate problems of exporting, the Department of Commerce has published a revised set of export regulations known as the Export Administration Regulations (EAR)

Under the original "Large-scale Retail Store Law," who judged first on proposals for stores larger than 500 square meters in Japan? Who also had to unanimously approve the plan?

Under Large-scale Retail Store Law (Daitenho) Its Purpose: To Protect the Small Retailer Any Retail Store Over 500 Sq Meters (5,382 Sq. Ft.) needs approval from the MITI (Ministry of International Trade & Industry) and the prefectural (county) government to: 1)Build a store 2)Expand an existing store 3)Change Operating Hours 4)Change Days Closed Also, Local Retailers must unanimously approve plan

*You have purchased a car from a dealer in Miami. Where does title get transferred in each of the following terms of sale:EX-WORKS? FOB factory? FOB factory with freight allowed to Miami?FOB Miami dealership? FAS Port of Miami? CIF Foreign Port?

When the goods are ready for collection at the seller's premises on the date agreed upon. When the goods are placed "on board" the inland carrier When the goods are unloaded from the carrier at the inland destination When the goods are at the Port of Shipment and in the hands of the air or ocean carrier When the goods are on board the vessel or plane at the Port of Shipment

What is a subsidy and how does the WTO punish it?

When the government form a foreign country pays for the exporting of a foreign product to make the product more competitive in the foreign country The WTO considers it as a unfair strategy/practice So they raise the taxes and duties (countervailing duties) A countervailing duty or minimum access volume (MAV), which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies whether in production, export, or transportation

What is the Total Cost Approach in international logistics management?

When you're planning your logistical system(total warehousing and distribution procedure) rely on total cost and not just the transporting You should consider all costs when planning distribution, not just the cost of transportation Total cost is the sum of the costs of: 1) cost of transportation 2) cost of warehousing 3) cost of inventory

How is ownership of the goods determined in an export transaction?

Whoever has ORIGINAL bill of lading is the owner of the goods at that time therefore, you the exporter are the owner of the goods so you should never give the original copy of the bill of lading away until you get paid

What are the 3 types of Certificates and their characteristics?

a) Certificate of Origin: Declaration that says what is the origin of these goods. Where were they made? b) Certificate of Quality: Says the quality of the product. quality / grade / purity c) Certificate of Inspection: Hire a company to check the items put in the container to certify it's what you bought.says that the container actually has what it says it does. Used to prevent smuggling or fraud

What is "country of origin effect (COE)"? How does ethnocentrism affect COE? How does degree of industrialization affect COE?

a) Country of Origin Effect (COE): The image(acceptance) that a product gets from where it is made(manufactured). b) Ethnocentrism: The feeling that your culture is superior. If you are a very ethnocentric country, you will prefer your countries product. c) Industrialization: Countries that are more industrialized have a better image of quality

What are the two types of export licenses granted by the United States?

a) General License: 95% of everything that goes out of the U.S. goes under this license. All you have to do is fill out this document. - Permits exportation of certain products that are not subject to EAR control with nothing more than a declaration of the type of product, its value, and its destination b) Validated License: Other 5%, for strategic reasons are validated. - Issued only on formal application, is a specific document authorizing exportation within specific limitations designated under the EAR

What are the benefits of a Global orientation?

a)Optimization of the value chain: In global marketing you assign each element of the value chain to the subsidiary that does it best. b) Economies of Scale in Production and Marketing c) Transfer of Experience and Know-How across Countries d) Uniform Global Image e) Control and Coordination of Operations

What is a "clean" Bill of Lading?

it is one that does shows no damage to the goods A bill of landing issued by a carrier declaring that the goods have been received in an appropriate condition- no damage

*What does a Letter of Credit do to a buyer's credit risk?

it substitutes the credit of the buyer with the credit of the buyers bank a letter of credit DECREASES a buyer's risk

What is a "foul" Bill of Lading?

shows damaged goods; means that the goods were received with damage Bill of landing with a notation that indicates damage or shortage of goods.

What is a norazi agent?

smugglers

Who is responsible for the cost of cargo insurance in a C&F transaction?

the BUYER is responsible for the insurance in a C&F

How is a draft typically used in international commercial payments?

you write a check to yourself and put the accounts to be charged as the buyer(whoever is paying you) You deposit it at your bank and it gets collected at your buyers bank Seller deposits draft in his bank, who sends it to the buyer's bank for collection →the bill of exchange gets deposited in your bank here (sellers bank) then the sellers bank sends it to buyer bank for collect