1) Countries benefit a lot based on their facilitating of export and import business. For example, China has attracted increased foreign investment from DaimlerChrysler, Hewlett-Packard, GM, and other similar corporations by accommodating them to set up production facilities that will support local sales as well as exports to world markets. Governments commonly use four activities to support and encourage firms that engage in exporting. These are tax incentives, subsidies, export assistance, and free trade zones. Tax incentives treat earnings from export activities preferentially either by applying a lower rate to earnings or by refunding taxes already paid on income associated with exporting. Also, tax benefits are offered by governments which may include tax exemption or tax deferral on export income, accelerated depreciation of export-related assets, and generous tax treatment of overseas market development activities. Governments also support export performance by providing outright subsidies. Subsidies are direct or indirect financial contributions or incentives that benefit producers. Governments also provide assistance to exporters. Companies can avail themselves of a great deal of governmental information concerning the location of markets and credit risks. Assistance may also be oriented toward export promotion. Various agencies at different levels hold trade fairs and trade missions designed to promote sales to foreign customers. In an effort to facilitate exports, countries are designating certain areas as "free trade zones" and particular "special economic zones." These zones are geographic entities that offer manufacturers simplified customs procedures, operational flexibility, and a general environment of relaxed regulations. Thus, these ways are very helpful and have helped several companies. 2) Export marketing targets the customer in the context of the total market environment. The export marketer does not simply take the domestic product "as is" and sell it to international customers. To the export marketer, the product offered in the home market represents a starting point. It is then modified as needed to meet the preferences of international target markets. In order to formulate a good exporting strategy the following points should be considered:
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 channels, advertising, and communications-the marketing mix.
The export marketer should also set prices to fit the marketing strategy and does not merely extend home-country pricing to the target market. Charges incurred in export preparation, transportation, and financing must be taken into account in determining prices. Finally, the export marketer also adjusts strategies and plans for communication and distribution to fit the market. In other words, effective communication about product features or uses to buyers in different export markets may require creating brochures with different copy, photographs, or artwork.
4) In order to promote domestic industries and agriculture and restrict the inflow of materials from unfavored nations, some governments impose certain barriers. The tariffs, which can be regarded as the three R's of global business: rules, rate schedules, and regulations, are imposed by countries. Duties can be imposed on goods and services, thereby making it difficult for importers to import as well as for consumers to buy. A Harmonized Tariff System (HTS) has been adopted by the majority of trading nations, under which importers and exporters have to determine the correct classification number for a given product or service that will cross borders. This classification helps in the identifying of the product and applicable tariff. A nontariff (NTB) can also be imposed which is any measure other than a tariff that is a deterrent or obstacle to the sale of products in a foreign market. This includes quotas, discriminatory procurement policies, restrictive customs procedures, arbitrary monetary policies, and restrictive regulations. A quota is a government-imposed limit or restriction on the number of units or the total value of a particular product or product category that can be imported. In addition, discriminatory procurement policies can take the form of government rules and administrative regulations specifying that local vendors or suppliers receive priority consideration. Customs procedures are also considered restrictive if they are administered in a way that makes compliance difficult and expensive. Discriminatory exchange rate policies are imposed to distort trade in much the same way as selective import duties and export subsidies. Finally, restrictive administrative and technical regulations can create barriers to trade. These may take the form of antidumping regulations, product size regulations, and safety and health regulations. Some of these regulations are intended to keep out foreign goods; others are directed toward legitimate domestic objectives. 6) There are two main categories of customs duties. Their calculation method is the differentiating factor. They may be calculated either as a percentage of the value of the goods (ad valorem duty), as a specific amount per unit (specific duty), or as a combination of both of these methods. An ad valorem duty is expressed as a percentage of the value of goods. The definition of customs value varies from country to country. An exporter has to determine the duty applicable and the method used for calculations. For countries under GATT conventions the customs value is landed cost, insurance, and freight amount at the port of importation. On the other hand, a specific duty is expressed as a specific amount of currency per unit of weight, volume, length, or other unit of measurement. Specific duties are usually expressed in the currency of the importing country, but there are exceptions, particularly in countries that have experienced sustained inflation. Both ad valorem and specific duties are occasionally set out in the custom tariff for a given product. Compound or mixed duties provide for specific, plus ad valorem, rates to be levied on the same articles. 8) Key export entities include purchasing agents, export brokers, and export merchants. They have no responsibility from the client. Others are export management companies, manufacturer's export representatives, export distributors, and freight forwarders. They are assigned responsibilities by the exporter. Foreign purchasing agents operate on behalf of, and are compensated by, an overseas customer known as a "principal." They generally seek out the manufacturer whose price and quality match the specifications of their principal. They often represent governments, utilities, railroads, and other large users of materials. Purchases may be completed as domestic transactions with the purchasing agent handling all export packing and shipping details, or the agent may rely on the manufacturers to handle the shipping arrangements. The export broker receives a fee for bringing together the seller and the overseas buyer. This fee is usually paid by the seller. The broker takes no title to the goods and assumes no financial responsibility. A broker usually specializes in a specific commodity, such as grain or cotton, and is less frequently involved in the export of manufactured goods. Export merchants are sometimes referred to as "jobbers" and they identify market opportunities in one country or region and make purchases in other countries to fill these needs. They typically buy unbranded products directly from the producer or manufacturer. The export merchant then brands the goods and performs all other marketing activities, including distribution. "Export management company" is the term used to designate an independent marketing intermediary that acts as the export department for two or more manufacturers whose product lines do not compete with each other. It may act as an independent distributor, purchasing and reselling goods at an established price or profit margin. It may also act as a commission representative taking no title or financial risk. Manufacturer's export agent acts as an export distributor or as an export commission representative. On the other hand, an export distributor assumes financial risk, whereas the export commission representative assumes no financial risk. The cooperative exporter is an export organization of a manufacturing company retained by other independent manufacturers to sell their products to foreign markets. Freight forwarders are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules. A licensed forwarder receives brokerage fees or rebates from shipping companies for booked space. 9) Outsourcing refers to shifting production jobs or work assignments to another company in order to cut costs. When the outsourced work moves to another country it becomes "global outsourcing" or "offshoring." Due to intense competition in the marketplace, more and more companies are under pressure to lower costs. One way to do this is to locate manufacturing or consumer relation activities in China, India, Philippines, or other low-wage countries. In theory, this situation bestows great flexibility on companies and in reality, the consumer is unaware of the country where a product is manufactured or service is delivered. However, in the case of call centers, consumers get in direct contact with the service provider or its representative. Call centers also perform outbound services such as telemarketing. A variety of tasks such as airline reservation, completing tax returns, reading medical charts, and drawing up manufacturing blueprints are done by persons who do the job at a fraction of the cost compared to what it will cost in the home country. The decision to use outsourcing requires careful analysis since saving cost may not be the only factor for success of many products or services. This requires careful consideration of management's vision, costs and conditions, customer needs, logistics, country infrastructure, political factors, and foreign exchange rates. In formulating a sourcing strategy, company managers and executives should also recognize the declining importance of direct manufacturing labor as a percentage of total product cost. For example, Compaq found that the human labor portion in manufacturing a PC is only about 15 minutes. Thus, the cost involved in saving human labor is not as high as one would imagine and outsourcing may not be the best choice for all products or services. Also, the company image and customer loyalty can be adversely affected if outsourced
services are not quality conscious.
10) Walt Disney Company generates nearly $15 billion in annual revenues from licensed merchandise, thanks to the popularity of their theme parks, movies, and television shows, as well as Mickey Mouse, Winnie the Pooh, and other popular characters which have gained familiarity all over the world. Licensing is a contractual arrangement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation. There are two key advantages associated with licensing as a market entry mode. First of all, because the licensee is typically a local business that will produce and market the goods or services on a local or regional basis, companies can circumvent tariffs, quotas, or similar export barriers. Secondly, licensees are granted considerable autonomy by the licensor to freely adapt the licensed goods to an extent to suit the local tastes and preferences. Disney licenses trademarked cartoon characters, names, and logos to producers of clothing, toys, and watches for sale throughout the world. This allows Disney to create synergies based on its core theme park, motion pictures, and television businesses. Its licensees have considerable leeway to adapt colors, materials, or other design elements that fit with the local tastes of a particular country or region. 13) Many companies have experienced difficulties, some serious, when working with partners under joint venture agreement. Anheuser Busch first entered the Japanese market in order to cross the difficult barrier by entering into a licensing agreement with Suntory, the smallest of the brewers in Japan. Although Budweiser became popular, it had a minuscule share of the market. Anheuser-Busch then created a joint venture with Kirin Brewery, the market leader with a 90 percent stake in the venture. Kirin's distribution channel was very helpful, and Anheuser-Busch was able to use some of Kirin's facilities. On the other hand, Kirin gained a lot of knowledge about the beer market globally. The beer market did not increase substantially for Anheuser-Busch, and the joint venture was losing money. Finally, Anheuser-Busch decided to dissolve the joint venture and reverted to a licensing agreement with Kirin. Thus, joint venture does not work in all circumstances and at times licensing works as well. In order for the joint venture relationship to work well, both partners must share rewards as well as risks. The main disadvantage associated with joint venture is that a company may incur very significant costs associated with control and coordination issues that arise when working with partners in another country. Another disadvantage is that of potential for conflict between partners. These often arise out of cultural differences. Corning Glass and Vitro, Mexico's largest industrial manufacturer had a joint venture. Mexican managers viewed the Americans as too direct and aggressive, whereas the American managers believed Mexicans took too much time to make important decisions. Another disadvantage is that a dynamic joint venture partner can evolve as a stronger competitor. GM and South Korea's Daewoo had joint venture to produce cars for the Korean market. GM developed Daewoo's competitiveness, and finally Daewoo terminated the venture since their cars were not allowed for exportation. Thus, all the disadvantages have to be taken into account when entering into a joint venture agreement. 14) Recent changes in the political, economic, socio-cultural, and technological environments of the global firms have prompted the need for strategies that are more current rather than the traditional strategies. Trade barriers are less, global markets are more accessible, consumer needs and wants have changed, product life cycles have shortened, and new communication technologies and trends have emerged. These factors may provide unprecedented opportunities. However, there are strong strategic implications for the global organizations and new challenges for the global marketer. All these converging environmental forces or changes require different unprecedented global strategies that take into account collaborations which were not thought of at any period of time. Today's competitive environment is described as turbulent, dynamic, and unpredictable. Global firms are under intense pressure to respond and adapt quickly. They have to pursue "entrepreneurial globalization" by developing unique and flexible organizational capabilities, innovation, and updating global strategies that take care of the demands 18) Global marketers must understand the importance of visual aesthetics embodied in the color or shape of a product,
label, or package. Also, aesthetic styles, such as the degree of complexity found on a label, are perceived differently
in different parts of the world. For example, it is mentioned that German wines would be more appealing in the
export market if the labels were simplified. Aesthetic elements that are deemed appropriate, attractive, and
appealing in one's home country may not be liked or may be perceived differently in other countries. Moreover,
there are certain colors and shapes which are culturally liked or disliked in different countries. In some cases, colors
that are accepted worldwide are preferable. For example, the yellow color of Caterpillar's corporation or the red
color of Marlboro is widely accepted. In China, red color is preferred, and white is considered as an unlucky color.
Packaging aesthetics are particularly important to the Japanese. The way a package is wrapped and presented is
very important for Japanese consumers.
19) A brand is a complex bundle of images and experiences in the consumer's mind. Brands perform two important
functions. First, they represent a promise by a particular company about a particular product and secondly, brands
enable customers to better organize their shopping experiences by helping them seek out and find a particular
product. Customers integrate all their experiences of observing, using, or consuming a product with other aspects
that they obtain from a variety of published and verbal information. Perceptions can be based on price, after-sale
service, distribution, and a variety of other experiences. The sum of these impressions becomes a brand image
which is actually a mental image of both the product as well as the company. Brand equity represents the total
value that accrues to a product as a result of a company's cumulative investments in the marketing of the brand.
Companies develop logos, distinctive packaging, and other communication devices to provide visual
representations of their brands. A local product or local brand is one that has achieved success in a single national
market. A global product meets the wants and needs of a global market. A true global product is offered in all
world regions. A global brand has the same name and, in some instances, a similar image and positioning
throughout the world. Thus, global products and global brands are different.
22) In global marketing, consumer perceptions play a very important role. Such perceptions contribute to what is
referred to as the "country-of-origin" effect. They become part of a brand's image and contribute to its brand equity.
This is particularly true for product categories that are most commonly consumed such as automobiles, electronics,
fashion, recorded music, food, and other products. The country of origin effect can be positive or negative. Of
course, positive ones add to the brand's image and contribute to its brand equity. For example, Swiss watches,
French wines, or Japanese cars are well known. Perceptions are hard to change, and it takes time for perceptions to
set. The manufacturing reputation of a particular country can change over time. Korea's image has improved
greatly in recent years. It is expected that some national brands developing from Asian countries will have an
impact. Sometimes one brand can lead in forming a country of origin affect. Nokia phones, for example, have made
Finland popular, and products coming from there will have the quality impression that has been formed by Nokia.
Also, recently the "Made in Mexico" image has become popular. For some product categories, foreign products have
a substantial advantage for just being foreign. Global marketers should utilize the opportunity to bank on the
special qualities of the products which are well known for their country of origin. If a country's manufacturers
produce high-quality products that are nonetheless perceived to be of low quality then one has to disguise the
foreign origin of the products. In any case, marketers should consider the impact that country of origin has and act
27) Marketing channels exist in order to create utility for customers. These utilities can be place utility, time utility,
form utility, or information utility. Thus, the selection of a marketing channel depends on the target market which a
manufacturer is planning to reach. Various companies have used innovative channel distribution methods.
Distribution channels are systems that link manufacturers to customers. Although channels for consumer products
and industrial products are similar, there are also some distinct differences. In business-to-consumer marketing
(B2C) consumer channels are designed to put products in the hands of consumers. In the case of business-tobusiness
(B2B), industrial channels deliver products to manufacturers or other types of organizations that use them
as inputs in the production process or in other types of operations. Agents and distributors are commonly used as
intermediaries. With the increased use of technology, peer-to-peer (p-to-p) marketing is becoming popular,
whereby individual consumers market products to other individuals. eBay pioneered a form of online commerce
which has gained popularity, and many companies are using it as a channel for distribution. Door-to-door selling
has been a traditional channel which is also currently in use. For example, in Japan, auto manufacturers use doorto-door
selling. Another direct selling alternative is the manufacturer-owned store or independent franchise store.
In many countries where manufacturers cannot own stores, franchising is a very popular method. Other channel
structure alternatives for consumer products include various combinations of a manufacturer's sales force and
wholesalers calling on independent retail outlets. Piggyback marketing is another channel innovation whereby one
manufacturer obtains product distribution by utilizing another company's distribution channels.
28) Channel innovation can be an essential element of a successful marketing strategy as noted in the case of Dell
computers, which began as a b-to-b marketer. The business model proved to be very successful, that the company
began marketing direct to the home PC market. This strategy may not work for other products, particularly where a
complicated system or mechanism is involved. Before deciding which system to use, marketers must study each
country individually. In general, if the market is large, it is more feasible to use a manufacturer's own sales force.
Piggyback marketing is a good example of another channel innovation that has grown in popularity. In this type of
marketing, one manufacturer obtains product distribution by utilizing another company's distribution. Both parties
can benefit by increasing the total revenue generated by the channel members. Successful piggyback marketing
requires that the combined product lines be complementary. They must appeal to the same customer and must not
compete with each other. Several companies have taken advantage of the opportunity to piggyback with Avon,
which has a network of direct sales representatives in over 100 countries. Several of Mattel's toy lines are being
marketed in China by local Avon representatives. In Australia, New Zealand, Brazil, Canada, and France, Avon
representatives offer Reader's Digest subscriptions along with Avon's health and beauty products. In emerging
markets, Avon offers a second catalog featuring products from Timex, Duracell, Time-Life, and others. Thus,
piggyback products already account for 15% of sales in some emerging markets.
32) The categories for global retailing can be visualized in the form of a matrix. One axis of the matrix represents
private or own-label focus versus a manufacturer brands focus. The other axis differentiates between retailers
specializing in relatively few product categories and retailers that offer a wide product assortment. IKEA, Benetton,
and Gap fall under quadrant A, which contains global retailers with a niche focus as well as an own-label focus. In
quadrant B, the private-label focus is retained, but many more product categories are offered. This is the strategy of
Marks & Spencer whose strategy, Michael private label, is found on a broad range of clothing, food, home
furnishings, jewelry, and other items. Retailers in the upper right quadrant offer many well-known brands in a
relatively tightly defined merchandise range. Such businesses include Toys "R" Us, Virgin, and others. These types
of stores tend to quickly dominate smaller established retailers by out-merchandising local competition and offering
customers superior value. Carrefour, Walmart, and Promodes and similar businesses fall in the fourth quadrant.
They offer the same type of merchandise available from established local retailers. Thus, there are different
strategies that can be followed based on different criteria.
33) There are four market entry expansion strategies available to retailers that wish to cross borders. These strategies
can be visualized by a matrix that differentiates between (a) markets that are easy to enter versus those that are
difficult to enter; and (b) culturally close markets versus culturally distant ones. The upper half of the matrix
encompasses quadrants A and D and represents markets in which shopping patterns and retail structures are
similar to those in the home country. In the lower half of the matrix, quadrants C and B represent markets that are
significantly different from the home country market in terms of one or more cultural characteristics. The right side
of the matrix, quadrants A and B, represents markets that are difficult to enter because of the presence of strong
competitors, location restrictions, excessively high rent or real estate costs, or other factors. In quadrants C and D,
any barriers that exist are relatively easy to overcome. The four entry strategies indicated by the matrix are organic,
franchise, chain acquisition, and joint venture. Organic growth occurs when a company uses its own resources to
open a store on a greenfield site or to acquire one or more existing retail facilities from another company.
Franchising is the appropriate entry strategy when barriers to entry are low yet the market is culturally distant in
terms of consumer behavior or retailing structures. In global retailing, acquisition is a market-entry strategy that
entails purchasing a company with multiple retail locations in a foreign country. This strategy can provide the
buyer with quick growth as well as access to existing brand suppliers, distributors, and customers. Joint ventures,
the final entry strategy, are advisable when culturally distant, difficult-to-enter markets are targeted. The strategy is
to collaborate with some local company as a joint venture.
34) As the statement describes, it has become very easy to have raw product in one country which can be transported to
several countries for processing or finishing, and then sold all over the world. IKEA, the global furniture
manufacturer, purchases wood and other raw material inputs from a network of suppliers located in several
countries. The wood is then transported to the factories, which add value to the inputs by transforming them into
furniture kits that are then shipped on to IKEA's store. The stores are downstream in IKEA's value chain. Thus,
there is a continuous global involvement from raw materials, to factories, retail distribution and finally to
consumers. The most important distribution activities are order processing, warehousing, inventory management,
and transportation. Order processing includes order entry, handling, and delivery. Proper inventory management
ensures that a company neither runs out of manufacturing components or finished goods nor incurs the expense
and risk of carrying excessive stocks at any time. Warehouses are used to store goods until they are sold. Finally,
transportation plays a big role in the movement of products. The transportation can be by rail, trucks, air, or ships.
35) The ongoing political upheaval in the Middle East has highlighted the importance of flexibility in global supplychain
design. For example, in spring 2011, P&G was forced to briefly close plants in Egypt that supply products for
South Africa. During the closure, production from plants in Hungary and Turkey was redirected to supply the
South African market. Such incidents explain why supply-chain managers use a term borrowed from the military,
VUCA, to describe places that are "volatile, uncertain, complex, and ambiguous." Walmart's mastery of logistics
and supply-chain management is an important source of competitive advantage. The retailing giant's basic value
proposition is simple: getting goods to people as efficiently as possible. To do this, Walmart exploits a core
competency: leveraging its vast customer database to know and anticipate what customers want and getting it to
them quickly and efficiently. In short, alternatives and alternative routes should always be taken into consideration
when undertaking marketing globally.