chapter 8: global marketing amazonaws com
Friday, September 28, 12
CHAPTER 8: GLOBAL MARKETING In many industries, innovation is essential to competitiveness, giving a small company an advantage over its large-firm counterparts.
Small businesses that invest heavily in research and development often outperform their large competitors. But as R&D costs rise, they often cannot be recovered from domestic sales, and hence small firms are forced to go abroad to cover the investment costs. Companies now are focusing on emerging markets such as China and India, due to their high level of populations and potential demand.
GLOBAL CHALLENGES Companies doing business abroad are facing the following obstacles:
Obtaining adequate knowledge about exporting Identifying viable sales prospect abroad Understanding business protocols in other countries Selecting suitable and most profitable target markets Broader security regulations due to political events such as 9/11 Overwhelming trade barriers around the world
Free Trade Agreement (FTA) – an accord that eases trade restrictions between Canada and the United States, which was signed in 1989. North American Free Trade Agreement (NAFTA) – an accord that eases trade restrictions among Canada, the United States, and Mexico, which was signed in 1993. General Agreement on Tariffs and Trade (GATT) – an international agreement that aims to reduce tariffs and other trade barriers among countries.
Friday, September 28, 12 World Trade Organization (WTO) – an international organization that administers General Agreement on Tariffs and Trade and works to lower tariffs and trade barriers worldwide. INITIAL PREPARATIONS FOR GLOBAL MARKETING 1. Researching the foreign market and setting: Decide if the firm is up to the task of globalization, which implies that they first need to obtain adequate, initial exporting information. Study the different cultural, political & business practices in foreign markets. Identify viable sales prospects abroad Understand business protocols Be prepared to modify products to meet design specifications that may vary from country to country. Finally, select suitable target markets abroad 2. Setting up a sales and distribution plan. The Department of Foreign Affairs and International Trade (DFAIT): primary Canadian government agency responsible for assisting exporters. Services offered by DFAIT include:
Export Information Kit Export Counseling World Information Network for Exporters (WINS): a list of over 30,000 Canadian exporters that would like to export. International Trade Data Bank: information about international trade Overseas Trade Fairs: Financial assistance to participate in a foreign trade fair. Trade Leads and Trade Missions: essential in identifying potential customers in target markets. Internet Resources www.international.gc.ca
Trade Missions: a planned visit to a potential foreign market to introduce Canadian firms to appropriate foreign buyers and government officials, and to establish exporting relationships. Usually consist of a group of several hundred-business executives, the prime minister, several provincial primers, and other government officials. Questions to Assist a small firm considering global expansion: Marketing:
Has an export plan been prepared? Has each potential market been researched? Will your product require any design changes or packaging modifications to comply with foreign selling or packaging laws? What distinguishes your product or service from the competition; is it still competitive from a pricing viewpoint after shipping and financing costs have been included?
Friday, September 28, 12 Financial:
Can your organization allocate funds to the global activity? Will the expansion into foreign markets decrease your ability to expand or operate domestically? Are you aware of currency risks and alternative forms of export financing?
Production:
What extent of your production do you wish to export; can your facilities handle the increased demand? How does your quality control standard fit the potential global market; are you deficient?
Human Resources:
Does your organization understand the long-term commitment that exporting or foreign expansion entails? Have SMART goals been established for the export initiative? Does your staff have skills to handle foreign operations? What training is needed?
HOW ORGANIZATIONS EXPAND INTERNATIONALLY?
Other options for foreign distribution channels are identified as follows:
Sales Representatives of Agents Foreign Distributors Foreign Retailers Selling Direct to the End-User State-controlled Trading Companies Commission Agents Country-controlled Buying Agents Export Management Companies Export Merchants
Friday, September 28, 12
Export Agents
SOURCES OF FINANCING ASSISTANCE •
Getting trade information and arranging financing is often the biggest barrier to small business exporting
Direct and indirect sources of trade and financing information: 1. Private banks (letters of credit) 2. Factoring houses 3. The Export Development Corporation (EDC) Letter of Credit Process: 1. Buyer arranges for its bank to open a letter of credit 2. Buyer’s bank prepares an irrevocable letter of credit 3. Buyer’s bank sends the irrevocable letter of credit to a Canadian bank, requesting confirmation. The Canadian bank prepares a letter of confirmation to forward to the exporter. 4. Exporter reviews all conditions in the letter of credit. 5. Exporter arranges with the freight forwarder to deliver the goods to the appropriate port or airport. 6. Freight forwarder completes the necessary documents. 7. Exporter (or the freight forwarder) presents to the Canadian bank documents indicating full compliance. 8. Bank reviews the documents. Documents are forwarded to the buyer’s bank for review and transmitted to the buyer. 9. Buyer (or agent) gets the documents that may be needed to claim the goods. 10. A draft, which may accompany the letter of credit, is paid by the exporter’s bank
CHAPTER 8: GLOBAL MARKETING In many industries, innovation is essential to competitiveness, giving a small company an advantage over its large-firm counterparts.
Small businesses that invest heavily in research and development often outperform their large competitors. But as R&D costs rise, they often cannot be recovered from domestic sales, and hence small firms are forced to go abroad to cover the investment costs. Companies now are focusing on emerging markets such as China and India, due to their high level of populations and potential demand.
GLOBAL CHALLENGES Companies doing business abroad are facing the following obstacles:
Obtaining adequate knowledge about exporting Identifying viable sales prospect abroad Understanding business protocols in other countries Selecting suitable and most profitable target markets Broader security regulations due to political events such as 9/11 Overwhelming trade barriers around the world
Free Trade Agreement (FTA) – an accord that eases trade restrictions between Canada and the United States, which was signed in 1989. North American Free Trade Agreement (NAFTA) – an accord that eases trade restrictions among Canada, the United States, and Mexico, which was signed in 1993. General Agreement on Tariffs and Trade (GATT) – an international agreement that aims to reduce tariffs and other trade barriers among countries.
Friday, September 28, 12 World Trade Organization (WTO) – an international organization that administers General Agreement on Tariffs and Trade and works to lower tariffs and trade barriers worldwide. INITIAL PREPARATIONS FOR GLOBAL MARKETING 1. Researching the foreign market and setting: Decide if the firm is up to the task of globalization, which implies that they first need to obtain adequate, initial exporting information. Study the different cultural, political & business practices in foreign markets. Identify viable sales prospects abroad Understand business protocols Be prepared to modify products to meet design specifications that may vary from country to country. Finally, select suitable target markets abroad 2. Setting up a sales and distribution plan. The Department of Foreign Affairs and International Trade (DFAIT): primary Canadian government agency responsible for assisting exporters. Services offered by DFAIT include:
Export Information Kit Export Counseling World Information Network for Exporters (WINS): a list of over 30,000 Canadian exporters that would like to export. International Trade Data Bank: information about international trade Overseas Trade Fairs: Financial assistance to participate in a foreign trade fair. Trade Leads and Trade Missions: essential in identifying potential customers in target markets. Internet Resources www.international.gc.ca
Trade Missions: a planned visit to a potential foreign market to introduce Canadian firms to appropriate foreign buyers and government officials, and to establish exporting relationships. Usually consist of a group of several hundred-business executives, the prime minister, several provincial primers, and other government officials. Questions to Assist a small firm considering global expansion: Marketing:
Has an export plan been prepared? Has each potential market been researched? Will your product require any design changes or packaging modifications to comply with foreign selling or packaging laws? What distinguishes your product or service from the competition; is it still competitive from a pricing viewpoint after shipping and financing costs have been included?
Friday, September 28, 12 Financial:
Can your organization allocate funds to the global activity? Will the expansion into foreign markets decrease your ability to expand or operate domestically? Are you aware of currency risks and alternative forms of export financing?
Production:
What extent of your production do you wish to export; can your facilities handle the increased demand? How does your quality control standard fit the potential global market; are you deficient?
Human Resources:
Does your organization understand the long-term commitment that exporting or foreign expansion entails? Have SMART goals been established for the export initiative? Does your staff have skills to handle foreign operations? What training is needed?
HOW ORGANIZATIONS EXPAND INTERNATIONALLY?
Other options for foreign distribution channels are identified as follows:
Sales Representatives of Agents Foreign Distributors Foreign Retailers Selling Direct to the End-User State-controlled Trading Companies Commission Agents Country-controlled Buying Agents Export Management Companies Export Merchants
Friday, September 28, 12
Export Agents
SOURCES OF FINANCING ASSISTANCE •
Getting trade information and arranging financing is often the biggest barrier to small business exporting
Direct and indirect sources of trade and financing information: 1. Private banks (letters of credit) 2. Factoring houses 3. The Export Development Corporation (EDC) Letter of Credit Process: 1. Buyer arranges for its bank to open a letter of credit 2. Buyer’s bank prepares an irrevocable letter of credit 3. Buyer’s bank sends the irrevocable letter of credit to a Canadian bank, requesting confirmation. The Canadian bank prepares a letter of confirmation to forward to the exporter. 4. Exporter reviews all conditions in the letter of credit. 5. Exporter arranges with the freight forwarder to deliver the goods to the appropriate port or airport. 6. Freight forwarder completes the necessary documents. 7. Exporter (or the freight forwarder) presents to the Canadian bank documents indicating full compliance. 8. Bank reviews the documents. Documents are forwarded to the buyer’s bank for review and transmitted to the buyer. 9. Buyer (or agent) gets the documents that may be needed to claim the goods. 10. A draft, which may accompany the letter of credit, is paid by the exporter’s bank
