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Questions and Answers
Questions and Answers
How might a country's approach to capitalism and political freedom, as perceived by other nations, most significantly impact its economic relationships with Hong Kong and Taiwan?
How might a country's approach to capitalism and political freedom, as perceived by other nations, most significantly impact its economic relationships with Hong Kong and Taiwan?
- It primarily influences philanthropic investments and cultural exchange programs.
- It determines the rate of technological advancement within their manufacturing sectors.
- It dictates the volume of tourist traffic towards these regions.
- It can either foster or hinder continued economic collaboration, trade, and investment. (correct)
Considering the economic trajectories of ASEAN countries, what strategic interplay of government actions and economic decisions best explains their transformation from cheap-labor economies to industrialized nations?
Considering the economic trajectories of ASEAN countries, what strategic interplay of government actions and economic decisions best explains their transformation from cheap-labor economies to industrialized nations?
- Aggressive pursuit of foreign direct investment coupled with currency manipulation to maintain export competitiveness.
- Strict protectionist policies combined with heavy investment in resource extraction.
- Centralized planning focusing on agricultural self-sufficiency and large-scale infrastructure projects.
- Deregulation, liberalization, privatization, a shift to manufacturing, specialization in high-value components, and leveraging external technology and capital sources. (correct)
How can global and international companies' strategies affect customer satisfaction and operational costs differently when addressing diverse market needs?
How can global and international companies' strategies affect customer satisfaction and operational costs differently when addressing diverse market needs?
- Global companies maximize satisfaction by focusing on basic common needs and employing standardized strategies to lower operational costs, whereas international companies adapt to individual market differences, potentially increasing satisfaction but also raising costs. (correct)
- International companies avoid customization to maintain low costs.
- Both global and international companies achieve similar satisfaction levels, but global companies always incur lower operational costs due to their scale of operations.
- Global companies enhance satisfaction with customized products, incurring higher operational costs, while international companies lower satisfaction with standardized products to minimize costs.
What multifaceted role does a 'global orientation' play in optimizing a company's value chain and facilitating international business operations?
What multifaceted role does a 'global orientation' play in optimizing a company's value chain and facilitating international business operations?
In what ways could stringent regulatory environments and protectionist measures complicate the execution of foreign direct investment (FDI) strategies, particularly concerning ownership and control?
In what ways could stringent regulatory environments and protectionist measures complicate the execution of foreign direct investment (FDI) strategies, particularly concerning ownership and control?
How do cultural perceptions and beliefs about a product's country of origin (COO) affect a global brand's market entry approach, particularly when consumer ethnocentrism is a significant factor?
How do cultural perceptions and beliefs about a product's country of origin (COO) affect a global brand's market entry approach, particularly when consumer ethnocentrism is a significant factor?
How does a product's perceived degree of innovation influence its market acceptance, and what specific strategies can companies use to mitigate resistance to highly innovative products?
How does a product's perceived degree of innovation influence its market acceptance, and what specific strategies can companies use to mitigate resistance to highly innovative products?
What strategic considerations and adaptations are essential for a company aiming to implement a dual extension strategy in geographic expansion, especially when facing diverse consumer preferences and cultural nuances?
What strategic considerations and adaptations are essential for a company aiming to implement a dual extension strategy in geographic expansion, especially when facing diverse consumer preferences and cultural nuances?
In the context of international marketing, how does the strategic choice between product adaptation and product invention reflect a company's commitment to meeting the needs of global customers?
In the context of international marketing, how does the strategic choice between product adaptation and product invention reflect a company's commitment to meeting the needs of global customers?
How do differences in channel control and inventory management philosophies between import-oriented and consumer-oriented distribution systems impact market access and supply chain efficiency for international firms?
How do differences in channel control and inventory management philosophies between import-oriented and consumer-oriented distribution systems impact market access and supply chain efficiency for international firms?
How do cultural values and regulatory frameworks in a specific market impact the structure and operational dynamics of its distribution system, and what adaptations might international firms need to make?
How do cultural values and regulatory frameworks in a specific market impact the structure and operational dynamics of its distribution system, and what adaptations might international firms need to make?
What strategic implications arise for international firms navigating the Japanese distribution system, considering the interplay of manufacturer control, unique cultural factors, and regulatory mechanisms like the Large-Scale Retail Store Law?
What strategic implications arise for international firms navigating the Japanese distribution system, considering the interplay of manufacturer control, unique cultural factors, and regulatory mechanisms like the Large-Scale Retail Store Law?
What are the strategic challenges and benefits for international businesses when employing 'piggybacking' as an export entry mode, considering the potential for both synergistic gains and risks of channel conflict?
What are the strategic challenges and benefits for international businesses when employing 'piggybacking' as an export entry mode, considering the potential for both synergistic gains and risks of channel conflict?
How do export regulations, specifically those enforced by the U.S. Department of Commerce through the Export Administration Regulations (EAR), impact a company's international market entry strategy, and what steps are necessary for compliance?
How do export regulations, specifically those enforced by the U.S. Department of Commerce through the Export Administration Regulations (EAR), impact a company's international market entry strategy, and what steps are necessary for compliance?
What is the strategic significance of INCOTERMS in international sales contracts, and how does their correct application mitigate risks related to ownership transfer and cost allocation between buyers and sellers?
What is the strategic significance of INCOTERMS in international sales contracts, and how does their correct application mitigate risks related to ownership transfer and cost allocation between buyers and sellers?
What are the implications of document discrepancies in letters of credit, and what proactive measures can exporters take to minimize the risk of payment delays or rejections due to such discrepancies?
What are the implications of document discrepancies in letters of credit, and what proactive measures can exporters take to minimize the risk of payment delays or rejections due to such discrepancies?
In what ways does utilizing Free Trade Zones (FTZ) strategically influence a company's global supply chain operations, and what considerations are paramount when integrating FTZs into distribution and manufacturing networks?
In what ways does utilizing Free Trade Zones (FTZ) strategically influence a company's global supply chain operations, and what considerations are paramount when integrating FTZs into distribution and manufacturing networks?
How has the digitization of international trade processes impacted the role and function of export management companies (EMCs), and what new competencies are required for EMCs to remain competitive?
How has the digitization of international trade processes impacted the role and function of export management companies (EMCs), and what new competencies are required for EMCs to remain competitive?
Considering the dynamics of global supply chains, how can firms leverage a 'total cost approach' in international logistics management to optimize efficiency and reduce expenses?
Considering the dynamics of global supply chains, how can firms leverage a 'total cost approach' in international logistics management to optimize efficiency and reduce expenses?
What strategic considerations should guide a global company's decision to use a global brand versus a national brand in a specific market, particularly when considering consumer ethnocentrism and local market dynamics?
What strategic considerations should guide a global company's decision to use a global brand versus a national brand in a specific market, particularly when considering consumer ethnocentrism and local market dynamics?
In what ways can modifications to the characteristics of a product, such as its form, taste, color, or texture, affect its acceptance and success, particularly in the context of diverse cultural preferences and market conditions?
In what ways can modifications to the characteristics of a product, such as its form, taste, color, or texture, affect its acceptance and success, particularly in the context of diverse cultural preferences and market conditions?
What challenges do international retailers face when adapting their business models and practices to align with the unique buying habits and preferences of Japanese consumers, and how do these patterns affect their operations?
What challenges do international retailers face when adapting their business models and practices to align with the unique buying habits and preferences of Japanese consumers, and how do these patterns affect their operations?
What are the key considerations for companies when choosing between direct and indirect exporting as market entry strategies, and how do these choices affect the level of control and financial risk assumed by the company?
What are the key considerations for companies when choosing between direct and indirect exporting as market entry strategies, and how do these choices affect the level of control and financial risk assumed by the company?
How does licensing allow the licensor to secure a return on their assets while limiting direct engagement in foreign markets?
How does licensing allow the licensor to secure a return on their assets while limiting direct engagement in foreign markets?
How does a strategic international alliance differ from a joint venture, and what unique challenges do these alliances face?
How does a strategic international alliance differ from a joint venture, and what unique challenges do these alliances face?
What circumstances justify the use of a national brand instead of a global one?
What circumstances justify the use of a national brand instead of a global one?
What happens when one fails to comply with EAR?
What happens when one fails to comply with EAR?
What should the exporter ensure to avoid delays?
What should the exporter ensure to avoid delays?
What is the role of foreign freight forwarders?
What is the role of foreign freight forwarders?
Questions and Answers
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Flashcards
Flashcards
Four Asian Tigers
Four Asian Tigers
Hong Kong, Singapore, South Korea and Taiwan.
Key to Hong Kong's economic progress
Key to Hong Kong's economic progress
China's attitude towards capitalism and political freedom.
Average growth of China's GDP
Average growth of China's GDP
6.2% in 2019 and 7.7% in 2024
China's GDP growth target
China's GDP growth target
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Minimum discretionary income in China
Minimum discretionary income in China
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Business environment in India
Business environment in India
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Keys to ASEAN's Transformation
Keys to ASEAN's Transformation
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Global vs. International Companies
Global vs. International Companies
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Benefits of a Global Orientation
Benefits of a Global Orientation
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Direct Exporting
Direct Exporting
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Indirect Exporting
Indirect Exporting
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Advantages/Disadvantages of Exporting
Advantages/Disadvantages of Exporting
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Licensing
Licensing
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Licensor
Licensor
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Licensee
Licensee
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Assets that can be Licensed
Assets that can be Licensed
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Licensing Advantages/Disadvantages
Licensing Advantages/Disadvantages
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Difference between License and Franchise
Difference between License and Franchise
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Adapting Products
Adapting Products
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Joint Venture
Joint Venture
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Advantages of a Joint Venture
Advantages of a Joint Venture
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Consortia
Consortia
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Advantages of Foreign Direct Investment
Advantages of Foreign Direct Investment
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Disadvantages of Foreign Direct Investment
Disadvantages of Foreign Direct Investment
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Strategic International Alliance
Strategic International Alliance
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Problems in Strategic Alliances
Problems in Strategic Alliances
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Global Brand
Global Brand
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When to use a national brand
When to use a national brand
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Private Brand
Private Brand
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Congruent Innovations
Congruent Innovations
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Study Notes
Study Notes
The Asia Pacific Region
- The Four Asian Tigers are Hong Kong, Singapore, South Korea, and Taiwan.
- Continued economic progress in Hong Kong and Taiwan hinges on China's attitude towards capitalism and political freedom.
- China's GDP has grown at an average of 6.2% (2019) and 7.7% (2024) in the last 25 years.
- The Chinese government targets a minimum GDP growth of 7%.
- Economists believe a minimum discretionary income of $5,000 is necessary to sustain a market economy in China.
- India's business environment is still difficult.
- The transformation of ASEAN members from cheap-labor countries to industrialized nations was aided by four major events:
- ASEAN governments' commissions to deregulation, liberalization, and privatization of their economies
- The decision to shift from commodity-based to manufacturing-based economies
- The decision to specialize in manufacturing components with a comparative advantage
- Japan's emergence as a major provider of technology and capital
Global Marketing Management: Planning and Organization
- Global companies and international companies differ in how they operate and serve customers.
- Global companies prioritize similarities in customer needs worldwide, using the same marketing strategy, offering low prices, and focusing on large-scale operations to minimize costs.
- Global companies may have lower customer satisfaction because they focus on basic needs. Conversely, international companies concentrate on individual countries, adapting strategies for higher satisfaction but at higher costs.
- Global orientation benefits:
- Economies of scale in production of marketing
- Transfer of experience and know-how across countries
- Uniform global image
- Control and coordination of operations
- The series of operations done (adding value)
- Optimization of value chain: Each element of the value chain can be assigned to the entity that does it best, in a global setting
- Direct exporting involves selling directly to a customer in another country, exemplified by Walmart.
- Indirect exporting involves selling to a domestic buyer (importer or distributor) who then exports the products.
- Exporting advantages as a market entry strategy: simplicity and minimal financial risk.
- Exporting disadvantage: lack of control.
- Licensing is a contractual arrangement where one company (licensor) provides an asset to another (licensee) for royalties, license fees, or other compensation.
- Licensor gives the license and Licensee gets the license
- Types of assets that can be licensed: patents, trade secrets, and company names
- Licensing advantages: Little initial investment required and attractive return for the life of the contract
- Licensing disadvantages: Limited form of participation in the foreign market and licensees can turn into competitors over time.
- A franchise provides a standard package of products, systems, and management services.
- The franchisee provides market knowledge, capital, and personal involvement in management.
- Master franchise and licensing individual franchisee (contract based) are two types of franchise.
- A joint venture is a partnership of two or more companies that create a separate legal entity.
- Joint venture advantages:
- Sharing the risk
- Combined strengths of partners
- Open doors to countries that favor local companies or prohibit foreign control
- Avoid tariff and quota barriers
- Joint venture disadvantages:
- Differences in culture and management
- Control and coordination can be costly for the foreign partner
- Local partners evolving into strong competitors
- Consortia are similar to joint ventures but typically involve a larger number of partners and often operate in a country or market where none of the participants are currently active.
- Consortia examples:
- Large construction projects like the Hoover Dam during the Great Depression
- Airbus Industrie involving France, Germany, Great Britain, and Spain
- Sematech: semiconductor R&D shared by members like IBM, Intel, TI, Motorola, and HP.
- Foreign Direct Investment (FDI) involves ownership by either acquisition or start-up.
- FDI advantages:
- Greater control
- Higher profits
- Technology transfer
- Access to market through tariff or quota barrier avoidance
- Fast entry through acquisition
- FDI disadvantages:
- Acquisitions needing integration into the worldwide organization
- High expense
- Requiring major commitment of managerial time and energy
- Being long-term and potentially clashing with short-term profitability goals
- A strategic international alliance (SIA) is a business relationship established by two or more companies cooperating out of mutual need to share risk while achieving a common objective.
- Common problems in Strategic Alliances:
- Partners having different "dreams"
- Imbalance between partners
- Differences in management philosophy
- Not enough people allocated to the alliance
Products and Services for Consumers
- Global brands are brands used the same way everywhere like Coca-Cola or Tide.
- National brands are used when people are ethnocentric, such as Inca Kola in Peru.
- The "country of origin effect (COE)" is the perception people have of a product based on where it is made.
- Ethnocentrism and the degree of industrialization influence COE
- A private brand belongs to a distributor such as a retailer.
- Private brands are formidable competitors due to high retailer margins, preferential shelf space and strong in-store promotion, and quality products at low prices.
- A product is more than a physical item. It is a bundle of benefits (satisfactions) (utilities) that a buyer receives.
- Some of the satisfactions (or utilities) a buyer receives from a product that are influenced by culture include:
- Form, taste, color, odor, and texture
- How it functions in use
- The package and label
- The warranty and service
- Any symbolic utility received from the possession or use of the goods
- Innovation from a sociological point of view is any idea perceived by a group of people; perception.
- Diffusion of innovations is the process by which the adoption of an innovation spreads.
- 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
- Four categories of degree of newness as perceived by a market:
- Congruent innovations:
- Not an innovation because the innovation does not change consumption patterns or behavior
- Example: Cane sugar vs. beet sugar
- Continuous innovations:
- Least disruptive of consumption patterns involves the alteration of a product resulting in a perceived improvement, called "new and improved" versions of existing products
- Examples: Fluoride toothpaste, disposable razors, flavors in coffee creamers
- Dynamically continuous innovations:
- Generally disruptive of consumption patterns, creates a fundamental change in the core features of a product where the same people use it for the same purpose. It is resisted because old patterns of behavior must change.
- Discontinuous innovations:
- Involves establishing a new consumption pattern, not changing anything but learning a new way to behave/think
- Examples: VCR, personal computer, internet, ATM, microwave ovens etc.
- The more innovative a product is perceived to be, the more difficult it is to gain market acceptance.
- Congruent innovation is not disruptive of established consumption patterns.
- Continuous innovation is the least disruptive, involving perceived improvements to an already existing product.
- Dynamically continuous innovation is generally disruptive, and consumers may react positively because it doesn't involve drastic changes.
- Five 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 and norms and values, how well something matches existing practices.
- Complexity - how consumers perceive the product's complexity.
- Trialability - the perceived degree of economic or social risk associated with product use.
- Observability - How easily product benefits can be communicated.
- Dual extension strategy for geographic expansion involves advertising a product the same way it is done locally.
- Extending product and communication to a market.
- Pepsico, Gillette sensor (“the best a man can get' advertising message)
- Failures of dual extension:
- Campbell soup in the UK (tomato soup needs a bitter taste in this country).
- Cake mix in the UK (resisted because housewives considered it departure from their traditional role as family nurturers).
- Philip Morris in Canada (Canadians prefer a “straight” Virginia leaf cigarette, don't like “blended” cigarettes).
- Knorr dehydrated soups in the USA (15-20 minutes to cook).
- Categories for services:
- Inseparable: Creation cannot be separated from consumption.
- Heterogeneous: Individually produced and virtually unique.
- Perishable: Once created, it cannot be stored and must be consumed simultaneously.
- Intangible: Cannot be perceived through the senses the same way a good can.
- Three components of a product:
- Core
- Packaging component
- Services
- ALL CAN BE ADAPTED OR STANDARDIZED
- The global launch of the Gillette Sensor shaving system represents a dual extension strategy for geographic expansion, extending product and communication to market.
- The sale of USA bicycles, motor scooters, and outboard marine motors in overseas markets, the sale of USA lawn and garden power equipment, and the sale of Perrier mineral water in the USA constitute product extension/communication adaptation.
- Product extension/communication adaptation Examples:
- 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).
- Utilizing different formulations overseas but the same "Put a Tiger in Your Tank" appeal for Exxon gasoline is an example of product adaptation/communication extension.
- Same advertising appeals but the product is adapted to local needs/taste.
- Examples:
- Exxon gasoline: different formulations, but same "Put a Tiger in Your Tank" appeal.
- Kellogg's Mueslix cereal: same health appeal, but different formulation in USA.
- Development by Hallmark of new greeting cards in Europe with no prepared message and cellophane wrapping is product/communication adaption (dual adaptation). Local conditions, preferences, functions, and receptivity to advertising appeals differ from the home country.
- Development by Colgate of their new global toothpaste Total is product invention.
- 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 promoting it through a global advertising campaign.
- Colgate's new Total toothpaste for the global market (perceived as a global brand).
International Marketing Channels
- Three types of international channel of distribution structures:
- Import oriented (traditional)
- A limited number of import middlemen control the channel
- Follow 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
- Example: The Bahamas
- Consumer-oriented (push) system
- No single supplier dominates the channel
- Lots of distributors, produce in large quantities, and push them to other distributors
- Example: FINISH (Japan)
- Integrated logistics (pull) system
- pull system used in more modern areas
- Distributors control the channel
- 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.”
- Physical Distribution (JIT) - KEEP inventory flowing as needed, just in time, shelf replenished just as customer approaches - Uses data interchange in order to make the process more efficient, especially with third-party selling? - Important in global business - Management of the supply chain
- Characteristics of the Japanese distribution system:
- High Density of Middlemen
- 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)
- Channel controlled by manufacturers
- Four ways Japanese manufacturers maintain control over their channel of distribution:
- Inventory Financing to Middlemen
- Cumulative Rebates to Middlemen
- Merchandise Returns of Unsold Goods
- Marketing Assistance to Retailers:
- In-Store Displays
- Advertising
- Financial Assistance for Marketing
- Buying habits of Japanese consumers:
- Brand loyal
- Prefer service and quality over price
- Make small, frequent purchases in their neighborhood
- This is changing with the introduction of large supermarkets
- Under the original "Large-scale Retail Store Law," the MITI (Ministry of International Trade & Industry) and the prefectural (county) government judged first on proposals for stores larger than 500 square meters in Japan and had to unanimously approve the plan:
- Approval is needed from MITI to:
- Build a store
- Expand an existing store
- Change Operating Hours
- Local retailers must unanimously approve plan
- Takes months to years for approval
- Under the new "Large-scale Retail Store Location Act" in Japan.
- Takes MITI out of the approval process
- Agent middlemen take responsibility for a producer's goods in a city, regional market area, entire country, or several adjacent countries, but do not take physical possession and title to goods.
- Merchant middlemen take ownership of goods they purchase for resale, making their profit from the difference between the buying and selling price, including retailers and wholesalers.
- An Export Management Company (EMC) comprises people who specialize in export knowledge and become an integral part of the marketing operations of their clients, doing business in their name.
- "Piggybacking" (complementary marketing) involves using somebody else's distribution channel, contacting a company with experience in similar distribution who will handle your exporting for a price.
- Norzi agents smuggle products through “backdoor” because high tariffs cause smuggling.
- Countries impose export regulations to conserve scarce goods for home consumption or control the flow of strategic goods to potential enemies.
- The Department of Commerce regulates exports and information on U.S. licensing requirements for exports can be found in the Export Administration Regulations (EAR).
- Two types of export licenses granted by the U.S.:
- General license permit requires filing a particular document
- Validated license is issued only on formal application, a specific document authorizing exportation within specific limitations designated under the EAR.
- 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 is a shipper's export declaration.
- The party mainly responsible for ensuring EAR regulations are not violated is the shipper.
- A commercial invoice is a required document for export and import clearance and includes:
- Who your customer is
- Where you are shipping to
- List of what the items include
- Pro Forma Invoice: Not defined
- A Consular Invoice is a commercial invoice that has been stamped by the local consulate.
- The two purposes of an Export Declaration:
- Statistical purposes
- Compliance with the requirements of the General License
- Three types of Certificates:
- Certificate of inspection
- Requires an independent inspector to watch loading of the containers to avoid fraud
- Certificate (statement) of origin
- Determines what tariffs to assign the product based on country
- Must be notarized and paid
- Certificate of quality/grade/purity
- A document certifying the characteristics of a substance, ensuring specific standards are met.
- Three purposes of a Bill of Lading:
- 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.
- Indicates the title to the goods
- Identifies who owns the goods at what time
- The bill of lading is the title for goods being transported, basically a receipt, contract, or document of certification.
- Ownership of goods in an export transaction is determined by whoever has the bill of lading.
- A "clean" Bill of Lading does not show any damage to the goods.
- A “foul” Bill of Lading shows evidence of damage to the goods, noted on the bill of lading after inspection
- Tariffs calculations
- Ad Valorem (ad value)- based on a percentage of the determined value of the imported goods
- Specific Duties - stipulated amount per unit weight or some other measure of quantity. A dollar per pillow
- Compound duty- Combines both specific and ad valorem taxes on a particular item.
- INCOTERMS determine where the ownership changes hands and up to what point are the costs included
- The buyer has to buy the insurance in a c and f transaction
- An exporter would prefer Ex-Works because its easy and the money will be received upfront
- An exporter's foreign customer would prefer C&F or CIF.
- Least risky payment term: Cash in advance
- Most risky payment term: Open account
- Letter of credit is
- A conditional contract for payment
- A separate contract from the sales contract
- Substitutes the credit of the buyer with the credit of the buyer's bank
- Issued only within 30 day Increments, NOT FOREVER
- Costs money
- A Letter of Credit substitutes the credit of the buyer with the credit of the buyer's bank, which can then be "confirmed” by a bank in the seller's country.
- A Letter of Credit fundamentally changes the nature of the transaction from “delivery of goods” to “delivery of documents".
- Typical Letter of Credit documents required by bank:
- Clean, On Board, Original Bill of Lading - The title to the goods
- Commercial Invoice
- Draft/Bill of Exchange is like a check written to yourself, charged to their bank and account #, endorsed and deposited to your account
- Packing List
- Certificates (Origin, Quality, Inspection, etc.)
- An irrevocable Letter of Credit can not be taken back once the letter is opened
- A Letter of Credit is not a guarantee of payment to the seller because there could be discrepancies
- Listed in the document
- A Letter of Credit "discrepancies" that could delay payment include:
- Insufficient documents
- Wrong description of goods/Misspelling
- "Foul” Bill of Lading (shows damaged goods)
- No "On Board" Stamp
- Letter of Credit expired
- Stalemated documents
- A draft (or bill) of exchange is a check you write to yourself
- In a Forfait transaction, an seller discounts their time draft not regularly
- Factoring:To Do this all the time as a method of doing business
- Forfaiting: Do this only once and a while
- In FAS port of Miami, the transfer of title is when the car is offloaded from the truck and into the hands of the carrier
- In CIF Foreign Port, title transfer is when the automobile is places on board the ship
- In EX-WORKS, title is transferred when the buyer comes to pick it up at the factory
- In FOB Factory, title is transferred when you place the automobile on top of the truck
- In FOB factory with freight allowed to Miami, title is transferred the same as FOB factory
- Three most common uses for Free Trade Zones:
- Distribution centers (free trade zones)
- Manufacturing (free ports)
- In-bond facilities (postpone payment of duties)
- No duties paid because it never entered commerce of the United States
- To avoid duties keep in In bond facility if product is in US liquor distribution
- The Total Cost Approach in international logistics management:
- A decision involving one activity affects the costs and efficiency of one or all others:
- Total cost of the system is defined as the sum of the costs of all of these activities.
- Some services provided by foreign freight forwarders:
- Arranges for the shipment of goods as the agent for an exporter, free of cost because the forwarders get a % of commission
- Example: Liquor distributor in the US who wants to go worldwide and buy liquor, to sell later
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