Finding Piggyback Partners in Indirect Exporting - In Like Industries Chapter 8
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Questions and Answers

What is the main challenge in qualifying partners for indirect exporting?

  • Deciding on pricing strategies
  • Verifying the partners' products and familiarity with piggyback exporting (correct)
  • Setting up marketing and customer support expectations
  • Determining the market demand

    • Which of the following is not mentioned as a potential piggyback partner for indirect exporting?

  • Current suppliers
  • Current customers
  • Competing companies that produce the same product (correct)
  • Noncompeting companies in your industry

    • What is a key pricing consideration when negotiating contracts for indirect exporting?

  • Using a target costing method based on competitors' prices
  • Offering discounts to partners to increase sales
  • Starting with the lowest price possible to mitigate price escalation impact (correct)
  • Setting high initial prices to show product quality

    • How can lower prices be achieved in foreign markets according to the text?

    <p>Lowering or omitting overhead costs</p> Signup and view all the answers

    What should be detailed in the contract regarding marketing and customer support expectations?

    <p>The type and frequency of marketing/customer support, and tenure</p> Signup and view all the answers

    Where are potential resources for finding partners listed in the text?

    <p>In trade associations and industry press</p> Signup and view all the answers

    What may be a reason for choosing piggyback partners over EMC's in terms of brand awareness?

    <p>EMC's are known for strong brand push</p> Signup and view all the answers

    Why is it cautioned to consider finding an EMC as turning international sales over to an outside company?

    <p>It may lead to loss of control over international sales</p> Signup and view all the answers

    What is one method recommended for finding an EMC according to the text?

    <p>Asking peers and gaining referrals</p> Signup and view all the answers

    Why might a firm prefer a piggyback partner over an EMC if specific industry or technical experience is required?

    <p>Piggyback partners may have the required experience</p> Signup and view all the answers

    What is one method suggested in the text for finding an EMC through international trade centers?

    <p>Using Kompass or Avention</p> Signup and view all the answers

    Why might training and warranty issues be pushed back on manufacturers instead of on EMC's?

    <p>EMC's focus on marketing support</p> Signup and view all the answers

    What is considered the second most powerful motivational tool for partners, according to the text?

    <p>Exclusivity</p> Signup and view all the answers

    What does exclusivity entail in the context of exporting?

    <p>Selling only to foreign partner in-territory</p> Signup and view all the answers

    What justifies exclusivity for a foreign partner in terms of marketing and sales development?

    <p>Conducting more marketing &amp; sales development</p> Signup and view all the answers

    What is the role of EMCs in indirect exporting?

    <p>Contacting foreign distributors and agents on behalf of the manufacturer.</p> Signup and view all the answers

    What is a significant test of loyalty between an exporter and a foreign partner?

    <p>Exclusivity preventing the sale of competing products</p> Signup and view all the answers

    What can be expected when negotiating contracts with Piggyback Partners?

    <p>Limited involvement in the foreign distribution channel.</p> Signup and view all the answers

    When should an exporter consider moving to a non-exclusive contract with a foreign partner?

    <p>When minimum sales targets are exceeded</p> Signup and view all the answers

    How do Piggyback Partners differ from EMCs in terms of product distribution?

    <p>Piggyback Partners do not know who represents the products, unlike EMCs.</p> Signup and view all the answers

    In indirect exporting, what is a common expectation when working with a Piggyback Partner?

    <p>Assuming products will be sold through the partner's existing distribution channel.</p> Signup and view all the answers

    What is a key difference between an Agent and a Manufacturing Rep in foreign partner selection?

    <p>Agents represent manufacturers, while Manufacturing Reps represent distributors.</p> Signup and view all the answers

    What is a common norm for the length of a contract in indirect exporting?

    <p>6 months renewable to an additional 6 months</p> Signup and view all the answers

    What is the norm commission rate for EMCs and sales agents in indirect exporting?

    <p>5%</p> Signup and view all the answers

    What type of insurance policy is recommended to cover errors and omissions related to exporting company products?

    <p>Errors and omissions insurance</p> Signup and view all the answers

    What motivates EMCs to invest further in a market according to the text?

    <p>Lost Profit</p> Signup and view all the answers

    Why should open discussions be held with foreign partners in indirect exporting?

    <p>To prevent legal proceedings</p> Signup and view all the answers

    What kind of contract solution is not considered the best in indirect exporting according to the text?

    <p>Global contract</p> Signup and view all the answers

    Study Notes

    Finding Partners for Indirect Exporting

    • Foreign Partner Selection: types of partners include EMCs (Export Management Companies), Piggyback Partners, Agents, Distributors, Manufacturing Reps, Strategic Alliances, and Joint Ventures.

    EMCS Versus Piggyback Partners

    • EMCs:
      • Contact foreign distributors and agents on behalf of the manufacturer
      • Greater involvement in foreign distribution channel
    • Piggyback Partners:
      • Know distribution channel
      • May not know who is representing their products
      • Assume products will be sold through their existing international distribution channel
      • May not know who is representing their products

    EMCS vs. Piggyback Partners (continued)

    • Brand Awareness:
      • Lower with Piggyback Partners
      • EMCs push brand strength
    • Customer Service:
      • Piggyback partners often chosen for their experience and international strength
      • EMCs offer sales and marketing support, while training and warranty are often pushed back on manufacturers
    • Industry and Technical Knowledge:
      • EMCs specialize in broad areas
      • If specific industry or tech experience is required, Piggyback partners may be preferred

    Finding an EMC

    • Caution: firm is effectively turning its international sales over to an outside company
    • Finding an EMC is like finding an employee
    • Requires networking, asking peers, gaining referrals, and searching industry associations, trade journals, and the internet

    Finding a Piggyback Partner

    • Obvious partners: manufacturers in your domestic market whose products are enhanced or complemented by yours
    • Main challenge: qualifying partners
    • Will they sell the product under your brand or not?
    • Will they represent your product?
    • How will they do so?
    • Potential partners: current customers, suppliers, noncompeting companies in your industry, and competing companies that don't produce the product you want to export

    What to Expect When Negotiating Contracts

    • Pricing considerations:
      • Partners always want to begin with the lowest price possible
      • Pricing strategies: cost plus, marginal cost/price point penetration, target costing method
      • Ensure lower pricing results in lower prices in foreign markets
    • Marketing and customer support considerations:
      • Detail bi-lateral expectations in contract
      • Type/frequency of marketing/customer support and tenure
      • Warranty issues, product services, and use and ownership of IPR
      • Volume-based pricing and/or rebates
      • Other items related to marketing and customer support

    Negotiating Contracts

    • Exclusive or Non-Exclusive Contracts:
      • Exclusivity is a powerful motivational tool
      • The more marketing and sales development conducted by the foreign partner, the stronger the justification for exclusivity
      • Exclusivity works both ways: exporter sells only to foreign partner in-territory, and foreign partner won't sell competing products
      • Minimum sales targets/performance requirements included in contract
    • Length of contract:
      • Trial: 6 months renewable to additional 6 months
      • Norm: 1 minimum
      • Special circumstances: 2-3 years
      • Grandfather Clause (Termination Clause)
      • Commission on sales after contract expires: EMCs and Sales Agents
      • EU: 3 Years Lost Profit
      • Puerto Rico: gives EMCs further motivation to invest in the market
      • Norm commission rate: 5.0% - 7.0% with 6-12 months expiry date
      • Errors and omissions insurance policy
      • Ensure umbrella policy for errors, omissions, operational concerns related to export of company products
    • Territory covered by the contract:
      • Partners will want a global or regional contract
      • Not the best contract solution
      • Territory considerations: partner's industry positioning, partner's breadth, partner's strengths and weaknesses
      • Foreign partners may breach contract and sell extraterritorial
      • Have open discussions to prevent legal proceedings

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    Description

    This quiz covers the process of finding piggyback partners for indirect exporting in Chapter 8 of 'In Like Industries'. Topics include identifying potential partners, challenges in qualifying partners, and considerations like brand representation and sales strategies.

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