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Questions and Answers
What is the main challenge in qualifying partners for indirect exporting?
Which of the following is not mentioned as a potential piggyback partner for indirect exporting?
What is a key pricing consideration when negotiating contracts for indirect exporting?
How can lower prices be achieved in foreign markets according to the text?
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What should be detailed in the contract regarding marketing and customer support expectations?
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Where are potential resources for finding partners listed in the text?
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What may be a reason for choosing piggyback partners over EMC's in terms of brand awareness?
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Why is it cautioned to consider finding an EMC as turning international sales over to an outside company?
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What is one method recommended for finding an EMC according to the text?
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Why might a firm prefer a piggyback partner over an EMC if specific industry or technical experience is required?
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What is one method suggested in the text for finding an EMC through international trade centers?
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Why might training and warranty issues be pushed back on manufacturers instead of on EMC's?
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What is considered the second most powerful motivational tool for partners, according to the text?
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What does exclusivity entail in the context of exporting?
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What justifies exclusivity for a foreign partner in terms of marketing and sales development?
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What is the role of EMCs in indirect exporting?
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What is a significant test of loyalty between an exporter and a foreign partner?
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What can be expected when negotiating contracts with Piggyback Partners?
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When should an exporter consider moving to a non-exclusive contract with a foreign partner?
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How do Piggyback Partners differ from EMCs in terms of product distribution?
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In indirect exporting, what is a common expectation when working with a Piggyback Partner?
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What is a key difference between an Agent and a Manufacturing Rep in foreign partner selection?
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What is a common norm for the length of a contract in indirect exporting?
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What is the norm commission rate for EMCs and sales agents in indirect exporting?
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What type of insurance policy is recommended to cover errors and omissions related to exporting company products?
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What motivates EMCs to invest further in a market according to the text?
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Why should open discussions be held with foreign partners in indirect exporting?
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What kind of contract solution is not considered the best in indirect exporting according to the text?
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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.
