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