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• Chapter 8 discusses importing, exporting, and sourcing strategies for businesses.
• Chapter 9 explores global market-entry approaches such as licensing, investment, and strategic alliances.
• Chapters 11 and 14 cover pricing and communication decisions in global marketing.

Export Selling vs. Export Marketing

• Export selling involves selling the existing product in a new market without any changes.
• Export marketing adapts the marketing mix to suit the international customers.

Requirements for Export Marketing

• Understanding the target market
• Conducting market research
• Identifying market potential
• Making decisions about product design, pricing, distribution, and advertising

Stages of Organizational Export Activities

• Unwilling to export
• Filling unsolicited orders
• Exploring feasibility
• Exporting on a trial basis
• Experienced exporter
• Country/region-focused marketing
• Evaluating global market potential

Common Exporting Problems

• Transportation issues
• Customs regulations
• Distribution coordination
• Licensing and trade restrictions
• Competition, product liability, and sales promotion

Why Governments Support Exports

• It can reduce trade deficits
• Stimulate economic growth
• Increase global competitiveness

Government Programs Supporting Exports

• Tax incentives
• Subsidies
• Governmental assistance
• Free trade zones

Tax Incentives

• Deductions or exemptions to encourage business activities or investments

Malaysia's tax incentives

• Pioneer Status: 70% to 100% exemption on statutory income for up to 5 years for promoted industries
• Investment Tax Allowance (ITA): 60% allowance on qualifying capital expenditure for high-tech projects

Subsidies

• Financial support to reduce the cost of goods or services

Malaysia's subsidies

• Petrol and Diesel: Subsidized fuel prices
• Rice: Support given to rice farmers under BERNAS

Governmental Assistance

• Financial aid or advisory services for businesses

Governmental Assistance in Malaysia

• MIDF offers low-interest loans to SMEs for expansion
• PERKESO Wage Subsidy Program: Financial support during economic downturns

Free Trade Zones (FTZs)

• Designated areas for importing, storing, handling, and exporting goods without customs duties or taxes

FTZs in Malaysia

• Port Klang Free Zone (PKFZ): A logistics and manufacturing hub and international trade promotion site
• Bayan Lepas Free Industrial Zone (Penang): Attracts electronics companies with tax exemptions

Governmental Actions to Discourage Imports

• Tariffs
• Quotas
• Discriminatory procurement policies
• Restrictive customs procedures
• Technical regulations

Tariffs

• Taxes on imported or exported goods

Tariffs in Malaysia

• Import Duty on Cars: Up to 30% to promote local brands
• Excise Duties on Alcohol: High taxes to protect local producers

Quotas

• Limits on the quantity of goods imported or exported

Quotas in Malaysia

• Sugar Import Quota: Limits to protect local producers like MSM Malaysia Holdings Berhad
• Rice Import Quota: Controlled by Padiberas Nasional Berhad (BERNAS)

Discriminatory Procurement Policies

• Preference to local companies in government contracts

Discriminatory Procurement Policies in Malaysia

• Bumiputera Procurement Policy: Contracts reserved for Bumiputera-owned companies
• Local Content Requirements: Companies must source a percentage of materials from local suppliers

Restrictive Customs Procedures

• Complex processes creating barriers to importing or exporting

Restrictive Customs Procedures in Malaysia

• Complex Licensing for Alcohol Imports: Multiple licenses are required
• Halal Certification Requirements: Strict documentation required for food products

Technical Regulations

• Safety and quality standards acting as trade barriers

Example of Technical Regulations in Malaysia

• Halal Certification: All food products must be certified by JAKIM
• SIRIM Certification: Electrical appliances must obtain safety certification from SIRIM Berhad

Harmonized Tariff System (HTS)

• System for standardizing tariff classifications globally

Single-Column vs. Two-Column Tariff

• Single-column tariff applies a uniform rate to all countries
• Two-column tariff includes general duties plus special duties for certain countries

Preferential Tariff

• Reduced tariff for imports from specific countries

Ad Valorem, Specific, and Compound Duties

• Ad valorem: Percentage of the product's value
• Specific: Fixed amount per unit
• Compound: Combination of both

Dumping

• Selling goods in foreign markets below cost

Anti-Dumping Duties

• Tariffs to counteract the effects of dumping

Anti-Dumping Duties in Malaysia

• In 2021: antidumping duties on cold-rolled stainless steel imports from China, South Korea, Taiwan, and Thailand

Countervailing Duty

• Duty to offset subsidies given to producers in the exporting country

Key Participants in the Export Process

• Foreign purchasing agents
• Export brokers
• Export merchants
• Manufacturers' export agents
• Freight forwarders

Ways to Organize Exporting

• Part-time activity
• Through an export partner or department
• Within an international division

Methods of Organizing Exporting By Market Country

• Direct market representation
• Representation by independent intermediaries

Methods of Payment in International Trade

• Cash with order
• Open account
• Documentary credits (letter of credit)
• Documentary collections (bill of exchange)

Letter of Credit (L/C)

• Ensures seller gets paid and reduces risks for buyers and sellers

Documentary Collection

• Banks handle trade documents for payment via sight or time drafts

Customs-Trade Partnership Against Terrorism (C-TPAT)

• U.S. program for businesses to certify supply chain security for priority inspections

Duty Drawback

• Refund of import duties when imported goods are processed and re-exported

Factors Influencing Sourcing Decisions

• Management vision
• Factor costs
• Customer needs
• Logistics
• Country infrastructure
• Political risk and exchange rates

Global Outsourcing

• Moving work to another country for cost reduction or access to specialized skills

Political Factors Influencing Export Decisions

• Political risk, protectionism, and foreign exchange rate fluctuations

Challenges in International Trade and Sourcing

• Logistics
• Trade barriers
• Market intelligence
• Infrastructure limitations
• Political risks

Licensing in Global Marketing

• Contractual agreement allowing a company to use intellectual property for royalties or fees

Advantages of Licensing

• Additional revenue with low investment
• Circumventing trade barriers
• Attractive ROI with low financial risk
• Licensees adapt products to local markets

Disadvantages of Licensing

• Limited market control
• Potential loss of brand reputation
• Lower returns
• Risk of licensee becoming a competitor
• Short-term agreements

Franchising

• Allows another party to operate under a brand with guidelines and ongoing support

Key Differences Between Licensing and Franchising

• Licensing
  • Definition: Allows use of intellectual property for a fee
  • Control: Limited control
  • Training & Support: Typically none
  • Fees: One-time fee or royalties
  • Operational Guidelines: Few requirements
  • Duration Shorter and more flexible -Investment Lower initial investment
• Franchisng -Definition: Operates business using brand, model, and support systems. -Control Significant franchisor control -Training Provided, including marketing and operational assistance -Fees Franchise fee and ongoing royalties -Operational Guidelines: Strict
  • Typically long-term -Higher invextme. Stonger brand support

Challenges of Franchising

• Adapting to cultural differences
• Maintaining brand consistency
• Managing franchisee relationships
• Government regulations

Foreign Direct Investment (FDI)

• Investing in foreign operations through ownership of assets

Types of FDI

• Joint Ventures: Shared ownership
• Equity Stakes: Minority or majority investments
• Full Ownership: Gaining 100% control

Advantages of FDI

• Greater control
• Access to new markets and resources
• Proprietary knowledge protection
• Long-term profit potential

Disadvantages of FDI

• High investment and risk
• Political and economic instability
• Legal and regulatory challenges
• Difficulties in managing foreign operations

Joint Venture

• Strategic partership in a foreign market

Benefits of Joint Ventures

• Shared financial and operational risks
• Faster market entry
• Access to local knowledge
• Regulatory advantages

Drawbacks of Joint Ventures

• Potential conflicts
• Difficulty aligning strategies
• Unequal distribution of risks
• Risk of partner becoming a competitor

Forms of FDI

• Joint ventures
• Minority and majority stakes
• Outright acquisition

Proton & Geely joint venture

• Geely acquired a 49.9% stake in Proton

Nestle Malaysia

• Nestle S.A. (Switzerland) holds a majority equity stake

AIA Group

• acquired 100% of ING Malaysia

Factors Influencing Market-Entry Strategy

• Company vision and goals
• Risk tolerance
• Investment capital
• Desired level of control

Differences Between Exporting, Licensing, and FDI

• Exporting: Selling goods from domestic markets
• Licensing: Granting rights to another company
• FDI: Establishing foreign business operations

What is an equit stake

• Owning a percentage of shares in a foreign company

Advantages of Acquiring a Foreign Company

• Instant market entry
• Access to local resources
• Faster ROI

Risks of Acquisitions

• High cost
• Cultural conflicts
• Existing liabilities

Strategic Alliances

• Agreements between companies to collaborate while remaining independent

Benefits of Strategic Alliances

• Access to resources
• Improved market positioning
• Cost-sharing

Risks of Strategic Alliances

• Conflicts
• Culture differences
• Sharing sensitive information

Differences Between Joint Ventures and Strategic Alliances

• Joint Venture: Shared ownership, requiring a new legal structure.
• Strategic Alliance: Companies remain independent, operating under a contract.

Proton & Geely - Joint Venture

New entity to develop and market car models

AirAsia & Expedia - Strategic Alliance:

Sell AirAsia tickets on Expedia's platform

Contract Manufacturing

• Outsourcing production to a foreign firm
• Apple outsources production to Inari Amertron in Malaysia.

Benefits of Contract Manufacturing

• Lower production costs, core activities
• Increased focus
• Fasted scalability

Risks of Contract Manufacturing

• Quality control issues
• Ethical concerns
• Supply chain disruptions

Keiretsu

• Japanese business networks linked
• Promote stability

Chaebol

• Family-owned conglomerates in South Korea
• Samsung, Hyundai

Regional Partnership Impact

• Trade agreements reduce barriers

Global Pricing Factors

• Influences a company's choice of market-entry strategy: Company Vision & Goals, Risk Tolerance, Investment Capital, and Desired Level of Control.

Exporting, Licensing, and FDI Distinctions

Distinguishes between Exporting, which involves selling goods in foreign markets, Licensing, granting rights to another company; FDI, establishing foreign business operations through investments.

Low-Risk Market Entry

Exporting over FDI: Companies may opt for exporting due to Lower financial risk and investment, Minimal commitments, and avoidance of political and economic uncertainties.

Global Marketing Strategies

-Pricing: Law of One Price - Ideal that all pay the same price when costs of regulation/tariffs can influence or inhibit Market penetration with razor and blades pricing

Key Pricing Elements for Global Managers

Price Floor, Price Ceiling, Optimum Price

Pricing Objectives in Global markets

• Increased market share
• Return on investment
• Brand recognition

Market Skimming

• Premium price for high sales

Penetration Pricing

• Low market entry for domination

Factors that contribute to Export Price Escalation

• Tariffs, insurance, distribution

What is Dumping?

Selling below cost to increase interest and attention

Types of Global Strategies

• ethnocentric
• polycentric
• geocentric

Countertrade

International trade by exchange of goods rather than currency

Five Types of Countertrade

• Barter: Oil for materials.
• Switch Trading: Selling to third party.
• Buyback: Repaying with products that are being made.
• Offset: Airbus invests in Malaysia

Cultural Differences

• Influence cultural impact by adjusting

Global Marketing and Sales

-Sales Promotion: sales activities to incentivize and increase interests and product sales.

• Consumer Promotions- stimulate engagement in a product, such as providing coupons, sales, gifts.
• Trade Promotions- targeting market share and retailers.

Key factors contributing to Company Headquarters and how they can promote Sales

• Consistency of Branding
• Skills
• Overseeing and Budget Management in Global Markets

Economic and Market Development

• Influence sales promotion's success rates.
• Sampling to allow consumers to have an example of the product to encourage new sales.

Couponing and Social Marketing

• Provides sales discount or promotion
• Social media marketing (Groupon style social coupon)
• Asian or Islamic based cultures are uncommon due to religious or moral standing.

Key selling points for consulting model

• Personal relationship.
• Relationships in bank management.
• Product strategy.
• Customer strategy.

Alternative Options for Managing International Sales Teams

Alternative options to hiring sales teams is market sales, exclusives, third party contractors and joint ventures.

##Direct Marketing and Mass Marketing Direct provides one on one opportunity for sales (examples of email marketing) Mass- broad marketing that hits mass interest but hard and difficult to communicate. Examples such as tv sales, Radio commercials and Billboard advertisement

Direct marketing effects:

Direct mail, infomercials and advertisements.

Key principles of marketing in Global Market

One on one communication. Direct personal and individual sales.

The Benefit of Direct Mail Marketing

Is Personalized, affordable and allows sales.

Event Sponsorships

Supportive, associate or active athlete. The Olympics.

Product Placement

Subtle increased brand recognition.

Effects of Infomercials on Tele-shopping

Allows wide audience with real sales and interactions

How internet communication affects global marketing

Personalized advertisements and direct engagement of customers.

Cultural Differences- what may not be accepted by local market that in fact hurts sales

Direct marketing

Ethical Issues in direct marketing

Security and Privacy.

Branding

Global brand consistency that makes it easier to see and understand new brand.

Local Marketing- sales tips

Localize marketing message to allow easier sales.