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| importing or global sourcing |
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Definition
| also known as global procurement, or global purchasing is the strategy of buying products and services from foreign sources and bringing them into the home country or a third country. |
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| the strategy of producing products or services in one country (often the producer's home country), and selling and distributing them to customers located in other countries. |
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| an international business transaction where all or partial payments are made in kind rather than cash. |
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| equity ownership based international business activites |
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Definition
| typically are FDI and equity based collaborative ventures. In contrast to home based international operations, here the firm establishes a presence in the foreign market by investing capital in and securing ownership of a factory subsidiary, or other facility there. |
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| contractual relationships |
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Definition
| take form of licensing and francising in which the firm allows foreign partners to use its intellectual property in return for royalties or other comparisons |
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| exporting, countertrade, and global sourcin. They provide the least coontrol over foreign operations, because the focal firm delegates considerable responsibility to foreign partners such as distributors or suppliers |
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| moderate control strategies |
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Definition
| contractual relationships such as licensing and francising and project based collaborative ventures. |
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| equity joint ventures and FDI. The focal firm attains maximum control by establishing a physical presence in the foreign market. |
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| unfavorable trends in the domestic market that compel firms to explore opportunities beyond national borders, such as declining demand, growing competition at home, and arrival at the mature phase in a product's life cycle. |
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| favorable conditions in foreign marekts that make international expansion attractive, such as the potential for faster growth and higher profits, foreign government incentives or increased opportunities to learn from competitors. |
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| the entry strategy responsible for the massive inflows and outflows that constitute global trade and generates substantial foreign exchange earnings for nations. |
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Definition
| increase overall sales volume, market share, and generate profit margins, increase economies of scale, reducing per unit cost of manufacturing, diversify customer base, reducing dependence on home markets,stabalize fluctuations in sales associated with economic cycles or seasonality of demand, minimize the cost of foreign market entry; the firm can use exporting to test new markets before committing greater resources through FDI, minimize risk and maximize flexibility compared other entry strategies, leverage the capabilities and skills of foreign distributors and other business partners located aroad. |
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| exporting that is accomplished by contracting with intermediaries located in the firm's home market. Smaller exporters, or those new to international business, typicall yhire an export management company ora trading company based in their home country. These intermediaries assume responsibility |
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Definition
| typically achieved by contracting with intermediaries located in the foreign market. The foreign intermediaries serve as an extension of the exporter, negotiating on behalf of the exporter and assuming such responsibilities as local supply chain management, pricing and customer service. The main advanatge is that it gives the exporter greater control over the export process and potential for higher profits, as well as allwoing a closer relationship with foreign buyers and the marketplace. |
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| a represenative office of the focal firm that handles marketing, physical distribution, promotion and customer service activities in the foreign market. |
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| modifying a product to make it fit the needs and tastes of the buyers in the target market. When Microsoft markets computer software in Japan, it must ensure the software is written in Japanese. |
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| marketing communications adaption |
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Definition
| modifying advertising, selling style, public relations, and promotional activities to suit individual markets. |
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| keeps foreign pricing in line with that of competitors. SMEs often lack the resources to compete with larger rivals on pricing. In order to succeed, they complete not by charging low prices, but by emphasizing the nonprice benefits of their products such as quality, reliability and brand leadership. |
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| often hinges on developing strong and mutually beneficial relations with foreign intermediaries. |
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| the official forms and other paperwork required in export transactions for shipping and customs procedures. The exporter usually first issues a quottation or pro forma invoice upon request by potential customers. |
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Definition
| the actual demand for payment issued by the exporter when a sale is made. |
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| the basic contract between exporter and shipper. It authorizes a shipping company to transport the goods to the buyer's destination and also serves as the importer's receipt and proof of title for purchase of the goods. |
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Definition
| lists the contact info of the exporter and the buyer as well as a full description of the products being shipped. |
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Definition
| universally accepted terms of sales that specify how the buyer and seller share the cost of freight and insurance in an international transaction and at which point the buyer takes title to the goods. |
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| delivery takes place at the seller's premises or another named place(i.e. works, factory or warehouse) represents minimal obligation for the seller; the buyer bears all costs and risks involved in claiming the goods from the seller's premises. buyer arranges shipping. |
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Definition
| delivery takes place when the goods pass the ship's rail at the named port of shipment. The buyer bears all the costs and risks of los or damage upon delivery. The seller clears the goods for export. |
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| cash in advance, letter of credit, open account, and countertrade. |
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| a contract between the banks of the buyer and seller that ensures payment from the buyer to the seller upon receipt of an export shipment. It amounts to a substitution of each bank's name and credit for the name and credit of the buyer and seller. |
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Term
| creditworthiness of the exporter |
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Definition
| firms with little collateral or minimal international experience, or large export orders that exceed their manufacturing capacity, may encounter difficulty in obtaining financing from banks and other lenders at reasonable interest rates or may not receive financing at all. |
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Term
| creditworthiness of importer |
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Definition
| an export sales transaction often hinges on the ability of the buyer to obtain sufficient funds to purchase the goods. |
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Definition
| banks are reluctant to loan funds for risky transactions, and international sales are usually more risky transactions, and international sales are usually more risky than domestic ones. Riskiness is a function of the value and marketability of the good being sold , the extent of uncertainty |
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| influences the cost of financing. In international trade, the exporter usually wants to be paid as soon as possible, while the buyer prefers to delay payment, especially until it has received or resold to goods. |
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| the discounting of a foreign account receivable by transferring title of the sold item and itsaccount receivable to a factoring house |
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| an organization that specializes in purchasing accounts receivable for cash at a discount from the face value. |
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| the selling at a discount of long term accounts receivable of the seller or promissory notes of the foreign buyer. |
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| financial service in which an independent company confirms an export order in the seller's country and makes payment for the goods in that country's currency. |
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Term
| distribution channel intermediaries |
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Definition
| many intermediaries such as trading and export management companies provide short term financing or simply purchase exported goods directly from the manufacturer, eliminating the need for financing and any risks associated with the export transaction. |
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Definition
| foreign buyers make down payments that reduce the need for financing from other sources. buyers may make incremental payments as production of the good s or prject is completed. |
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Definition
| large multinational enterprises with foreign subsidiaries have many more oprtions for financing exports. MNE may allow its subsidiary to retain a higher than usual level of its profits in order to finance export sales. the paretn firm may provide loans, equity investments and trade credit as funding for the international selling activities of its subsidiaries. |
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| government agency that issues credit insurance to protect firms against default on exports sold under short term credit. The US Small Business Administration helps small exporters obtain trade financing |
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Term
| Multilateral developmental banks |
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Definition
| international financial institutions owned by multiple governments within world regions or other groups. Their individual collective objective is to promote economic and social progress in their member countries many of which are developing countries. |
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| high quality, enduring business and social relationships with key intermediaries and facilitators abroad that provide competitive advantages. |
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| ability to finance initital sales and subsequent growth in market, ability to provide financing to customers, quality of management team, reputation among current and past customers, connections with influential people or government agencies in market |
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| familiarity with exporter's product, quality and sophistication of all product lines handled by the intermediary, ability to esnure security, ability to ensure security for patents and other intellectual property rights, willingness to drop competing prodcut lines |
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| experience with target customers, extent of geographic coverage provided i the target market, quality and quantity of sales force, ability to formulate and implement marketing plans. |
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| percent of intermediary's business accounted by a single supplier, willingness to maintain inventory sufficient to fully serve the market, commitment to achieving minimum sales targets |
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| the oldest form of trade, the direct exchange of goods without any money. Though less common today, it is still excercised even in domestic trade in straightforward, one shot deals. It requires a single contract rather than two or more contracts typical of other forms, has a short time span and is less complicated. |
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Definition
| include payment in both goods and cash. For example, a company may sell its equipment to the government of Brazil and receive half the payment in hard currency and the other half in merchandise. |
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Term
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Definition
| known as a back to back transaction or offset agreement, requires two distinct contracts. In the first, the seller agrees to a set price for goods and receveives cash from the buyer. However, this first deal is continent on a second contract wherein the seller also agrees to purchase goods from the buyer or produce and assemble a certain proportion of goods in the uyers country for the same cash amount as the first transaction or a set percentage of it. |
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Definition
| seller agrees to supply technology or equipment to construct a facility and receives payments in the form of goods and produced by the facility. Ex. the seller might design and construct a factory in the buyer's country to manufacture tractors. The seller is compensated by receiving finished tractors from the factory it built which it then sells in world markets. |
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