Import Restrictions - Import regulations may be imposed to protect health, conserve foreign exchange, serve as

economic reprisals, protect home industry, or provide revenue in the form of tariffs. The most frequently encountered
trade restrictions include:
• Tariffs
• Exchange Permits
• Quotas
• Import Licenses
• Standards
• Boycotts
• Voluntary Restrictions
1. Tariffs - Custom duties are based on value or quantity or a combination of both and are classified as follows:
• ad valorem duties, which are based on a percentage of the determined value of the imported goods;
• specific duties, a stipulated amount per unit weight or some other measure of quantity; and
• a compound duty, which combines both specific and ad valorem taxes on a particular item, that is, a tax per
pound plus a percentage of value
2. Exchange Permits - To conserve scarce foreign exchange many countries impose restrictions on the amount of their
currency they will exchange for the currency of another country
3. Quotas - Countries may also impose limitations on the quantity of certain goods imported during a specific period
4. Import Licenses: - As a means of regulating the flow of exchange and the quantity of a particular imported commodity,
countries often require import licenses
5. Standards - Health standards, safety standards, and product quality standards are necessary to protect the consuming
public from imported
6. Boycotts - A boycott is an absolute restriction against trade with a country, or trade of specific goods
7. Voluntary Restrictions: - Countries may themselves impose restrictions on firms exporting to specific countries

Letter of Credit
A letter of credit is a financial tool that can be very useful in some situations. Find out exactly what it is, what types of
letters of credit there are, and how they work.
What Is a Letter of Credit?
When you hear the phrase 'letter of credit,' it might be natural to think it refers to a document verifying that you are
creditworthy, but that isn't the case. A letter of credit is a document issued by a third party that guarantees payment for
goods or services when the seller provides acceptable documentation. Letters of credit are usually issued by banks or
other financial institutions, but some creditworthy financial services companies, like insurance companies or mutual funds,
might issue letters of credit under certain circumstances.

A letter of credit generally has three participants. First, there is the beneficiary, the person or company who will be paid.
Next, there is the buyer or applicant of the goods or services. This is the one who needs the letter of credit. Finally, there
is the issuing bank, the institution issuing the letter of credit. In addition, the beneficiary may request payment to an
advising bank, which is a bank where the beneficiary is a client, rather than directly to the beneficiary. This might be done,
for example, if the advising bank financed the transaction for the beneficiary until payment was received.

Letters of credit are most often used in international trade, where they are governed by the Uniform Customs and
Practice for Documentary Credits (or UCP), the rules of the International Chamber of Commerce. However, they can be
used in other situations, as we shall see.

Types and Features of Letters of Credit

Most letters of credit are import/export letters of credit, which, as the name implies, are letters of credit that are used in
international trade. The same letter of credit would be termed an import letter of credit by the importer and an export letter
of credit by the exporter. In most cases, the importer is the buyer and the exporter is the beneficiary.

There are also other types of letters of credit. The revocable letter of credit can be changed at any time by either the buyer
or the issuing bank with no notification to the beneficiary. The most recent version of the UCP, UCP 600, did away with
this form of letter of credit for any transaction under their jurisdiction. Conversely, the irrevocable letter of credit only
allows change or cancellation of the letter of credit by the issuing bank after application by the buyer and approval by the
beneficiary. All letters of credit governed by the current UCP are irrevocable letters of credit.

A confirmed letter of credit is one where a second bank agrees to pay the letter of credit at the request of the issuing
bank. While not usually required by law, an issuing bank might be required by court order to only issue confirmed letters of
credit if they are in receivership. As you might guess, an unconfirmed letter of credit is guaranteed only by the issuing
bank. This is the most common form with regard to confirmation.
A letter of credit may also be a transferrable letter of credit. These are commonly used when the beneficiary is simply an
intermediary for the real supplier of the goods and services or is one of a group of suppliers. It allows the named
beneficiary to present its own documentation but transfer all or part of the payment to the actual suppliers. As you might
guess, an un-transferrable letter of credit does not allow transfer of payments to third parties.
A letter of credit may also be at sight, which is payable as soon as the documentation has been presented and verified, or
payment may be deferred. Deferred letters of credit are also called a usance letter of credit and may be put off until a
certain time period has passed or the buyer has had the opportunity to inspect or even sell the related goods.
A red clause letter of credit allows the beneficiary to receive partial payment before shipping the products or performing
the services. Originally, these terms were written in red ink, hence the name. In practical use, issuing banks will rarely
offer these terms unless the beneficiary is very creditworthy or an advising bank agrees to refund the money if the
shipment is not made.
Finally, a back-to-back letter of credit is used in a trade involving an intermediary, such as a trading house. It is actually
made up of two letters of credit, one issued by the buyer's bank to the intermediary and the other issued by the
intermediary's bank to the seller.

Documentation Requirements
In order to receive payment, the beneficiary must present documentation of completion of their part in the transaction to
the issuing bank. The documents that the issuing bank will accept are specified in the letter of credit, but may often
include:

Bills of exchange
Invoices
Government documents, such as licenses, certificates of origin, inspection certificates, embassy legalizations, and
phytosanitary certificates
Shipping and transport documents, such as bills of lading and airway bills
Insurance policies or certificates, except cover notes
Risks in Letter of Credit Transactions
Letter of credit transactions are not without risks. The risks inherent in these types of transactions include:

Fraud risk, in which the payment is obtained through the use of falsified or forged documents for worthless or nonexistent
merchandise
Regulatory risk, in which government action may prevent completion of the transaction
Legal risk, in which legal action prevents completion of the transaction
Force majeure risk, in which completion of the transaction is prevented by an external force, such as war or a natural
disaster
Failure of the issuing or collecting bank
Or insolvency of the buyer or beneficiary
In addition, the normal risks inherent in transactions, such as non-delivery, shipping less than was ordered, inferior quality
merchandise, early or late shipment, or goods being damaged in transit, apply.
Chapter 8 Developing a Global Vision through Marketing Research

Marketing research is traditionally defined as the systematic gathering, recording, and analyzing of data to provide
information useful to marketing decision making.
Although the research processes and methods are basically the same, whether applied in Columbus, Ohio, or Colombo,
Sri Lanka, international marketing research involves two additional complications. First, information must be
communicated across cultural boundaries. That is, executives in Chicago must be able to “translate” their research
questions into terms that consumers in Guangzhou, China, can understand. Then the Chinese answers must be put into
terms (i.e., reports and data summaries) that American managers can comprehend.

Issues with Gathering Data „

- Secondary Data Collection „
- Primary Data Collection „
- Data Collection in Multicultural Settings

Secondary data is data that has already been collected by someone else that will answer the research question you are
trying to answer.

Problems with Secondary Data „

- Availability of the Data „
- Reliability of the Data „
- Comparability of the Data „
- Validating Secondary Data
Primary Data „ - Primary data research is when you go out and collect the data first hand. „ Usually primary data
collection is needed when adequate secondary data does not exist. „ Primary data research can be broken up into two
Quantitative Research - This data is collected by asking verbally or in writing structured questions that have specified or
formatted responses. „ This research tends to ask close-ended questions. „ Data is gathered usually using surveys or
interviews.
Qualitative research focuses more on open-ended questions, which tend to be highly unstructured. …It tends to solicit a
person’s thoughts and feelings on a subject. „ Qualitative research can come in the form of direct observation

Methods for Handling Language Barriers

Back Translation …This is when one language is translated into another language, and then a second party translates it
back. „
Parallel Translation …This is where more than two translators are used for the back translation. …This helps deal with
idioms that occur in both languages.
Decentering …“It is a successive process of translation and retranslation of a questionnaire, each time by a different
translator.” (Cateora) This process keeps going until a suitable translation and retranslation are found
Multicultural research involves countries that have different languages, economies, social structures, behavior, and
attitude patterns. When designing multicultural studies, it is essential that these differences be taken into account

EIGHT DIFFERENT USES FOR THE INTERNET IN INTERNATIONAL RESEARCH:

1. Online surveys and buyer panels. These can include incentives for participation, and they have better “branching”
capabilities (asking different questions based on previous answers) than more expensive mail and phone surveys.

2. Online focus groups. Bulletin boards can be used for this purpose.

3. Web visitor tracking. Servers automatically track and time visitors’ travel through Web sites.

4. Advertising measurement. Servers track links to other sites, and their usefulness can therefore be assessed.

5. Customer identifi cation systems. Many companies are installing registration procedures that allow them to track
visits and purchases over time, creating a “virtual panel.”

6. E-mail marketing lists. Customers can be asked to sign up on e-mail lists to receive future direct marketing efforts via
the Internet.

7. Embedded research. The Internet continues to automate traditional economic roles of customers, such as searching
for information about products and services, comparison shopping among alternatives, interacting with service providers,
and maintaining the customer–brand relationship. More and more of these Internet processes look and feel like research
processes themselves. The methods are often embedded directly into the actual purchase and use situations and
therefore are more closely tied to actual economic behavior than traditional research methods. Some fi rms even provide
the option of custom designing products online—the ultimate in applying research for product development purposes.

8. Observational research (also known as netnography). Chat rooms, blogs, and personal Web sites can all be
systematically monitored to assess consumers’ opinions about products and services.

For many market estimation problems, particularly in foreign countries that are new to the marketer, expert opinion is
advisable. In this method, experts are polled for their opinions about market size and growth rates.
Infrastructure represents those types of capital goods that serve the activities of many industries.

Global Marketing Management: PLANNING AND ORGANIZATION

Planning is a systematized way of relating to the future. It is an attempt to manage the effects of external, uncontrollable
factors on the firm’s strengths, weaknesses, objectives, and goals to attain a desired end. Furthermore, it is a commitment
of resources to a country market to achieve specific goals. In other words, planning is the job of making things happen
that might not otherwise occur.
International corporate planning is essentially long term, incorporating generalized goals for the enterprise as a whole.
Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the
long- and short-term goals of the company.

Tactical planning , or market planning, pertains to specific actions and to the allocation of resources used to implement
strategic planning goals in specific markets.

The Planning Process

Phase 1: Preliminary Analysis and Screening—Matching Company and Country Needs.
Phase 2: Defining Target Markets and Adapting the Marketing Mix Accordingly.
Phase 3: Developing the Marketing Plan.
Phase 4: Implementation and Control.

Direct exporting , the company sells to a customer in another country. This method is the most common approach
employed by companies taking their fi rst international step because the risks of fi nancial loss can be minimized. In
contrast, indirect exporting usually means that the company sells to a buyer (importer or distributor) in the home country,
which in turn exports the product. Customers include large retailers such as Walmart or Sears, wholesale supply houses,
trading companies, and others that buy to supply customers abroad.

The Internet is becoming increasingly important as a foreign market entry method.

Contractual agreements are long-term, nonequity associations between a company and another in a foreign market

A means of establishing a foothold in foreign markets without large capital outlays is licensing . Patent rights, trademark
rights, and the rights to use technological processes are granted in foreign licensing

Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products,
systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in
management.

A joint venture is different from other types of strategic alliances or collaborative relationships in that a joint venture is a
partnership of two or more participating companies that have joined forces to create a separate legal entity. Joint ventures
are different from minority holdings by an MNC in a local fi rm.

Quality can be defined on two dimensions: market-perceived quality and performance quality. Both are important
concepts, but consumer perceptions of a quality product often have more to do with market-perceived quality than
performance quality. The relationship of quality (of course, relative to price) conformance to customer satisfaction is
analogous to an airline’s delivery of quality.

Product homologation is used to describe the changes mandated by local product and service standards. A recent
study reaffirmed the often-reported finding that mandatory adaptations were more frequently the reason for product
adaptation than adapting for cultural reasons.

Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing
activities.

From a sociological viewpoint, any idea perceived as new by a group of people is an innovation

The core component consists of the physical product—the platform that contains the essential technology—and all its
design and functional features

The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all
other aspects of a product’s package.

The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and
the availability of spare parts.

A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/ or auditory), design, or
combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors

Price–quality relationship is an important factor in marketing in developing economies, especially those in the first three
stages of economic development described earlier.

Derived demand can be defined as demand dependent on another source

ISO 9000s , a series of five international industrial standards (ISO 9000–9004) originally designed by the International
Organization for Standardization in Geneva to meet the need for product quality assurances in purchasing agreements,
are becoming a quality assurance certification program that has competitive and legal ramifications when doing business
in the European Union and elsewhere. The original ISO 9000 system was promulgated

The characteristics LO7 The importance of relationship marketing for industrial products and services that yield the
uniqueness of industrial products and services lead naturally to relationship marketing
The distribution process includes the physical handling and distribution of goods, the passage of ownership (title),
and—most important from the standpoint of marketing strategy—the buying and selling negotiations between producers
and middlemen and between middlemen and customers

A distribution structure through which goods pass from producer to user. Within this structure are a variety of
middlemen whose customary functions, activities

Size Patterns. The extremes in size in retailing are similar to those that predominate in wholesaling. Exhibit 15.2
dramatically illustrates some of the variations in size and number of retailers per person that exist in some countries

Direct Marketing. Selling directly to the consumer through mail, by telephone, or door-to-door is often the approach of
choice in markets with insufficient or underdeveloped distribution systems

Resistance to Change. Efforts to improve the efficiency of the distribution system, new types of middlemen, and other
attempts to change traditional ways are typically viewed as threatening and are thus resisted.

Agent middlemen work on commission and arrange for sales in the foreign country but do not take title to the
merchandise

Merchant middlemen actually take title to manufacturers’ goods and assume the trading risks, so they tend to be less
controllable than agent middlemen.

Home-country middlemen , or domestic middlemen , located in the producing firm’s country, provide marketing services
from a domestic base.

Export management company (EMC) is an important middleman for firms with relatively small international volume or
those unwilling to involve their own personnel in the international function.

Trading companies accumulate, transport, and distribute goods from many countries.

Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a
broader product line sometimes take on additional lines for international distribution; though the formal name for such
activities is complementary marketing , it is commonly called piggybacking

The manufacturer’s export agent (MEA) is an individual agent middleman or an agent middleman fi rm providing a
selling service for manufacturers

WebbPomerene export associations (WPEAs) are another major form of group exporting.

A foreign sales corporation (FSC) is a sales corporation set up in a foreign country or U.S. possession that can obtain a
corporate tax exemption on a portion of the earnings generated by the sale or lease of export property.

E-commerce is used to market B2B services, consumer services, and consumer and industrial products via the World
Wide Web.

Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen
effectiveness and cooperation.
1. An information source. An international marketing executive with a product message to communicate.
2. Encoding. The message from the source converted into effective symbolism for transmission to a receiver.
3. A message channel. The sales force and/or advertising media that convey the encoded message to the intended
receiver.
4. Decoding. The interpretation by the receiver of the symbolism transmitted from the information source.
5. Receiver. Consumer action by those who receive the message and are the target for the thought transmitted.
6. Feedback. Information about the effectiveness of the message that flows from the receiver (the intended target) back
to the information source for evaluation of the effectiveness of the process.
7. Noise. Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the
process and affect any or all of the other six steps.

Word-of-mouth (WOM) advertising and peer recommendations have always been key influencers of brand choice, but
the power of the Internet has changed the pace and reach of WOM.
ACRONYM

OECD - Organization for Economic Cooperation and Development

WAP (Wireless Access Protocol)

MDCs (more-developed countries)

LDCs (less-developed countries)

(NICs) newly industrialized countries

(BEMs)Big Emerging Markets

(NAFTA) North American Free Trade Agreement

(CFTA) Canada Free Trade Area

LAIA - Latin American Integration Association

(CARICOM) Caribbean Community and Common Market

(GBIC) Guinness Bass Import Corporation

(IIM) international Internet marketing

(SIA) strategic international alliance

(IJVs) International joint ventures

(IJVs) self-reference criterion

(COE) Country-of-origin effect

(M2M) machine-to-machine

(CIS) Commonwealth of Independent States

(TQM) total quality management

(EMC) Export Management Company

(ETC) Export Trading Company

(MEA) manufacturer’s export agent

(WPEAs) WebbPomerene export associations

(FSC) Foreign Sales Corporation

(IMC) Integrated marketing communications

(MNCs) Multinational companies