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MS-64 INTERNATIONAL MARKETING
1) Differentiate between the following
a) Free trade area and customs union
Free trade area
Free trade area is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs, quotas and
preferences on most goods and services traded between them. It can be considered the second stage of economic integration.
Countries choose this kind of economic integration form if their economical structures are complementary. If they are competitive,
they are more likely to choose customs union.
Unlike a customs union, members of a free trade area do not have a common external tariff.
The aim of free trade area is to reduce barriers to exchange so that trade can grow as a result of specialization, division of
labour, and most importantly via comparative advantage.
The Difference Between a Free Trade Area & a Customs Union
The explosive technological advances of the last century have facilitated the spread of globalization, the integration of
political structures and markets. These forces toward globalization have influenced the move toward regional economic integration
and the development of regional markets.
Free Trade Areas
A free trade area eliminates most, if not all, trade barriers such as tariffs, quotas and preferences on the flow of goods and services
between its member countries. However, member countries negotiate trade agreements separately with external countries. The 1994
North American Free Trade Agreement between the U.S., Canada and Mexico, also known as NAFTA, formed the largest free trade
area at that time.
Customs Unions
A customs union, in contrast to a free trade area, is a trade agreement in which a group of countries charges a common set of
tariffs to external countries, while granting free trade among member countries. It is a higher level of economic integration over a free
trade area, but less than a common market, which also allows free movement of resources such as capital and labor between member
countries. The European Union, for example, evolved from a customs union to a common market. The addition of common tariffs
imposed on external countries differentiates a customs union agreement from a free trade area.
Significance
Regional economic agreements reflect the level of political cooperation of the countries involved and serve to affirm their
political relations. Whether such trade agreements are beneficial to member countries depends on the level of trade creation versus
trade diversion. The impact of economic integration on political ties, however, remains unquestionable.
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b)” Commercial invoice” and “Proforma invoice”
Pro Forma Invoice:
Often when potential importers request a quotation from exporters what do most exporters provide their prospective buyers?
Price, quantity and cost of transportation? Payment terms, product availability, shipping instructions and service charges? Terms of
sale, description and delivery time? Well, you guessed it, not enough information for importers to make a buying decision. To make
life easier for buyers, exporters should always quote using a carefully prepared pro forma invoice.
A price quotation prepared in the form of an invoice, a pro forma invoice is different from commercial invoices in that it is
used to create a sale and is sent in advance of the commercial invoice. The content of a pro forma invoice is almost identical to a
commercial invoice and is usually considered a binding agreement although the price might change in advance of the final sale.
Here are some reasons why pro forma invoices are widely used in international transactions:
• Considered a binding agreement.

• May be required by some countries as part of their import licensing procedures.
• Bankers and financial institutions use pro forma invoices to open letters of credit for importers.
• Easily recognized due to their similarity to commercial invoices.
• Their invoice format encourages exporters to include all the information that will appear in the commercial invoice.
Pro forma invoices are formal offers to sell. When the buyers agree with all the terms and conditions of the pro forma invoice
the result is a purchase order sent by the buyer, which finally leads to a sales contract that is, if the buyer and the exporter agree to
have a formal sales contract. The pro forma and purchase order must be compared before goods are shipped to check for
discrepancies. Should there be a discrepancy, the buyer should be promptly notified to correct any errors.
Commercial Invoice:
Prepared after the sale takes place, the commercial invoice is the final bill from the exporter to the buyer that conforms in all
respects to the agreement. It could have the exact terms of the pro forma invoice first offered, or it could differ in those terms that
were the result of final negotiations. Commercial invoices are also used by governments to determine the true value of goods for
assessing Customs duties, examining goods and gathering statistics. Additionally, many countries use commercial invoices to control
imports. It is important for the exporter to check with the buyer the type of information that must be included in the commercial
invoice in order to clear Customs in the buyer's country. Here are few key areas to consider when producing a commercial invoice.
• Should be prepared in the manner customary to trade.

• Most countries require that a commercial invoice must be filed for each shipment.
• It must be original although some countries accept photo copies with a declaration by foreign sellers, shippers or importers
verifying that it is a true copy.
• When an invoice is not available some countries accept a pro forma invoice with information adequate to assess duty,
examine goods and collect statistics.
• Some countries may require a special Customs Invoice - US for example, waived Customs Invoices in March 1, 1982.
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c) Pre investment and Post investment planning for management of political risk
Pre Investment:
Pre-investment planning includes:
• Preparation of Master Plans

• Project Identification Studies
• Preparation of Financing Applications
• Feasibility Studies and Project Appraisal Studies,
• Preparation of Project Documents and
• Preparation of Policy and Strategy Documents.
Post Investment: EIF actively manages its fund participations. This includes, but is not limited to, representation in the funds boards;
providing access to EIF's network in the VC community and active networking; positioning follow-on funds; constructive support
during critical situations.
d) Ethnocentric and polycentric orientation:
Polycentric:
The term polycentric defines a decentralized organizational orientation having many centers of authority or control. This term
usually refers to the assumptions and mind-sets of top managers and applies to firms with affiliates (or subsidiaries) in several
different countries.
Polycentric implies that the firm’s conciseness has shifted from a single to a multiple country entity.
The polycentric is very much a host country orientation, dominated by the notion that the firm is substantially based in
several different countries.
It assumes that host country cultures are distinctive, making the ethnocentric, centralized, one-size-fits-all approach
unfeasible.
Ethnocentrism:
Ethnocentrism is the tendency to believe that one's ethnic or cultural group is centrally important, and that all other groups
are measured in relation to one's own.
The ethnocentric individual will judge other groups relative to his or her own particular ethnic group or culture, especially
with concern to language, behavior, customs, and religion. These ethnic distinctions and sub-divisions serve to define each ethnicity's
unique cultural identity.
2. Explain the alternative product – communication strategies available to an international marketer, giving suitable examples.
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Communication strategy is the "what, who, why, when, how, and where" of conveying a message. In this fast paced world,
information travels at the speed of light and leads to undesirable consequences if only half the story (or a one sided opinion) is echoed
in the marketplace.
Communication strategies help the companies to propagate information in a structured and controlled manner. An
ideal strategy details the structure of information flow, the message, the correct audience to address, potential vehicles to carry the
message, resources required to fulfill, and feedback mechanisms to learn from the whole exercise.
These strategies form the blueprint to build a campaign to inform, as well as to be informed by others. Communications
strategies also can be used to expedite the flow of information in sudden, unfolding, but structured events. Communication Strategies
can help you think your way through a situation.
Why would you need a communication strategy?
For the same reason an army would need an assault plan or a football team would need a defense layout. When a strategy is
built, resources of the organization are matched up with the needs and are appropriately allocated. Imagine what would happen if you
send out a medic to recon a terrain?
Communication strategies help you to plan communication with your target audience, the stakeholders, and your colleagues.
Good strategies can improve the interactive nature of communication and help you receive information from your audience.
It is a two way process, to gather information as well as receive information. Communication strategy provides a structure
for identifying events (e.g., issues, problems, and actions) that need to be addressed; it considers potential audience and the
appropriate messages; it also develops vehicles to deliver information.
On a lighter note, Here is how leaders of yesterday would think
Napoleon, Caesar and Alexander the Great watched the army parade in Red Square, as visitors of honor...
'If I had Soviet planes,' Caesar speaks, 'I could have conquered the whole world!'
'If I had Soviet tanks,' Alexander said, 'I would have been invincible!'
'And if I had had "The Truth" (The newspaper),' Napoleon said, 'the world, even now, would not have found out about Waterloo!'
A good strategy of communication helps you to think about and plan audience involvement, which saves time and money.
Communication strategies maximize shared information and minimize misinterpretations. An Advertisement might be a small chunk
of a larger communication strategy,
The basic steps of developing a communication strategy are:
1. The Need for the Communication Strategy: Identify the Reason
Determine why the communication is necessary would be the first step in developing a communication strategy. You should
devout some time defining a single, focused message that requires communication. Ask yourself:
What is the issue to which you are responding?
Or
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What actions are you taking that warrant development of a strategy?
Is this a launch of a new product or an information campaign?
Also, decide what you want to achieve with this communication. Are you asking for a response, providing information,
encouraging an action, increasing awareness, building consensus, changing behavior or something else?
2. The Message: Identify the message that is to be conveyed.
To determine what you want to communicate, identify and define all messages. This step might involve a brainstorming
session where all possible message ideas are listed. Focus on two to three key messages and rank them by importance, timeliness, or
other factors. Bring the whole message together and look at it from a Big Picture perspective to see if it conveys what needs to be
conveyed.
On a lighter side, take a moment to go through this funny piece about a President who knows not how to communicate and
definitely no Strategy for communication; it is actually a Tragedy of communication
President Bush was visiting a school. One class was amidst a discussion related to words and their meaning.
The teacher asked the president if he would like to lead the discussion of the word "tragedy." So the illustrious leader asked the class
for an example of a tragedy.
Little Jimmy stood up and offered, "If my best friend, Cheney, living in the farm, were playing in the field and a tanker ran him over
and killed him, that would be a tragedy."
"No," said the great leader, "that would be an accident."
Little Susie said: "If a Fun bus carrying 65 students drove over a cliff, killing everyone inside, that would be a tragedy."
"I'm afraid not." explained Mr. Bush. "That would be a great loss."
The room went totally silent.
No one else volunteered.
"Isn't there someone here who can give me an example of tragedy?"
Finally little Johnny raised his hand. In a shy voice he said: "If Air Force One carrying Mr. and Mrs. Bush was struck by a "friendly
fire" missile and blown to smithereens that would be a tragedy."
"That's right!" exclaimed Bush. "Can you tell me why that would be a tragedy?"
"Well, you see" says little Johnny, "it has to be a tragedy, coz it certainly wouldn't be a great loss and it wouldn't be an accident
either."
3. The Audience: Identify the target audience for the Communication
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Once the messages are identified, ask yourself:
Who is involved, affected, interested? What information do they need? How are they likely to react? What are their
concerns? What information do they already have?
By answering the probable audience questions, you will improve the effectiveness of the message and increase the efficiency
of the delivery mechanism to be developed. You also need to spend some time finding out the best time and place to communicate.
Some messages are best received on weekdays, others on weekends.
Understand how the setting might affect the message. Once you have made a list of all potential settings for message
delivery, analyze how the settings might affect the way your messages will be received. Will the setting be formal or informal?
Perhaps "good news" should be shared in formal settings and "bad news" in informal settings-or vice versa.
4. Determine measures for success
How will you know your message has been well received and understood?
One measure might be the number of people who attended i.e. quantitative
Or
The subscriptions picked up or qualitative like ending up on national television. What are the end results of your
communication? If you understand this well, you can direct the flow of information effectively.
5. Identify the modes of delivery for the communication
Explore vehicles and tools for delivering the message. How will you reach key stakeholders? Note that the reach and impact of your
message will increase if the same message is distributed via multiple vehicles more than one time.
Some of the vehicles and tools for delivering the message include:
Presentations,
Public notices
Briefings
Exhibits
Responsiveness summaries
Telephone
Internet
Mailing information
By planning out a proper utilization of existing resources, you can minimize cost incurred on building additional vehicles for
communication.
Example: Enthusiastic word of mouth publicity would be far more effective than printing of hundreds of handouts. It would
be cost effective as well. I cannot emphasis the importance of identifying potential human assets within the organization who can
implement these into the main communication strategy as it would go a long way in making all communication cost effective.
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Actual delivery of your Message:
Sometimes it is better to put forward an Expert / Specialist to deliver the message rather than the primary stakeholders.
Example a scientist communicating the importance of new research will be a lot more credible than the lead sponsor taking over the
mike when the intention is to gather attention and interest of public. A better role for the lead sponsor would be in raising more money
for the cause.
A Good Communication Strategy should identify good human assets within the organization for each program and
keep them ready to fly when required.
Gathering Feedback
Any professional worth his dime will tell you even the best strategy will fail if it is not dynamic. The only way to be efficient
is to learn from experience. Hence make it a point to design a few different methods of collecting feedback. Setting a target and
comparing the actual results to it can be one of the readily available feedbacks.
Encourage feedback by showing the audience how their input was used. Evaluate the results and refine the strategy.
Based on audience feedback and measures for success, evaluate the implementation of your strategy. What are its strengths? Where
can it be improved? How should your communication strategy be amended to ensure continued effectiveness?
Remember any communication strategy is just that, a strategy. It should not replace the process of actually communicating
with your audience. It needs to be flexible enough to allow for a change in the message or in the audience. Consult your strategy often
to remind yourself of your goals, messages, and audiences. Document successes and shortcomings to learn how your communication
strategy can be improved.
Thus by following these communication strategies for a alternative product an International marketer do the business in a
successful way.
3. What are the similarities and differences between domestic and international marketing research? Explain giving suitable
examples.
International marketing
International marketing (IM) or global marketing refers to marketing carried out by companies overseas or across
national borderlines. This strategy uses an extension of the techniques used in the home country of a firm. It refers to the firm-level
marketing practices across the border including market identification and targeting, entry mode selection, marketing mix, and strategic
decisions to compete in international markets.
According to the American Marketing Association (AMA) "international marketing is the multinational process of
planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organizational objectives." In contrast to the definition of marketing only the word multinational has been
added. In simple words international marketing is the application of marketing principles to across national boundaries. However,
there is a crossover between what is commonly expressed as international marketing and global marketing, which is a similar term.
The intersection is the result of the process of internationalization. Many American and European authors see international
marketing as a simple extension of exporting, whereby the marketing mix 4P's is simply adapted in some way to take into account
differences in consumers and segments. It then follows that global marketing takes a more standardised approach to world markets and
focuses upon sameness, in other words the similarities in consumers and segments.
Differences between domestic marketing and international marketing

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There are various differences between domestic marketing and international marketing. Due to a language barrier it is more
difficult to obtain and interpret research data in international marketing. Promotional messages needs to consider numerous cultural
differences between different countries. This includes the differences in languages, expressions, habits, gestures, ideologies and more.
For example, in the United States the round O sign made with thumb and first finger means "okay" while in Mediterranean countries
the same gesture means "zero" or "the worst". In Tunisia it is understood as "I'll kill you" meanwhile for a Japan consumer it implies
"money". Even among the 74 English-speaking nations a word with the same meaning can differ greatly from the English which is
spoken in the United States as the following example shows:
• Police: bobby (Britain), garda (Ireland), Mountie (Canada), police wallah (South Africa)
• Porch: stoep (South Africa), gallery (Caribbean)
• Bar: pub (Britain), hotel (Australia), boozer (Australia, Britain, New Zealand)
• Bathroom: loo (Britain), dunny (Australia)
• Ghost or monster: wendigo (Canada), duppy (Caribbean), taniwha (New Zealand)
• Barbecue: braai (South Africa), barbie (Australia)
• Truck: lorry (Britain and Australia)
• Festival: feis (Ireland)
• Sweater: jumper (England)
• French fries: chips (Britain)
• Soccer: football (the rest of the world)
• Soccer field: pitch (England)
Three recent international examples of misinterpretation are:
• On a sign in a Bucharest hotel lobby: The lift is being fixed for the next day. During that time, we regret that you will be
unbearable.
• From a Japanese information booklet about using a hotel air conditioner: Cooles and Heates: If you want just condition of
warmin your room, please control yourself.
• In an Acapulco hotel: The manager has personally passed all the water served here.
Worldwide competition
One of the product categories in which global competition has been easy to track in U.S.is automotive sales. The increasing
intensity of competition in global markets is a challenge facing companies at all stages of involvement in international markets. As
markets open up, and become more integrated, the pace of change accelerates, technology shrinks distances between markets and
reduces the scale advantages of large firms, new sources of competition emerge, and competitive pressures mount at all levels of the
organization. Also, the threat of competition from companies in countries such as India, China, Malaysia, and Brazil is on the rise, as
their own domestic markets are opening up to foreign competition, stimulating greater awareness of international market opportunities
and of the need to be internationally competitive. Companies which previously focused on protected domestic markets are entering
into markets in other countries, creating new sources of competition, often targeted to price-sensitive market segments. Not only is
competition intensifying for all firms regardless of their degree of global market involvement, but the basis for competition is
changing. Competition continues to be market-based and ultimately relies on delivering superior value to consumers. However,
success in global markets depends on knowledge accumulation and deployment.[1] tiwana.
Domestic marketing
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A marketing restricted to the political boundaries of a country, is called "Domestic Marketing". A company marketing only
within its national boundaries only has to consider domestic competition. Even if that competition includes companies from foreign
markets, it still only has to focus on the competition that exists in its home market. Products and services are developed for customers
in the home market without thought of how the product or service could be used in other markets. All marketing decisions are made at
headquarters.
The biggest obstacle these marketers face is being blindsided by emerging global marketers. Because domestic marketers do
not generally focus on the changes in the global marketplace, they may not be aware of a potential competitor who is a market leader
on three continents until they simultaneously open 20 stores in the Northeastern U.S. These marketers can be considered ethnocentric
as they are most concerned with how they are perceived in their home country. Exporting goods to other countries.
International marketing
If the exporting departments are becoming successful but the costs of doing business from headquarters plus time differences,
language barriers, and cultural ignorance are hindering the company’s competitiveness in the foreign market, then offices could be
built in the foreign countries. Sometimes companies buy firms in the foreign countries to take advantage of relationships, storefronts,
factories, and personnel already in place. These offices still report to headquarters in the home market but most of the marketing mix
decisions are made in the individual countries since that staff is the most knowledgeable about the target markets. Local product
development is based on the needs of local customers. These marketers are considered polycentric because they acknowledge that
each market/country has different needs.
Advantages and Disadvantages
Advantages
• The advantages of global market we can introduce our product by using advertising
• Economies of scale in production and distribution
• Lower marketing costs
• Power and scope
• Consistency in brand image
• Ability to leverage good ideas quickly and efficiently
• Uniformity of marketing practices
• Helps to establish relationships outside of the "political arena"
• Helps to encourage ancillary industries to be set up to cater for the needs of the global player
• Benefits of eMarketing over traditional marketing
Domestic marketing is the marketing practices within a marketer's home country. Foreign marketing is the domestic
operations within a foreign country (i.e., marketing methods used outside the home market). Comparative marketing analytically
compares two or more countries' marketing systems to identify similarities and differences.
International marketing studies the "how" and "why" a product succeeds or fails abroad and how marketing efforts affect
the outcome. It provides a micro view of the market at the company level.
Multinational, global, and world marketing are all the same thing. Multinational marketing treats all countries as the world
market without designating a particular country as domestic or foreign. As such, a company engaging in multinational marketing is a
corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference
between international marketing and multinational marketing is probably insignificant in terms of strategic implications.
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4. You have to export heavy machinery from manufacturing unit in Delhi to London. Assume that the export is by sea,
explain the effect in terms of delivery on the price to be quoted. You may take hypothetical figures for various cost
components.
When we export our manufacturing goods to other countries by sea, we have to have INCOTERM
agreement. It refers to a type of agreement for the purchase and shipping of goods internationally. There are 13
different terms, each of which helps users deal with different situations involving the movement of goods. For
example, the term FCA is often used with shipments involving Ro/Ro or container transport; DDU assists with
situations found in intermodal or courier service-based shipments.
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INCOTERMS also deal with the documentation required for global trade, specifying which parties are
responsible for which documents. Determining the paperwork required to move a shipment is an important job,
since requirements vary so much between countries. Two items, however, are standard: the commercial invoice
and the packing list.
INCOTERMS were created primarily for people inside the world of global trade. Outsiders frequently
find them difficult to understand. Seemingly common words such as "responsibility" and "delivery" have
different meanings in global trade than they do in other situations.
In global trade, "delivery" refers to the seller fulfilling the obligation of the terms of sale or to
completing a contractual obligation. "Delivery" can occur while the merchandise is on a vessel on the high seas
and the parties involved are thousands of miles from the goods. In the end, however, the terms wind up boiling
down to a few basic specifics:
Costs: who is responsible for the expenses involved in a shipment at a given point in the shipment's
journey?
Control: who owns the goods at a given point in the journey?
Liability: who is responsible for paying damage to goods at a given point in a shipment's transit?
It is essential for shippers to know the exact status of their shipments in terms of ownership and
responsibility. It is also vital for sellers & buyers to arrange insurance on their goods while the goods are in their
"legal" possession. Lack of insurance can result in wasted time, lawsuits, and broken relationships.
INCOTERMS can thus have a direct financial impact on a company's business. What is important is not
the acronyms, but the business results. Often companies like to be in control of their freight. That being the case,
sellers of goods might choose to sell CIF, which gives them a good grasp of shipments moving out of their
country, and buyers may prefer to purchase FOB, which gives them a tighter hold on goods moving into their
country.
In this glossary, we'll tell you what terms such as CIF and FOB mean and their impact on the trade
process. In addition, since we realize that most international buyers and sellers do not handle goods themselves,
but work through customs brokers and freight forwarders, we'll discuss how both fit into the terms under
discussion.
INCOTERMS are most frequently listed by category. Terms beginning with F refer to shipments where the
primary cost of shipping is not paid for by the seller. Terms beginning with C deal with shipments where the
seller pays for shipping. E-terms occur when a seller's responsibilities are fulfilled when goods are ready to depart
from their facilities. D terms cover shipments where the shipper/seller's responsibility ends when the goods arrive
at some specific point. Because shipments are moving into a country, D terms usually involve the services of a
customs broker and a freight forwarder. In addition, D terms also deal with the pier or docking charges found at
virtually all ports and determining who is responsible for each charge.
Recently the ICC changed basic aspects of the definitions of a number of INCOTERMS, buyers and
sellers should be aware of this. Terms that have changed have a star
11alongside them.
EX-Works
One of the simplest and most basic shipment arrangements places the minimum responsibility on the seller
pickup at the shipper/seller's factory or warehouse and "delivery" is accomplished when the merchandise is
released to the consignee's freight forwarder. The buyer is responsible for making arrangements with their
forwarder for insurance, export clearance and handling all other paperwork.
FOB (Free On Board)
One of the most commonly used-and misused-terms, FOB means VK. that the shipper/seller uses his freight
forwarder to move the merchandise to the port or designated point of origin. Though frequently used to describe
inland movement of cargo, FOB specifically refers to ocean or inland waterway transportation of goods.
"Delivery" is accomplished when the shipper/seller releases the goods to the buyer's forwarder. The buyer's
5. A friend of yours, who owns a small manufacturing and selling leather jackets, would like to market his products abroad.
responsibility for insurance and transportation begins at the same moment.
Your friend seeks information from you on the following:
FCA (Free Carrier)

a) What are the major decision areas for strategic planning in the international marketing context?
The major areas for strategic planning in the International marketing context are the following:
In this type of transaction, the seller is responsible for arranging transportation, but he is acting at the risk
and the expense of the buyer. Where in FOB the freight forwarder or carrier is the choice of the buyer, in FCA the
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its
seller chooses and works with the freight forwarder or the carrier. "Delivery" is accomplished at a predetermined
resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic
port or destination point and the buyer is responsible for Insurance.
planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ), PEST analysis (Political, Economic, Social,
and Technological), STEER analysis (Socio-cultural, Technological, Economic, Ecological, and Regulatory factors), and EPISTEL
FAS (Free Alongside
(Environment, Ship)*
Political, Informatic, Social, Technological, Economic and Legal).
Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of
In these
three key transactions, the buyer bears all the transportation costs and the risk of loss of goods. FAS requires
questions:
the shipper/seller to clear goods for export, which is a reversal from past practices. Companies selling on these
terms1.will"What
ordinarily
do weuse their freight forwarder to clear the goods for export. "Delivery" is accomplished when
do?"
the goods
2. "For whom do wetodo
are turned over theit?"
Buyers Forwarder for insurance and transportation.
3. "How do we excel?"
CFR (Cost and Freight)
In business strategic planning, some authors phrase the third question as "How can we beat or avoid competition?". (Bradford and
Duncan, page 1). But this approach is more about defeating competitors than about excelling.
This term formerly known as CNF (C&F) defines two distinct and separate responsibilities-one is dealing
withInthemany
actual cost of merchandise
organizations, "C" and
this is viewed asthe other "F"
a process forrefers to the freight
determining where charges to a predetermined
an organization is going over the next year or - more
destination point. It is the shipper/seller's responsibility to get goods from
typically - 3 to 5 years (long term), although some extend their vision to 20 years. their door to the port of destination.
"Delivery" is accomplished at this time. It is the buyer's responsibility to cover insurance from the port of origin
or port of shipment
In order to buyer's
to determine wheredoor.
it isGiven
going,that
thethe shipper is responsible
organization needs to knowfor exactly
transportation,
where itthe shipper
stands, thenalso
determine where it wants to
chooses the forwarder.
go and how it will get there. The resulting document is called the "strategic plan."
CIF It
(Cost, Insurance
is also true thatand Freight
strategic planning may be a tool for effectively plotting the direction of a company; however, strategic planning
itself cannot foretell exactly how the market will evolve and what issues will surface in the coming days in order to plan your
This arrangement
organizational similar to CFR,
strategy. Therefore, but innovation
strategic instead of the
andbuyer insuring
tinkering withthe
thegoods for the
'strategic maritime
plan' have to phase of the
be a cornerstone strategy for an
voyage, the shipper/seller
organization to survive thewill insure business
turbulent the merchandise.
climate. In this arrangement, the seller usually chooses the
forwarder. "Delivery" as above, is accomplished at the port of destination.
Vision statements, Mission statements and values
CPT (Carriage Paid To)
Vision: Defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective
and/orIn CPT transactions
strategic the shipper/seller
direction. Vision has view,
is a long-term the same obligations
sometimes found with
describing how CIF, with the addition
the organization wouldthat
likethe
the world to be in which
seller has toFor
it operates. buyexample,
cargo insurance,
a charitynaming
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poorthemight
insured while
have the goods
a vision are inwhich
statement transit.reads "A World without Poverty."
CIP (Carriage and Defines

Mission: Insurance
thePaid To)
fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it
does to achieve its Vision.
It is
This sometimes
term usedused
is primarily to set
forout a "picture"transport.
multimodal of the organization
Because it in the on
relies future. A mission
the carrier's statement
insurance, theprovides details of what is
done and answers
shipper/seller therequired
is only question:to"What do we
purchase do?" For
minimum example,When
coverage. the charity might provide
this particular "job is
agreement training forFreight
in force, the homeless and
unemployed."
Forwarders often act in effect, as carriers. The buyer's insurance is effective when the goods are turned over to the
Forwarder.
DAF (Delivered At Frontier)

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Here the seller's responsibility is to hire a forwarder to take goods to a named frontier, which usually a
border crossing point, and clear them for export. "Delivery" occurs at this time. The buyer's responsibility is to
arrange with their forwarder for the pick up of the goods after they are cleared for export, carry them across the
border, clear them for importation and effect delivery. In most cases, the buyer's forwarder handles the task of
DES (Delivered Ex Ship)
In this type of transaction, it is the seller's responsibility to get the goods to the port of destination or to
engage the forwarder to the move cargo to the http://mbaignoumaterial.blogspot.com/
port of destination uncleared. "Delivery" occurs at this time. Any
destination charges that occur after the ship is docked are the buyer's responsibility.
Send(Delivered
DEQ documents Ex in *.pdf or *.doc format only. Your contribution is vital for success of this blog’s mission. Thanks Rajan
Quay)*
VK.
In this arrangement, the buyer/consignee is responsible for duties and charges and the seller is responsible
for delivering the goods to the quay, wharf or port of destination. In a reversal of previous practice, the buyer
must alsoValues:
arrange Beliefs that are
for customs shared among the stakeholders of an organization. Values drive an organization's culture and
clearance.
priorities and provide a framework in which decisions are made. For example, "Knowledge and skills are the keys to success" or "give
a man bread and feed him for a day, but teach him to farm and feed him for life". These example values may set the priorities of self
DDP (Delivered Duty Paid)
sufficiency over shelter.
DDP terms tend to be used in intermodal or courier-type shipments. Whereby, the shipper/seller is
Strategy: Strategy, narrowly defined, means "the art of the general" (from Greek stratigos). A combination of the ends
responsible for dealing with all the tasks involved in moving goods from the manufacturing plant to the
(goals) for which the firm is striving and the means (policies) by which it is seeking to get there.
buyer/consignee's door. It is the shipper/seller's responsibility to insure the goods and absorb all costs and risks
including the payment of duty and fees.
Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement. Others begin
with a vision and mission and use them to formulate goals and objectives.
DDU (Delivered Duty Unpaid)
Strategic planning outline
This arrangement is basically the same as with DDP, except for the fact that the buyer is responsible for the
duty, fees and taxes.
The preparatory phase of a business plan relies on planning. The first chapters of a business plan include Analysis of the
Current Situation and Marketing Plan Strategy and Objectives.
Thus these are the effects of terms of delivery on the price to be quoted when we are going to export our heavy
machinery from Delhi to London.
Analysis of the current situation - past year
• Business trends analysis

• Market analysis
• Competitive analysis
• Market segmentation
• Marketing-mix
• SWOT analysis
• Positioning - analyzing perceptions
• Sources of information
Marketing plan strategy & objectives - next year
• Marketing strategy
• Desired market segmentation
• Desired marketing-mix
• TOWS-based objectives as a result of the SWOT
• Position & perceptual gaps
• Yearly sales forecast
According to Arieu, "there is strategic consistency when the actions of an organisation are consistent with the expectations of
management, and these in turn are with the market and the context" (S.K. Sharman in Human Resource Management: A Strategic
Approach to Employment)
There are many approaches to strategic planning but typically a three-step process may be used:
• Situation - evaluate the current situation and how it came about.

• Target - define goals and/or objectives (sometimes called ideal state)
• Path / Proposal - map a possible route to the goals/objectives
One alternative approach is called Draw-See-Think

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• Draw - what is the ideal image or the desired end state?

• See - what is today's situation? What is the gap from ideal and why?
• Think - what specific actions must be taken to close the gap between today's situation and the ideal state?
• Plan - what resources are required to execute the activities?
An alternative to the Draw-See-Think approach is called See-Think-Draw
• See - what is today's situation?

• Think - define goals/objectives
• Draw - map a route to achieving the goals/objectives
In other terms strategic planning can be as follows:
• Vision - Define the vision and set a mission statement with hierarchy of goals and objectives
• SWOT - Analysis conducted according to the desired goals
• Formulate - Formulate actions and processes to be taken to attain these goals
• Implement - Implementation of the agreed upon processes
• Control - Monitor and get feedback from implemented processes to fully control the operation
Situational analysis
When developing strategies, analysis of the organization and its environment as it is at the moment and how it may develop
in the future, is important. The analysis has to be executed at an internal level as well as an external level to identify all opportunities
and threats of the external environment as well as the strengths and weaknesses of the organizations.
There are several factors to assess in the external situation analysis:
1. Markets (customers)
2. Competition
3. Technology
4. Supplier markets
5. Labor markets
6. The economy
7. The regulatory environment
It is rare to find all seven of these factors having critical importance. It is also uncommon to find that the first two - markets and
competition - are not of critical importance. (Bradford "External Situation - What to Consider")
Analysis of the external environment normally focuses on the customer. Management should be visionary in formulating
customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether
those customer sets are the ones the company wishes to serve.
Analysis of the competitive environment is also performed, many times based on the framework suggested by Michael Porter.
Thus following these above things he can make the decision in the international marketing context.
b) What kind of assistance can he get from different institutions?
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He can get a lot of assistance from different institutions to sell his leather products from the following.
a) Mens Leather Jacket company:
A splendid way to attain warmth, style and comfort in whole winter are these mens Leather Jackets, offered by us in
numberless designs, colors and sizes to opt for. These mens Leather Jackets are manufactured by us using high quality leather
procured from certified vendors of the market. We offer these mens leather jackets in standard as well as customized forms.
b) Formal leather Jacket
Leather House (CNB Exports) INDIA specialize in premium quality Men’s Leather Jacket which is designed by experts
keeping in mind the latest fashion and design trends. Made from premium quality processed leather, the Men’s Leather Jacket offered
by us have carved niche for themselves in the market.
c) Ladies Jackets:
d) Leather ladies Jacket:
Apart from being extremely warm and comfortable, these leather ladies jackets provide the wearers a glamorous appeal.
Manufactured from high grade leather, these ladies leather jackets are available in varied colors, sizes and designs options. These
women's jackets can be worn with Indian as well as western outfits.
e)Ladies Sheep Nappa Jacket
Biki is a specially designed ladies jacket with artificial fur in the collar, cuff and waist with contrast pipings. This is one of
our newest collection of our exclusive designs.
f) Motorcycle Jackets
Motor cycle jackets with triple stitch and with safety norms according to CE approved protectors and shoulder pads. Using
the specially developed fabrics and anti skid fabrics and the water proof leather , Motor Cycle jackets are made. These fabrics reduce
the risk of friction wearing holes in garments and injuring the wearer. Using a combination of traditional craftsmanship and innovative
technology, we are able to create Motorcycle clothes with the right feel. Motorcycle Clothes that give you the freedom to enjoy riding
your motorcycle on your own terms. Both our Motorcycle leather jackets feature items of clothing using the wind and water-resistant
functional membranes DrywayR, Dryway+R and c_changeTM. These keep the rider warm and dry even when the leather or fabric is
soaked through, improving comfort, which in turn increases passive safety. Improve comfort even more by adding the temperature
regulating material OutlastR and our TFL Cool System.
Thus he can get the assistance from different institutions to sell his products.
c) What are the options available to him for entering foreign markets and the potential difficulties involved with each
option?
Foreign Market Entry Modes
Foreign market entry modes differ in degree of risk they present, the control and commitment of resources they require and
the return on investment they promise.
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There are two major types of entry modes: equity and non-equity modes. The non-equity modes category includes export and
contractual agreements. The equity modes category includes: joint venture and wholly owned subsidiaries.
Exporting
Exporting is the process of selling of goods and services produced in one country to other countries. There are two types of
exporting: direct and indirect.
Direct exports
Direct exports represent the most basic mode of exporting, capitalizing on economies of scale in production concentrated in
the home country and affording better control over distribution. Foreign demand is treated as an extension of domestic demand. Direct
export works the best if the volumes are small. Large volumes of export may trigger protectionism. Direct exporting relies on two
principal channels: the foreign distributor channel, and the foreign subsidiary channel. A third, less common channel, is direct contact
between the manufacturer and the final buyers in the target market.
Types of Direct Exporting.
• Sales representatives represent foreign suppliers/manufacturers in their local markets for an established
commission on sales. Provide support services to a manufacturer regarding local advertising, local sales
presentations, customs clearance formalities, legal requirements. Manufacturers of highly technical services or
products such as production machinery, benefit the most form sales representation.
• Importing distributors purchase product in their own right and resell it in their local markets to
wholesalers, retailers, or both. Importing distributors are a good market entry strategy for products that are carried in
inventory, such as toys, appliances, prepared food.
Indirect exports
Indirect exports is the process of exporting through domestically based export intermediaries. The exporter has no control
over its products in the foreign market.
Types of Indirect Exporting:
• Export trading companies (ETCs) provide support services of the entire export process for one or more
suppliers. Attractive to suppliers that are not familiar with exporting as ETCs usually perform all the necessary
work: locate overseas trading partners, present the product, quote on specific enquiries, etc.
• Export management companies (EMCs) are similar to ETCs in the way that they usually export for
producers. Unlike ETCs, they rarely take on export credit risks and carry one type of product, not representing
competing ones. Usually, EMCs trade on behalf of their suppliers as their export departments.
• Export merchants are wholesale companies that buy unpackaged products from suppliers/manufacturers
for resale overseas under their own brand names. The advantage of export merchants is promotion. One of the
disadvantages for using export merchants result in presence of identical products under different brand names and
pricing on the market, meaning that export merchant’s activities may hinder manufacturer’s exporting efforts.
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• Confirming houses are intermediate sellers that work for foreign buyers. They receive the product
requirements from their clients, negotiate purchases, make delivery, and pay the suppliers/manufacturers. An
opportunity here arises in the fact that if the client likes the product it may become a trade representative. A potential
disadvantage includes supplier’s unawareness and lack of control over what a confirming house does with their
product.
• Nonconforming purchasing agents are similar to confirming houses with the exception that they do not
pay the suppliers directly – payments take place between a supplier/manufacturer and a foreign buyer.
Those companies that seriously consider international markets as a crucial part of their success would likely consider direct
exporting as the market entry tool. Indirect exporting is preferred by companies who would want to avoid financial risk as a threat to
their other goals.
Licensing
An international licensing agreement allows foreign firms, either exclusively or non-exclusively to manufacture a
proprietor’s product for a fixed term in a specific market.
Summarizing, in this foreign market entry mode, a licensor in the home country makes limited rights or resources available to
the licensee in the host country. The rights or resources may include patents, trademarks, managerial skills, technology, and others that
can make it possible for the licensee to manufacture and sell in the host country a similar product to the one the licensor has already
been producing and selling in the home country without requiring the licensor to open a new operation overseas. The licensor earnings
usually take forms of one time payments, technical fees and royalty payments usually calculated as a percentage of sales.
As in this mode of entry the transference of knowledge between the parental company and the licensee is strongly present,
the decision of making a international license agreement depend on the respect the host government show for intellectual property and
on the ability of the licensor to choose the right partners and avoid them to compete in each other market. Licensing is a relatively
flexible work agreement that can be customized to fit the needs and interests of both, licensor and licensee.
Following are the main advantages and reasons to use an international licensing for expanding internationally:
• Obtain extra income for technical know-how and services

• Reach new markets not accessible by export from existing facilities
• Quickly expand without much risk and large capital investment
• Pave the way for future investments in the market
• Retain established markets closed by trade restrictions
• Political risk is minimized as the licensee is usually 100% locally owned
• Is highly attractive for companies that are new in international business.
On the other hand, international licensing is a foreign market entry mode that presents some disadvantages and reasons why
companies should not use it as:
• Lower income than in other entry modes

• Loss of control of the licensee manufacture and marketing operations and practices dealing to loss of
quality
• Risk of having the trademark and reputation ruined by a incompetent partner
• The foreign partner can also become a competitor by selling its production in places where the parental
company is already in.
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Franchising
The Franchising system can be defined as: “A system in which semi-independent business owners (franchisees) pay fees and
royalties to a parent company (franchiser) in return for the right to become identified with its trademark, to sell its products or
services, and often to use its business format and system.”
Compared to licensing, franchising agreements tends to be longer and the franchisor offers a broader package of rights and
resources which usually includes: equipments, managerial systems, operation manual, initial trainings, site approval and all the
support necessary for the franchisee to run its business in the same way it is done by the franchisor. In addition to that, while a
licensing agreement involves things such as intellectual property, trade secrets and others while in franchising it is limited to
trademarks and operating know-how of the business.
Turnkey Projects
A turnkey project refers to a project in which clients pay contractors to design and construct new facilities and train
personnel. A turnkey project is way for a foreign company to export its process and technology to other countries by building a plant
in that country. Industrial companies that specialize in complex production technologies normally use turnkey projects as an entry
strategy.
One of the major advantages of turnkey projects is the possibility for a company to establish a plant and earn profits in a
foreign country especially in which foreign direct investment opportunities are limited and lack of expertise in a specific area exists.
Potential disadvantages of a turnkey project for a company include risk of revealing companies secrets to rivals, and takeover
of their plant by the host country. By entering a market with a turnkey project proves that a company has no long-term interest in the
country which can become a disadvantage if the country proves to be the main market for the output of the exported process.
Wholly Owned Subsidiaries (WOS)
A wholly owned subsidiary includes two types of strategies: Greenfield investment and Acquisitions. Greenfield investment
and acquisition include both advantages and disadvantages. To decide which entry modes to use is depending on situations.
Greenfield investment is the establishment of a new wholly owned subsidiary. It is often complex and potentially costly, but
it is able to full control to the firm and has the most potential to provide above average return. “Wholly-owned subsidiaries and
expatriate staff are preferred in service industries where close contact with end customers and high levels of professional skills,
specialized know how, and customization are required.” Greenfield investment is more likely preferred where physical capital
intensive plants are planned. This strategy is attractive if there are no competitors to buy or the transfer competitive advantages that
consists of embedded competencies, skills, routines, and culture.
Greenfield investment is high risk due to the costs of establishing a new business in a new country. A firm may need to
acquire knowledge and expertise of the existing market by third parties, such consultant, competitors, or business partners. This entry
strategy takes much time due to the need of establishing new operations, distribution networks, and the necessity to learn and
implement appropriate marketing strategies to compete with rivals in a new market.
Acquisition has become a popular mode of entering foreign markets mainly due to its quick access. Acquisition strategy
offers the fastest, and the largest, initial international expansion of any of the alternative.
Acquisition has been increasing because it is a way to achieve greater market power.The market share usually is affected by
market power. Therefore, many multinational corporations apply acquisitions to achieve their greater market power require buying a
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competitor, a supplier, a distributor, or a business in highly related industry to allow exercise of a core competency and capture
competitive advantage in the market.
Acquisition is lower risk than Greenfield investment because of the outcomes of an acquisition can be estimated more easily
and accurately. In overall, acquisition is attractive if there are well established firms already in operations or competitors want to enter
the region.
On the other hand, there are many disadvantages and problems in achieving acquisition success.
• Integrating two organizations can be quite difficult due to different organization cultures, control system,
and relationships. Integration is a complex issue, but it is one of the most important things for organizations.
• By applying acquisitions, some companies significantly increased their levels of debt which can have
negative effects on the firms because high debt may cause bankrupt.
• Too much diversification may cause problems. Even when a firm is not too over diversified, a high level
of diversification can have a negative effect on the firm in the long term performance due to a lack of management
of diversification.
Joint Venture
There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product
development, and conforming to government regulations. Other benefits include political connections and distribution channel access
that may depend on relationships. Such alliances often are favourable when:
• The partners' strategic goals converge while their competitive goals diverge
• The partners' size, market power, and resources are small compared to the Industry leaders
• Partners are able to learn from one another while limiting access to their own proprietary skills
The key issues to consider in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local
firm capabilities and resources, and government intentions. Potential problems include.
• Conflict over asymmetric new investments

• Mistrust over proprietary knowledge
• Performance ambiguity - how to split the pie
• Lack of parent firm support
• Cultural clashes
• If, how, and when to terminate the relationship
Joint ventures have conflicting pressures to cooperate and compete.
• Strategic imperative: the partners want to maximize the advantage gained for the joint venture, but they
also want to maximize their own competitive position.
• The joint venture attempts to develop shared resources, but each firm wants to develop and protect its own
proprietary resources.
• The joint venture is controlled through negotiations and coordination processes, while each firm would like
to have hierarchical control.
Strategic Alliance
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A Strategic Alliance is a term used to describe a variety of cooperative agreements between different firms, such as shared
research, formal joint ventures, or minority equity participation. The modern form of strategic alliances is becoming increasingly
popular and has three distinguishing characteristics:
1. They are frequently between firms in industrialized nations
2. The focus is often on creating new products and/or technologies rather than distributing existing ones
3. They are often only created for short term durations
Potential Risks:
Risk Options
Risk mitigation measures are usually formulated according to one or more of the following major risk options, which are:
1. Design a new business process with adequate built-in risk control and containment measures from the start.
2. Periodically re-assess risks that are accepted in ongoing processes as a normal feature of business operations and modify mitigation
measures.
3. Transfer risks to an external agency (e.g. an insurance company)
4. Avoid risks altogether (e.g. by closing down a particular high-risk business area)
Later research has shown that the financial benefits of risk management are less dependent on the formula used but are more
dependent on the frequency and how risk assessment is performed.
In business it is imperative to be able to present the findings of risk assessments in financial terms. Robert Courtney Jr. (IBM,
1970) proposed a formula for presenting risks in financial terms. The Courtney formula was accepted as the official risk analysis
method for the US governmental agencies. The formula proposes calculation of ALE (annualised loss expectancy) and compares the
expected loss value to the security control implementation costs (cost-benefit analysis).
Potential risk treatments
Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of these four major
categories:
• Avoidance (eliminate, withdraw from or not become involved)

• Reduction (optimize - mitigate)
• Sharing (transfer - outsource or insure)
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• Retention (accept and budget)
Ideal use of these strategies may not be possible. Some of them may involve trade-offs that are not acceptable to the organization
or person making the risk management decisions. Another source, from the US Department of Defense, Defense Acquisition
University, calls these categories ACAT, for Avoid, Control, Accept, or Transfer. This use of the ACAT acronym is reminiscent of
another ACAT (for Acquisition Category) used in US Defense industry procurements, in which Risk Management figures prominently
in decision making and planning.
Risk avoidance
This includes not performing an activity that could carry risk. An example would be not buying a property or business in
order to not take on the legal liability that comes with it. Another would be not flying in order not to take the risk that the airplane
were to be hijacked. Avoidance may seem the answer to all risks, but avoiding risks also means losing out on the potential gain that
accepting (retaining) the risk may have allowed. Not entering a business to avoid the risk of loss also avoids the possibility of earning
profits.
Risk reduction
Risk reduction or "optimization" involves reducing the severity of the loss or the likelihood of the loss from occurring. For
example, sprinklers are designed to put out a fire to reduce the risk of loss by fire. This method may cause a greater loss by water
damage and therefore may not be suitable. Halon fire suppression systems may mitigate that risk, but the cost may be prohibitive as a
strategy.
Acknowledging that risks can be positive or negative, optimising risks means finding a balance between negative risk and the
benefit of the operation or activity; and between risk reduction and effort applied. By an offshore drilling contractor effectively
applying HSE Management in its organisation, it can optimise risk to achieve levels of residual risk that are tolerable.
Modern software development methodologies reduce risk by developing and delivering software incrementally. Early
methodologies suffered from the fact that they only delivered software in the final phase of development; any problems encountered in
earlier phases meant costly rework and often jeopardized the whole project. By developing in iterations, software projects can limit
effort wasted to a single iteration.
Outsourcing could be an example of risk reduction if the outsourcer can demonstrate higher capability at managing or
reducing risks. For example, a company may outsource only its software development, the manufacturing of hard goods, or customer
support needs to another company, while handling the business management itself. This way, the company can concentrate more on
business development without having to worry as much about the manufacturing process, managing the development team, or finding
a physical location for a call center.
Risk sharing
Briefly defined as "sharing with another party the burden of loss or the benefit of gain, from a risk, and the measures to
reduce a risk."
The term of 'risk transfer' is often used in place of risk sharing in the mistaken belief that you can transfer a risk to a third
party through insurance or outsourcing. In practice if the insurance company or contractor go bankrupt or end up in court, the original
risk is likely to still revert to the first party. As such in the terminology of practitioners and scholars alike, the purchase of an insurance
contract is often described as a "transfer of risk." However, technically speaking, the buyer of the contract generally retains legal
responsibility for the losses "transferred", meaning that insurance may be described more accurately as a post-event compensatory
mechanism. For example, a personal injuries insurance policy does not transfer the risk of a car accident to the insurance company.
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The risk still lies with the policy holder namely the person who has been in the accident. The insurance policy simply provides that if
an accident (the event) occurs involving the policy holder then some compensation may be payable to the policy holder that is
commensurate to the suffering/damage.
Some ways of managing risk fall into multiple categories. Risk retention pools are technically retaining the risk for the group,
but spreading it over the whole group involves transfer among individual members of the group. This is different from traditional
insurance, in that no premium is exchanged between members of the group up front, but instead losses are assessed to all members of
the group.
Risk retention
Involves accepting the loss, or benefit of gain, from a risk when it occurs. True self insurance falls in this category. Risk
retention is a viable strategy for small risks where the cost of insuring against the risk would be greater over time than the total losses
sustained. All risks that are not avoided or transferred are retained by default. This includes risks that are so large or catastrophic that
they either cannot be insured against or the premiums would be infeasible. War is an example since most property and risks are not
insured against war, so the loss attributed by war is retained by the insured. Also any amounts of potential loss (risk) over the amount
insured is retained risk. This may also be acceptable if the chance of a very large loss is small or if the cost to insure for greater
coverage amounts is so great it would hinder the goals of the organization too much.
6. Why is an undertaking of different cultures important to an international marketing manager? Discuss with the help of
suitable examples.
Culture
Culture is part of the external influences that impact the consumer. That is, culture represents influences that are imposed on
the consumer by other individuals.
The definition of culture offered one text is “That complex whole which includes knowledge, belief, art, morals, custom, and any
other capabilities and habits acquired by man person as a member of society.” From this definition, we make the following
observations:
• Culture, as a “complex whole,” is a system of interdependent components.

• Knowledge and beliefs are important parts. In the U.S., we know and believe that a person who is skilled and works hard
will get ahead. In other countries, it may be believed that differences in outcome result more from luck. “Chunking,” the
name for China in Chinese, literally means “The Middle Kingdom.” The belief among ancient Chinese that they were in the
center of the universe greatly influenced their thinking.
• Other issues are relevant. Art, for example, may be reflected in the rather arbitrary practice of wearing ties in some countries
and wearing turbans in others. Morality may be exhibited in the view in the United States that one should not be naked in
public. In Japan, on the other hand, groups of men and women may take steam baths together without perceived as
improper. On the other extreme, women in some Arab countries are not even allowed to reveal their faces. Notice, by the
way, that what at least some countries view as moral may in fact be highly immoral by the standards of another country.
Culture has several important characteristics:
(1) Culture is comprehensive. This means that all parts must fit together in some logical fashion. For example, bowing and a
strong desire to avoid the loss of face are unified in their manifestation of the importance of respect.
(2) Culture is learned rather than being something we are born with. We will consider the mechanics of learning later in the course.
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(3) Culture is manifested within boundaries of acceptable behavior. For example, in American society, one cannot show up to
class naked, but wearing anything from a suit and tie to shorts and a T-shirt would usually be acceptable.
Failure to behave within the prescribed norms may lead to sanctions, ranging from being hauled off by the police for indecent
exposure to being laughed at by others for wearing a suit at the beach.
(4) Conscious awareness of cultural standards is limited. One American spy was intercepted by the Germans during World War II
simply because of the way he held his knife and fork while eating.
(5) Cultures fall somewhere on a continuum between static and dynamic depending on how quickly they accept change. For
example, American culture has changed a great deal since the 1950s, while the culture of Saudi Arabia has changed much less.
Dealing with culture
Culture is a problematic issue for many marketers since it is inherently nebulous and often difficult to understand. One may
violate the cultural norms of another country without being informed of this, and people from different cultures may feel
uncomfortable in each other’s presence without knowing exactly why (for example, two speakers may unconsciously continue to
attempt to adjust to reach an incompatible preferred interpersonal distance).
Warning about stereotyping.
When observing a culture, one must be careful not to over-generalize about traits that one sees. Research in social
psychology has suggested a strong tendency for people to perceive an “outgroup” as more homogenous than an “ingroup,” even when
they knew what members had been assigned to each group purely by chance. When there is often a “grain of truth” to some of the
perceived differences, the temptation to over-generalize is often strong. Note that there are often significant individual differences
within cultures.
Cultural lessons.
We considered several cultural lessons in class; the important thing here is the big picture. For example, within the Muslim
tradition, the dog is considered a “dirty” animal, so portraying it as “man’s best friend” in an advertisement is counter-productive.
Packaging, seen as a reflection of the quality of the “real” product, is considerably more important in Asia than in the U.S., where
there is a tendency to focus on the contents which “really count.” Many cultures observe significantly greater levels of formality than
that typical in the U.S., and Japanese negotiator tend to observe long silent pauses as a speaker’s point is considered.
Cultural characteristics as a continuum.
There is a tendency to stereotype cultures as being one way or another (e.g., individualistic rather than collectivistic). Note,
however, countries fall on a continuum of cultural traits. Hofstede’s research demonstrates a wide range between the most
individualistic and collectivistic countries, for example—some fall in the middle.
Hofstede’s Dimensions.
Gert Hofstede, a Dutch researcher, was able to interview a large number of IBM executives in various countries, and found that
cultural differences tended to center around four key dimensions:
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• Individualism vs. collectivism: To what extent do people believe in individual responsibility and reward rather than having
these measures aimed at the larger group? Contrary to the stereotype, Japan actually ranks in the middle of this dimension,
while Indonesia and West Africa rank toward the collectivistic side. The U.S., Britain, and the Netherlands rate toward
individualism.
• Power distance: To what extent is there a strong separation of individuals based on rank? Power distance tends to be
particularly high in Arab countries and some Latin American ones, while it is more modest in Northern Europe and the U.S.
• Masculinity vs. femininity involves a somewhat more nebulous concept. “Masculine” values involve competition and
“conquering” nature by means such as large construction projects, while “feminine” values involve harmony and
environmental protection. Japan is one of the more masculine countries, while the Netherlands rank relatively low. The
U.S. is close to the middle, slightly toward the masculine side. ( The fact that these values are thought of as “masculine” or
“feminine” does not mean that they are consistently held by members of each respective gender—there are very large
“within-group” differences. There is, however, often a large correlation of these cultural values with the status of women.)
• Uncertainty avoidance involves the extent to which a “structured” situation with clear rules is preferred to a more ambiguous
one; in general, countries with lower uncertainty avoidance tend to be more tolerant of risk. Japan ranks very high. Few
countries are very low in any absolute sense, but relatively speaking, Britain and Hong Kong are lower, and the U.S. is in the
lower range of the distribution.
Although Hofstede’s original work did not address this, a fifth dimension of long term vs. short term orientation has been
proposed. In the U.S., managers like to see quick results, while Japanese managers are known for take a long term view, often
accepting long periods before profitability is obtained.
High vs. low context cultures:
In some cultures, “what you see is what you get”—the speaker is expected to make his or her points clear and limit
ambiguity. This is the case in the U.S.—if you have something on your mind, you are expected to say it directly, subject to some
reasonable standards of diplomacy. In Japan, in contrast, facial expressions and what is not said may be an important clue to
understanding a speaker’s meaning. Thus, it may be very difficult for Japanese speakers to understand another’s written
communication. The nature of languages may exacerbate this phenomenon—while the German language is very precise, Chinese
lacks many grammatical features, and the meaning of words may be somewhat less precise. English ranks somewhere in the middle
of this continuum.
Ethnocentrism and the self-reference criterion.
The self-reference criterion refers to the tendency of individuals, often unconsciously, to use the standards of one’s own
culture to evaluate others. For example, Americans may perceive more traditional societies to be “backward” and “unmotivated”
because they fail to adopt new technologies or social customs, seeking instead to preserve traditional values. In the 1960s, a
supposedly well read American psychology professor referred to India’s culture of “sick” because, despite severe food shortages, the
Hindu religion did not allow the eating of cows. The psychologist expressed disgust that the cows were allowed to roam free in
villages, although it turns out that they provided valuable functions by offering milk and fertilizing fields. Ethnocentrism is the
tendency to view one’s culture to be superior to others. The important thing here is to consider how these biases may come in the way
in dealing with members of other cultures.
It should be noted that there is a tendency of outsiders to a culture to overstate the similarity of members of that culture to
each other. In the United States, we are well aware that there is a great deal of heterogeneity within our culture; however, we often
24

VK.
underestimate the diversity within other cultures. For example, in Latin America, there are great differences between people who live
in coastal and mountainous areas; there are also great differences between social classes.
Language issues.
Language is an important element of culture. It should be realized that regional differences may be subtle. For example, one
word may mean one thing in one Latin American country, but something off-color in another. It should also be kept in mind that
much information is carried in non-verbal communication. In some cultures, we nod to signify “yes” and shake our heads to signify
“no;” in other cultures, the practice is reversed. Within the context of language:
• There are often large variations in regional dialects of a given language. The differences between U.S., Australian, and
British English are actually modest compared to differences between dialects of Spanish and German.
• Idioms involve “figures of speech” that may not be used, literally translated, in other languages. For example, baseball is a
predominantly North and South American sport, so the notion of “in the ball park” makes sense here, but the term does not
carry the same meaning in cultures where the sport is less popular.
• Neologisms involve terms that have come into language relatively recently as technology or society involved. With the
proliferation of computer technology, for example, the idea of an “add-on” became widely known. It may take longer for
such terms to “diffuse” into other regions of the world. In parts of the World where English is heavily studied in schools, the
emphasis is often on grammar and traditional language rather than on current terminology, so neologisms have a wide
potential not to be understood.
• Slang exists within most languages. Again, regional variations are common and not all people in a region where slang is
used will necessarily understand this. There are often significant generation gaps in the use of slang.
Writing patterns, or the socially accepted ways of writing, will differs significantly between cultures.
In English and Northern European languages, there is an emphasis on organization and conciseness. Here, a point is made by
building up to it through background. An introduction will often foreshadow what is to be said. In Romance languages such as
Spanish, French, and Portuguese, this style is often considered “boring” and “inelegant.” Detours are expected and are considered a
25

VK.
sign of class, not of poor organization. In Asian languages, there is often a great deal of circularity. Because of concerns about
potential loss of face, opinions may not be expressed directly. Instead, speakers may hint at ideas or indicate what others have said,
waiting for feedback from the other speaker before committing to a point of view.
Because of differences in values, assumptions, and language structure, it is not possible to meaningfully translate “word-for-
word” from one language to another. A translator must keep “unspoken understandings” and assumptions in mind in translating. The
intended meaning of a word may also differ from its literal translation. For example, the Japanese word hai is literally translated as
“yes.” To Americans, that would imply “Yes, I agree.” To the Japanese speaker, however, the word may mean “Yes, I hear what you
are saying” (without any agreement expressed) or even “Yes, I hear you are saying something even though I am not sure exactly what
you are saying.”
Differences in cultural values result in different preferred methods of speech. In American English, where the individual is
assumed to be more in control of his or her destiny than is the case in many other cultures, there is a preference for the “active” tense
(e.g., “I wrote the marketing plan”) as opposed to the passive (e.g., “The marketing plan was written by me.”)
Because of the potential for misunderstandings in translations, it is dangerous to rely on a translation from one language to
another made by one person. In the “decentering” method, multiple translators are used. The text is first translated by one translator
—say, from German to Mandarin Chinese. A second translator, who does not know what the original German text said, will then
translate back to German from Mandarin Chinese translation. The text is then compared. If the meaning is not similar, a third
translator, keeping in mind this feedback, will then translate from German to Mandarin. The process is continued until the translated
meaning appears to be satisfactory.
Different perspectives exist in different cultures on several issues; e.g.:
• Monochronic cultures tend to value precise scheduling and doing one thing at a time; in polychronic cultures, in contrast,
promptness is valued less, and multiple tasks may be performed simultaneously. (See text for more detail).
• Space is perceived differently. Americans will feel crowded where people from more densely populated countries will be
comfortable.
• Symbols differ in meaning. For example, while white symbols purity in the U.S., it is a symbol of death in China. Colors
that are considered masculine and feminine also differ by culture.
• Americans have a lot of quite shallow friends toward whom little obligation is felt; people in European and some Asian
cultures have fewer, but more significant friends. For example, one Ph.D. student from India, with limited income, felt
obligated to try buy an airline ticket for a friend to go back to India when a relative had died.
• In the U.S. and much of Europe, agreements are typically rather precise and contractual in nature; in Asia, there is a greater
tendency to settle issues as they come up. As a result, building a relationship of trust is more important in Asia, since you
must be able to count on your partner being reasonable.
• In terms of etiquette, some cultures have more rigid procedures than others. In some countries, for example, there are explicit
standards as to how a gift should be presented. In some cultures, gifts should be presented in private to avoid embarrassing
the recipient; in others, the gift should be made publicly to ensure that no perception of secret bribery could be made.
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MS-64 INTERNATIONAL MARKETING

1) Differentiate between the following

a) Free trade area and customs union

Free trade area

The Difference Between a Free Trade Area & a Customs Union

Free Trade Areas

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b)” Commercial invoice” and “Proforma invoice”

Pro Forma Invoice:

• Considered a binding agreement.

• Should be prepared in the manner customary to trade.

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Pre-investment planning includes:

• Preparation of Master Plans

d) Ethnocentric and polycentric orientation:

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Why would you need a communication strategy?

1. The Need for the Communication Strategy: Identify the Reason

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What actions are you taking that warrant development of a strategy?

Is this a launch of a new product or an information campaign?

2. The Message: Identify the message that is to be conveyed.

"No," said the great leader, "that would be an accident."

The room went totally silent.

No one else volunteered.

"Isn't there someone here who can give me an example of tragedy?"

3. The Audience: Identify the target audience for the Communication

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Once the messages are identified, ask yourself:

4. Determine measures for success

5. Identify the modes of delivery for the communication

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Actual delivery of your Message:

Differences between domestic marketing and international marketing

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Three recent international examples of misinterpretation are:

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Advantages and Disadvantages

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FCA (Free Carrier)

CIP (Carriage and Defines

DAF (Delivered At Frontier)

• Business trends analysis

Marketing plan strategy & objectives - next year

• Situation - evaluate the current situation and how it came about.

One alternative approach is called Draw-See-Think

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• Draw - what is the ideal image or the desired end state?

An alternative to the Draw-See-Think approach is called See-Think-Draw

• See - what is today's situation?

In other terms strategic planning can be as follows:

There are several factors to assess in the external situation analysis:

b) What kind of assistance can he get from different institutions?

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a) Mens Leather Jacket company:

b) Formal leather Jacket

e)Ladies Sheep Nappa Jacket

Foreign Market Entry Modes

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Types of Direct Exporting.