Question No. 3 IBO - 02 International Marketing Management Mcom 1st Year

Solutions to Assignments 

IBO-02 International Marketing Management

Solutions to Question No. 3

a) International Sales People 

An international sales representative is a person who sells goods or services to clients outside of his own country. 

A salesman is an ambassador of his company to the external world. He leaves a lasting impression on those with whom he interacts and form an opinion about the company from his behaviour. By no stretch of imagination, we can consider the production staff or, for that matter any other staff of the organisation wielding the same influence as the salesman does.

A salesman is out in the field, with no direct or little direct supervision, whereas other employees have to work under close supervision. A salesman needs human relations skill much more than others. As he interacts with a variety of people in diverse situations, he must show diplomatic skills and composure. Field duties involve hard physical labor, and are never a bed of roses. Besides, selling demands creativity, doggedness and initiative. Thus, a successful salesman should have a combination of brain and brawn. As he is to be self-directed, he needs strong motivation.

A salesman needs human relations skill much more than others. As he interacts with a variety of people in diverse situations, he must show diplomatic skills and composure. He should show tact and intelligence while dealing with his customers.

A salesman is authorized to spend company’s money for his lodging, boarding, travelling and entertainment. Very few in the company are so authorized to use the company’s funds.He should show tact and intelligence while dealing with his customers. A salesman is authorized to spend company’s money for his lodging, boarding, travelling and entertainment. A salesman cannot enjoy family life like people in other walks of life do. He has to travel his territory while servicing it.

A salesman cannot enjoy family life like people in other walks of life do. He has to travel his territory while servicing it. Besides, selling is a high pressure job. All this makes him prone to stress. Thus, a salesman has to brave all kinds of adverse situations, while being away from home. It is, thus, a very tough job.

A salesperson is an individual whose fundamental job is to sell a product/service. They are people who are predomi­nantly engaged in personal selling activities on behalf of the company with a view to generate business connections that culminate the salespeople in delivering the product or service to the customers.

This is the description of salespeople that was portrayed in traditional selling. However, in modern selling, a salesperson’s role extends much over than just delivering the product to the customers. Today, the bigger role of a salesperson lies in the post-selling period.

The job of the salesperson apparently sounds simple in ideation but intricate in execution. Selling is an all-important task of an organization. It is the wheel of the organization that gives mobility to it. It determines the success or failure of the organization. It guides and controls the performance of the organization. Salespeople are the drivers of the ‘organization’ wagon.

Salespeople are the human factors in selling that stimulates prospective cus­tomers to be the real customers and the present customers to stay with the firm and opt for higher rate of consumption. Salespeople also act at the operational ambit of the organization. Success in sales plans, policies, strategies rely heav­ily on the personalized selling demonstrated by salespeople. A salesperson can work on behalf of a manufacturer, wholesaler, distributor, retailer, institution, franchisee, etc.

In the traditional selling format, salespeople held a ‘pushy’ image. They used to coax and cajole innocent customers into buying their products. Even for narrow interests, salespeople did not hesitate to cross ethical lines of business and dupe naive customers by swallowing over-priced products or inferior-quality products. Tall talk and lofty claims were often used as means to persuade customers to lean towards their products. Often, these salespeople were talkative and deceptive. They persistently used to flatter less or non-informative customers to join hands by pressure tactics.

(b) Export agency agreement

The export contract is used for the international sale of certain products (industrial supplies, raw materials, manufactured goods), which are projected for resale, where the buyer is a trader, importer, distributor or wholesaler that will sell the products to another company or merchant. Though it is common practice to export products based a proforma invoice or quotation received from exporters, it is a safe practice to use written and legal export contracts. Some of the essential elements of an export contract are:

• Products, standards and specifications.
• Units of measure in both figures and words.
• Total value. The total contract value in words and figures, and in a specific currency.
• Terms of delivery. Delivery terms, based on the Incoterms.
• Terms of payment. Amount, mode and currency.
• Documentary requirements. Documents needed for international trade transactions.
• Delay in delivery. Damages due to the importer from the exporter in the event of late delivery owing to reasons other that force majeure.
• A contract should provide for the insurance of goods against loss, damage or destruction during transportation.
• Force majeure. Provisions in the contract defining circumstances that would relieve partners of their liability for non-performance of the contract.
• Applicable law. The law of the country that is to govern the contract.
• Arbitration clause to facilitate amicable and quick settlement of disputes or differences that may arise between the parties.

(c) Data sources

Marketing information and research are powerful tools to improve your understanding of your customers, competitors, and the industry and market in which you work. In today’s information-rich world, many great sources of marketing data are already available. Knowing what they are and how to find them is a great skill for any marketer.

The data sources recommended below are a representative sampling, rather than a complete list.

It is also worth noting that the marketing information landscape is continually changing. Marketers would be well served to continually scan for new developments and information sources that may be beneficial to improve their understanding of customers and ways of serving them.

- Publicly Available Data Sources

Government agencies, non-profit organizations, and non-governmental organizations often publish freely available data that may inform marketers’ understanding of consumers, customers, the geographies, and industry sectors where they operate.

- Syndicated Marketing Research Data

A number of commercial companies provide syndicated marketing research that is well respected and often well used by organisations that subscribe to their services.

- Other Useful Sources for Marketing Data

These additional sources for other types of marketing information are also warrant attention. Whether or not marketers use them, they should be aware of these tools and how they can be useful for a variety of marketing purposes. 

 (d) Transfer Pricing

Transfer prices are those charged for intracompany movement of goods and services. Firms need to make transfer-pricing decisions when goods are transferred from the headquarters to the subsidiaries in another countries. This transfer prices are important because goods transferred from country to country must have a value for cross-border taxation purposes. There are three basic approaches to transfer pricing:

• Transfer at cost. The transfer price is set at the level of the production cost and the international division is credited with the entire profit that the firm makes. This means that the production center is evaluated on efficiency parameters rather than profitability.
• Transfer at arm´s length. Here the international division is charged the same as any buyer outside the firm. Problems occur if the overseas division is allowed to buy elsewhere when the price is uncompetitive or the product quality is inferior, and further problems arise if there are no external buyers, making it difficult to establish a relevant price. Nevertheless, this approach has now been accepted worldwide as the preferred (not required) standard by which transfer prices should be set.
• Transfer at cost plus. This is the usual compromise, where profits are split between the headquarters and the subsidiaries. The formula used for assessing the transfer price can vary, but usually it is this method that has the greatest chance of minimizing time spent on transfer-price disagreements, optimizing corporate profits and motivating the headquarters and subsidiaries.

The best solution also depends on the tax rates in the countries of the headquarters and subsidiaries. 

Question No. 2 IBO - 02 International Marketing Management Mcom 1st Year

Solutions to Assignments 

IBO-02 International Marketing Management

Solutions to Question No. 2

International marketing communication includes all methods companies use to provide information to and communicate with existing and potential customers and other stakeholders. The international communication process is affected by many factors that complicate communication in an international (cross-country or cross-cultural) setting (see Chapter 9). In this context, aspects such as language differences, economic differences, socio-cultural differences, legal and regulatory differences or competitive differences are crucial.

The international communication mix consists of a diverse set of communication tools such as advertising, personal selling, sales promotions, public relations or direct marketing.

The most viable form of communication is advertising, which often constitutes the most important part of the communication mix in the consumer goods industry. However, in business-to-business markets, advertising is often less important than personal selling.

Marketers engage in international marketing communications with the following objectives in mind: 

Question No. 1 IBO - 02 International Marketing Management Mcom 1st Year

Solutions to Assignments 

IBO-02 International Marketing Management

Solutions to Question No. 1 

After a firm has chosen an attractive market, the next decision to be made is the timing of entry. Entry is considered early, when an international business enters the market prior to other foreign firms and late when it enters after other firms have already established themselves in the market. Entering the market early brings first mover advantages that include the opportunity to establish a strong brand name, acquire demand from the market, increase sales volume, and create switching costs that attach a customer to a given product or service (Kotabe & Kothari, 2016).

However, entering the market early can bring pioneering costs that a firm that enters the market later may be able to avoid. Pioneering costs include the costs of promoting and establishing the product. The probability of a firm surviving in a market increases, if they enter after several other firms have already established the market. Government regulations can also put an early entrant at a disadvantage, because laws can hinder the value of the early entrant’s investment (Hill, 2013).

The next decision that needs to be made is the scale of entry and strategic commitments. Significant assets and resources are needed for a large scale foreign market entry, which commits a firm to the market. Strategic commitments alter the competitive playing field for other firms and produce various changes and inflexibility for the firm. Large scale market entry implies rapid entry and offers the first mover advantages, such as demand acquisition, scale economies, and switching costs.

An entry on a smaller scale allows the firm to build themselves up gradually while becoming better acquainted with the market and limiting exposure to the market. Small scale market entry can also make it difficult for the firm to increase market share, because of their lack of commitment to the market. The small scale entrant reduces potential risk but also misses out on the opportunity for first mover advantages (Porter, 1980).

Taking all of these considerations into mind, there are not right or wrong decisions for a firm to make. Each series of decisions offers unique rewards and benefits and costs and risks.

Different companies grow globally by adopting different types of strategies of entering into foreign markets. Some companies even adopt different strategies for different nations. Various strategies of entering into foreign markets are discussed as follows:

(1) Exporting: Exporting is the most traditional way of entering into foreign market. Initially, a domestic business unit starts its international business by exporting to one nation. Gradually, it expands its exports to various nations. Exporting is very useful when a country has surplus production capacity i.e., its domestic consumption is less than its production capacity 

(2) licensing and Franchising: In licensing business unit of one country (Licensor) allows the business unit of other country (Licensee) to use its technical know-how (patents, trademarks, copyrights, etc.). For this, licensor charges royalty from license for a stipulated period of time. In most of the nations, the rate of royalty ranges from 5 per cent to 8 per cent of sales. Licensing agreements enable the licensor to make maximum utilization of its intellectual property. Licensee, too, can avail the benefits of modern technology by entering into licensing agreement. Under franchising, business unit of one nation (Franchiser) grants right to do business in a particular manner to the business unit of other nation (Franchisee). This right can be with regard to selling the goods under the brand name of franchiser. In some cases, the key components are provided by franchiser to franchisee. In another form of franchising, the manufacturer may appoint dealers in other nations. For example, soft drink manufacturers like Pepsi and Coca-Cola provide the key part of their product, Le. syrup to their franchisee in other nations. The franchisees have their own bottling plants where they make soft drinks but they sell the same under the brand name of franchiser.

(3) Contract Manufacturing: In this agreement, business unit of one nation enters into agreement with manufacturers of other nations to allow them to manufacture the goods at their own, but right to market these goods is retained by the parent foreign enterprise. Under such agreement, the parent foreign enterprise can expand its business to other nations without setting up its own manufacturing plant in other nations. If the parent enterprise feels that marketing in a particular nation is not much profitable, it can have easy exit from that nation as it has not set up its own production plant in other nation.

(4) Joint Ventures: It is a common strategy for getting an entry into foreign market. In joint venture, foreign partner makes an arrangement with local unit of other country in which ownership and management are shared by iocal unit and foreign partner. Local unit has thorough knowledge of domestic conditions and it has its local set-up and infrastructure like manufacturing unit, distribution network, service centres, etc.

(5) Management Contracting: In this arrangement, parent enterprise of one nation sets up management agencies. Through these management agencies, business units of other nations are managed without any stake in ownership/capital. It means the parent enterprise simply provides its managerial expertise to business units of other nations. For this, some fees in the form of percentage of profit or lump sum fee is charged by parent enterprise.

(6) Wholly Owned Subsidiaries: Some companies open wholly owned manufacturing units in other nations. These subsidiary companies are wholly owned by their parent company. MNCs prefer this route for globalization when they want to have complete control over manufacturing activities in other nations. Instead of entering into joint ventures, licensing, franchising, exporting, etc., they set up their own subsidiary units in different nations. MNCs have full ownership and control over these subsidiary units. For example, LG Electronics has set up LG India as its wholly owned manufacturing subsidiary unit. 

IBO-02 International Marketing Management Mcom 1st Year

SOLUTIONS TO ASSIGNMENTS

IBO - 02 - International Marketing Management

Question No. 1 “One of the critical decisions in international marketing is the mode of entering the foreign market”. Discuss                                                     CLICK HERE 

Question No. 2 What is international marketing communication? Discuss its objectives and highlight the key issues in international marketing communication.                 CLICK HERE

Question No. 3 Write short notes on the following: 

(a) International Sales People 

(b) Export agency agreement 

(c) Data sources 

(d) Transfer Pricing                                                  CLICK HERE

Question No. 4 Differentiate between the following: 

(a) Probability and Non-probability Sampling Methods 

(b) Adaptation and Standardization International Advertising 

(c) Domestic agent and Domestic merchants. 

(d) Ethnocentric orientation and Polycentric orientation             CLICK HERE

Question No. 5 Comment briefly on the following statement: 

(a) In addition to the general considerations in packaging, there are certain special factors to be considered in export packaging. 

(b) International marketing displays an interesting paradox with respect to control situation. 

(c) The revolutionary changes in the information technology is sweeping across global business. 

(d) A market research report must use the format that best fits the needs and desires of its readers. 

                                                                                                        CLICK HERE

Question No. 5 IBO - 01 International Business Environment Mcom 1st Year

 

Solutions to Assignments

IBO-01 International Business Environment

Question No. 5 A) 

Political Risks

Geopolitical risk, also known as political risk, transpires when a country's government unexpectedly changes its policies, which now negatively affect the foreign company. These policy changes can include such things as trade barriers, which serve to limit or prevent international trade.

Some governments will request additional funds or tariffs in exchange for the right to export items into their country. Tariffs and quotas are used to protect domestic producers from foreign competition. This also can have a huge effect on the profits of an organization because it either cuts revenues from the result of a tax on exports or restricts the amount of revenues that can be earned.

Countries have implemented free-trade agreements, such as the North American Free Trade Agreement (NAFTA) and other similar measures, in an effort to reduce the number of trade barriers. However, not all of these measures are successful, and ongoing trade wars can disrupt an international company's business and market efficiency. Thus, the everyday differences in the laws of foreign countries continue to influence the profits and overall success of a company doing business transactions abroad.

Question No. 5 B) 

Alternative Dispute Resolution (ADR)

Alternative dispute resolution (ADR) is, in an insurance sense, a number of disparate processes used by companies to resolve claims and contractual disputes. Insured clients who are denied a claim are offered this course of action as a form of recourse. It is employed to avoid expensive and time-consuming litigation and arbitration.

Alternative dispute resolution (ADR) is designed to settle disputes outside of the courtroom with the help of an impartial third party. This path is generally accessible after efforts between the client and the insurer to resolve any differences between themselves fails and reaches an impasse.

Many insurance policies contain mandatory alternative dispute resolution (ADR) clauses, depending on the state. The two most common forms of alternative dispute resolution (ADR) are:

1. Mediation: An independent third party steps in to try and find a way for the insured and the insurer to agree on a mutually acceptable outcome. The mediator is not called upon to decide who is right but rather to add structure to communication between the disputing parties, so that they can, hopefully, eventually reach a resolution between themselves.
2. Arbitration: A neutral independent party called an arbitrator listens to arguments from both sides, collects evidence, and then decides on the outcome of the dispute, similar to a court ruling. Arbitration can either be non-binding or binding. The latter means the decision is final and enforceable, while the former implies that the arbitrator’s ruling is advisory and only set in stone if both parties agree to it.

Question No. 5 C) 

Wagering Agreement

Agreements entered into between parties under the condition that money is payable by the first party to the second party on the happening of a future uncertain event, and the second party to the first party when the event does not happen, are called Wagering Agreements or Wager. There should be mutual chance of profit and loss in a wagering agreement. Generally wagering agreements are void.

Wager means a bet. It is a game of chance where the probability of winning or losing is uncertain. The chance of either winning or losing is wholly dependent on an uncertain event.

Parties involved in a wagering contract mutually agree upon the nature of the agreement that either one will win. Each party stands equally to win or lose the bet. The chance of gain or the risk of loss is not one sided. If either of the parties may win but not lose, or may lose but cannot win, it is a wagering contract.

The essence of a wagering contract is that neither of the parties should have any interest in the contract other than the sum, which he will win or lose. Parties to a wagering contract focus mainly on the profit or loss they earn.

Question No. 5 D) 

Code of Ethics for International Marketing

A large amount of international trade is carried out by MNCs that are under conflicting pressures of their stakeholders. Some of the notable pressures on them are listed below.

Pressure to meet demands of consumers of their products, having apparently similar characteristics and expectations from products and services, but differing in their lifestyles and environmental factors. Pressure to meet the expectations of shareholders about rate of return on investment, requiring them to be prudent investors and to effectively handle various risks of their activities. Pressure to do effective financial management including availing all legally permissible tax benefits. Pressure to compete effectively in their markets.

A review of various pressures on major player in international trade shows the need to clearly lay down guidelines, in form of code ethics, for their employees. Such code of ethics should lay down guidelines for operating in various markets, particularly focusing on places where unethical behaviour is more common. However, as the player have been more concerned with growth and development of their business, the code of conduct has been emphasized and laid down by outside agencies such as OECD, International Chamber of commerce, International Labour Organization and UN Committee on Transnational Corporations. These codes address issues related to MNCs and their stakeholders such as host government, the public, consumers and employees.

Apart from conforming to general ethical behaviour, the ethical codes of the companies active in international trade should ensure the following.

i) Need to respect laws and regulations of the host countries and do nothing to compromise with the health and safety of consumers. US laws on product liability, a big litigation issue, is an extreme case that affects the development of new products, especially the pharmaceuticals. Such legislation makes small firms reluctant to export to USA due to prohibitive cost of litigation.

ii) Firms should not exploit the weakness in legislation in host countries such as selling products in these markets that are banned elsewhere.

 iii) The firms can be proactive and assist the governments in preventing marketing of unsafe products. However, the close relationship developed by firm with the local government, should not be misused such as gaining competitive advantage through adaptation of company's product specification, taking advantage of local lack of expertise in a particular area.