Chapter 13: Exporting, Importing, and Countertrade Export and Import Financing Mechanism for financing exports and imports have evolved over the centuries in response to a problem that can be particular acute in international trade. 1. Lack of trust: Firms engaged in international trade have to trust someone they may have never seen, who live in a different country, who speaks a different language, who abides by a different legal system, and who could be very difficult to track down if he or she defaults on an obligation. 2. Letter of credit: Issued by a bank at the request of an importer, the letter of credit states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents. 3. Draft: An order written by an exporter instructing an importer, or an importer’s agent, to pay a specified amount of money at a specified time. 4. Bill of loading: A document issued to the exporter by the common carrier transporting the merchandise; it serves as a receipt, a contract, and a document of title. 5 types of countertrade 1. Barter: the exchange of goods and/or services between two parties without a cash transaction. 2. Counterpurchase : A reciprocal buying agreement. 3. Offset : A buying agreement similar to a counterpurchase, but the exporting country can then fulfill the agreement with any firm in the country to which the sale is being made. 4. Switch Trading : The use of a specialized third-party trading house in a countertrade arrangement. 5. Buyback : When a firm builds a plant in a country and agrees to take a certain percentage of the plant’s output as partial payment for the contract. Chapter 15 : Global Marketing and R&D What is marketing mix? Marketing mix is choices about product attributes, distribution strategy, communication strategy, and pricing strategy that a firm offers its targeted markets. What is market segmentation? Market Segmentation is identifying groups of consumers whose purchasing behavior differs from others in important ways. Product Attributes A product can be viewed as a bundle of attributes. For example, the attributes that make up a car include power, design, quality, performance, fuel consumption, and comfort. Cultural Differences are countries differ along a whole range of dimensions, including social structure, language, religion, and education. These differences have important implications for marketing strategy. For example, hamburger do not sell well in Islamic countries, where the consumption of ham is forbidden by Islamic law. Economic development : Consumer behavior is influenced by the level of economic development country. Firm based in highly developed countries such as the United States tend to build a lot of extra performance attributes into their products. Product and technical standards : Differing government – mandated product standards can rule out mass production and marketing of a standardized product.