Question

International Business

1. Identify and discuss 2 sources of secondary and 2 sources of primary market research.

2. Identify and describe one element of ‘the marketing plan’.

3. Identify and describe two of the five Stages of Exporting.

4. Identify and describe two advantages and two disadvantages of working with a Distributor.

5. Identify and describe the 4 categories of Incoterms.

6. Discuss whether the following terms are an unfair trade advantage: anti-dumping and subsidies.

Answer 1

Ans- 1) 2 SOURCES OF PRIMARY MARKET RESEARCH (means first hand information by the original tageted population/buyers) -:

• Interviews - : Can be telephonic or face to face. You interview the prospective buyer about his choices,willingness to pay etc for a specific product.
• Surveys -: Can be online or through mail. The prospective buyers are asked questions related to product and the resu;ts are then interpreted to analyse the market for a particular product.

2 SOURCES OF SECONDARY MARKET RESEARCH (means using reports or studies compiled by other organisations) -:

• Govt agencies -: Data compiled by a govt agency about the market can be useful for analysis to The demand and supply gaps in the market.
• Magazines -; Data compiled by pvt companies and published in magazines can also be used for the market SWOT analysis.

Ans-2) One element of MARKET PLAN -:

• Promotion -: It is an important element of Market Plan as it is instrumental in drawing attention of the customers towards your product . Promotion refers to advertise your product showing its advantages to the customer and enumerating reasons why they must buy it . The ways of promotions must be efficiently worked out . It can be done through Mass Advertising on TV'S , personal selling , sponsoring events etc.

Ans-3) 5 STAGES OF EXPORTING - :

• Domestic Market Establishment
• Export Research and Planning
• Initial Export Sales
• Expansion of international Sales
• Investment Abroad.

2 OF THE AABOVE 5 STAGES DISCUSSED AS FOLLOWS -:

1) Domestic Market Establishment - It provides a base for exporting. It tests the product in the domestic market i.e. it may be taken as a dress rehearsal for export activities. The potential gaps are spotted in the domestic market itself and made it fit for international markets.

2) Export Research and Planning - Before exporting the product to the target market it is essential to conduct a SWOT analysis of the target market so that you are aware of the tastes and preferences . This enables the exporting company to tailor the product according to target buyers preferences. It also increases the profitability.

Ans-4) 2 ADVANTAGES OF WORKING WITH A DISTRIBUTOR -:

• Established Customer Base - A distributor's job is to distribute the products to the target buyers. It means he/she automatically would possess a well established customer base due to daily interactions . This is beneficial for the firm as it will allow the firm to take advantage of his customer base and would not have to suffer in searching for customers.
• Storage aND Logistics - Distributors also have good storage and transportation facilities which makes it easier for the firm to move its products quickly into the target market and earn substantial income.

2 DIS-ADVANTAGES OF WORKING WITH A DISTRIBUTOR -:

• Loss Of Control - By working through distributors you lose the control over product as it is not sold by you . You will get a filtered feedback from the distributors and you cant control the type of buyers you would like to target.
• Loss of revenue - The revenue is lost as distributors ask for high margins . it can be as high as 30-40%

Ans-5) 4 CATEGORIES OF INCOTERMS -: (Incoterms are developed and published by International Chambers of Commerce.They define nature of relationship between buyer and seller.There are 11 incoterms and each type is classified in 4 categories- E,F,C and D)

1. Incoterms Group E - It puts most of the responsibility on buyer. The seller is responsible to bring the goods to the premises or the location decided by the buyer and then it is finally cleared by the buyer for export purpose.
2. Incoterms Group F - The sellers delivers goods through that mode of transportation as what is decided by the buyer. Under this group, the buyer bears all the cost and risk. The sub categories are -

• Free Carrier
• Free Alongside Ship
• Free on board

   3. Incoterms Group C - The sellers bears all cost incurred upto destination port and thereafter the risks are transferred to buyers.Sub-categories as follows-

• Cost and Freight.
• Cost,Insurance and FREIGHT
• Carriage
• Carriage and Insurance

4. Incoterms Group D - It points at the destination of goods i.e where they will be delivered. Under this seller bears full responsibility upto delivery of goods to mentioned location.

• Delivered at Terminal
• Delivered at Place
• Delivered Duty Paid

Ans-6) ANTI-DUMPING -: It is the duty which is imposed by the home country on the foreign country who dumps goods in the home country /(i.e sell products at very low prices to penetrate into the market). It is not an Unfair trade advantage as it is done to save the domestic producers of the economy. Infact Dumping gives an unfair trade advantage to dumping country as it sells goods way below its cost . This hurts the domestic players and the economy as well. Anti- dumping is just a measure to counter the dumping practices to gice impetud to home producers . So it is not an unfair trade advantage.

SUBSIDIES -: It is the monetary help by the govt to the domestic producers in order to bring them in competition to international players and promote exports. Subsidies are of different types. Some are trade distorting and some are not. The trade distorting subsidies prove to be an unfair trade advantage. Subsidies to specific sectors helps that sector to increase production and provide goods at cheap rates as compared to other suppliers in the global market. This distorts trade because the other players wont be aBLE TO COMPETE AND THE SPECIFIC SECTOR MAY SUFFER IN THEIR OWN COUNTY.