Leanne Mulholland Nguyen Vo Zhouyang Lu

Only part of the marketing mix that is revenue generating Can help organization gain market share Established by: Demand Competition Costs Legal consideration Credit terms

Pricing SituationInternational Involvement Exporting Foreign-Market Pricing Intracompany Pricing First Time Pricing Changing Pricing Multiple- Product Pricing

Production CostStandardCost PlusMarginal Cost Materials2.00 Fixed Costs Addl foreign product costs Production Overhead Total Production Cost US Marketing Price General & Administration Foreign Marketing Other Foreign Costs Subtotal Profit Margin (25%) Selling Price

The cost of modifying the product for foreign markets Operational costs of the export operation Costs incurred in entering the foreign markets

E Terms F Terms C Terms D Terms

The amount of payment and the need for protection Terms offered by competitors Practices in the industry Capacity for financing international transactions Relative strength of the parties involved

Commercial risk: refers to the insolvency of, or protracted payment default by, an overseas buyer. Noncommercial risk/ political risk: completely beyond the control of either the buyer or the seller.

1. Credit reports may not be reliable. 2. Audited reports may not be available. 3. Financial reports may have been prepared according to a different format. 4. Many governments require that assets be annually reevaluated upward, which can distort results. 5. Statements are in local currency. 6. The buyer may have the financial resources in local currency buy may be precluded from converting to dollars because of exchange controls and other government actions.

Risk shifting Forward exchange market – exporter gets a bank to agree to a rate at which it will buy the foreign currency after payment Option – gives the holder the right to buy or sell foreign currency at a prespecified price on or up to a prespecified date Futures – conceptually similar to the forward exchange market, but in smaller amounts

Risk modifying Pass-through - export price decreases in conjunction with increases in the value of import currency to maintain stable prices Absorption – increase in the exchange rate price is absorbed into margin, possibly resulting in loss Pass through only a portion of increase to customer

Market refocus. Streamlined operations. Shift in production.

Commercial banks Forfaiting Factoring Official trade finance

The most sensitive issue Some concessions as in importers hopes Some tips for exporters Emphasize quality and reliability of delivery

Making a $220 billion industry. Potential source of hard currency Cases in which leasing can be used Customers reluctant to buy unfamiliar products. Balance-of-payment problems Shortage of trained personnel and spare parts in developing countries

Definition: selling goods overseas for less than in the exporters home market at a price below the cost of production 2 kinds: predatory dumping unintentional dumping Antidumping duties Countervailing duties Dumping suits have strong competitive motivations in some cases. Minimize the risk of being accused of dumping.