PowerPoint Presentations for Small Business Management: Launching and Growing New Ventures, Fifth Canadian Edition Adapted by Cheryl Dowell Algonquin College

CHAPTER 8 Global Marketing 8-2

LOOKING AHEAD After studying this chapter, you should be able to: 1.Discuss global marketing and the potential of small firms as global enterprises. 2.Explain the challenges that global enterprises face. 3.Describe the initial steps of a global marketing effort. 4.Identify sources of trade and financing assistance. Copyright © 2013 by Nelson Education Limited 8-3

GLOBAL BUSINESS Copyright © 2013 by Nelson Education Limited 8-4 Innovation is essential to competitiveness Expanding markets are one of the forces behind global expansion Companies are looking to emerging markets where income and buying power are growing rapidly (see Exhibit 8-1) China and India have attracted attention from international firms because of their large populations and potential market demand LO 1

GLOBAL BUSINESS Copyright © 2013 by Nelson Education Limited 8-5 LO 1

GLOBAL CHALLENGES TRADE AGREEMENTS Free Trade Agreement (FTA) accord that eases trade restrictions between Canada and the United States North American Free Trade Agreement (NAFTA) eases trade restrictions among Canada, the United States, and Mexico General Agreement on Tariffs and Trade (GATT) international agreement that aims to reduce tariffs and other trade barriers among countries World Trade Organization (WTO) international organization that administers GATT and works to lower tariffs and trade barriers worldwide Copyright © 2013 by Nelson Education Limited 8-6 LO 2

INITIAL PREPARATIONS FOR GLOBAL MARKETING Copyright © 2013 by Nelson Education Limited 8-7 Research the foreign market and setting Set up a sales and distribution plan LO 3

RESEARCHING A FOREIGN MARKET DFAIT (Department Of Foreign Affairs And International Trade) – primary Canadian government agency responsible for assisting exporters – Services offered: Export Information Kit Export Counselling World Information Network for Exporters (WINS) International Trade Data Bank Overseas Trade Fairs Trade Leads and Trade Missions Internet Resources Copyright © 2013 by Nelson Education Limited 8-8 LO 3

OTHER FEDERAL GOVERNMENT DEPARTMENTS AND PROGRAMS Copyright © 2013 by Nelson Education Limited 8-9 Canadian Commercial Corporation (CCC) – Export Development Canada – Canadian International Development Agency (CIDA) – Canada Revenue Agency – BDC – Statistics Canada – Forum for International Trade Training (FITT) – LO 3

QUESTIONS TO ASSIST WITH GLOBAL EXPANSION Copyright © 2013 by Nelson Education Limited 8-10 LO 3

SALES AND DISTRIBUTION CHANNELS Copyright © 2013 by Nelson Education Limited 8-11 Licensing – legal arrangement allowing another manufacturer to use the property of the licenser in return for royalties LO 3

SALES AND DISTRIBUTION RISK LEVELS Copyright © 2013 by Nelson Education Limited 8-12 LO 3

FOREIGN MARKET CHANNELS OF DISTRIBUTION Sales representative or agentForeign distributorForeign retailersSelling direct to end-userState-controlled trading companiesCommission agentsCountry- controlled buying agentsExport management companiesExport merchantsExport agents Copyright © 2013 by Nelson Education Limited 8-13 LO 3

SOURCES OF TRADE AND FINANCING ASSISTANCE Copyright © 2013 by Nelson Education Limited 8-14 Getting trade information and arranging financing is often the biggest barrier to small business exporting Direct and indirect sources of trade and financing information: – Private banks letters of credit – Factoring houses – The Export Development Corporation (EDC) LO 4

LETTER OF CREDIT Copyright © 2013 by Nelson Education Limited Buyer arranges for its bank to open a letter of credit 2.Buyer’s bank prepares an irrevocable letter of credit 3.Buyer’s bank sends the irrevocable letter of credit to a Canadian bank, requesting confirmation. The Canadian bank prepares a letter of confirmation to forward to the exporter. 4.Exporter reviews all conditions in the letter of credit. 5.Exporter arranges with the freight forwarder to deliver the goods to the appropriate port or airport. Continued… LO 4

LETTER OF CREDIT Copyright © 2013 by Nelson Education Limited Freight forwarder completes the necessary documents. 7.Exporter (or the freight forwarder) presents to the Canadian bank documents indicating full compliance. 8.Bank reviews the documents. Documents are forwarded to the buyer’s bank for review and transmitted to the buyer. 9.Buyer (or agent) gets the documents that may be needed to claim the goods. 10.A draft, which may accompany the letter of credit, is paid by the exporter’s bank LO 4