1. NEW TECHNIQUES IN INTERNATIONAL MARKETING
Ms. Kanupriya
PGGC-11,Chandigarh

2. CONTENTS INTRODUCTION NEW TECHNIQUES IN INTERNATIONAL MARKETING
JOINT VENTURE
COUNTER TRADE
SUB CONTRACTING
CONCLUSION

3. INTRODUCTION
Organisations exist in environment. The changes in customer’s tastes, supplier’s conditions, government policies, political conditions, international conditions etc. result in the corresponding changes in the production and trade structure. New systems and techniques are evolved and developed to conduct international business. There are new techniques which have been recognised as important in this area.

4. NEW TECHNIQUES IN INTERNATIONAL MARKETING
JOINT VENTURES
COUNTER TRADE
INTERNATIONAL SUBCONTRACTING

5. Joint Venture
KFC entered Japan through a joint ownership venture with Japanese conglomerate Mitsubishi.

6. Joint Venture
A corporate entity created with the participation of two companies that share equity, capital, and labour, among others.
Preferred entry mode in developing countries, where they contribute to developing local expertise and to the country’s balance of trade if production is exported.
International firm provides expertise, know-how, most of the capital, brand name reputation, trademark
Local partner provides the labour, the infrastructure, local expertise and relationships, and connections to the government

7. Joint Venture (contd.) Advantages:
Higher control entry mode, potentially resulting in higher profits.
Costs and risks shared with joint-venture partner.
Local partner shares local market expertise, relationships, as well as connections to government decision-making bodies.
Disadvantages:
Repatriation of profits may be difficult if local government has control over/stake in the local joint-venture partner.
Can produce a new competitor: the joint-venture partner
70% of all joint ventures break up within 3.5 years

8. Counter trade
Trade carried out wholly or partially in goods rather than money.

9. Counter trade Denotes a whole range of barter-like agreements
Primarily used when a firm exports to a country whose currency is not freely convertible
Developing countries e.g. former USSR
Importing country may lack the foreign exchange reserves required
8 to 10% of world trade in form of countertrade
Example: Venezuelan government’s contract with Caterpillar.

10. Types of counter trade Barter Counterpurchase
Direct exchange of goods and services between two parties without a cash transaction
Two fold problems
If goods are not exchanged simultaneously, one party ends up financing the other for a period
Goods may be unwanted, unusable or have a low re-sale value
Counterpurchase
Reciprocal buying agreement

11. Types of counter trade Offset Switch trading
One party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale
Party can fulfill the obligation with any firm in the country to which the sale is being made
Gives exporter greater flexibility to choose goods to be purchased
Switch trading
Occurs when a third-party trading house buys the firm’s counterpurchase credits and sells them to another firm that can better use them

12. Types of counter trade Compensation or buybacks
Occurs when a firm builds a plant in a country or supplies technology, equipment, training, or other services
Agrees to take certain percentage of plant’s output as partial payment for the contract

13. Advantages of counter trade
Means to finance an export deal when other means are not available
Unwilling firms may lose an export opportunity and be at a competitive disadvantage
Countertrade can become a strategic marketing weapon

14. Disadvantages of counter trade
Accept alternative means of payment instead of hard currency
Exchange of unusable or poor-quality goods that cannot be disposed profitably
Expenses relating to maintaining an in-house trading department to arrange and manage countertrade deals

15. SUB CONTRACTING
An arrangement by manufacturer in the developed country with one in the developing country under which the latter agrees to supply the parts and components and or do assembly operations for the former, on a long term basis

16. Contd…
Under this system the manufacturer of a final product does not produce the whole product but imports some of its parts and components from the manufacturers of those parts and components in another country under specifications provided to them by the former
Sometimes the contractee also supplies finance and technical assistance to the contracting party
Such types of arrangements are generally made in labour-intensive industrial products.

17. REASONS FOR GROWTH OF SUB CONTRACTING
CAPITAL SCARCITY
LABOUR-COST FACTOR
LACK OF EXPERTISE
LACK OF NATURAL RESOURCES
SURVIVAL OF SMALL SCALE UNITS

18. SCOPE OF SUB CONTRACTING
WHERE THERE IS UNUTILISED OR UNDER-UTILISED CAPACITY
JOINT TENDERING
NO SPECIFIC ITEMS
CO-PRODUCTION
PRODUCTION SHARING SCHEME
MINIMUM EXPORT-IMPORT CONTROLS
TURNKEY PROJECTS

19. CONCLUSION
Once a firm has decided to go international it has different alternatives to choose, amongst for getting the entry into the foreign market. The choice depends very much on the resources of the firm and the market potentials for its product in the importing country. New systems and techniques are evolved and developed to conduct international business from time to time.

20. THANK
YOU