ANSWERS TO CASE QUESTIONS

7.1 Sinova Management Consultantcy Ltd.

1. What advantages are there to an exporter wanting to enter China and/or Hong Kong
for using an agent like Sinova?

Ms Chan and her employees can provide information, contacts, and assistance in making all
sorts of business and logistical arrangements. Ms Chan had unique qualifications for starting a
company to provide services for companies wanting to enter China: a cross-cultural background
and multilingual capabilities; a European university degree and solid experience in banking;
good contacts in Hong Kong and China plus potential European clients from among those
whose accounts she had handled while working for major banks. As her business grew, she
added multilingual employees with a diversity of professional backgrounds and abilities. Ms
Chan was thus able to provide valuable assistance to European companies wanting to invest in
China, and an increasingly wide range of services to them as her own staff grew. For her clients,
she could provide advice and services that they could not have obtained by themselves without
great cost (and possibly not even at great cost).

2. Are the benefits of using Sinova most valuable to small exporters or can the
multinational larger firms also benefit? Explain.

The benefits are clearly very valuable to small exporters who do not have the resources or
contacts to support expansion into the Chinese market. Multinational firms can also benefit from
the services her firm can offer as they expand into new areas or markets: contacts and services
supporting smaller divisions; and even services for established divisions of larger companies if
she can provide the services more reliably, more efficiently, or more cheaply.

3. If an exporter has used a company like Sinova, at what point in the exporters market
development would it be more profitable to stop using them? Discuss.

The exporter might find it profitable to stop using their services if it developed a staff in Hong
Kong and China that was of sufficient size to carry out some of the functions itself (or hire other
local companies to do so) more responsively, cheaply, reliably, or effectively. It could be
expected that even if a company does grow in size sufficiently to justify providing some of these
services itself (local marketing management) or by hiring specialists (customs house brokers), it
would likely continue to use Sinova to provide the other services that it would be more
expensive for the exporter to carry out.

7.2 Quint Winery

1. Does the Japanese market appear to offer enough potential for Quint Winery to
export there? Explain why or why not.

The Japanese market does appear to offer potential for Quint Winery to export there. Wine
sales are increasing in Japan, and German wines already occupy second place in value of
imports (behind France). The white wines in which Quint has traditionally specialized have the
largest share of the Japanese market. With the wide range of distribution channels opening up
in Japan, there are opportunities for small, high quality producers like Quint to begin to export to
that market.

2. How can Quint Winery locate potential Japanese purchasers?

 Albaum and Duerr, International Marketing and Export Management, sixth edition, Instructors Manual

The activities sponsored by JETRO can be very useful, Japanese travel companies may also
prove helpful, and placing information on the World Wide Web (in English) is of increasing value
in Japan.

Quint Winery can arrange to have its products displayed in Japan at one of the government-
sponsored trade shows of consumer goods. This will bring them to the attention of the various
importers. It is important that the winery have attractive brochures made up, stressing the high
quality and limited production quantities. This will serve to increase the attractiveness of the
product to smaller importers, and avoid attracting buyers who might require more than is
available. JETRO can assist in making arrangements to have the brochures translated into
Japanese. JETRO can also supply lists of potential importers, and provide initial contacts.

Japanese travel bureaus and airlines are always looking for interesting activities for tour groups,
and a wine tasting party and dinner might prove very popular. Again, JETRO can provide
contacts.

Small wine importers and small department store chains in Japan are continually seeking
additional items that may be imported in relatively small quantities.

3. Should the winery owner visit Japan, or should he attempt to attract company
representatives to come to his winery? Is your answer influenced by specific
aspects of Japanese culture? Explain.

Japanese business people place a high value on getting to know and trust those with whom
they expect to do business. However, making a business trip to Japan is a very expensive
undertaking. Initially, Quint Winery could have their products (and brochures) entered in one of
the trade shows, invite traveling Japanese company or travel organization representatives to
come to a wine tasting party in Germany, and get on the World Wide Web. They could then wait
for an initial indication of interest before deciding about a trip to Japan.

4. Should the winery work by themselves in any attempts to enter the Japanese
market, or should they attempt to cooperate with other local wineries in a type of
cooperative export effort?

The potential problems of coordination and control of an export marketing effort by a group of
competing small wineries would probably offset any gain that could be hoped for. At some point,
however, there will have to be some form of consolidation of orders from a number of small
wineries in order to make up economical container loads. This function might be performed by a
German freight forwarder or other facilitating organization, or by the buying representative of a
Japanese importer.

5. What kind of marketing research should be done with respect to potential Japanese
consumers?

The small volume of exports that could be provided by Quint Winery, and the large amount of
secondary research information available from JETRO, indicate that little primary research other
than taste testing is likely to be cost effective. This tasting can be done at their winery if
Japanese can be attracted to their wine tasting parties. Potential Japanese importers could also
be given sample bottles after contacts through trade shows or other means.

6. What other questions should the owner ask; what problems may he expect to
encounter?

The owner will need to know all of the legal requirements for testing and labeling for the
Japanese market. Maximum and minimum quantities available/required must be determined.
Possible exclusivity of distribution rights must be discussed. Time of transfer of title,
 Albaum and Duerr, International Marketing and Export Management, sixth edition, Instructors Manual

responsibilities for each step in the export/import processes, and methods of payment must be
agreed upon. Language problems in both interpretation and translation can be expected.
Negotiations with the Japanese often proceed more slowly than Europeans and Americans
expect. In short, the owner should acquire much of the information provided in a book on
international marketing and exporting.

7.3 Nestle
1. Evaluate Nestles use of the Internet and Web to this point. How will its marketing
operations be enhanced?

Nestle has made a very ambitious plan to use the Internet and Web to make the company more
agile, more responsive to its customers, and more profitable. In practical terms, this includes
sharing information online and increasing cooperation between various components of the
company to reduce procurement costs and duplication of activities, coordinating sales and
manufacturing, reducing transportation/supply chain costs, providing better information for
management, and improving customer relations.

2. What other uses of the Internet should Nestle explore?

The list of software solutions offered by SAP is extensive. SAP should be able to provide
programs to support additional efforts such as gathering more information from customers (if
they are not already pursuing this as part of their current efforts). Nestle may eventually want to
consider e-tailing again.

3. Does the signing of a contract for such major software and solutions development
with SAP seem appropriate at this stage? Should the company take one step at a
time rather than attempt to do so much at once?

The advantage of undertaking so many initiatives at one time, with the supplier SAP, is that it
increases the probability of being able to develop an overall system with coherent parts.
Additionally, some components such as management control systems will depend upon the
information bases developed in order to work.

The potential problem with the alternative of moving more slowly and using multiple specialized
suppliers is that the final system may be suboptimal and/or the components may fail to work
together.

Doing everything at once is, of course, expensive. It could have serious effects on overall
operations and managerial control if it fails to work as envisioned.

For the approach chosen, Germanys SAP, the worlds largest supplier of enterprise resource
planning offering integrated management systems, seem to be a good choice. The company
has both extensive experience and resources.

4. Will the Internet and World Wide Web revolutionize international marketing? Explain.

They already have. They have resulted in the creation of new markets (e.g., eBay), more closely
linked suppliers and customers, and even resulted in joint activities by competitors. Pricing is
more transparent and competitive. B2B business has grown very rapidly. B2C business is
increasing, and many traditional businesses are using the Internet to provide information to
customers and make sales. With the continuing growth in communications capabilities and
expanding use of the Internet and Web, further advances can be expected.

5. What are the advantages and disadvantages of having some 8000 brands?
 Albaum and Duerr, International Marketing and Export Management, sixth edition, Instructors Manual

Advantages: It enables the company to meet local preferences in both products and brand
names. Where several products can be economically handled through the same marketing
channels or manufactured in the same plant, economies can be realized.

Disadvantages: A wide range of products and varying brand names for the same products is
likely to dilute management attention, require more types of packaging and diverse distribution
channels, result in duplication of advertising, and fail to capture possible benefits of international
brand recognition (as enjoyed, for example, by McDonalds and Coca-Cola).

TEST BANK

1 Germanys Mittelstand or midranking companies:

(a) pay high wages, but employ few workers.
(b) target small but profitable niches.
(c) save money by avoiding R&D expenditures.
(d) All of the above.
(e) None of the above.

2. Japans sogo shosha or general trading companies:

(a) are supply and demand oriented rather than production or user oriented.
(b) deal only internationally, not domestically.
(c) do not provide financing.
(d) All of the above.
(e) None of the above.

3. The government of the PRC has avoided fostering multipurpose trading houses because of
the problems faced by Japanese and Korean conglomerates in the Asian financial crisis
(19971998).
(a) True
(b) False

4. Export desk jobbers:

(a) are also called export drop shippers or cable merchants.
(b) take title but not physical possession.
(c) are used primarily in international sales of raw materials.
(d) All of the above.
(e) None of the above.
 Albaum and Duerr, International Marketing and Export Management, sixth edition, Instructors Manual

5. Piggyback marketing:
(a) is used for competing products from unrelated companies.
(b) always uses the brand name of the carrier.
(c) is never used for industrial products.
(d) All of the above.
(e) None of the above.

6. Regarding foreign-based distributors and agents/representatives:

(a) a distributor is a merchant and a customer of the exporter.
(b) an agent is a representative of the exporter.
(c) the terms distributor and agent are often used interchangeably or incorrectly.
(d) All of the above.
(e) None of the above.

7. Points made in Germanys export champions are that:

(a) it can be advantageous for a company to restrict its exports to a small percentage of total
sales.
(b) Germanys Mittelstand companies can no longer compete in exporting.
(c) in Germany, there are too many existing companies that are not willing to risk
developing completely new products and too few new companies are being created.
(d) All of the above.
(e) None of the above.

8. Using e-commerce to replace a salesperson may be a mistake where person-to-person

interaction is very important in a relationship.
(a) True
(b) False

1 It appears that the export development process tends to proceed in stages, and is not
primarily dependent upon firm size.
(a) True
(b) False

1. A built-in export department does actual selling or direction of selling, but support functions
are carried out by other departments.
(a) True
(b) False

2. The only reason for establishing a foreign incorporated sales subsidiary is the tax advantage.
(a) True
(b) False
 Albaum and Duerr, International Marketing and Export Management, sixth edition, Instructors Manual

3. An important function of the field sales force should be that of information gatherer and
communicator.
(a) True
(b) False

4. Gray market channels are those that are not authorized by the exporter for a particular
foreign market.
(a) True
(b) False

5. A franchise never gives the holder the right to use a brand name or trademark.
(a) True
(b) False

6. Parallel imports into the EU are banned, but are allowed between member countries of the
EU.
(a) True
(b) False

7. The percentages of the populations having Internet access are similar in the US and the
European countries.
(a) True
(b) False

8. In e-commerce:
(a) B2C commerce is much larger than B2B commerce.
(b) B2C commerce is no longer growing.
(c) There is very little e-commerce in China.
(d) All of the above.
(e) None of the above.

Answers to Test Bank questions

1. (b) 2. (a) 3. (b) 4. (d) 5. (e) 6. (d) 7. (c) 8. (a) 9. (a) 10. (a)
11. (b) 12. (a) 13. (a) 14. (b) 15. (a) 16. (b) 17. (e)
Albaum and Duerr, International Marketing and Export Management, sixth edition, Instructors Manual