Page 247 - Foundations of Marketing

214 Part 3 | Customer Behavior and E-Marketing

Once a company becomes involved in exporting, it usually develops more knowledge of the
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country and becomes more confident in its competitiveness.
Marketers sometimes employ a trading company , which links buyers and sellers in dif-
ferent countries but is not involved in manufacturing and does not own assets related to manu-
facturing. Trading companies buy products in one country at the lowest price consistent with
quality and sell them to buyers in another country. For instance, WTSC offers a 24 -hour-per-
day online world trade system that connects 20 million companies in 245 countries, offering
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more than 60 million products. A trading company acts like a wholesaler, taking on much
of the responsibility of finding markets while facilitating all marketing aspects of a transac-
tion. An important function of trading companies is taking title to products and performing
all the activities necessary to move the products to the targeted foreign country. For instance,
large grain-trading companies that operate out-of-home offices in both the United States and
overseas control a major portion of world trade of basic food commodities. These trading
companies sell homogeneous agricultural commodities that can be stored and moved rapidly
in response to market conditions. Trading companies reduce risk for firms that want to get
involved in international marketing.

Licensing and Franchising
When potential markets are found across national boundaries, and when production, technical
assistance, or marketing know-how is required, licensing is an alternative to direct invest-
ment. The licensee (the owner of the foreign operation) pays commissions or royalties on sales
or supplies used in manufacturing. The licensee may also pay an initial down payment or fee
when the licensing agreement is signed. Exchanges of management techniques or technical
assistance are primary reasons for licensing agreements. Yoplait, for example, is a French
trading company A company
that links buyers and sellers in yogurt that is licensed for production in the United States; the Yoplait brand tries to maintain
different countries a French image. Similarly, sports organizations like the International Olympic Committee
(IOC), which is responsible for the Olympic Games, typically concentrate on organizing their
licensing An alternative to
direct investment that requires sporting events while licensing the merchandise and other products that are sold.
a licensee to pay commissions Licensing is an attractive alternative when resources are unavailable for direct investment
or royalties on sales or supplies or when the core competencies of the firm or organization are not related to the product being
used in manufacturing sold (such as in the case of Olympics merchandise). Licensing can also be a viable alternative

Borderlands/Alamy

Global Franchises
KFC offers an extensive global
franchise network.

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