QUESTION 1: A firm based in Washington State wants to export a shipload of finished
lmber to the !hilippines" The wold# be importer $annot get sffi$ient $redit from domesti$
sor$es to pa% for shipment& bt insists that the finished lmber $an 'i$(l% be resold in the
!hilippines for a profit" Otline the steps that the exporter shold ta(e to effe$t the export of
this shipment to the !hilippines)
ANSWE* 1: The steps are as follows:
The !hilippine importer pla$es an order with the Ameri$an exporter& and as(s the Ameri$an if
he wold be willing to ship nder a letter of $redit"
The Ameri$an exporter agrees to ship nder a letter of $redit& and spe$ifies rele+ant
information s$h as pri$es& deli+er% terms& and the li(e"
The !hilippine importer applies to the ,an( of -anila .or some other international ban(/ for
a letter of $redit to be issed in fa+or of the Ameri$an exporter for the mer$handise the
importer wishes to b%"
The ,an( of -anila isses a letter of $redit in the !hilippine importer0s fa+or and sends it to
the Ameri$an exporter0s ban(& the ,an( of Seattle"
The ,an( of Seattle ad+ises the Ameri$an exporter of the opening of a letter of $redit in his
fa+or"
The Ameri$an exporter ships the goods to the !hilippine importer on a $ommon $arrier"
The Ameri$an exporter presents a 12 da% time draft to the ,an( of Seattle& drawn on the ,an(
of -anila in a$$ordan$e with the ,an( of -anila0s letter of $redit and a$$ompanied b% the
bill of lading" The Ameri$an exporter endorses the bill of lading s$h that the title to the
goods goes with the holder of the do$ment # whi$h at this point in the transa$tion is the
,an( of Seattle"
The ,an( of Seattle presents the draft and do$ments to the ,an( of -anila" The ,an( of
-anila a$$epts the draft& ta(ing possession of the do$ments and promising to pa% the now
a$$epted draft in 12 da%s"
The ,an( of -anila retrns the a$$epted draft to the ,an( of Seattle"
The ,an( of Seattle tells the Ameri$an exporter that the% ha+e the a$$epted ban( draft& whi$h
is pa%able in 12 da%s"
The exporter sells the draft to the ,an( of Seattle for a dis$ont from the fa$e +ale and
re$ei+es the dis$onted $ash +ale of the draft in retrn"
The ,an( of -anila notifies the !hilippine importer of the arri+al of the do$ments" It agrees
to pa% the ,an( of -anila in 12 da%s" The ,an( of -anila releases the do$ments so that the
!hilippine importer $an ta(e possession of the shipment"
In 12 da%s the ,an( of -anila re$ei+es the importer0s pa%ment so that it has fnds to pa% the
matring draft"
In 12 da%s the holder of the matred a$$eptan$e& in this $ase the ,an( of Seattle& presents it to
the ,an( of -anila for pa%ment" The ,an( of -anila pa%s"
.If the exporter feels $onfident in and $an $ompletel% trst the pr$haser in the !hilippines&
then a m$h simpler pro$edre than this $old be followed"/
Another !erspe$ti+e: Trade !ort pro+ides a 3lobal trade Ttorial on export finan$ing" The ttorial
is a+ailable at 4http:55www"tradeport"org5ttorial5finan$ing6" The site pro+ides ex$ellent details on the
pro$ess& and is well worth a +isit"
QUESTION 7: !lot the position of the following firms on 8igre 17"9: !ro$ter : 3amble&
,oeing& ;o$a ;ola& <ow ;hemi$als& Intel& and -$<onald=s" In ea$h $ase >stif% %or
answer"
ANSWE* 7:
!ro$tor : 3amble follows an international strateg% mo+ing towards transnational" -ost of
the *:< is done $entrall%& while the prod$tion and mar(eting is done lo$all%" Their lo$al
$ompetition la$(s the mar(eting s(ills and *:< resor$es !:3 possess" As their lo$al
$ompetition be$omes more sophisti$ated& the% ma% mo+e into a transnational strateg%" This
pro$ess has alread% begn"
,oeing follows a global strateg% in that it fa$es high pressre on $ost and exploits lo$ation
e$onomies in its relati+el% standardi?ed prod$t"
;o$a#;ola follows an international strateg%" Its *:< and the general mar(et approa$h
originate in Atlanta" Sbsidiaries do ha+e some dis$retion in mar(eting" One $old also arge
that be$ase ;o$a ;ola has been a$'iring lo$al bottlers& the% are prsing a mltidomesti$
strateg%"
<ow ;hemi$al follows a global strateg% in that most of its prod$ts are $ommodities& so there
is no pressre for lo$ali?ation" !ri$e $ompetition is $riti$al"
Intel follows a global strateg%" *:<& prod$tion and mar(eting are lo$ated in fa+orable
lo$ations and the prod$t is relati+el% standardi?ed" ;ost pressres are high"
-$<onald=s has been pla$ed in the international strateg% 'adrant histori$all%" It transfers
+alable s(ills and mar(eting (nowledge into other mar(ets& where it has fa$ed limited lo$al
$ompetition be$ase the lo$al firms la$(ed -$<onald=s s(ill and (nowledge" There is lo$al
adaptation to tastes" In$reasingl% -$<onald=s is fa$ing lo$al $ompetition in international
mar(ets from other 'i$( ser+i$e restarants and lo$al imitators" -$<onald=s lo$ali?es
mar(eting other than the brand positioning& its sppl% $hain& its hman resor$es& its real
estate strateg%& and its prod$tion" This pla$e -$<onald=s in the mlti domesti$ strateg%
'adrant"
