ucla internationl marketing 5 20-09

Confidential 1

Global Non-Cash Trading

International Marketing

Global Trading

Confidential 2


What is Non-Cash Trading?Defined as companies trading goods and services without the use of currency or cash

– This market is segmented:

• Barter - Small businesses with average trade of $450 – non-geographic or local items- printing, oil change, dentist, restaurant

• Large Corporate Trade – Includes F1000 and G2000, with average trade of $1-20 million- global commodities- coal, computers, steel, equipment- even diapers and alcohol

Confidential 3


The Market$1.2 trillion of global commerce is traded on a non-cash basis (U.S. Department of Commerce and World Trade Organization)

Worlwide totals exceed $7 Trillion

Types of Trades

Company-to-Company

Company to Country

Country-to-Country

Confidential 4


Examples of Large CorporateNon-Cash Trades

IBM traded $40 million of goods and services in return for Olympic sponsorship

CBS traded $62 million of advertising for an equity position in Sportsline.com

IBM Mexico traded 2,600 computers valued at $1.7 million for 120 Volkswagens and other services

Sumitomo trades $1.2 billion of goods and services with 40,000 other businesses

Caterpillar trades heavy equipment for raw materials

Confidential 5


Facilitation vs. Finalization

80% of the Process 20% of the Value

Aggregation

Value

Exchange

Cycle

Final payment,

settlement & collection

occurs offline

EXIT

Communication

Negotiation

Transaction

20% of the Process 80% of the Value

PaymentSettlementCollection

“In today's B2B environment, buyers and sellers meet online, but frequently go offline to complete the transaction.” eONE Global: Payments DNA White Paper

Confidential 6


Reasons companies tradeinstead of using cash

ALLConserve cash

ALLNew distribution channel

Airlines, Hotels, Broadband, Media, Energy, Services

Sell irrecoverable/perishable inventory

Manufacturing, WarehousingFill idle capacity

Manufacturing/Finished GoodsMove unsold inventory

INDUSTRIESREASON

In countries with weak or fluctuating currencies – trade may be the best way to acquire needed goods and services

Confidential 7


Which Type of Companies Trade? Industries that have a history of non-cash trading include, among others,

airlines, hotels, media, real estate, broadband, manufacturing

65 percent of the Fortune 500 participate in non-cash trade

Confidential 8


Anatomy of a Simple Trade

Tracking & Reporting

Tracking & Reporting

Sales

Procurement

Sales

Procurement

CFO

IBM$40 Million of Computers

CFO

Olympics$40 Million of

Sponsorship Ads

Phone

Fax Email

Confidential 9


Which distribution channel would you choose?

Institute of Management & Administration (IOMA) recently found that “removing excess, obsolete and slow-moving inventory” is the #1 most challenging task by a 2:1 margin

Current economic data suggest building inventories

Retail $10MM of

computers (100% of

current value)

Wholesale $5MM

(50% of value)

International $2MM (20% of

value)

Liquidation $1MM (10% of

value)

Trade for $10MM of

Volkswagens (100% of

current value)

OR

Trading offers an alternative distribution channel at higher value and conserves cash

Confidential 10


Types of Corporate Trade

Locate a trading partner Agree on mutual need Agree on equal value Consummate trade Track trade Report trade

Direct Trade

Computer Mfg.

Energy

$5MM Computers

$5MM Electricity

The Process

1 to 1

$5MM computers for energy

Confidential 11



Locate multiple trading partners

Agree on mutual need for each trade

Agree on equal value for each trade

Consummate each trade Track each trade Report each trade

Multiple-Direct Trades

Consulting

Furniture

Energy

Computer

$10MM

$10MM

$3MM

$3MM

$7MM

$7MM

The Process

1 to Many

$20MM computers for Multiple Items

Confidential 12



Locate initial trading partner

Agree on mutual need Agree on equal value Consummate trade Take possession of

excess goods Track initial trade Report initial trade Find partners to trade off

excess goods* Energy company is faced with Multi-Direct Trading situations (with goods/services that he did not produce, but now owns)

The ProcessMulti-Party Trade

Computer Mfg.

Furniture Mfg.

Energy Consulting

Airline

$30MM Computers

$30MM Electricity

$10MM Computers

$10MM Furniture

$5MM Computers

$5MM Consulting

$5MM Computers

$5MM Travel

Energy Company only needs $10MM of computers- thus take $30MM of product and trades for other goods

Confidential 13


Value Proposition

Efficiency ~ Quicker opportunity to move goods or services. Move large quantities at once.

Liquidity ~ Provides access to multiple trading partners and new distribution channels or outlets.

Trust ~ Trading among known or trusted partners. Decreases credit risk.

Efficiency+Liquidity+Trust = VALUE

ELT=V

Confidential 14


How does trading affect International Marketing?

Foreign Relations between Companies and Countries

Impact on Taxes and CurrenciesMulti-lateral trade negotiationsPublicity and Public RelationsFinancial Impact- Revenue/TaxesOther?

Confidential 15


Technique for Marketing Yourself

1. Identify who or what your goal is.Whom are you trying to sell to or

influence

2. Isolate faces. Industries, Companies, People

3. Use for Marketing, Sales, Referrals, Networking, or Job Search

Confidential 16


“Tornado Technique”

• The basis for everything– What you do- high level (realize most

people don’t care or don’t understand)– Who do you do it for (types of industries,

companies, etc.)– Names of current clients or companies– Ask for the order- who are you trying to get

to- be specific

Confidential 17


“Tornado Technique”• Job Search

– I am interested in International Marketing.– In particular I like industries such as-Banking,

Financing, Manufacturing, Other?___

– Think of companies like X, Y, Z. Or companies that work with____

– Directly, I am looking for introductions to Chief Marketing Officers or people in the marketing department.

– Do you know anyone in Marketing?

Confidential 18


Questions?

Contact [email protected]

ucla internationl marketing 5 20-09

Documents