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Global Marketing Exam 2 Blair Study guide

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GDP
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Gross Domestic Product
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GNI
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Gross National Income
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LDC
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Less Developed Countries
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MDC
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Most Developed Countries
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PPP
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Purchasing Power Parity
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COO
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Certificate of Origin
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EEI
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Electronic Export Information
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FDI
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Foreign Direct Investment
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PAT
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Protected Approval Team
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NPD
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New Product Development
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IPS(Definition)
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International Partner Search- Service provided by the US commercial Service Connecting firms with potential foreign partners
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CKD(Definition)
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Completely knocked down- method of foreign assembly where the product is shipped in components & then assembled in the foreign market
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Pull Strategy
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strategy attempting to gain business by bringing consumers to the manufacturer, often through heavy consumer advertising
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Push Strategy
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a strategy attempting to gain business by incentivizing the channel (wholesalers, retailers) to “push” the product to buyers. This strategy often uses incentives & promotions aimed directly at the wholesalers or retailers
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Sensory Segmentation
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segmenting consumers based on their likes & dislikes, especially as related to sensory factors (taste & smell)
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Product line Extension
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process of developing a new product (or model) primarily based on an existing product offering new or enhanced characteristics or benefits
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Brand Extension
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A new product can be introduced with lower incremental advertising expenditures by using a well-known & previously established brand name
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Licensing
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arrangement where the licensor gives something of value to the licensee in exchange for specified performance & payments from the licensee
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Vertical Trade Mission
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trade mission focused within a single industry
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Horizontal Trade Mission
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Trade mission focused across a wide spectrum of industries but typically within a single market or region
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Vertical Trade show
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trade shows focused within a single industry
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Horizontal Trade Show
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trade show focused across a wide spectrum of industries but typically within a single market or region
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Product Platform
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common technology, design, architecture, or formula base which a line of products is developed
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Product Family
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a collection of products built on a common platform of technology, design, architecture, or formula
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6 Modes of Market Entry
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• Indirect exporting • Direct exporting • Direct exporting with FDI • Foreign manufacturing, sales, & distribution • Licensing • Joint Venture / Strategic Alliances
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Japanese Model of Managing NPD:
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-work with few suppliers -develop long-term partnerships with suppliers -require continuous improvement from suppliers in quality, speed, & time to supply -require lower prices & fewer numbers of parts -involve a limited number of key suppliers early in the design & development of new products
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Types of Retailers
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• Vending Retailers – firms maintaining traditional brick-and-mortar retail stores • Mail-order Retailers – firms selling through catalogs & the internet • Direct-selling Retailers – firms using a sales force to make their
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7 Characteristics of a Global Brand
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1. Brand is strong in home market 2. Geographic balance exists 3. Product addresses a similar need worldwide 4. Ever global brand has a Country of Origin that is part of its brand identity 5. Brand’s main focus is on a single broad product category 6. Consistent positioning occurs so the brand represents same practical and emotional attributes 7. There is a link to the corporate brand.
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5 Elements of a strong brand:
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1. Share of mind (awareness / familiarity) 2. Share of heart (high regard) 3. Value (value for money) 4. Momentum (potential for future growth) 5. Singularity (business choice)
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Promotional Tools: Advertising
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— the paid communication of company messages through impersonal media. ex. Audio (radio), Visual (billboards), autovisual (internet, tv, movies)
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Promotional Tools: Personal Selling
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— direct contact with a potential buyer for the purpose of making or influencing a sale. Paid communication that can be altered quickly targeted at specific individuals. Most individualized promotion
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Promotional Tools: Public Relations
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effort to influence the opinion people have towards a company, brand, product, or service. Company does not pay for this directly
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Promotional Tools: Sales Promotion
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includes things “all other” category of promotional tools. Coupons, email, traditional mail, sponsorship of events.
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Standardized Promotion
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identical in all markets.
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Independent Promotion
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has little similarity among countries
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International Promotional Budget Approaches: Percentage-of Sales Approach
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method for determining the amount to spend on promotion in a country where the promotion budget is based on a specific percentage of sales, typically based on the percentage of sales spent on promotion in current markets
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International Promotional Budget Approaches: Competitive-Parity Approach
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method for determining the amount to spend on promotion in a country whereby the promotion budget is based on matching the amount spent by competitors in that country
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International Promotional Budget Approaches: Objective-and-Task Approach
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method for determining the amount to spend on promotion in a country where the promotion budget is based on how much it costs to achieve specific promotion objectives (Ex: level of sales or brand awareness)
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International Promotional Budget Approaches: Comparative-Analysis Approach
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method for determining the amount to spend on promotion in a country whereby the country is grouped into a category with other markets according to characteristics relevant to promotion (Ex: language, availability of media types, market size) & markets in the same category have similar promotion budgets
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International Promotions differ in Different Markets:
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• Language • Media Availability • Government Controls on the Media • Competition • Agency Availability
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Supply Chain –
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sum of activities related to the moving of goods from their source (raw materials, components) to the final consumer (finished goods)
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Supply Chain Management –
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management of all events within a firm’s supply chain
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Reverse Logistics –
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range of activities associated with customer support (returns, warranties, & repairs)
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Third-Party Logistics (3PL) –
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use of companies to outsource specific functions of supply chain management
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Freight Forwarders –
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companies providing services to support the transportation & movement of goods
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Distribution –
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sum of activities moving products from a firm to its customers
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Warehousing –
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storing of materials or products in one location for further distribution at a later date
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Cross-docking –
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moving products immediately from one delivery vehicle at a logistics facility to another vehicle in the same facility that will then take the products directly to a retail store or to the buyer —- Use of cross-docking eliminates the intermediate step of warehousing
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Commercial Invoice –
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a shipping document issued by the seller identifying key sales information, including the buyer, products or services sold, payment terms, shipping date, mode of transport, & prices
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Packing List –
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shipping document detailing each product included with a shipment & in which box
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Bill of Lading –
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shipping document issued by the freight carrier (shipping company) acting as receipt for the cargo, contract for the transport of the cargo, & document of ownership (title)
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Export License –
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permission by the US government for a company to make a shipment or shipments to a foreign buyer that otherwise would be illegal without the license ———- Export licenses are not required for all shipments but are required if the product or the foreign buyer is subject to export controls
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Inventory Turnover Ratio =
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Inventory Turnover Ratio = COGS / Avg. Inv. ex. (50m / 5m) = 10m
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Days of Sales Inventory =
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Days of Sales Inventory = Avg. Inv. / COGS (5m / 50m) = .1 * 365 = 36.5 days
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9 supply chain strategic decisions
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1. Supplier 2. Location of Production 3. Transportation 4. Warehousing 5. Technology 6. Outsource or In0House 7. Management of Delivery Times 8. LT needs vs ST needs 9. International Compliance
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6 Major Modes of Market Entry: Indirect Exporting
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third party conducts export transaction → (manufacturer has very little control/feedback) —Piggybacking —Export Management Companies —-Export Trading Companies
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6 Major Modes of Market Entry: Direct Exporting:
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manufacturer exports & directly sells to importer (may be final consumer or intermediary) in another country → (offers great control/feedback, but costs/risks are higher) —Agents: makes international sales on behalf of manufacturer —-Distributors: takes ownership of manufacturers product and sells —-Direct Sales: internet sales
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6 Major Modes of Market Entry: Direct Exporting with FDI
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a financial investment in a foreign market involving ownership of foreign assets or foreign offices/employees Factors Forcing FDI: Barriers 2 Export Success, Need more control/feedback, sales/customer needs —Overseas Salesperson —Overseas Sales and Marketing Office —Overseas Distribution
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6 Major Modes of Market Entry: Foreign Manufacturing / Foreign Sales & Distribution
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produces product in foreign market rather than exporting —Foreign Assembly: firm produces domestically most of the components of its product & ships them to foreign markets for assembly —–Completely Knocked Down —Contract Manufacturing: firm’s product is produced in foreign market by another producer under contract with the firm (Marketing handled by firm) —–Drawbacks→ quality control and limited profits —Wholly Owned Foreign Production: 100% ownership by international firm —-Acquisition: buying foreign producer or firm —-Greenfield: establishment of brand new facility built from ground up
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6 Major Modes of Market Entry: Licensing
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licensor gives something of value to the licensee in exchange for specified performance & payments from the licensee ** Requires no capital ** Quickest and easiest way to enter foreign market —–Patent Rights —–Trademark Rights —–Copyrights —–Know-How on Products or Processes
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6 Major Modes of Market Entry: Joint Venture/Strategic Alliances
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international company has enough equity in a new company to have a voice in management but not enough to completely dominate the venture Mixed Ventures: joint venture with foreign government entities as opposed to foreign firms ** Greater returns over royalties ** Greater control over production and marketing → better market feedback
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Strategic Alliance:
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relationship formed by a firm & another partner covering a variety of contractual relationships → may involve competitors & usually does not involve equity
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Sales Channel:
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means by which a manufacturer gets a product to market
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Merchant Wholesalers:
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firms performing traditional role of buying products and selling to retailers
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Single-Line Wholesalers:
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firms focusing on a specific product line
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Specialty Wholesalers:
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firms carrying a very narrow line of products, often to an equally narrow retail market
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Step-Wise Approach to Manage NPD:
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Utilizes a project approval team (PAT) composed of employees from multiple departments 1. Idea Generation 2. Feasibility Study 3. Product Development 4. Product Launch
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Trade in Services-accounts for about 20% of all world trade
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**become more important as an economy becomes more developed Examples) – Banking & Financial services – Insurance – Legal and accounting – Computer software & data
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Intangibility:
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makes selling services more difficult because buyer must take quality of service on faith
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Heterogeneity:
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of service may occur because different customers going to the same company may not
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receive same service –
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different people perform service, not the same way each time
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Perishability:
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services cannot be inventoried, saved, or stored
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Simultaneous Production/Consumption:
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production/consumption services take place at same time
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Measuring Service Quality:
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difficult to measure, particularly in cross-cultural settings
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Inventory turn over ratio=
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COGS/AVG Inventory
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Day’s of Sales Inventory=
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(Inventory/COGS)x 365
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Supply Chain:
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sum of activities related to the moving of goods from their source (raw materials, components) to the final consumer (finished goods)
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FCA –
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Free to carrier: Buyer agrees to pay all fees after supplier transports the goods to the main carrier
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Incoterms –
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set of 11 transportation-related terms issued by the International Chamber of Commerce (ICC) & used worldwide in sales contracts
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ExW –
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Ex-Works: Buyer agrees to assume all responsibility for transporting the goods from the supplier’s factory
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DDP –
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Delivered Duty Paid: Seller is responsible for all fees & transportation to the buyer