International Marketing

Financiall environment

The Financial Environment

JAL – Boeing

JAL – Best customers of Boeing

JAL- $ 800 million to purchase aircrafts

Boeings priced in $ (737 – 35m 767 – 160m)

Lead time – Two to Six years

10 % deposit and balance 90 % on delivery

JAL’s revenue – in yen

Order for $ 100 million

1987 – 1= 240

1992 1=120

1987 hedge 1=185 but slipped to 99

Case:

Nissan – The Japanese Yen

1990	1,875,000/134+2600	16,595
1991	1,875,000/125+2600 5%	17,600
1992	1,875,000/124+2600 6.6%	17,720
1993	1,875,000/111+2600 17.4%	19,495
1994	1,875,000/99+2600 29.7%	21,540
1995	1,875,000/102+2600 26.3%	20,985
1996	1,875,000/115+2600 13.8%	18,905
1993	1,875,000/111+2600 17.4%	19,495
1994	1,875,000/99+2600 29.7%	21,540

1990	804,000/134+9000	15,000
1991	804,000/125+9000 2.7%	15,435
1992	804,000/124+9000 3.1%	15,485
1993	804,000/111+9000 8.2%	16,245
1994	804,000/99+9000 14.0	17,120
1995	804,000/102+9000 12.4%	16,885
1996	804,000/115+9000 6.5%	15,990

• Is it possible to shift manufacturing from domestic to host country ?

• Is the parity a permanent condition?

• Then the question is, if other FACTORS are favorable, why not BRAZIL or Mexico or India or China

• Possibilities of contract mnfr to be explored

• Other factors within firms control could be as per weak or strong Y conditions

• Why Suzuki in India/ BMW north Carolina/ Volks in Brazil / GM in China

	Currency weak	Currency strong	Remarks
Price	Stress on price benefits	Engage in non price competition
Costing	Full cost unless you want penetration pricing	Marginal costing and Contribution analysis
Bill	Foreign supplier in local?	Suppliers in US$
Payment terms	Cash for goods	Credit preferred
Money-Repatriation	Quick	Delay
Number of markets	As many as possible	Few strong currency countries Counter trade in weak currency countries
Product line	More	Few
Services	Domestic	Foreign