WF SEM II Objective 1.05

1. WF SEM II Objective 1.05 Explain international trade considerations for sport/event industries.

2. Explain the impact of exchange rates on sport marketing • Exchange rates: the value of one currency for the purpose of conversion to another • Example: • Dollar( United States) to • Euro(Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain) to • Pound (Great Britain, Egypt, Lebanon, Sudan and Syria.) • Exchange rates have a direct effect on the power of a team's payroll

3. Explain the impact of exchange rates on sport marketing • As businesses of the world continue to expand to global dimensions, the question of international currency dynamics becomes increasingly important. • Research has shown that the success of sports teams around the world is directly related to their purchasing power in the international talent market. • The higher the value of the teams’ home currency = the more purchasing power the team has meaning that based on prior research, the team will be more successful.

4. Discuss the use of financial institutions in international sport marketing. • Financial Institutions -an institution that provides financial services for its clients or members (Bank) • Financial institutions are important in the exchange rate process when doing international sport marketing. • Why?

5. Describe trade regulations affecting international sport marketing • Trade restrictions are regulations, policies and actions that limit trade among nations. • Example: Trade restrictions are barriers that a nation imposes, which hinders a sporting-goods manufacturer's ability to do business in other nations. • Types of trade restrictions include tariffs, quotas, and embargoes. • Tariffs: taxes placed on imported goods • Quotas: limit the quantity of goods that move into or out of the country. • Licenses: permits that a nation grants to businesses that want to import or export goods. Some nations limit the number of licenses they grant. • Embargoes: A policy that suspends all import-export trade with another country.

6. Describe trade regulations affecting international sport marketing • Suppose the sporting-goods manufacturer wants to sell baseball gloves to a business in another country that has a very high tariff (tax) on sporting-goods. • If the tariff is too high, the costs (taxes) may exceed the benefits (e.g., profits) of selling the baseball gloves to businesses in the other country.

7. Explain the use of foreign distributors in international sport marketing • Distributor: An agent who sells directly for a supplier and maintains an inventory of the supplier’s products. • A foreign distributor buys the manufacturer’s product for resale to middlemen or final buyers. • He has more functions than an agent (maintaining inventories providing after-sales services) and assumes the ownership risk. • He obtains a profit margin on resale of the product

8. Explain the use of foreign distributors in international sport marketing • Your company wants to sell its products in foreign markets. • Increased sales mean increased revenues, which should translate into increased profits. • In order to accomplish this goal, you must first establish distribution channels in foreign markets.

9. Discuss the impact of government regulation on international sport marketing. • In addition to domestic restrictions, international businesses must deal with a range of additional government rules regulating international trade. • Tariffs, import quotas and prohibition issues are all facts of life for importers. • The restrictions could cause barriers and negative impacts to international sport marketing.

10. Explain how cultural/value differences impact international sport marketing. • Methods of communication vary among cultures • Personal style concerns the way a negotiator talks to others, uses titles, dresses, speaks, and interacts with other persons. • It has been observed, for example, that Germans have a more formal style than Americans

11. Explain how cultural/value differences impact international sport marketing. • A negotiator with a formal style insists on addressing counterparts by their titles, avoids personal anecdotes, and refrains from questions touching on the private or family life of members of the other negotiating team. • A negotiator with an informal style tries to start the discussion on a first-name basis, quickly seeks to develop a personal, friendly relationship with the other team, and may take off his jacket and roll up his sleeves when deal making begins in earnest.

12. Explain how cultural/value differences impact international sport marketing. • Various cultural attitudes towards time. • Germans are always punctual, Latins are habitually late, Japanese negotiate slowly, and Americans are quick to make a deal. • Emotionalisms are different. • Latin Americans show their emotions at the negotiating table, while the Japanese and many other Asians hide their feelings

13. Explain how cultural/value differences impact international sport marketing. • Cultural factors influence the form of the written agreement that the parties make. • Americans prefer very detailed contracts that attempt to anticipate all possible circumstances and eventualities • Chinese, prefer a contract in the form of general principles rather than detailed rules. • Risk taking differs. • Team organization: One leader or group consensus? • Culture is one important factor that affects how executives organize themselves to negotiate a deal

15. Resources • http://econ.duke.edu/uploads/media_items/elliott-nick.original.pdf • http://www.going-global.com/articles/evaluating_foreign_distributors.htm • http://www.internationaltrade.co.uk/articles_print.php?CID=7&SCID=&AID=153 • http://smallbusiness.chron.com/government-regulation-factors-business-2966.html • http://iveybusinessjournal.com/topics/global-business/the-top-ten-ways-that-culture-can-affect-international-negotiations