Distribution policy and risk management
International Strategic marketing. Contents Lecture. To trade = to run risks. Risks. Commercial or business risks –. buyer. Commercial or business risks –. seller. Insurance. Types of insurance. Finance payment conditions. Choice of payment conditions. Payment conditions. Clean Payment. Clean collection. Documentary collection. Payment Against Documents. Payment Against Documents. Documentary collection procedure. Documentary credit / Letter of Credit (L/C). Documentary credit. Confirmed letter of credit. International bank guarantees. Logistics/Place strategy.
Risk Management and methods payment Place / distribution strategy.
Risk means “a dangerous chance” First investigate what the risks are take measures. Risk management: companies operate an active policy to eliminate/minimise these risks.
Coverage of risks Indemnity insurance and sum insurance Parties: insurer and policyholder Uncertainty: when and how much might be paid out Policy: document in which a contract is set out Coinsurance: insurers and brokers jointly enter into insurance agreements covering a high risk or a large insured sum.
When clean collection has been agreed to within the terms of payment, the seller must give the bank authorization to collect money from the buyer. Essentially the same rules apply as for clean payment , but the seller’s bank has a more active role to play with this type of payment. The bank is ordered to collect the payment without having to deal with the business document.
A number of documents are attached to each international contact. These documents include invoices, shipping document, bills of lading, certificates of origin, certificates of agreed tests, insurance documents and inspection documents. A buyer (importer) needs these documents in order to gain possession of the imported products.