You work for a manufacturer of computer peripherals for a global company in a credit-management capacity. At an international meeting of your company in São Paulo, you happen to have dinner with the Brazilian team. The conversation quickly turns to their primary problem. Brazilian customers are going to the United States to purchase computer equipment rather than purchasing them in the home country because they are considerably cheaper in the United States. This explains the Brazilian team’s lackluster performance and the corporate office’s concerns about that subsidiary.
The Brazilian real has gained a lot in value against the dollar. However, you are intrigued and wonder how this exchange rate could affect your company’s Brazilian subsidiary. Your colleagues say that their sales are 50% below the objective set by the corporate office.
You remember that, in college, your international finance professor had mentioned something about parallel imports and gray markets in class, but you did not pay much attention, as you thought it to be more of a European problem. Now that it’s a problem hitting close to home, you want to find out what your company can do to prevent it.
Finding a way to contain this problem would allow both the Brazilian team to achieve its goal and you to demonstrate your ability to progress into an international position within the company.
You need to brush up on your understanding of parallel imports. In addition, you need to explore the existence and causes of price differentials—the conditions that trigger parallel imports—and determine which strategies and tactics can be used to prevent both customers and members of the distribution channel from engaging in gray markets. You would also like to be able to offer recommendations for an international pricing strategy, which could improve your company’s overall performance. Where do you start?
The Accenture Academy course Managing Parallel Imports
highlights and discusses the main issues to consider in fighting gray-market goods and ensuring your company’s long-term global performance.