3Chapter Objectives To introduce the ideas of export and import To identify the elements of export and exporting strategiesTo compare direct and indirect selling of exportsTo identify the elements of import and importing strategiesTo discuss the types and roles of third-party intermediariesTo profile the role of counter-trade
4Exporting and Importing Exporting refers to the sale of goods or services produced by a company based in one country to customers that reside in a different country.Importing is the converse: the purchase of products by a company based in one country from sellers that reside in another.
6Environmental Factors Influencing Export and Import Operations
7Export Strategy Advantages to exporting Requires less expertise, time, and capital than other modes of entryOperational controlHelps companies expand and diversify sales as well as achieve economies of scale
8Questions to ConsiderCompanies typically consider the following questions in evaluating the export option:What do we want to gain from exporting?• Is exporting consistent with our goals?Will exporting put undue demands on our resources? If so, how will we meet them?Does exporting leverage our core competency?Does exporting fit the current configuration of our value chain?Do our coordination systems support the needs posed by exporting?Are the projected benefits of exporting worth the costs?Would our resources be better used to develop new domestic business?
9Characteristics of Exporters Although the largest companies are the biggest exporters, small companies are also expanding their export capability.Firm characteristics moderate its export intensity. Size plays a role, but often management commitment, efficiency, and cost structure matter more.
10Two Views of Export Development Two views of export shape interpretation:The slow, sequential dynamic of incrementalinternationalization and the instantinternationalization of the born global
12Pitfalls of Exporting Adjusting Financial Management Adjusting Customer ManagementAdjusting for Information TechnologyAdditional Stumbling Blocks
13Designing an Export Strategy 1. Assess the company’s export potential by examining its opportunities and resources.2. Obtain expert counseling on exporting.3. Select a market or markets.4. Formulate and implement an export strategy.
14Import Strategy There are three types of importers: • Those looking for any product around the world to import and sell.• Those looking for foreign sourcing to get their products at the cheapest price.• Those using foreign sourcing as part of their global supply chain.
15Advantages of Importing Specialization of LaborGlobal RivalryLocal UnavailabilityDiversification of Operating Risks
16Import Brokers Key Broker Functions: Valuing products in such a way that they qualify for more favorable duty treatmentQualifying for duty refunds through drawback provisionsDeferring duties by using bonded warehouses and foreign trade zonesDocument and paper-flow managementLimiting liability by properly marking an import’s country of origin
18Future: The Technology of Trade Advances in transportation and communication increases tradeCollaborative software allows smaller companies to engage in international trade more efficiently3rd Party Logistics
19Import Documentation Bureaucratic Impediments The efficiency of importing is challenged by delays, documents, and fees.
20The Export Process Principal types of exporting: • Direct—products sold to an independent party outside of the exporter’s home country.• Indirect exports—products sold to an intermediary in the domestic market, which then sells the goods in the export market.
21Indirect Selling Export Intermediaries Export Management Companies: operate on a contractual basis—usually as an agent of the exporter.Export Trading Companies: operate based on demand rather than supply. They identify suppliers who can fill orders in overseas markets.
22Direct SellingDirect selling involves sales representatives, distributors, or retailers.Direct Selling to Foreign Retailers and End UsersDirect Selling over the Internet
23Export Documentation Key export documents are: Pro forma invoice Commercial invoiceBill of ladingConsular invoiceCertificate of originShipper’s export declarationExport packing list
24Sources of Regulatory Assistance In the United States, a number of institutions,most notably the Department of Commerceand its affiliates, help firms identify andrealize export and import opportunities.
25Freight ForwardersA foreign freight forwarder is an export or import specialist dealing in the movement of goods from producer to consumer.Primary transportation modes include:Surface freight (truck and rail), ocean freight, and airfreight.Intermodal transportation—the movement across different modes from origin to destination.
26Counter-trade This is an umbrella term for several sorts of trade, such as barter or offset, in which theseller accepts goods or services, rather thancurrency or credit, in payment for its products.
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