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International Business Chapter Thirteen Export and Import Strategies.

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Presentation on theme: "International Business Chapter Thirteen Export and Import Strategies."— Presentation transcript:

1 International Business Chapter Thirteen Export and Import Strategies

2 Strategy of the Multinationals Price Quality Competitive Advantage

3 3 Export Strategy of the Firm Firms export in order to…. Firms export in order to…. increase revenuesincrease revenues achieve economies of scaleachieve economies of scale alleviate excess capacityalleviate excess capacity minimize risk and diversify marketsminimize risk and diversify markets Firms consider the following factors to export: Firms consider the following factors to export: Ownership advantagesOwnership advantages Location advantagesLocation advantages Internalization advantagesInternalization advantages

4 4 Phases of Export Development

5 5 Steps Involved in Designing Export Strategy Assess company’s export potential Assess company’s export potential Obtain export counseling Obtain export counseling Select a market or markets Select a market or markets Formulate and implement an export strategy Formulate and implement an export strategy Table 13.2 Export Business Plan has the details

6 6 Export Intermediaries Export can be conducted directly, indirectly or through third party intermediaries. Export management company (EMC): a firm that either acts as a manufacturer’s agent or buys merchandise from manufacturers for international distribution. Export trading company (ETC): a large, independent broker whose primary purpose is to match suppliers to foreign customers for a fee. Foreign freight forwarder: an international trade specialist who assists in the delivery of goods from producer to customer

7 7 Import Strategy of the Firm Why import? Basic imports include: Why import? Basic imports include: industrial and consumer goods and servicesindustrial and consumer goods and services intermediate goods and servicesintermediate goods and services Strategic advantages of imports Strategic advantages of imports Specialization of laborSpecialization of labor Global rivalryGlobal rivalry Local unavailabilityLocal unavailability Diversification of operation risksDiversification of operation risks Gain knowledge from abroadGain knowledge from abroad

8 Export Import Process Informs Exporter Exporter’ s Bank Importer Importer’s Bank Receives payment Ships Bill of lading Informs Reimbursement Payment Opens Letter of Credit

9 9 Export Documentation Key export documents include: pro forma invoice: outlines the terms of sale, price, and delivery details pro forma invoice: outlines the terms of sale, price, and delivery details commercial invoice: detailed legal document-see example in the text commercial invoice: detailed legal document-see example in the text shipper’s export declaration: used to monitor exports and compile trade statistics shipper’s export declaration: used to monitor exports and compile trade statistics bill of lading: a detailed receipt from the carrier transporting the cargo bill of lading: a detailed receipt from the carrier transporting the cargo consular invoice: required to monitor imports consular invoice: required to monitor imports certificate of origin: determines the tariff certificate of origin: determines the tariff export packing list: lists the cargo details export packing list: lists the cargo details

10 10 Countertrade Countertrade: is good when a firm/government lacks sufficient funds or convertible currency to pay for imports Countertrade: is good when a firm/government lacks sufficient funds or convertible currency to pay for imports Two basic types of countertrade transactions include: Two basic types of countertrade transactions include: barter [based on clearing arrangements used to avoid money-based exchange]barter [based on clearing arrangements used to avoid money-based exchange] buybacks, offsets, and counterpurchase [all of which are used to impose reciprocal commitments]buybacks, offsets, and counterpurchase [all of which are used to impose reciprocal commitments] Countertrade can be inefficient or inflexible Countertrade can be inefficient or inflexible

11 11 Chapter 13: Discussion Questions 1. Explain why firms export or import. What do they gain from export-import? 2. Discuss the functions of Export Intermediaries. 3. Describe the export-import process and explain the role of various “export documentation” involved in the process. 4. What is countertrade? Why firms or governments engage in countertrade?


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