1. Part 5 Global Strategy, Structure, and Implementation 13-1

2. 13-2 Chapter 13 Export and Import Strategies

3. To introduce the ideas of export and import To identify the elements of export and exporting strategies To compare direct and indirect selling of exports To identify the elements of import and importing strategies To profile the role of counter-trade 13-3

4. 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. 13-4

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6. Advantages to exporting Requires less expertise, time, and capital than other modes of entry Operational control Helps companies expand and diversify sales as well as achieve economies of scale 13-6

7. Companies 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? 13-7

8. 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. 13-8

9. Two views of export shape interpretation: 1. The slow, sequential dynamic of incremental Internationalization: As a company gains experience, resources, and confidence, it progressively exports to increasingly distant and dissimilar countries 2. the instant internationalization of the born global: Rather than slowly learning about foreign markets, born- global companies step straight onto the world stage, exporting from day one of operations. 13-9

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11. Adjusting Financial Management : The currency and credit processes of export require adept financial management. Companies often struggle with the fact that completing an export sale requires them to help foreign customers obtain credit. Adjusting Customer Management : Worldwide, customers demand a greater range of services from their vendors. The fact that most products are available from many vendors boosts the buyer ’ s negotiating power. (Contd.) 13-11

12. Adjusting for Information Technology : Although information technologies reduce the cost of communications, they often increase customer expectations. Historically, exports were arm ’ s-length, ship-it-and-forget-it transactions. Contact with customers relied on hard-copy documents either faxed or posted overnight. This situation created useful time lags with which to deal with customers ’ concerns. Now, the ease of contacting vendors via e-mail or inexpensive voice-over- Internet-protocol (VoIP) gives customers real-time access, thereby increasing demands on the exporter. (Contd.) 13-12

13. Additional Stumbling Blocks: Insufficient commitment by top management to overcome the inevitable demands and difficulties of export Underestimating the usefulness of public and private export expertise Misestimating the costs of shipping and the complexity of customs regulations and procedures Poor selection of local agents to represent the company abroad Reacting to orders from around the world instead of designing a purposeful sales strategy Neglecting export markets when the domestic market booms Misclassifying products in terms of the destination country ’ s tariff schedule, thereby incurring a higher tax or slowing delivery Failure to treat international distributors on an equal basis with those in the home market Unwillingness to modify products to meet other countries ’ regulations or cultural preferences Failure to print service, sales, and warranty messages in local languages Bypassing public export assistance when the company lacks qualified personnel Failure to prepare for disputes with customers 13-13

14. 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. 13-14

15. 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. 13-15

16. Specialization of Labor Global Rivalry Local Unavailability Diversification of Operating Risks 13-16

17. Key Broker Functions: Valuing products in such a way that they qualify for more favorable duty treatment Qualifying for duty refunds through drawback provisions Deferring duties by using bonded warehouses and foreign trade zones Document and paper-flow management Limiting liability by properly marking an import’s country of origin 13-17

18. Procedural Assistance Efficiency Improvement 13-18

19. Bureaucratic Impediments The efficiency of importing is challenged by delays, documents, and fees. The specific documents that customs requires vary by country but usually include an entry manifest, a commercial invoice, and a packing list 13-19

20. 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. 13-20

21. 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. 13-21

22. Direct selling involves sales representatives, distributors, or retailers. Direct Selling to Foreign Retailers and End Users Direct Selling over the Internet 13-22

23. Key export documents are: Pro forma invoice Commercial invoice Bill of lading Consular invoice Certificate of origin Shipper’s export declaration Export packing list 13-23

24. A 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. 13-24

25. This is an umbrella term for several sorts of trade, such as barter or offset, in which the seller accepts goods or services, rather than currency or credit, in payment for its products. 13-25