Certified Global Business Professional Series CGBP Exam Review

Certified Global Business Professional Series CGBP Exam Review Julia Dvorko Regional Director Massachusetts Export Center Part of the Massachusetts Small Business Development Center Network 1

Agenda • • • Exam Structure Study Tips Exam Review & Study Guide Sample Exam This presentation and answers to the sample exam are posted online at: www. msbdc. org/cgbp. 2

Please Note… • Items, suggestions and tips contained in this presentation are solely the opinions of the presenters and in no way should be considered official statements from NASBITE. • All comments and tips are taken from public documents and from personal experience. 3

NASBITE CGBP Overview Top Level Domains Threads • Global Business Management • Global Marketing • Supply Chain Management • Trade Finance • Documentation • Legal & Regulatory Compliance • Cultural Awareness • Technology • Resources Terminology Across All Threads 4

NASBITE CGBP Overview, cont’d • The credential is very broad, but not very deep. Demonstrates general knowledge in the four main areas. CGBPs are generalists!!! • The credential is supposedly equivalent to 2 years experience in the industry. • The challenge for most people with experience in the industry will be to brush up on the domains to which they do not have day-to-day exposure. • Requirement for recertification is a new development – starting January 1, 2013: http: //www. nasbite. org/? cgbprecertguide Massachusetts Export Center 5

NASBITE CGBP Exam Overview • • 3 -hour exam 150 multiple-choice questions across all top level domains Possible scores range from 200 to 800; a score of 500 is required to pass Scores average 550 -580 and the pass rate has averaged 74% Exams are administered by PSE, a vendor chosen by NASBITE Exams are held during specific test windows, which last about 2 weeks The next test window is June 16 - July 5, 2014 (register by May 4) The remaining test windows for 2014 are August 18 – September 6 and December 1 -20 • The exams are administered through Prometric Test Centers, which in MA are located in West Springfield, Worcester, Lowell, Brockton, North Andover, Burlington and Boston • Exam can be retaken as early as the next test window • Exam costs: $395 initial, $100 for retake Massachusetts Export Center 6

Test Preparation Strategies • Identify your strengths and conduct a quick review of NASBITE CGBP domains in these areas: http: //c. ymcdn. com/sites/www. nasbite. org/resource/resmgr/files/nasbite_cgb p_practice_deline. pdf - very helpful overview of all domains • Identify your weaknesses and do most of your studying in these areas • Review the notes/presentations from Fast Track Export School, supplemented by other resources as necessary • Remember key acronyms (some questions use only acronyms) • Keep in mind the “two-year” guideline when studying topics • Helpful publications: – The Global Entrepreneur, by Jim Foley (available through Amazon) – A Basic Guide to Exporting and DOC webinars: http: //export. gov/basicguide/ 7

Reality Check • Even if you have international trade experience, you will need to prepare/study to do well on the exam. You may not perform as well on the exam as you would expect given the level of your experience. • If you don’t have international trade experience or knowledge, you will need to do some significant studying using multiple resources to pass the exam. • The NASBITE CGBP is a standardized exam that includes some flawed questions. Not everyone does well on standardized exams. 8

Exam Review & Study Guide 9

Global Business Management & Marketing 10

Global Business Management & Marketing • Overview – Probably the 2 most intuitive domains – Large, but manageable domains (lots of “common sense” issues) – Heavily focused on resources – Mini “case-study” questions – Skip or briefly review tasks/knowledge that seem overly general or vague (e. g. , cultural awareness) 11

Global Business Management & Marketing Resources 12

Understanding the roles of government in trade & investment promotion U. S. and state government efforts • • • Foreign government efforts • Promote exports from the U. S. to overseas markets Promote investment from foreign firms in the U. S. (e. g. , manufacturing facilities, sales offices, licensing or tech transfer arrangements, etc. ) Goal: promote job creation and economic development in the U. S. • • Promote exports from their country to the U. S. and other foreign markets Promote investment from foreign firms in their country (e. g. , manufacturing facilities, sales offices, licensing or tech transfer arrangements, etc. ) Goal: promote job creation and economic development in their country For scenarios presented on the exam, ask yourself this question: Where is the economic development? 13

U. S. Department of Commerce (USDOC) • International Trade Administration (ITA) – U. S. Commercial Service (USCS or CS) trade promotion arm of the ITA • Operates through a network of offices in the U. S. and overseas (usually housed with U. S. embassies or consulates) • Offers a variety of services to help U. S. firms link with overseas buyers and agents/distributors – – – Gold Key Service (GKS) International Partner Search (IPS) International Company Profile (ICP) Trade Missions & Trade Show Programs Export USA (former Commercial News USA) 14

U. S. Department of Commerce (USDOC) – International Trade Administration, cont’d • Compiles a variety of international market research reports to help U. S. firms assess overseas markets – Country Commercial Guides (CCGs) » Sample CCG for European Union – Below samples of “industry overviews” formerly known as ISAs or Industry Sector Analyses » Sample report on Brazilian natural gas sector overview – Below sample or a “market update” formerly known as IMI or International Market Insight » Sample report on German orthopedic device market – Best Market Reports (BMRs) » Sample BMR for Cosmetics – Trade Stats Express – trade statistics for USA and individual states 15

U. S. Department of Commerce (USDOC) – International Trade Administration, cont’d • Other resources and programs available through ITA – Trade Compliance Center » Focal U. S. government point for monitoring compliance with foreign trade agreements to see that U. S. firms and workers benefit from these agreements – Trade Advocacy Center » Based in Washington, D. C. , the Advocacy Center coordinates U. S. government interagency advocacy efforts on behalf of U. S. exporters bidding on public-sector contracts with overseas governments and government agencies. – Enforcement & Compliance (former Import Administration) » Enforcement and Compliance (E&C) safeguards and enhances the competitive strength of U. S. industries against unfair trade through the enforcement of U. S. antidumping duty (AD) and countervailing duty (CVD) trade laws and ensures compliance with trade agreements negotiated on behalf of U. S. industries. E & C also administers the Foreign Trade Zones program and certain sector-specific programs. 16

U. S. Department of Commerce (USDOC) • Bureau of Industry & Security (BIS) – Primary U. S. government agency responsible for administering and enforcing export regulations (“Export Administration Regulations” or “EAR”) • • Lists of Parties of Concern Commerce Control List Export Control Classification Number (ECCN) Simplified Network Application Process Redesign (SNAP-R) • Export Management and Compliance Program (EMCP) 17

U. S. Department of Commerce (USDOC) • Census Bureau – Responsible for compiling foreign trade statistics through: • Automated Export System (AES) – Administers Schedule B coding system • For purposes of the exam, Schedule B codes are for export, Harmonized Tariff Schedule (HTS) codes are for import – Difference between Schedule B codes and HTS codes 18

State Government Role • State efforts for trade promotion can vary significantly, but below are some examples of trade & investment promotional services offered by states: – – – – Overseas trade missions & trade shows Inbound trade missions and delegations Overseas offices in selected markets International marketing assistance Export financing assistance International trade education Foreign direct investment (FDI) promotion 19

Export Financing Programs • Export-Import Bank of the U. S. (Ex-Im Bank) – Export Working Capital • 90% loan guarantee – Export Credit Insurance – Direct loans and guarantees foreign buyers of U. S. goods • U. S. Small Business Administration (SBA) – Export Loans • Export Working Capital Program – Guarantee up to lesser of $5 Million or 90% – Must be a “small business” under SBA definition (<500 employees for most manufacturers) • Export Express – SBA Trade Finance Guide – Other resources from SBA 20

Other Organizations • World Trade Centers (WTC) – International trade education, networking, trade leads • International Monetary Fund (IMF) – Promotes international monetary cooperation and stability among 184 member countries • World Trade Organization (WTO) – Establishes a framework for negotiating and monitoring rules of trade between nations (e. g. , trade agreements, etc. ). Formerly GATT. • Overseas Private Investment Corporation (OPIC) – Political risk insurance and financing for U. S. investments in overseas markets • U. S. International Trade Commission (USITC) – Maintains Harmonized Tariff Schedule of the U. S. and monitors unfair international trade practices for U. S. industry • U. S. Customs & Border Protection - “Customs” (CBP) – Oversees importation of goods into the U. S. 21

Other Organizations • Foreign Agricultural Service, U. S. Dept of Agriculture (FAS, USDA) – The primary government agency for promoting exports of U. S. food and agricultural products • Office of the U. S. Trade Representative (USTR) – Chief representative of the U. S. government in negotiating trade agreements, resolving trade disputes and establishing trade policy with other countries • U. S. Agency for International Development (USAID) – Provides economic, developmental and humanitarian assistance around the world in support of the foreign policy goals of the United States • U. S. Trade and Development Agency (TDA) – Funds various forms of technical assistance, feasibility studies, training, orientation visits and business workshops that support the development of a modern infrastructure and a fair and open trading environment. Goal is to advance economic development and U. S. commercial interests in developing and middle-income countries. 22

Global Business Management & Marketing International Market Research & Assessment 23

International Market Assessment • Market research techniques – Primary vs. secondary research • Advantages & disadvantages of each – Market segmentation – Qualitative vs. quantitative research 24

International Market Assessment • Screening potential export markets • Common international market research elements • Country risk (political, economic) 25

Additional Market Research Resources • Export. gov – U. S. Department of Commerce market research reports • USA Trade Online – Commodity-specific U. S. export & import data from the Census Bureau & STAT-USA (similar to Trade Stats Express) • United Nations COMTRADE (UNCOMTRADE) – Database for researching trade statistics of specific commodities between all world countries • CIA World Factbook – Individual country profiles featuring geographic, demographic, government and economic information • US Bilateral Relations Fact Sheets (former Country Background Notes) – State Department publication • State Department Travel Advisories – Information on travel safety for American citizens in different countries 26

Additional Market Research Resources • • • World Bank World Development Indicators – Economic indicators for developing countries PIERS – Specific information on importers, exporters and their shipments through the U. S. , Latin America and Asia. Data collected from bills of lading (ocean freight only). Helpful for determining where competitors are shipping. Kompass – Subscription-based database featuring financial information, personnel and other key details of companies worldwide. Hoovers / Dun & Bradstreet – Similar information to Kompass (offers more free content) Private Sector Country/Industry Analyses – Euromonitor International – Marketresearch. com – Datamonitor Group 27

Global Business Management & Marketing Global Business Planning & Operations 28

Global Market Entry • Assessing Export Readiness • Indirect exporting vs. Direct exporting • Market entry modes • • Sales Agent/Rep Distributor Value-Added Reseller Licensing Partner Joint Venture Direct Investment (sales office, wholly owned subsidiary, mfg facility) Direct End-User • Factors when selecting a foreign agent or distributor 29

Global Market Entry • Grey market exporting (also called parallel marketing) – gray marketing or parallel importation refers to the diversion of branded products from authorized distribution channels within a country or importation of such products into another country for sale by independent distributors or brokers without the knowledge of the manufacturers. • Push and pull promotional strategies – A “push” promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product. – A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product. • Trade Shows and Trade Missions (horizontal vs. vertical, catalog trade shows) • Product Life Cycle 30

Global Business Planning & Operations • • Export Plan Outline SBA Export Business Planner SWOT Analysis Basic accounting – Export budgeting – Very basic financial statements (e. g. , balance sheet elements: assets = liabilities + owner’s equity also called shareholder’s equity) – Transfer pricing • The pricing of goods/services within a multidivisional organization, such a U. S. firm selling to a foreign subsidiary • OECD establishes transfer pricing rules – Export Pricing • Marginal (variable) cost pricing • Fixed cost pricing 31

The Role of Culture in Int’l Business • Ethnocentrism – the viewpoint that “one’s own group is the center of everything, ” against which all other groups are judged. • Adaptive Behavior – type of behavior that is used to adapt to another type of behavior or situation. • Cultural relativism – cultural relativism is the view that all beliefs are equally valid and that truth itself is relative, depending on the situation, environment, and individual. • Low vs. high context cultures – important in communication between entities from different cultures. • Geert Hofstede’s Cultural Dimensions – Power Distance, Individualism, Masculinity, Uncertainty Avoidance and Long. Term Orientation, Indulgence vs. Restraint 32

Legal Issues • International Sales/Distribution Contracts – Contract Elements – Exclusivity – Dispute Resolution • Arbitration (International Chamber of Commerce, American Bar Association, UNCITRAL, others) • Jurisdiction (choice of law) – Litigation • United Nations Convention on Contracts for the International Sale of Goods (UNCISG or CISG) • UNCITRAL (U. N. Commission on International Trade Law) – “Force majeure” 33

Legal Issues • Intellectual Property Protection – Types of IP Protection (e. g. , copyrights, patents, trademarks, trade secrets, etc. ) – Protecting IP Internationally (and risks of IP infringement internationally) – Conventions & Treaties governing international IP protection • e. g. , Berne Convention, Paris Convention, Madrid Protocol • Foreign Corrupt Practices Act (FCPA) – Exception: payments for “routine governmental actions” – Useful Article 34

International Standards Compliance • ISO 9000 – Benefits of ISO 9000 certification – Elements of the ISO 9000 standard/quality management system – Process for implementation of the ISO 9000 quality management system • International safety certifications – CE Mark (Europe) • CE Marking procedures – Directives, testing, technical file, declaration of conformity – Other countries (e. g. , CCC Mark for China) 35

Trade Policy Issues • Trade Agreements & Trading Blocs – Free Trade Areas (e. g. , NAFTA) – Economic Unions (e. g. , EU) – Bilateral vs. multilateral agreements • Barriers to Trade – Tariffs • Ad Valorem Duties • Specific Duty Rates – Non-Tariff Barriers • • Quotas Import licensing requirements Standards Embargoes – Dumping/Anti-Dumping • Countervailing Duties • Office of the U. S. Trade Representative • World Trade Organization 36

Export Regulatory Compliance • U. S. Department of Commerce – Bureau of Industry & Security (BIS) • U. S. Department of State – Directorate of Defense Trade Controls (ITAR) • U. S. Department of Treasury – Office of Foreign Assets Control (OFAC) 37

Authorities Governing Exports • Export Controls are Largely Outlined in 3 Sets of Regulations: – Export Administration Regulations (EAR) – International Traffic in Arms Regulations (ITAR) – Office of Foreign Assets Control (OFAC) • Authorities Governing Exports: – U. S. Department of Commerce (EAR) • Bureau of Industry & Security – U. S. Department of State (ITAR) • Directorate of Defense Trade Controls – U. S. Treasury (OFAC) • Office of Foreign Assets Control – U. S. Department of Energy – U. S. Customs (enforcement of controls) • Immigration & Customs Enforcement (ICE)

Avoiding Embargoed Countries Heavy or Total Trade Sanctions ( with some humanitarian exceptions) Cuba N. Korea Syria Iran Sudan Office of Foreign Assets Control www. treas. gov/ofac Massachusetts Export Center

Product Controls – Commerce Control List (Commerce Dept - EAR) • Commercial & “dual use” goods – Commerce Control List – U. S. Munitions List (State Department - ITAR) • Military, defense, aerospace and related goods • Items specifically designed, developed, configured, adapted or modified for military application – http: //pmddtc. state. gov/regulations_laws/documents/official_itar/ITAR_Part_121. pdf • Registration required for all manufacturers under ITAR jurisdiction, regardless of whether they export – Registration Fees » Tier 1: $2250/year (first time registrants) » Tier 2: $2750/year (up to 10 applications per year) » Tier 3: $2750/year + $250 per application (>10 applications per year) Massachusetts Export Center

Anti-Boycott Compliance http: //www. bis. doc. gov/index. php/enforcement/oac • Prohibits compliance with boycotts in which the U. S. does not participate (e. g. , Arab boycott of Israel) • Boycott requests may appear in: – – Requests for quote Letters of credit Purchase orders / contracts / invoices Oral communications Massachusetts Export Center

Anti-Boycott Compliance • Be alert to: – Language referring specifically to Israel, blacklists or boycotts – Requests for information on: business activity in specific countries; race, religion, sex, national origin • Possible exceptions (e. g. , “positive” statements of origin) • Requests must be reported to the Office of Anti. Boycott Compliance by the end of the month following the calendar quarter in which the request was made Massachusetts Export Center

Export Licensing Requirements • Any product exported from the U. S. to a restricted country or party • Products found on the Commerce Control List exported to countries flagged on the Commerce Country Chart for reasons outlined in the product’s ECCN entry – BIS is the licensing agency • Export of any product found on the U. S. Munitions List or under ITAR jurisdiction – DDTC is the licensing agency • Release of controlled technical information, data or know-how to a foreign national when required (using above guidelines) Massachusetts Export Center

Supply Chain Management & Trade Finance 44

Supply Chain Management & Trade Finance • Overview – Perhaps the most difficult domains for some – Least intuitive, most technical – Contain the most definitions – The good news: narrower than the other 2 domains 45

Product and Tariff Classifications • Harmonized System (HS) – The international Harmonized System (HS) is administered by the World Customs Organization and serves as the foundation for the import and export classification systems used in the United States. The United States (U. S. ) import classification system, the Harmonized Tariff Schedule (HTS) administered by the U. S. International Trade Commission (USITC), and the U. S. export classification system, the Schedule B administered by the U. S. Census Bureau, Foreign Trade Division, both rely on the international HS codes for their 4 - and 6 -digit headings and subheadings. – Harmonized Tariff Schedule of the US (U. S. Imports) • General Rules of Interpretation – Concept of “essential character” • Schedule B Codes (U. S. Exports) • Difference between HTS and Schedule B • World Customs Organization 46

General Trade Logistics • Modes of transportation – Air, sea/inland waterways, rail, multimodal • Types of containers • Role of the freight forwarder – Freight consolidation function of forwarders • Role of the customs broker – Freight forwarders are usually licensed customs brokers – Customs Power of Attorney • Third Party Logistics (3 PL) • Import marking requirements 47

Supply Chain Security Issues • Customs-Trade Partnership Against Terrorism (C-TPAT) – C-TPAT Procedures & Practices • Container Security Initiative (CSI) • FDA Bioterrorism Act – Requirements for food imports 48

Incoterms • Incoterms overview – International Terms of Trade Used Worldwide – Published by the International Chamber of Commerce (ICC) – Key Incoterm Rules • EXW, FCA/FOB, FAS, CFR/CPT, CIF/CIP, DDP • Incoterms Chart of Responsibility 49

Export Documentation • Basic export documentation (overview) – Automated Export System (AES) • Filing of EEI – Electronic Export Information • Administered by U. S. Census Bureau, Foreign Trade Division – Bill of Lading – can be negotiable • Sample • Master vs. House B/L – Commercial Invoice – Certificates of Origin • Specific types of C/Os are often required to demonstrate origin when shipping under Free Trade Agreements – NAFTA Certificate of Origin – U. S. Certificate of Origin for Exports to Israel – Others – Packing List – Dock Receipt – Other Documents 50

Shipping Under Free Trade Agreements • NAFTA (and other trade agreements) Rules of Origin – Key Preference Criterion • A) “Wholly Obtained or Produced” – Goods wholly obtained or produced entirely in Canada, Mexico or the United States contain no foreign materials or parts from outside the NAFTA territory • B) Tariff Shifts & Regional Value Content (RVC) – For goods substantially processed or transformed in the US, Canada or Mexico • C) “Produced in the NAFTA Territory From Wholly of Originating Materials” – Goods produced entirely in Canada, Mexico and/or the United States exclusively from materials that are considered to be originating according to the terms of the Agreement (even though originating materials may have foreign content) – De Minimus Rule • Office of United States Trade Representative 51

Drawback & FTZs • Duty Drawback – Types of drawback – Very general questions (definitions) • Foreign Trade Zones – What they are and how they can be used 52

Miscellaneous Logistical Issues • Cargo insurance – Cargo Insurance Terms • “General Average” • “Free of Particular Average” • “All Risks” – Insurance as it relates to Incoterms – Carriage of Goods by Sea Act (COGSA) • Limits loss liability to “$500 per customary shipping unit” – Warsaw Convention • Limits air carrier loss liability to $9. 07/lb or $20/kg – “Force majeure” • Carnets • Tariff Engineering • Landed cost – Total cost to foreign buyer • Demurrage 53

Assessing Credit Risk • Types of Risk (country, commercial, foreign exchange) • Assessing credit risk • Credit reporting resources – Private sector providers, such as Coface, Graydon, D&B – USDOC International Company Profile 54

Global Trade Banking • Methods of International Payment • Cash in Advance • Letters of Credit – Letter of credit types and uses (basic) – Impact of confirming an L/C • Documentary Collections • Open Account – In conjunction with credit insurance – Levels of risk for importer & exporter – Advantages/disadvantages of each method – Assessing most appropriate method for a transaction or buyer • • • SWIFT UCP 600 (formerly UCP 500) e. UCP – electronic LCs URC 522 – documentary collections Export Quotations and Pro Forma Invoices Foreign Exchange – – Impact of exchange rate fluctuations on import & export competitiveness Forward contracts Currency options Spot contracts 55

Online Link to Presentations www. msbdc. org/cgbp 56

Thank You and Good Luck! 57

Massachusetts Export Center www. mass. gov/export 508 -929 -8844 58