International Business Environments and Operations 13e Part 5

Chapter 13 Export and Import Strategies 13 -2 Copyright © 2011 Pearson Education, Inc.

Chapter Objectives • 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 discuss the types and roles of third-party intermediaries • To profile the role of counter-trade 13 -3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Exporting 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. 13 -4 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

World’s Top Trading Countries 13 -5 Copyright © 2011 Pearson Education, Inc. publishing as

Environmental Factors Influencing Export and Import Operations 13 -6 Copyright © 2011 Pearson Education,

Export Strategy • Advantages to exporting – Requires less expertise, time, and capital than other modes of entry – Operational control – Helps companies expand diversify sales as well as achieve economies of scale 13 -7 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Questions to Consider 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 -8 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Characteristics 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. 13 -9 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Two Views of Export Development Two views of export shape interpretation: The slow, sequential dynamic of incremental internationalization and the instant internationalization of the born global 13 -10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Phases of Export Development 13 -11 Copyright © 2011 Pearson Education, Inc. publishing as

Pitfalls of Exporting • • Adjusting Financial Management Adjusting Customer Management Adjusting for Information Technology Additional Stumbling Blocks 13 -12 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Designing 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. 13 -13 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Import Strategy There are three types of importers: • Those looking for any product around the world to import and sell. • Those looking foreign sourcing to get their products at the cheapest price. • Those using foreign sourcing as part of their global supply chain. 13 -14 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Advantages of Importing • • Specialization of Labor Global Rivalry Local Unavailability Diversification of

Import Brokers • 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 -16 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Customs Agencies • Procedural Assistance • Efficiency Improvement 13 -17 Copyright © 2011 Pearson

Future: The Technology of Trade • Advances in transportation and communication increases trade • Collaborative software allows smaller companies to engage in international trade more efficiently • 3 rd Party Logistics 13 -18 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Import Documentation • Bureaucratic Impediments – The efficiency of importing is challenged by delays,

The 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. 13 -20 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Indirect 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. 13 -21 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Direct Selling • Direct selling involves sales representatives, distributors, or retailers. – Direct Selling to Foreign Retailers and End Users – Direct Selling over the Internet 13 -22 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Export Documentation 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 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Sources of Regulatory Assistance In the United States, a number of institutions, most notably the Department of Commerce and its affiliates, help firms identify and realize export and import opportunities. 13 -24 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Freight Forwarders 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 -25 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Counter-trade 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 -26 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. 13 -27 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall