Export and Import Strategies

1. IAF 605 - International Business Management
Export and Import Strategies
Week 10

2. Reminder

3. Agenda
Review Chapter 12
Chapter 13 – Export and
Import Strategies

4. Review

5. 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 exporting
To identify the elements of import and importing strategies
To discuss the types and roles of third-party intermediaries
To discuss the role of countertrade

6. Exports & Imports
Exporting - sale of goods or
services produced by a
company based in one country
to customers that reside in a
different country.
Importing - purchase of
goods or services by a
company based in one
country from sellers that
reside in another.

7. To export or not export – that is the question!
what do we want will it place
consistent with
to gain from demands on our
our other goals?
exporting? key resources?
fit with our current
how will we meet leverage our core
value chain
these demands? competency?
configuration?
coordination
develop new
systems support
cost/benefit? domestic business
the needs posed
instead?
by exporting?
Source: thehamletweblog.blogspot.com

8. Strategic Advantages of Exporting
Lower investment way to enter
foreign markets
Lower risk way to enter
foreign markets but lower return on
sales
E x p a n d s sales
Achieves economie$ of scale
Profit Potential

9. Size doesn’t matter
export intensity
of a firm is
related to and
often
determined by
firm-specific
feature that are
independent of
its size
Image source: http://i.dailymail.co.uk/

10. Export Development – 2 views
incremental
internationalization
born-global

11. Incremental Internationalization - 3 Phases of Export Development

12. Pitfalls of Exporting
adjusting financial management
customer demand for greater
range of services; competition =
less negotiating power
technology = instant
communication…no time to deal
with issues
see p484-485 for 12 additional
stumbling blocks

13. Designing an Export Strategy to Avoid Making Mistakes
assess export potential
obtain expert counseling (banks, lawyers, EDC, agents..)
select a market or markets where you will focus your exports
formulate and implement your strategy
(see Table 13.2 – page 488)

14. Figure 13.3 The International Transaction Chain (page 485)

15. Types of Importers
Those looking for any product around the
world to import and sell.
Those looking for foreign sourcing to get
highest quality products at the cheapest
price.
Those using foreign sourcing as part of
their global supply chain.

16. Why Import? Strategic Advantages of Imports
Specialization of Labor
Global Rivalry
Local Unavailability
Diversification of Operating Risks

17. Import Brokers and Customs Agencies
import brokers help by customs brokers help by
• valuing products to qualify for more • providing procedural assistance
favorable duty treatment • efficiency improvement via
• qualifying products for duty technologies and systems
refunds through drawback
provisions
• deferring duties by using bonded
warehouses and foreign trade
zones
• providing document and paper-
flow management
• limiting liability by properly
marking an import’s country of
origin

18. Import Documentation
documents to
determine if
customs will release
the shipment
documents for duty
and statistical
purposes
usually include an
entry manifest,
commercial invoice
and a packing list

19. Principal types of exporting: direct and indirect
goods and services are sold to an
independent party outside of the exporter’s
home country.

20. Indirect Selling
Exporters may deal directly with:
indirectly through third-
agents or distributors in other types of trading
party intermediaries,
a foreign country companies
such as EMC’s or ETC’s

21. Direct Selling
Internet marketing -
Through distributors allowing many small-
who usually deal To foreign retailers and medium-sized
with retailers instead and end users companies to access
of end users export markets as
never before

22. Export Documentation
shipper’s
pro forma bill of consular
export
invoice lading invoice
declaration
certificate commercial export
of origin invoice packing list

23. Pro Forma Invoice
Purpose
• used to declare value
for customs
• commitment from the
seller to provide
specified goods to the
buyer at specific prices
Critical information
• selling terms, price and
delivery

24. Commercial Invoice
Purpose
• Generate payment for goods
• Provide valuation for
customs (duties)
• Ensure compliance
Critical information
• description of
goods/markings
• quantity and value
• selling & delivery terms,
instructions
• seller and buyer information

25. Bill of Lading
Purpose
• Contract between shipper
and carrier
• document of title
Critical information
• complete description of
goods
• quantity
• delivery instructions
• names/addresses of all 3
parties
Source: carbonless.net

26. Consular/Customs Invoice
Purpose
• Satisfy customs
requirements in certain
countries…especially
Canada
Critical information
• Information contained in
commercial invoice,
country of origin
Source: http://www.cbsa-asfc.gc.ca

27. Certificate of Origin
Purpose
• verify source of goods for
correct duty rate
Critical information:
• notarization by local
Chamber of Commerce or
other external source

28. Export Declaration
Purpose When needed
• Statistical analysis of trade • Shipments over $2000
and export control anywhere EXCEPT U.S.
• controlled /regulated
Critical information: /prohibited goods
• product description including
HS code
• quantity
• value FOB point of exit Note: Canada and U.S.
• origin of goods including share import information
PROVINCE if origin is Canada with each other.
Source: http://www.cbsa-asfc.gc.ca

29. Export Packing List

30. Regulatory Assistance
national/provincial/local trade offices
freight forwarders
international banks
trade consultants

31. Countertrade - when goods and services are traded for each other.
used when a firm exports to a country
whose currency creates barriers to
efficient trade or country does not have
enough cash or credit
common types are:
 barter (avoid money-based
exchange)
 buyback, offset, and counter
purchase (reciprocal commitments)
inefficient but provides flexibility

32. Pepsi – Stolichnaya Vodka countertrade
MONEY
Image sources: http://www.drugrehab.ca/; http://www.normansliquors.com

33. Homework
review Chapter 13
do quiz (Blackboard)
read Chapter 14 – Direct
Investment and Collaborative
Strategies
CASE: be prepared to discuss
Getting Airline Alliances off the
Ground