Managing Export Operations Chapter Four

Managing Export Operations Segment World Markets Customer preferences must be understood Higher price means search for higher GDP per capita Product quality Product features Both of these affect product price

Market segmentation Low cost Differentiation Country climates Growth levels of countries THEN PRIORITIZE markets for the firm as you cannot serve them all at once!

Select Entry Strategy Channels of distribution Sales and advertising techniques Service before and after the sale Multi-country versus Global products…? Does one size fit all?

Take a long run perspective R&D, channel development, and advertising should be viewed as investments, not costs Initial losses are incurred to penetrate markets with low prices It doesn’t happen overnight so have funds available for the initial losses

Mitsubishi & Malaysia When Mitsubishi went into Malaysia, four people studied market/distribution for one year Year 2 was spent selecting and negotiating with distributors Year 3 was spent in training Year 4, Mitsubishi began exporting

Trade impediments GATT was created after WWI to reduce trade barriers among nations, both tariffs (initial focus) and non-tariff barriers In the mid 70s, focus shifted to non-trade barriers, but over 600 existed (quotas, antidumping and countervailing duty laws, labeling, product standards, customs, procurement regulations….)

Uruguay GATT talks Started in 1986, ended in 1993 trade in services trade in agricultural products technical barriers to trade (standards) intellectual property rights trade related investment measures voluntary export restraints (increased foreign direct investment)

European Union 15 nations (Belgium, Germany, France, Italy, Luxembourg, Netherlands, Denmark, Ireland, UK, Greece, Portugal, Spain, Austria, Finland, Sweden) Only 11 have accepted the Euro currency (two didn’t meet criteria while two don’t want to be tied to Euro) – know who these are!

Channels of Distribution More complex than domestic (producer-wholesaler-retailer); It’s more like producer-export agent-import agent-major wholesaler-small wholesaler-retailer! Costs of channels are higher May be different types of channels Provide information to the firm

Possible channels brokers factors manufacturer’s representatives export agents wholesalers retailers import jobbers trading houses

Trade intermediaries Import traders Export traders Trading houses

Countertrade barter counter purchase compensation or buyback production sharing industrial offsets switches unblocking funds debt for equity swaps