Part 5 Global Strategy, Structure, and Implementation International Business Environments and Operations, 13/e Global Edition Part 5 Global Strategy, Structure, and Implementation

Chapter 13 Export and Import Strategies

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

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.

World’s Top Trading Countries

Environmental Factors Influencing Export and Import Operations

Export Strategy 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

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?

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.

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

Phases of Export Development

Pitfalls of Exporting Adjusting Financial Management Adjusting Customer Management Adjusting for Information Technology Additional Stumbling Blocks

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.

Import Strategy 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.

Advantages of Importing Specialization of Labor Global Rivalry Local Unavailability Diversification of Operating Risks

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

Customs Agencies Procedural Assistance Efficiency Improvement

Future: The Technology of Trade Advances in transportation and communication increases trade Collaborative software allows smaller companies to engage in international trade more efficiently 3rd Party Logistics

Import Documentation Bureaucratic Impediments The efficiency of importing is challenged by delays, documents, and fees.

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.

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.

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

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

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.

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.

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.

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