1. Managing Export Operations
Chapter Four

2. 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

3. 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!

4. 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?

5. 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

6. 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

7. 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….)

8. 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)

9. 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!

10. 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

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

12. Trade intermediaries
Import traders
Export traders
Trading houses

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