1. Part Five Global Strategy, Structure, and Implementation
Chapter 9
Export And Import Strategies
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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 in exporting
To discuss the role of countertrade in international business
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Exports & Imports
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 purchase of goods or services by a company based in one country from sellers that reside in another
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4. Advantages of Exporting
Lower investment way to enter foreign markets
Lower risk way to enter foreign markets
Expands sales
Achieves scale economies
Diversifies sales
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5. Characteristics of Exporters
The probability of a company’s becoming an exporter increases with company size, but the extent of exporting does not directly correlate with size
Companies export to increase sales revenues, use excess capacity, and diversify markets
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Pitfalls of Exporting
Companies new to exporting (and also some experienced exporters) often make many mistakes
One way to avoid mistakes is to develop a comprehensive export strategy that includes an analysis of the company’s resources as well as its export potential
Companies can also improve the odds of export success by working with an experienced export intermediary
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7. Designing an Export Strategy
As a company establishes its export business plan, it must:
assess export potential
obtain expert counseling
select a country or countries where it will focus its exports
formulate its strategy
determine how to get its goods to market
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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.
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Types of imports
Industrial and consumer goods to independent individuals and companies.
Intermediate goods and services that are part of the firm’s global supply chain.
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10. Strategic Advantages of Imports
Specialization of Labor
Global Rivalry
Local Unavailability
Diversification of Operating Risks
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Customs Agencies
Customs agencies assess and collect duties, as well as ensure that import regulations are adhered to
A custom broker helps by valuing products to qualify for:
more favorable duty treatment
qualifying products for duty refunds through drawback provisions
deferring duties by using bonded warehouses and foreign trade zones
limiting liability by properly marking an import’s country of origin
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12. Principal types of exporting
Direct: goods and services are sold to an independent party outside of the exporter’s home country.
Indirect exports: goods and services are sold to an intermediary in the domestic market, which then sells the goods in the export market.
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Indirect Selling
Exporters may deal directly with:
agents or distributors in a foreign country
indirectly through third-party intermediaries, such as export management companies
other types of trading companies
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Direct Selling
Through distributors who usually deal with retailers instead of end users
To retailers and end users
Internet marketing is a new form of direct exporting that is allowing many small- and medium-sized companies to access export markets as never before
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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
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Export Assistance
Trading companies can perform many of the functions for which manufacturers lack the expertise
Exporters can use the services of other specialists, such as freight forwarders, to facilitate exporting
These specialists can help an exporter with the complex documentation that accompanies exports
Government agencies in some countries, such as the Ex-Im Bank in the United States, provide assistance in:
terms of direct loans to importers
bank guarantees to fund an exporter’s working capital needs
insurance against commercial and political risk
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Countertrade
Countertrade is when goods and services are traded for each other. It is used when a firm exports to a country whose currency creates barriers to efficient trade
Common types are: barter, buyback, offset, switch trading, and counter purchase
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