Module 2-2

Export and Import

13-1

Learning Objectives
To introduce the idea of exporting and profile its elements To introduce the idea of importing and profile its elements To identify the problems and pitfalls that challenge international traders To identify the resources and assistance that helps international traders To discuss the idea of an export plan To outline the practice of countertrade

13-2

Introduction
Exporting and importing are the most common modes of international business Exporting and importing are one of the fastest growing activities in the world

13-3

Introduction
Environmental Factors Influencing Export and Import Operations

13-4

Exporting
Learning Objective 1: To introduce the idea of exporting and profile its elements

13-5

Exporting

Exporting

the sale of goods or services produced by a company based in one country to customers that reside in a different country
Non-exporter Occasional exporter Regular exporter

Types of exporters

13-6

Exporting
Entry mode is influenced by Ownership advantages

the firms core competencies

Location advantages

the combination of sales opportunity and investment risk that creates favorable locations in foreign markets
reflect companies response to market imperfections that often create uncertainties
13-7

Internalization advantages

Characteristics of Exporters

Size Large

Small and medium-sized enterprises (SMEs)

Management commitment Efficiency Cost structure

13-8

Why Export?

Reasons to export include Profits Productivity Diversification

13-9

Exporters: Initiation and Development

Two approaches Incremental internationalization exporting is a learning process Born global instant internationalization global focus

13-10

Approaches to Exporting

Export approaches include

Direct exporting involves independent representatives, distributors, or retailers outside of the exporters home country Indirect exporting products are sold to an intermediary in the domestic market, which then exports them Passively filling orders from domestic buyers who then export the product Selling to domestic buyers who represent foreign end users or customers
13-11

Importing
Learning Objective 2: To introduce the idea of importing and profile its elements

13-12

Importing

Importing

the purchase of a good or service by a buyer in one country from a seller in another Input optimizers Opportunistic Arbitrageurs

Types of importers

13-13

Characteristics of Importers

Size

most are also exporters

Efficiency Innovation Commitment

13-14

Why Import?

Reasons to import

Specialization of labor Global rivalry Local unavailability Diversification Top management outlook

13-15

Importing and Exporting: Problems and Pitfalls

Learning Objective 3: To identify the problems and pitfalls that challenge international traders

13-16

Importing and Exporting: Problems and Pitfalls

Financial risks Customer management Lack of international business experience Marketing barriers Top management commitment Trade regulations Trade documentation

13-17

Importing and Exporting: Problems and Pitfalls

Types of Export Documents

13-18

Importing and Exporting: Resources and Assistance

Learning Objective 4: To identify the resources and assistance that helps international traders

13-19

Importing and Exporting: Resources and Assistance

Companies can get resources and assistance from Government agencies The Department of Commerce: DGFT EXIM Bank Trade Consultants Chamber of Commerce and Industry Associations
13-20

Importing and Exporting: Resources and Assistance

Trade Information by Type and Source

13-21

Importing and Exporting: Resources and Assistance

Export intermediaries

third party firms that market products and services abroad on behalf of manufacturers, farm groups, and distributors Export management company (EMC) Export trade companies (ETC)

13-22

Importing and Exporting: Resources and Assistance

Customs agents

enforce the rules of trade for a particular country help importers navigate the regulations imposed by customs agencies

Customs brokers

13-23

Importing and Exporting: Resources and Assistance

Where the Trading is Easy and Where it is Not

13-24

Importing and Exporting: Resources and Assistance

Freight forwarders

the largest export/import intermediary in terms of value and weight of products shipped internationally

13-25

Importing and Exporting: Resources and Assistance

Third party logistics (3PLs) move cargo and provide a range of logistics options work in partnership with manufacturers, shippers, and retailers

13-26

Reconciling Opportunity and Challenge: An Export Plan

Learning Objective 5: To discuss the idea of an export plan

13-27

Reconciling Opportunity and Challenge: An Export Plan

Export plan identifies useful resources, assigns responsibility, and stipulates controls

13-28

Reconciling Opportunity and Challenge: An Export Plan

An Export Plan

13-29

Countertrade
Learning Objective 6: To outline the practice of countertrade

13-30

Countertrade

Countertrade

different arrangements that parties use to trade products via transactions that use limited or no currency or credit
inefficient risky cumbersome build mutually beneficial relationships
13-31

Costs

Benefits

Countertrade
Common Types of Countertrade

13-32

Technology and International Trade

Advances in technology are leveling the playing field for SMEs

Online platform Software platform Logistics platform

13-33