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IAF605 week 10 chapter 13 export and import strategies

Export and Import Strategies

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IAF605 week 10 chapter 13 export and import strategies

  1. 1. IAF 605 - International Business Management Export and Import Strategies Week 10
  2. 2. Reminder
  3. 3. Agenda Review Chapter 12 Chapter 13 – Export and Import Strategies
  4. 4. Review
  5. 5. 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 To discuss the role of countertrade
  6. 6. Exports & Imports Exporting - sale of goods or services produced by a company based in one country to customers that reside in a different country. Importing - purchase of goods or services by a company based in one country from sellers that reside in another.
  7. 7. To export or not export – that is the question! what do we want will it place consistent with to gain from demands on our our other goals? exporting? key resources? fit with our current how will we meet leverage our core value chain these demands? competency? configuration? coordination develop new systems support cost/benefit? domestic business the needs posed instead? by exporting? Source:
  8. 8. Strategic Advantages of Exporting Lower investment way to enter foreign markets Lower risk way to enter foreign markets but lower return on sales E x p a n d s sales Achieves economie$ of scale Profit Potential
  9. 9. Size doesn’t matter export intensity of a firm is related to and often determined by firm-specific feature that are independent of its size Image source:
  10. 10. Export Development – 2 views incremental internationalization born-global
  11. 11. Incremental Internationalization - 3 Phases of Export Development
  12. 12. Pitfalls of Exporting adjusting financial management customer demand for greater range of services; competition = less negotiating power technology = instant communication…no time to deal with issues see p484-485 for 12 additional stumbling blocks
  13. 13. Designing an Export Strategy to Avoid Making Mistakes assess export potential obtain expert counseling (banks, lawyers, EDC, agents..) select a market or markets where you will focus your exports formulate and implement your strategy (see Table 13.2 – page 488)
  14. 14. Figure 13.3 The International Transaction Chain (page 485)
  15. 15. Types of Importers Those looking for any product around the world to import and sell. Those looking for foreign sourcing to get highest quality products at the cheapest price. Those using foreign sourcing as part of their global supply chain.
  16. 16. Why Import? Strategic Advantages of Imports Specialization of Labor Global Rivalry Local Unavailability Diversification of Operating Risks
  17. 17. Import Brokers and Customs Agencies import brokers help by customs brokers help by • valuing products to qualify for more • providing procedural assistance favorable duty treatment • efficiency improvement via • qualifying products for duty technologies and systems refunds through drawback provisions • deferring duties by using bonded warehouses and foreign trade zones • providing document and paper- flow management • limiting liability by properly marking an import’s country of origin
  18. 18. Import Documentation documents to determine if customs will release the shipment documents for duty and statistical purposes usually include an entry manifest, commercial invoice and a packing list
  19. 19. Principal types of exporting: direct and indirect goods and services are sold to an independent party outside of the exporter’s home country.
  20. 20. Indirect Selling Exporters may deal directly with: indirectly through third- agents or distributors in other types of trading party intermediaries, a foreign country companies such as EMC’s or ETC’s
  21. 21. Direct Selling Internet marketing - Through distributors allowing many small- who usually deal To foreign retailers and medium-sized with retailers instead and end users companies to access of end users export markets as never before
  22. 22. Export Documentation shipper’s pro forma bill of consular export invoice lading invoice declaration certificate commercial export of origin invoice packing list
  23. 23. Pro Forma Invoice Purpose • used to declare value for customs • commitment from the seller to provide specified goods to the buyer at specific prices Critical information • selling terms, price and delivery
  24. 24. Commercial Invoice Purpose • Generate payment for goods • Provide valuation for customs (duties) • Ensure compliance Critical information • description of goods/markings • quantity and value • selling & delivery terms, instructions • seller and buyer information
  25. 25. Bill of Lading Purpose • Contract between shipper and carrier • document of title Critical information • complete description of goods • quantity • delivery instructions • names/addresses of all 3 parties Source:
  26. 26. Consular/Customs Invoice Purpose • Satisfy customs requirements in certain countries…especially Canada Critical information • Information contained in commercial invoice, country of origin Source:
  27. 27. Certificate of Origin Purpose • verify source of goods for correct duty rate Critical information: • notarization by local Chamber of Commerce or other external source
  28. 28. Export Declaration Purpose When needed • Statistical analysis of trade • Shipments over $2000 and export control anywhere EXCEPT U.S. • controlled /regulated Critical information: /prohibited goods • product description including HS code • quantity • value FOB point of exit Note: Canada and U.S. • origin of goods including share import information PROVINCE if origin is Canada with each other. Source:
  29. 29. Export Packing List
  30. 30. Regulatory Assistance national/provincial/local trade offices freight forwarders international banks trade consultants
  31. 31. Countertrade - when goods and services are traded for each other. used when a firm exports to a country whose currency creates barriers to efficient trade or country does not have enough cash or credit common types are:  barter (avoid money-based exchange)  buyback, offset, and counter purchase (reciprocal commitments) inefficient but provides flexibility
  32. 32. Pepsi – Stolichnaya Vodka countertrade MONEY Image sources:;
  33. 33. Homework review Chapter 13 do quiz (Blackboard) read Chapter 14 – Direct Investment and Collaborative Strategies CASE: be prepared to discuss Getting Airline Alliances off the Ground