Course Introduction and Lecture slides for "Practice of International Trade", Department of International Business, Tunghai University. Utilizing the Export Import Management System V. 2.0 from JAI International (USA).
Degree of control and risk, information feedback. Payment.
The configuration of the five forces differs byindustry. In the market for commercial aircraft,fierce rivalry between dominant producersAirbus and Boeing and the bargainingpower of the airlines that place huge ordersfor aircraft are strong, while the threat of entry,the threat of substitutes, and the power ofsuppliers are more benign. In the movie theaterindustry, the proliferation of substituteforms of entertainment and the power of themovie producers and distributors who supplymovies, the critical input, are important.The strongest competitive force or forces determinethe profitability of an industry and becomethe most important to strategy formulation.The most salient force, however, is notalways obvious.For example, even though rivalry is oftenfierce in commodity industries, it may not bethe factor limiting profitability. Low returns inthe photographic film industry, for instance,are the result of a superior substitute product—as Kodak and Fuji, the world’s leadingproducers of photographic film, learned withthe advent of digital photography. In such a situation,coping with the substitute product becomes
New entrants to an industrybring new capacity and a desire to gainmarket share that puts pressure on prices,costs, and the rate of investment necessary tocompete. Particularly when new entrants arediversifying from other markets, they can leverageexisting capabilities and cash flows toshake up competition, as Pepsi did when it enteredthe bottled water industry, Microsoft didwhen it began to offer internet browsers, andApple did when it entered the music distributionbusiness.The threat of entry, therefore, puts a cap onthe profit potential of an industry. When thethreat is high, incumbents must hold downtheir prices or boost investment to deter newcompetitors. In specialty coffee retailing, forexample, relatively low entry barriers meanthat Starbucks must invest aggressively inmodernizing stores and menus.The threat of entry in an industry dependson the height of entry barriers that are presentand on the reaction entrants can expect fromincumbents. If entry barriers are low and newcomersexpect little retaliation from the entrenchedcompetitors, the threat of entry ishigh and industry profitability is moderated. Itis thethreatof entry, not whether entry actuallyoccurs, that holds down profitability.Barriers to entry.Entry barriers are advantagesthat incumbents have relative to new entrants.There are seven major sources:1.Supply-side economies of scale.These economiesarise when firms that produce at largervolumes enjoy lower costs per unit becausethey can spread fixed costs over more units,employ more efficient technology, or commandbetter terms from suppliers. Supplysidescale economies deter entry by forcingthe aspiring entrant either to come into theindustry on a large scale, which requires dislodgingentrenched competitors, or to accepta cost disadvantage.Scale economies can be found in virtuallyevery activity in the value chain; which ones
Anti-trust (Competition Law): It may prohibit agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels. It may ban abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal and many others. It may supervise the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to "remedies" such as an obligation to divest part of the merged business or to offer licences or access to facilities to enable other businesses to continue competing.
Practice of International Trade EIMSO2 Lecture V3
Practice of International Business UtilizingExport Management System Online<br />www.eimso2.com<br />funded by Tunghai International Business <br />
<ul><li>An online management planning tool designed to help develop a company’s export strategy.
…and enable informed Management Decisions</li></ul>http://www.eimso2.com<br />Purpose of EMSO<br />
At www.eimso2.comselect “student” under login location</li></ul>http://www.eimso2.com<br />Registering<br />
<ul><li>Enter the purchase code provided by the department. </li></ul>Purchasing<br />
Getting Started-Individual Projects<br /><ul><li>After logging in, Click in the Individual Projects table.
Then, click “Module 1” in the Quick Links toolbar or “1.1 Company Analysis” in the table to begin entering information.</li></li></ul><li><ul><li>When a group is created, an automated e-mail with group information will be sent to all group members.
Each member of the group will use his or her own username and password to log in.
After logging in, click in the Group Project table. In the “Logged” column, EIMSO indicates when group members are logged in. If the field is blank, that means the group member is NOT logged in.</li></ul>Group Assignments<br />
<ul><li>Two group members should not be working on one screen simultaneously.
Communicate with your group members frequently to keep track of each others progress.
If it should occur that two members are working on one screen, when one of those persons clicks “Save,” the other person will lose all of his or her entered data!</li></ul>Group Tips<br />
<ul><li>The objective of Module 1 is to conduct an in-depth situation analysis of a company.</li></ul>Each group will choose a company within an industry and conduct an internal and external analysis. <br />You will then choose a specific product line/service within the company to export and determine the companies readiness for exporting. <br />Module 1: Company Situation Analysis<br />
But public companies are usually already well established internationally : you may need to select countries in which the company does not have a presence.
Any selection should be a company that exports from Taiwan.</li></ul>http://www.eimso2.com<br />Choosing a Company<br />
<ul><li>Identify the countries with the greatest market potential for the company's products or services.
Research and select countries to be analyzed and evaluated.
Select essential criteria in determining high potential country markets for the company's product(s)/service(s).</li></ul>http://www.eimso2.com<br />Module 2: Global Market Search<br />
<ul><li>Evaluate the top two countries with the highest potential for the company and its products/services:</li></ul>Develop business contacts who can assist with exporting,<br />Determine the total market potential along with the company's sales potential in each country,<br />Develop a profile for the top two (2) competitors in each country. <br />http://www.eimso2.com<br />Module 3: In-Depth Market Analysis<br />
Determine the most effective entry strategy and marketing plan.<br />Forecast future sales/profits, projected income statement, and breakeven analysis for the Target Market.<br />http://www.eimso2.com<br />Module 4: Entry Strategy and Marketing Plan<br />
<ul><li>Remember to click “Save” at the bottom of every screen before exiting or moving forward to the next page.
Click “Continue” or “Previous” buttons to navigate through EMSO.</li></ul>http://www.eimso2.com<br />Save and Continue<br />
<ul><li>At the end of each module, a Report can be generated. Print one for your use & bring to every class.
Click on “Module #” in the Quick Links toolbar, and then click “Report.” A new tab or webpage will open.
Choose to export the document as a Word document, PDF file, Excel document, or Rich text. </li></ul>http://www.eimso2.com<br />GENERATE & PRINT REPORTS<br />
<ul><li>You can also click on tables and print them separately and export the same way.
Once you have exported the Module or table, you can print as you would a normal document.</li></ul>Printing<br />
<ul><li>Search for answers instead of expecting answers with the click of the mouse.
Carefully Review & Print the User Guide, Case Examples, Resources and Glossary before working on the project.
Glossary terms are hyperlinked in all 4 Modules.</li></ul>http://www.eimso2.com<br />Research Tips<br />
At the End of the Course: Executive Summary and Bibliography<br /><ul><li>Create an Executive Summary. Located on the Quick Links Toolbar.
Includes Purpose, Research Methodology, Key Findings for each Module, Conclusions, and Recommendations.
To print Executive summary, copy and paste paragraphs into a separate Word document.
Create a Bibliography that includes all resources used for research on your project on a Word document and upload onto EMSO. </li></li></ul><li>Suggestions to Start Module 1:<br />Preview all four Modules to see the big picture<br />Print out your User Guide<br />Print & review our Case Example (Select Bedding)<br />Review Porters 5 Forces Model:<br />eLearning “Tunghai Porter” Document (Slideshare)<br />EIMSO link or<br />International Business textbook<br />Review SWOT Models:<br />eLearning “Tunghai Swot” Document (Slideshare)<br />Management textbooks or online sources<br />Questions???<br />
Company Situation Analysis<br />Module 1: <br />
Overview<br />Choose Industry & Company<br />Conduct internal analysis<br />Determine international experience (if any)<br />Conduct Porters 5 Forces analysis: <br />evaluate the profitability or power dynamics of the specific industry<br />Select a specific product line or service of the chosen company to export<br />Analyze companies readiness to export<br />Conduct a SWOT Analysis<br />Evaluate your company’s competitive position<br />State your summary/ conclusions and initial recommendations for Module 1.<br />Module 1: Company Situation Analysis<br />
1.1a-c Company Analysis<br />Company Selection<br />Choose a company that you know about or have an interest in<br />Select one that has information readily available<br />Public traded company or private one that you have a relationship with<br />Find a company from Taiwan <br />1.1a Background<br />1.1b Mission<br />1.1c Sales/Profits for 3 Years<br />1.1d International Diversification Strategy<br />1.1e List the companies products and the countries it currently exports to.<br />
Describes a companies movement into foreign markets:<br />Concentration Strategy (low)<br />Diversification Strategy (high)<br />Many markets, quickly, and increasing resources gradually to all<br />Expensive, requires extensive management for success<br />Licensing / franchising entry strategies can reduce resource requirements<br />one or a few foreign markets until it develops a strong competitive position there<br />Less resource intensive<br />Less risk intensive<br />1.1d Corporate Level International Strategy<br />
Prefer Prefer<br />Factor Diversification Concentration<br />if: if:<br />1. Market growth rate low high<br />2. Market sales stability low high<br />3. Competitive lead time short long<br />4. Spillover effects highhigh<br />5. Need for product adaptation low high<br />6. Need for promotion lowhigh<br /> and distribution adaptation<br />7. Program control requirement lowhigh<br />8. Constraints low high<br />Source: “Marketing Expansion Strategies in International Marketing,” Journal of Marketing, Spring 1979, p.89.<br />12-26<br />Diversification vs. Concentration Strategies: Product and Market Factors<br />
Global Structure (product, geography, function)</li></ul>1.2 International Involvement<br />Organization<br />Key: Export functions closer to C.E.O show more resource, attention and commitment to international business<br />
International Division<br />Organizational Structures<br />Export Department<br />
Porters Five Forces<br />“To Sustain long term profitability you must respond to your competition strategically”. Michael Porter, 1979, The Five Forces of Industry Strategy<br /><ul><li>We always monitor our rivals (competitors) …but there is more:
Smart customers can force down prices (buying groups Wal*Mart)
Suppliers can limit your profits if they are powerful enough to dictate prices to you (E.g. Microsoft)
New entrants (competitors), often with lower cost structures and hungry for success can require you to increase investments/upgrades to maintain your position (E.g. Ryan Air UK, GolBrasil)
Substitute offers can someday lure your customers away (E.g. Magellan GPS vs. the iPhone or Blackberry)</li></ul>1.3 Industry Analysis<br />
One of the least profitable industries because all five forces (against the firm) are strong:<br />Established rivals: compete intensely on price (online reservation systems change continuously, Expedia, Travelocity, Bing)<br />Customers are fickle, always searching for the lowest fare, regardless of carrier (airline independent – non loyal, miles only go so far)<br />Suppliers; Plane (Boeing) and Engine Manufactures (GE, Pratt & Whitney) are few and strong, so are labor unions (highly trained employees)<br />New Competitors enter the market every year<br />Substitutes: HSR, Bus, Car<br />Porters Five Forces Example: "Commercial Aviation"<br />
Industry Profitability examplesNotice the differences among industries<br />
End User Description:<br />Gender, Age, Income, Education, Frequency of Purchases<br />Household Types (large, multi-family, singles)<br />Differences between the Domestic and Target Markets<br />Customizations required (physical, energy, package, user guide)<br />Typical use of product/service<br />Cultural factors<br />1.4 Target Market Profile<br />
Computer assisted scoring.<br />Team review & analysis.<br />Do you agree, why or why not?<br />If not, state your reasoning.<br />1.6 Export Readiness<br />
Strengths = Internal to Company or Product<br />Weaknesses = Internal to Company or Product<br />Opportunities = External provided by market<br />Threats = External attacks from market forces<br />Trends = What is happening over time (3-5 yrs)<br />Provides us a better insight when we study factors over time.<br />Shows changes either beneficial or problematic<br />1.7 SWOT + “T”<br />
Research & Select prospective Countries<br />Select Criteria relevant to determine market success<br />Determine a “weighted value” of importance for each criteria<br />Conclusion/Summary and recommendations<br />Report Generation & Printing<br />Module 2 Agenda<br />
Consider findings from Module 1 Analysis:<br />Choose 3-10 countries based on?:<br />Product demand indicators or proxies<br />Similar target market as domestic market<br />Similar cultural orbehavioral characteristics<br />Positive economic or per capita income statistics<br />Other unique factors<br />Choice should indicate a high sales potential<br />These countries become your “short list”<br />From 230 to as few as three.<br />2.1 Country Selection<br />
Industry specific</li></ul>2.2 Criteria Selection<br />Specific (product)<br />
Derived Marketing Data<br />Estimate consumption based on GDP:<br />Use other countries as a guide<br />If positive slope, tells us that GDP is important to demand<br />Can be used for planning sales over time<br />Emerging economies with changing GDP’s<br />
Weighted Criteria<br />Each criteria = X% of the total of all criteria<br />Enter Year, unit of measure, and the value<br />Should total 100%<br />If Positive impact on demand don’t check box (leave blank)<br />If Negative impact on demand (e.g. unemployment, corruption), check box= √<br />Transparency International: http://www.transparency.org/<br />Survey: http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table<br />2.3 Country Evaluation<br />
US Commercial Service<br />www.export.gov<br />Doing business in><br />www.doingbusinessin.org<br />See EIMSO website resources<br />CIA Factbook<br />Yahoo.finance.com<br />Sources<br />
Goals: Evaluate the top two countries with the highest potential for export success:<br />Methods:<br />Select top 2 countries from previous module<br />Develop business contacts that may assist with your export research and confirm your assumptions (e.g.):<br /><ul><li>Agents/Local Distributors/Trade Associations
Government agencies, NGO’s, etc.</li></ul>Determine market sales potential <br />Develop a profile of the top two competitors<br />Module 3 Agenda (part I)<br />
Consider all sources of information:<br />Government Trade offices (www.export.gov, www.taitra.org)<br />Associations, Journals, Reports, Newspapers<br />Provide leads or contact names.<br />Trade Fair Schedules (by country)<br />Names and coordinators of industry leads/contacts<br />Distributors from online databases<br />Alibaba, ebay, others<br />Make a list and prioritize from strongest to weakest.<br />3.1 Contacts<br />
China Examples<br /><ul><li>China Consumer Market
World Wireless Data</li></ul>3.1 Secondary Research Search Terms<br />Brazil Examples<br />
Total Market Potential (a x b x c = TMP)<br />Number of potential consumers<br /><ul><li>Eligible or qualified (ability to pay, access to store, freedom to purchase, interest)
Critical, realistic analysis, consider substitutes</li></ul>Frequency<br /><ul><li>Use domestic market as a starting point
Consider differences in frequency or size of package or culture and buying habits (household, individual extended households)</li></ul>Selling price of the product (your estimate, can be changed)<br />3.2 Market and Company Sales Potential<br />
Top Down<br /><ul><li>Start with population data
Result is Total Market Potential</li></ul>Start with detailed existing sales data for your competitors product<br />Add up data from multiple competitors<br />Result is Total Market Potential<br />3.2 Market Estimation<br />Bottom Up<br />Multiply TMP by your sales success percentage<br />to get your estimated (forecast) sales number.<br />
Total Potential Market x Success Factor = Market Estimation<br />Estimate your sales achievement based on competitors distribution strategy<br />Direct vs. non direct competitor sales is a key factor<br />Direct have better success, typically<br />Due to closeness and information exchange from producer to consumer<br />3.2 Market Estimation<br />
A: Top three Export Competitors:<br />See Module 1.2 for your original competitor list<br />Choose one domestic and one international minimally<br />Who is the most dangerous competitor?<br />Local or international<br />What are customers buying preferences (local or import)?<br />B: Export methods<br />Refer to export method chart for competitors for each country – recall for your own strategy.<br />3.3 Competition<br />
C: Market Coverage<br />National, regional or local/city market coverage<br />D: Export methods by Competitor<br />Choose known export methods for your competitor<br />E: Final review of competitors by country<br />The more direct their methods, the more difficult for our plan<br />3.3 Competition<br />
Score 1 for very high tariff’s or low quotas or 5 for low tariffs or no quotas.</li></ul>3.5a Country Entry Conditions<br />
Convertibility of currency (e.g. can you exchange it easily and inexpensively at a bank)<br />Score 1 if no, 5 if yes (favorable).<br />Country’s current account standing (balance of payments)<br />Score 1 if no, 5 if yes (favorable).<br />Country’s currency is stable?<br />Score 1 if no, 5 if yes (favorable).<br />3.5b Foreign Exchange Performance<br />
Banking system is efficient, available, useful, helpful?<br />Energy reliability and accessibility?<br />Internet connections and availability (speed, performance)<br />Telecommunications systems &<br />Transportation (highways, air cargo system, waterways, railways)<br />3.5c Country Infrastructure<br />Score 1 if no (unfavorable), 5 if yes (favorable).<br />
Regulated distribution channels, protection bias?<br />Channels provide national accessibility (geographic reach)?<br />Existing channels are capable to distribute our product?<br />Score 1 if no, 5 if yes (favorable). “Capability Analysis”<br />Others?<br />3.5d Market Channel Conditions<br />Score 1 if no (unfavorable), 5 if yes (favorable).<br />
Is it easy to establish a presence (company, office)?<br />Score 1 if no, 5 if yes (favorable). “Doing Business In”<br />Country has anti-trust legislation (competition laws) in place?<br />Country is a member of the WTO?<br />Intellectual property protection &<br />Level of corruption<br />3.5e Legal Environment<br />Score 1 if no (unfavorable), 5 if yes (favorable).<br />
More than just market numbers and costs (e.g. tariff’s & transportation)<br />Include administrative realities & bureaucracy<br />Include legal protection & distributor strength<br />Include telecoms and transportation<br />This weighting will calculate the best market based on all the criteria you chose (highest weight)<br />3.6 The best target market<br />
Conclusion:<br />A summary or important information for each section (at least the critical ones)<br />Talk especially about unique factors or items which you do not agree with the computer results<br />Recommendation:<br />What choice your group will make regarding #1 country to export to (so far)<br />3.7 Prepare your Conclusion (summary) and Recommendation<br />
Entry Strategy and Marketing Plan<br />Module 4: <br />
Goals: To determine the most effective entry strategy and develop a marketing plan based on previous analysis of:<br />Company goals, resources and strengths & weaknesses<br />Product and target market, and<br />Available distribution alternatives<br />Topics:<br />Entry Mode compared to company goals<br />Product / Market Strategy<br />Distribution Strategy<br />Shipping<br />Pricing and Payment Plans<br />Promotion<br />Projected Profit/Loss Statement<br />4.0 Module Introduction<br />
Consider your realistic market entry options (likely export oriented)<br />Estimate how each different entry mode would effect your sales success<br />Estimate on a comparative basis to the other options<br />Which are better, (higher score) which are worse (lower score)<br />Enter your numerical ranking.<br />This weighting will calculate the best entry option for you.<br />4.1 Entry Mode<br />
Enter scores for each potantial market entry alternative<br />5 = good / favorable<br />1 = not good / unfavorable<br />Ex. Would Corporate Owed Retail stores be good for sales?<br />Only choose potential entry options.<br />Consider how that entry alternative would impact sales.<br />Also consider long term market knowledge development.<br />
Entry Mode Choice Evaluation Example<br />How would using “Company Owned Retail Sales” effect your export sales: 1= not well, 5 very well?<br />How would using “Company Owned Retail Sales” effect your control over the export sales process?<br />What effect would using “Company Owned Retail Sales have on your companies international experience?<br />What effect would using “Company Owned Retail Sales have on your competitive capability?<br />What effect would using “Company Owned Retail Sales have on your competitive capability?<br />How would using “Company Owned Retail Sales” help<br />
Calculate weights to find a quantitative ranking.<br />Explain your choice in 4.1b.<br />Speak about your best option, then remaining options.<br />
Focus on your specific markets<br />Enter data in sections that relate to your target market<br />Add additional factors if not present using“other”<br />Place a check mark in activate box.<br />Use the information from 4.2a section to complete 4.2c Describe the market using bullets<br />Consider your target market, potential distributors and create a promotion plan<br />Goal is what you will accomplish<br />Objective is how you will do it<br />Time is the date of completion<br />4.2 a, b, c Product / Market Strategy<br />
Short sentence to describe target customer…<br />Marketing goals should be very specific for your chosen target market: include dates, costs, personnel..<br />Target market & marketing goals<br />
Channel Issues<br />Describe any specific licenses or known legal/admin threats with regard to distributors – this can be critical.<br />Choose the best channel (check all that apply)<br />Discuss the relative advantages and disadvantages from your top choices<br />Remember, your top choice may not be interested<br />Remember, your top choice may not be available - legal<br />Remember, your top choice may not be capable – financial or technical<br />4.3 Distribution Strategy & Plan<br />
Port of origin (E.g. EXW – Taichung, Taiwan)<br />Select INCOTERM E.g. ExWorks [From Factory]<br />Determine the shipping origination (city, port)<br />Determine the destination port<br />Port of destination (CIF – USSEA – Seattle, USA<br />http://www.worldportsource.com/countries.php<br />http://www.worldportsource.com/ports/CHL.php<br />Transportation Carrier Costs<br />Air<br />Ocean<br />Motor / Truck<br />Rail<br />4.4a-c Shipping Details<br />
Air Transport<br />Less Than Load Trucking<br />Marking/Labeling<br />Loading<br />Total US$ 1,800<br />Shipping Details<br />
Choose required shipping documents<br />Based on your product and country and transportation method<br />Export Price List√<br />Commercial Invoice √<br />Bill of Lading <br />Ocean Bill<br />Shippers Export Declaration √<br />Dock Receipt<br />Certificate of Origin √<br />See EIMSO for examples related to your product.<br />Insurance Certificate<br />Power of Attorney<br />Pro Forma Invoice √<br />Packing Slip<br />Airway Bill √<br />Truck Bill of Lading √<br />Shippers Instructions<br />4.4d Documentation Requirements<br />
Check the ones that apply to your product/company/ shipping method<br />Example Documents<br />
Channel Issues<br />Describe any specific licenses or known legal/admin threats with regard to distributors – this can be critical.<br />Choose the best channels (check all that apply)<br />Discuss the relative advantages and disadvantages from your top choices<br />Remember, your top choice may not be interested<br />Remember, your top choice may not be available - legal<br />Remember, your top choice may not be capable – financial or technical<br />4.5 Pricing/Payment Methods<br />
4.5a-c Export Price EXW Taichung, Taiwan<br />Price: Cost Plus Pricing (Fixed? + Variable + Profit)<br />Decide if fixed costs are to be included or not based on weather there is existing unused factory capacity<br />Seek data from online sources: “XXX manufacturing costs”<br />iPhone example : http://www.dslreports.com/forum/r18978878-iPhone-manufacturing-cost<br />Our tea example = No fixed costs to start, variable is $2=Profit is $3<br />Shipping Costs: Use from Section 4.3<br />Wholesale Price: Total Cost * Wholesale Markup<br />Cost of Tea = US$5 * 50% Markup = US$7.50<br />Retail Price: Wholesale Price * Retail Markup<br />Wholesale Price US$7.50 * 50% Markup = $11.25<br />
EX Works (Factory) Price 1,000 units.<br />Cost (2) + Profit (3)<br />Add<br />-Shipping<br />-Forwarder<br />-Duties<br />= Landed Cost in Country<br />Enter Markup’s = 50% or so.<br />Export Price<br />
4.5 d-e Terms of Sale & Payment Methods<br />Determine INCOTERM for Shipping & Legal Responsibility issues<br />E.g. EXW (ExWorks), CIF (Cargo Insurance Freight), FOB (Free on Board)<br />Consider shipping method and competitive situation<br />Consider liability and ownership of cargo<br />Choose best payment alternative<br />Consider existing relationship, economy, value of goods<br />Consider common practice in industry<br />Letter of credit is most popular export financing method<br />
Consider advantages and disadvantages of each alternative, then choose your best option.<br />Incoterms and Financial Optoins<br />
4.6 Promotion Tips<br />Select promotional options & estimate costs:<br />Consider international coach travel expenses for 1 individual at a minimum of US$5,000/week.<br />Consider/estimate costs to deliver trade show materials.<br />Consider relationship building practices in each country, cost of entertainment, local travel, shows and memberships if desired.<br />Consider internet website as a required mechanism localized for language and cultural access. Mobile internet access should also be evaluated.<br />
4.7a Projected Profit/Loss (P/L)<br />Review Company Sales Potential and Total market Potential to estimate your unit sales and price.<br />Initial years sales should be a fraction of ongoing; perhaps growing by 100% for the first two years, recall Derived Data<br />Cost of goods sold may be found from Module 1.1c or your current estimate of the materials and labor involved in producing a unit of your product.<br />Operating expenses may be found in 1.1c or may be estimated again. Manufacturing expenses may typically range in the 10-30% range; this is dependent on your industry.<br />Calculate Net Profit.<br />
First Year total unit sales & revenue<br />Second year forecast & third year forecast<br />OP Expenditure is your promotional expenses plus any other expenses incurred resulting from the specific export project<br />Projected P & L<br />
4.7b-c Break Even Point & Scenario Planning<br />How many units are required to break even?<br />Based on a percentage of gross profit<br />Unit sales calculated by dividing operating expenses by percentage of gross profit<br />Profit & Sales Case Scenarios<br />Choose best case: (I usually choose my actual planned for case here)<br />Choose worst case:<br />You may reduce sales by a fraction (25%, 50%, 75%) considering economic conditions, forecast errors, selling difficulties or the reliability of your information<br />You should also consider if you selling expenses will rise:<br /> This is often the case in emerging markets as estimates are difficult to identify<br />
Break Even PointBest Case & Worst Case Scenarios<br />
Conclusion / Summary:<br />A summary sentence or important information for each section<br />Talk especially about unique factors or items which were not expected and had an impact on your strategy<br />Recommendation:<br />What choice your group will make (go or no-go based on profitability)<br />What would be the next steps to make this plan a reality?<br />What is the timing involved for any next steps?<br />4.8 Prepare your Conclusion (summary) and Recommendation<br />
Review & Refine Summary /Conclusion for each Module (1-4).<br />Make sure you mention the important findings (learning's, insights, revelations) from each sub-module (e.g. 1.1, 1.4, 2.3, 4.1, etc).<br />This information should explain and tell a logical story.<br />This should be objective not persuasive.<br />If there is missing data/information, make an assumption and state that the data was not available.<br />Cite your data sources when appropriate – mention when you make an educated estimate (“guestimate”)<br />Your plan should tell why your chosen product and country are the best options for an export project.<br />Course Integration: Export Plan<br />
Executive Summary Format<br />Uses the same information from your Module Conclusion sections. Must be factual, reliable – well written. Enter this data in EIMSO Executive Summary sections.<br />Re-format it when necessary into paragraph form. Use complete sentences, proof-read for grammar and spelling.<br />Must tell a logical story.<br />EIMSO automatically creates lower blue sections. (TOC ->Appendices)<br />
15-20 minutes – approximately 15-20 slides<br />Everyone participates in the presentation<br />Submit our presentation slides and your executive summary before your presentation.<br />Goal is to explain and recommend a specific product for export to a specific country, including modules 1-4:<br />Company Situation– Industry Analysis<br />Country Candidates – User Segments<br />Market Selection – Entry Strategy & Marketing Plan<br />Cost estimates (Marketing, Shipping, Documentation, COGS)<br />P/L: Profit & Loss Analysis<br />Presentation Contents<br />
C.E.O PowerPoint Presentation Format<br />Uses the same information from the Executive Summary.<br />Simply re-format it into PowerPoint slides – 15-20 slides for a 15-20 minute presentation.<br />Change your communication from objective to persuasive to suggest your audience agree with your final recommendation and show confidence.<br />Must tell a logical story; Recommendation is important.<br />All group members must be able to discuss all sections. Sometimes people get sick or change jobs.<br />
C.E.O. Export Plan Presentation<br />Module’s 1-4: <br />
Please take a few minutes to complete the course evaluation.<br />Turn in your evaluation to the student leader.<br />Thank you!<br />Course Evaluation<br />
Consider the next class…<br />What advice would you give to next semester’s students?<br />White a one page note from your group to next years student groups on how they can be successful in this class.<br />Submit to Instructor as you leave.<br />Thank you.<br />Final Thoughts<br />
International Business is as much an Art as it is a Science.<br />Wrap Up<br />