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What is international business. Marketing and sales in international market.

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  1. 1. International Marketing & Sales Rakesh KherRakesh Kher
  2. 2. Context: International Sales International Marketing Industry Example Foreign Trade Policy
  3. 3. International SalesInternational Sales
  4. 4. WHAT IS INTERNATIONAL BUSINESS ?WHAT IS INTERNATIONAL BUSINESS ?  The exchange of goods & services, Resources,       Knowledge  & Skills , among individuals & businesses in multiple/two or  more countries.  Transaction that are carried out across national borders      to  satisfy the objectives of individuals and organization
  5. 5. Selling In International MarketSelling In International Market A company may decide to sell its product in international market  due to one or more of the following reasons- It has a good market domestically where the growth is limited. International market offer large and profitable opportunities. The company has excess capacity, which the domestic market  cannot absorb.
  6. 6. Selling In International MarketSelling In International Market Trade between countries occurs because of following reasons- A particular product is unavailable. There are cost advantage by buying the product instead of  manufacturing locally. The product offered is differentiated from the local product.
  7. 7. Selling In International MarketSelling In International Market The company has a considerable cost advantage over its  international competitors. The company foresees increased competition in the  domestic market and seeks to mitigate the risk by  diversifying.
  8. 8. Entry Strategies For International MarketEntry Strategies For International Market Agent Distributor Government Overseas Subsidiary Trading Company Export Management Piggyback Overseas Subsidiary
  9. 9. Entry Strategies For International MarketEntry Strategies For International Market Foreign Production Licensing Joint Venture Contract  Manufacture Ownership Export Processing
  10. 10. Organizing For International SellingOrganizing For International Selling The type of organization a company   adopts for International sales  DEPENDS ON The size and nature of its    international business
  11. 11. DistributionDistribution  Role of distribution becomes more important at global level  due to-
  12. 12. Types of Distribution ChannelsTypes of Distribution Channels The type of distribution  channel chosen The nature of the product  and its positioning Depends on Distribution Channel Up market  Stores Exclusive  Stores Supermarkets  and   Hypermarkets
  13. 13. Profile of an International SalespersonProfile of an International Salesperson International salesperson need to have the following additional qualities- The ability to speak in one or more international languages. The ability to adapt to foreign culture. The ability to act independently and decisively. A pleasant and amiable personality. The ability to understand not only the product and pricing, but also financing of the sales, the instrument of payment, and foreign exchange risk.
  14. 14. Pricing and Payment TermsPricing and Payment Terms Pricing of product for international markets can be done on various terms. Some of the commonly used term are- 6. CIF6. CIF4. FOB4. FOB 5. C&F5. C&F 1. Ex Works1. Ex Works 2. FOT2. FOT 3. FAS3. FAS FOT- Free on Truck FAS- Free alongside Ship FOB- Free on Board C&F- Cost and Freight CIF- Cost, Insurance and Freight
  15. 15. Packing and ShippingPacking and Shipping  The packing should be-  Light and Strong.  Must be appealing for the end users.  Usually buyers tend to specify the type of packing required.  Packing should show the contents and specify origin, weight and quantity of the item inside.  Most shipment these days are done in containers which is safer and easier to handle.
  16. 16. Market Intelligence and ResearchMarket Intelligence and Research  Collecting primary data is very expensive and not feasible for most companies.  Secondary data is available from no. of sources such as-  Embassies  EXIM bank  Trade journals and publication  Internet websites  Commercial banks, etc.
  17. 17. SALES-Quotation / Pro Forma InvoiceSALES-Quotation / Pro Forma Invoice 1) Seller's and buyer's names and addresses 2) Buyer's reference number and date of inquiry 3) Listing of requested products and a brief description 4) Price of each item (It is advisable to indicate whether items are new or used and to quote the price in U.S. dollars to reduce foreign exchange risk.) 5) Appropriate total cubic volume and dimensions packed for export 6) Appropriate gross and net shipping weight
  18. 18. SALES-Quotation / Pro Forma InvoiceSALES-Quotation / Pro Forma Invoice 7) Trade discount (if applicable) •Delivery point •Terms of sale •Terms of payment •Insurance and shipping costs •Validity period for quotation •Total charges to be paid by customer •Estimated shipping date from port or airport or export •Currency of sale
  19. 19. IncotermsIncoterms
  20. 20. IncotermsIncoterms Most common: Ex-works: Buy picks up cargo from seller; all shipping costs for buyer FAS/FOB: Seller delivers to port / Seller loads cargo on vessel, buyer pays for shipping CFR/CIF: Seller pays for shipping to port of import /with insurance, buy pays for arrival charges, import duties, taxes, and transport from port.
  21. 21. Payment MethodsPayment Methods  Advance  Bill of Exchange (documentary drafts)  Letter of Credit
  22. 22. Payment MethodsPayment Methods Letter of Credit:
  23. 23. NegotiationNegotiation Win-Lose VS. Win-Win Win — Lose: From each deal, there is a winner and a loser Win — Win: In each deal, both parties gain J. Salacuse survey: 100% of Japanese > Win — Win 33% of Spanish > Win — Win Contract or Relationship Win — Lose or Win — Win approach is tied to overall goal. For a one-off trade, Win-Lose is likely
  24. 24. What does the International Manager reallyWhat does the International Manager really do?do?  Coordinate their company's activities and resources across international boundaries.  Represent their company overseas:  Purchasing  Sales  Production  Logistics So, can anyone (or any manager) be an International manager?
  29. 29. WHICH MARKETS TO ENTER External Analysis Political factors Economical factors Social factors Technological factors Environmental factors Legal factors Industry Example- UNO MindaIndustry Example- UNO Minda USA  Government Stability  IPR Laws  Stable Currency  Free Market  Lifestyles Product  Recreational Uses  Product Performance  Improvement in life  Competition  Market Growth  Competition  Market Growth
  30. 30.  Based on the above marketing tools we short listed, a company known as Polaris in USA was prospected over mails and telephonic conference. A meeting was organized in USA to showcase our capabilities along with demonstration of our existing products.  Subsequently high level engineering team visited our plants and asses our ability and potential to achieve the product performance required by them.  Once this was stablished we have be final round of price negotiation to conclude the agreement for design, engineering, tooling, manufacturing, testing and validation for the product.  Finally packaging and shipping were discussed and the prices were arrived on FOB basis. Case StudyCase Study
  31. 31. Recreational Vehicles SegmentRecreational Vehicles Segment ATVATV Snow MobileSnow Mobile Lawn MoverLawn Mover
  32. 32.  The relationship with customer grew over a period of next 3-5 years resulting in many other orders for new parts.  What started as initially a small order of few hundred dollars as now resulted into a multimillion supply to this and many other similar companies in the US Future OpportunitiesFuture Opportunities
  34. 34. FOREIGN TRADEFOREIGN TRADE Types of Foreign Trade  Import Trade : Import trade refers to purchase of goods by one country from another country or inflow of goods and services from foreign country to home country.  Export Trade: Export trade refers to the sale of goods by one country to another country or outflow of goods from home country to foreign country.  India’s Foreign Trade i.e. Exports and Imports are regulated by the Foreign Trade (Development and Regulation) Act 1992.  Presently Foreign Trade Policy 2015-20 is effective from 1st April, 2015.  Export is defined as an act of taking out of India any goods by land, sea or air.
  35. 35. HOW TO EXPORTHOW TO EXPORT Starting Exports Establishing an Organisation: To start the export business, first a sole Proprietary concern/ Partnership firm/Company has to be set up as per procedure with an attractive name and logo Opening a Bank Account A current account with a Bank authorized to deal in Foreign Exchange should be opened.. Obtaining Permanent Account Number (PAN) It is necessary for every exporter and importer to obtain a PAN from the Income Tax Department.
  36. 36. Obtaining Importer-Exporter Code (IEC) Number An IEC is a 10 digit number. Mandatory for undertaking export/ import. Issued by DGFT . Pricing/Costing Export proceeds on the basis of terms of sale Free on Board (FOB), Cost, Insurance & Freight (CIF), Cost & Freight(C&F). Registration cum membership certificate (RCMC) Mandatory for availing import/ export benefit or concession under FTP 2015-20 Issuing Authority Export Promotion Councils/FEDERATION OF INDIAN EXPORT ORGANISATIONS (FIEO)/Commodity Boards. HOW TO EXPORTHOW TO EXPORT
  37. 37. EXPORT BENEFITSEXPORT BENEFITS 1. EXPORT PROMOTION SCHEMES  Foreign Trade Policy 2015-20 and other schemes provide promotional measures to boost India’s exports.  Brief of these measures are as under: 1.1 Exports from India Scheme I - Merchandise Exports from India Scheme (MEIS) Under this scheme, exports of notified goods/ products to notified markets. Listed in Appendix 3B of Handbook of Procedures of FTP. Benefit will receive in form of Duty credit scrips. Benefit rate (2-5%) on FOB value of exports. The Duty Credit Scrips can be used for the following requirements: Payment of Customs Duties for import of inputs or goods. Payment of excise duties on domestic procurement of inputs or goods. Payment of service tax on procurement of services. Payment of Customs Duty.
  38. 38. All countries divided into A, B, C categories.  A- Traditional markets like US, Europe.  B- Emerging markets like Africa, Latin America CIS etc.  C- Others. Example: Exports to Sri Lanka. Handle Bar Switch TVS. HS code of Switch is 85365090. S. No. ITC(HS) Code Description of goods MEIS rates based on Appendix 3B Country groups A B C 4396 85365090 Othr Switches 2% 2% 2% 2% benefit will receive on FOB value. ITC(HS) Code: Indian Trade Clarification (Harmonised Systems) The Harmonized Commodity Description and Coding System generally referred to as "Harmonized System" or simply "HS" is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). EXPORT BENEFITSEXPORT BENEFITS
  39. 39. II- Service Exports from India Scheme (SEIS) Service providers of notified services are eligible for duty credit scrip @ 3-5% of net foreign exchange earned. a) Service providers defined as those located in India b) On Net Foreign Exchange earned on specified services Eligible services include service for  a- Business. – 5%  b- Construction and related Engineering. – 5%  c- Educational – 5%  d- Environment- 5%  e- Health & Social- 5%  f- Tourism and Travel related- Hotel & Restaurants- 3% & Travel agencies and Tourist guides services -5%  g- Recreational, Cultural and sports – 5%  h- Transport- 5% EXPORT BENEFITSEXPORT BENEFITS
  40. 40. Example: List of Services: S.No. SECTORS Central product Classification Code Admissible rate in % (on Net (CPC) Foreign Exchange earnings) 1 BUSINESS SERVICES A. Professional services a. Legal services 861 5% b. Accounting, auditing and bookkeeping services 862 5% 2 COMMUNICATION SERVICES Audio-visual services a. Radio and television services 9613 5% b. Motion picture projection service 9612 55 3 CONSTRUCTION AND RELATED ENGINEERING SERVICES A. General Construction work for building 512 5% B. General Construction work for Civil Engineering 513 5% % will be calculate on Net Foreign Exchange earned on specified services EXPORT BENEFITSEXPORT BENEFITS
  41. 41. 2. DUTY EXEMPTION & REMISSION SCHEMES These schemes enable duty free import of inputs for export production with export obligation. These scheme consists of:- 2.1 Advance Authorization Scheme (AA) for Raw Material Under this scheme, duty free import of raw materials are allowed. Material must be physically use in the export product with minimum 15% value addition. AA normally have a validity period of 12 months for the purpose of making imports And a period of 18 months for fulfilment of Export Obligation (EO) from the date of issue of AA. AA is issued either to a manufacturer exporter or merchant exporter tied to a supporting manufacturer(s). EXPORT BENEFITSEXPORT BENEFITS
  42. 42. 2.2 Duty Drawback of Customs/Central Excise Duties/Service Tax The scheme is administered by Department of Revenue. Under this scheme products made out of duty paid inputs are first exported and thereafter refund of duty is claimed in two ways: i) All Industry Rates   :       As per Schedule ii) Brand Rate            :       As per application on the basis of data/documents Example: Exports Handle Bar Switch of TVS HS code of Switch is 85365090. Duty Drawback ITC-HS Code Description Duty Drawback Code Drawback Rate 85365090 Other switches: Other 853601 2.5% 2.5% incentive receive on FOB value and directly send by customs to Export’s bank A/c. EXPORT BENEFITSEXPORT BENEFITS
  43. 43. 3.1 Zero duty EPCG scheme Under this scheme import of capital goods at zero custom duty is allowed for producing quality goods and services to enhance India’s export competitiveness. Import under EPCG shall be subject to export obligation (EO) equivalent to six times of duty saved in six years. Scheme also allows indigenous sourcing of capital goods with 25% less export obligation i.e. equivalent to four & half times of duty saved in six years. Example: If total duty saved INR 100.00 then EO will be INR 600.00 in case of imported machinery. If total duty saved INR 100.00 then EO will be INR 450.00 in case of indigenous machinery. 3.2 Post Export EPCG Duty Credit Scrip Scheme A Post Export EPCG Duty Credit Scrip Scheme shall be available for exporters who intend to import capital goods on full payment of applicable duty in cash. 3. EXPORT PROMOTION OF CAPITAL GOODS (EPCG SCHEME) EXPORT BENEFITSEXPORT BENEFITS
  44. 44.  Under the EOU scheme, the units are allowed to import or procure locally without payment of duty  All types of goods including capital goods, raw materials, components, packing materials etc..  In the case of EOUs engaged in agriculture, animal husbandry, floriculture, horticulture, and poultry 5. OTHER SCHEMES 5.1 Marketing Development Assistance (MDA) Scheme Financial assistance is available for exporters having an annual export turnover upto Rs. 30 crores for trade fairs, buyer seller meets organized by EPC’s/ Trade promotion organizations. MDA guidelines available at 4. EXPORT ORIENTED UNITS (EOU) EXPORT BENEFITSEXPORT BENEFITS
  45. 45. Thank you !Thank you !
  46. 46. Q & AQ & A