chapter 13 exports, imports, countertrade. 13 - 2 mcgraw-hill/irwin global business today, 4/e ©...
TRANSCRIPT
Chapter 13
Exports, Imports, Countertrade
13 - 2
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Exports, Imports, Countertrade
•Opportunities and risks of exporting• Steps to improve export performance• Information sources/programs on exporting• Financing exporting•Countertrade as an export facilitator
13 - 3
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Exporting Opportunities and Risks
• Perception: Exports- Offer huge revenue / profit opportunities overseas - Are “there for the pickings”
• Large firms are more successful- Proactive about exporting to realize promise- Systematic effort backed by knowledge of overseas
markets• Smaller firms are reactive - Overseas markets are an afterthought- Ad-hoc effort on an opportunistic and often naïve basis
• Exports require volumes of specialized paperwork
13 - 4
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Export Performance Improvement Factors
• Government information sources- US: various parts of the Dept. of Commerce- Other countries: similar entity- Embassies and consulates: commercial sections
• Export management companies- Act as the export department of firms- Experienced specialists- Not exclusive
• Focused export strategy
13 - 5
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Some Successful Export Strategies
•Enter on a small scale to reduce risks
•Add product lines after export operations
begin to be successful
•Hire locals to promote the firm’s products
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McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Export/Import Financing
• Assures:
- Exporter of payment
- Importer of product• Banks offer financing intermediary service
- Letters of credit: bank guarantee of payment to exporter “bought” by the corresponding importer
- Draft or bill of exchange: instructions to bank to pay at a certain time based on certain documentation
• Carriers provide to the exporter
- Bill of lading: receipt, contract and document of title
13 - 7
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
13 - 8
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
13 - 9
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
13 - 10
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
13 - 11
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Countertrade
• Structures an international sale when means of payment are difficult, costly, or non-existent- No currency convertibility- Weak reserves prohibit access to hard currency
• Barter-like agreements- Trade goods and services for other goods and
services- 8-10% or world trade by value is in the form of
countertrade (up from 2% in 1975)
13 - 12
McGraw-Hill/IrwinGlobal Business Today, 4/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Countertrade
• Main attraction: - way to finance an export deal - meet requirement of local government to
support exports
• Main drawback: - risk of disposal / sale of goods at less than
full value - disposal of imports may require resources
other than those that the firm possesses