copyright © 2015 pearson education, inc.14-1 international business environments & operations...

Copyright © 2015 Pearson Education, Inc. 14-1

International Business

Environments & Operations

15e

Daniels ● Radebaugh ● Sullivan


Chapter 14

Export and Import


Learning Objectives

Understand the role of export/import in the strategy of the multinationals

Learn about export/import process and the documentation involved

Explain the idea of exporting/importing and evaluate their relative benefits/drawbacks

Describe the intermediaries in export/import-resources and assistance for international traders

Identify and discuss the platforms that support expanding international trade

Competitive Advantage and the Strategy of the Multinationals

Price

Quality

Competitive Advantage

Export Strategy

Investment /

Collaborative strategy

Manufacturing / Supply

chain strategy

Marketing Finance

Accounting Human Resource

R&D

5

Export Strategy of the Firm-1

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

Why Export…. Profitability-increase revenues Productivity-achieve economies of scale,

alleviate excess capacity Diversification-minimize risk and diversify

markets


Export Strategy of the Firm-2

Firms’ “entry strategy/mode” is influenced byOwnership advantages

the firm’s core competenciesLocation advantages

the combination of sales opportunity and investment risk that creates favorable locations in foreign markets

Internalization advantages reflect companies’ response to market

imperfections that often create uncertainties


Exporters: Initiation and Development

Two approaches Incremental internationalization

exporting is a learning process Born global

instant internationalization global focus


Exporters: Initiation and Development

Top Trade Partners of the United States: Exports and Imports


Approaches to Exporting

Export approaches include Direct exporting

involves independent representatives, distributors, or retailers outside of the exporter’s 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

Export Import Process

Informs

Exporter

Exporter’s Bank

Importer

Importer’s Bank

Receives payment

Ships

Bill of lading

Informs

Reimbursement

Payment

Opens Letter of Credit

11

Types of Exports Documents

Pro Forma Invoice: outlines the terms of sale, price, and delivery details, it is the basis for Commercial Invoice

Shipper’s Export Declaration: used to monitor exports and compile trade statistics

Bill of Lading: a detailed receipt from the carrier transporting the cargo

Consular Invoice: required to monitor imports Certificate of Origin: determines the tariff Export Packing List: lists the cargo details Commercial Invoice: details of sale according

to Pro Forma Invoice, it is legal document

12

Types of Exports Documents

13

Import Strategy of the Firm

Why import? Strategic advantages of import…. Specialization of labor Global rivalry Local unavailability Diversification of operation risks


Issues in Exporting/Importing

Financial risks Customer management Lack of international business experience Marketing challenges Top management commitment Government regulation Trade documentation


Support, Resources and Assistance

Companies can get support, resources and assistance from Government agencies The U.S. Department of Commerce

International Trade Administration The Small Business Administration


Support, Resources and Assistance

Trade Assistance by Type and Source


Export/Import Intermediaries

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)

Customs agents: enforce the rules of trade for a particular country

Customs brokers: help importers navigate the regulations imposed by customs agencies

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


An Export Plan

An Export Plan


Countertrade Countertrade

different arrangements that parties use to trade products via transactions that use limited or no currency or credit

Examples of countertrade transactions…. barter [based on clearing arrangements used to

avoid money-based exchange] buybacks, offsets, and counter purchase [all of which

are used to impose reciprocal commitments] Costs and Benefits of Countertrade

Costs: inefficient, risky, cumbersome Benefits: build mutually beneficial relationships


Types of Countertrade

Common Types of Countertrade

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Chapter 14: Discussion Questions1. Explain why firms export or import. What are their

competitive advantages for export or import? 2. Describe the export-import process and explain the role

of various “export documentation” involved in the process.

3. Who are the export/import intermediaries? Explain their role and functions in the export-import process.

4. What are the common issues in exporting/importing? Explain.

5. What is countertrade? What are the different types of countertrade? Why firms or governments engage in countertrade? Explain.


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copyright © 2015 pearson education, inc.14-1 international business environments & operations...

Documents

import slide

imports slide

export strategy

pearson education

international trade

export approaches

export import process

letter of credit slide