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Export management

• Export management means conducting the export activity in an orderly, efficient and profitable manner.

• Since the heart of each business is marketing, export management can be termed as export marketing management. Because it needs to be managed efficiently so that the export should increase and exporter should get more profit and importer should get more satisfaction.

• Export management means managing export marketing activity efficiently, smoothly and in an orderly manner.

Export management

We can discuss the need for export management at two different levels.

(A) At the National level.

(B) At the Business level.

NEED FOR EXPORT MANAGEMENT

Need For Export Management At The NationalLevel

Earning foreign Exchange

International Relations

Balance of payments

Economic Growth

Reputation in the World

Employment

Research and Development

Standard of Living

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Export Obligation

Higher Profits

Reputation and Goodwill

Imports are liberalized

Government Incentives

Need Export management At Business Level

Export management

1. Identifying Export Products

2. Market Selection

3. SWOT Analysis

4. Export License

5. Export Pricing and Costing

6. Understanding of Foreign Exchange Rates

7. Export Risk Management

8. Packing and Labeling of Goods

1. Identifying Export Products• The product should be manufactured or sourced with consistent

standard quality, comparable to your competitors

• If possible, avoid products which are monopoly of one or few suppliers

• The price of the exported product should not fluctuate very often - threatening profitability to the export business.

• Strictly check the government policies related to the export of a particular product

• Carefully study the various government incentive schemes and tax exemption like duty drawback and DEPB.

• Seasonal vagaries of selected products

• Keep in mind special packaging and labeling requirements of perishable products like processed food and dairy products.

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2. Market Selection

Market selection process requires a broad range of information depending upon the products or services to be exported, which includes:

• The demand for product/service.

• The size of the potential audience.

• Whether the target audience can afford product.

• What the regulatory issues are that impact on exports of product.

• Are there appropriate distribution channels for product/service?

• The environment for doing business – language, culture, politics etc.

• Is it financially viable to export to selected market?

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3. SWOT Analysis

• SWOT analysis is a useful method of summaries all the information generated during the export planning. SWOT stands for strengths, weakness, opportunities and threats, which helps to isolate the strong and week areas within an export strategy. SWOT also indicates the future opportunities or threats that may exist in the chosen markets and is instrumental in strategy formulation and selection.

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4. Export License

• Export license are only issued for the goods mentioned in the Schedule 2 of ITC (HS) Classifications of Export and Import items.

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5. Export Pricing and Costing

Export Pricing can be determined by the following factors:

• Range of products offered.

• Prompt deliveries and continuity in supply.

• After-sales service in products like machine tools, consumer durables.

• Product differentiation and brand image.

• Frequency of purchase.

• Presumed relationship between quality and price.

• Specialty value goods and gift items.

• Credit offered.

• Aggressive marketing and sales promotion.

• Unique value goods and gift items.

Export Costing

• Export Costing is basically Cost Accountant's job. It consists of fixed cost and variable cost comprising various elements. It is advisable to prepare an export costing sheet for every export product.

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6. Understanding of Foreign Exchange Rates

An exporter without any commercial contract is completely exposed of foreign exchange risks that arises due to the probability of an adverse change in exchange rates.

Therefore, it becomes important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates.

• Rate at which one country’s currency is exchanged for another country’s

• Has become a major concern for companies doing business internationally

• Changes in the exchange rate can have major implications for profitability of international operations12-13

7. Export Risk Management

The various types of export risks involve in an international trade are as follow

• Credit Risk

• Poor Quality Risk

• Transportation Risks

• Logistic Risk

• Legal Risks

• Political Risk

• Unforeseen Risks

• Exchange Rate Risks

8. Packing and Labeling Of Goods

PackingThe primary role of packaging is to contain, protect and preserve a product as well as aid in its handling and final presentation.

Packaging provides following benefits

• Physical Protection

• Containment

• Marketing

• Security

Labeling Labeling on product provides the following important information:

• Shipper's mark

• Country of origin

• Weight marking (in pounds and in kilograms)

• Number of packages and size of cases (in inches and centimeters)

• Handling marks (international pictorial symbols)

Tools used to aid transactions

Letters of Credit (LOC)Bank guarantee on behalf of importer to

exporter assuring payment when exporter presents specified documents

Drafts (Bill of Exchange)Written order exporter, telling an importer to

pay a specified amount of money at a specified time

Bill of Lading Issued to exporter, by carrier. Serves as

receipt, contract and document of title

Letter of Credit Model

Exhibit 5.6

Exporter seller

beneficiary

Importer’s bank

Importer buyer

account party

Exporter’s bank

7. Remits payment

6. Presents documents

4. Advises of L/C

2. L/C application

10. Sends documents

11. Pays bank or gets loan

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8. Presents docum

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3. Opens L/C

• Export Import Policy or better known as Exim Policy is a set of guidelines and instructions related to the import and export of goods. The Government of India notifies the Exim Policy for a period of five years . The Export Import Policy is updated every year on the 31st of March and the modifications, improvements and new schemes become effective from 1st April of every year. All types of changes or modifications related to the Exim Policy is normally announced by the Union Minister of Commerce and Industry who coordinates with the Ministry of Finance, the Directorate General of Foreign Trade and its network of regional offices.

Export Import (Exim) Policy

Foreign Exchange Management Act (FEMA)

• Foreign Exchange Management Act or in short (FEMA) is an act that provides guidelines for the free flow of foreign exchange in India. It has brought a new management regime of foreign exchange consistent with the emerging frame work of the World Trade Organization (WTO).

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EXPORT FINANCE

• Commercial banks

• EXPORT-IMPORT BANK OF INDIA (EXIM BANK)

• Export Credit and Guarantee Corporation of India Ltd. (ECGC)

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