of 11
7/28/2019 Export Strategies
1/11
International Business
Chapter Thirteen
Export and ImportStrategies
7/28/2019 Export Strategies
2/11
Strategy of the MultinationalsPrice
Quality
Competitive
Advantage
Export Strategy
Investment /
Collaborative strategy
Manufacturing / Supply
chain strategy
MarketingFinance
AccountingHuman Resource
R&D
7/28/2019 Export Strategies
3/11
3
Export Strategy of the Firm
Firms export in order to. increase revenues
achieve economies of scale
alleviate excess capacity
minimize risk and diversify markets Firms consider the following factors to
export:
Ownership advantages
Location advantages
Internalization advantages
7/28/2019 Export Strategies
4/11
4
Phases of Export Development
7/28/2019 Export Strategies
5/11
5
Steps Involved in DesigningExport Strategy
Assess companys export potential
Obtain export counseling
Select a market or markets
Formulate and implement an exportstrategy
Table 13.2 Export Business Plan has thedetails
7/28/2019 Export Strategies
6/11
6
Export Intermediaries
Export can be conducted directly, indirectly or
through third party intermediaries.
Export management company (EMC): a firm thateither acts as a manufacturers agent or buysmerchandise from manufacturers for international
distribution.Export trading company (ETC): a large,
independent broker whose primary purpose is tomatch suppliers to foreign customers for a fee.
Foreign freight forwarder: an international trade
specialist who assists in the delivery of goodsfrom producer to customer
7/28/2019 Export Strategies
7/11
7
Import Strategy of the Firm
Why import? Basic imports include: industrial and consumer goods and
services
intermediate goods and services
Strategic advantages of imports
Specialization of labor
Global rivalry
Local unavailability
Diversification of operation risks
Gain knowledge from abroad
7/28/2019 Export Strategies
8/11
Export Import Process
Informs
Exporter
Exporter
s Bank
Importer
Importers
Bank
Receivespayment
Ships
Bill of lading
Informs
Reimbursement
Payment Opens Letter of Credit
7/28/2019 Export Strategies
9/11
9
Export Documentation
Key export documents include: pro forma invoice: outlines the terms of
sale, price, and delivery details commercial invoice: detailed legal
document-see example in the text shippers export declaration: used to
monitor exports and compile tradestatistics
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
7/28/2019 Export Strategies
10/11
10
Countertrade
Countertrade: is good when afirm/government lacks sufficient funds orconvertible currency to pay for imports
Two basic types of countertradetransactions include: barter [based on clearing arrangements
used to avoid money-based exchange] buybacks, offsets, and counterpurchase
[all of which are used to imposereciprocal commitments]
Countertrade can be inefficient orinflexible
7/28/2019 Export Strategies
11/11
11
Chapter 13: Discussion Questions
1. Explain why firms export or import. Whatdo they gain from export-import?
2. Discuss the functions of Export
Intermediaries.3. Describe the export-import process and
explain the role of various exportdocumentation involved in the process.
4. What is countertrade? Why firms orgovernments engage in countertrade?