International Business

Chapter Thirteen

Export and Import Strategies

Strategy of the Multinationals

Export Strategy
Investment / Collaborative strategy

Price

Manufacturing / Supply chain strategy

Marketing Finance Accounting Human Resource R&D
Quality

Competitive Advantage

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
3

Phases of Export Development

Steps Involved in Designing Export Strategy

Assess companys export potential Obtain export counseling Select a market or markets Formulate and implement an export strategy

Table 13.2 Export Business Plan has the details

5

Export Intermediaries
Export can be conducted directly, indirectly or through third party intermediaries. Export management company (EMC): a firm that either acts as a manufacturers agent or buys merchandise from manufacturers for international distribution. Export trading company (ETC): a large, independent broker whose primary purpose is to match suppliers to foreign customers for a fee. Foreign freight forwarder: an international trade specialist who assists in the delivery of goods from producer to customer

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

Export Import Process

Exporter
Ships Bill of lading

Importer

Informs

Receives payment

Payment

Opens Letter of Credit

Exporter s Bank

Reimbursement Informs

Importers Bank

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 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

Countertrade

Countertrade: is good when a firm/government lacks sufficient funds or convertible currency to pay for imports Two basic types of countertrade transactions include: barter [based on clearing arrangements used to avoid money-based exchange] buybacks, offsets, and counterpurchase [all of which are used to impose reciprocal commitments] Countertrade can be inefficient or inflexible
10

Chapter 13: Discussion Questions

1.

2.

3.

4.

Explain why firms export or import. What do they gain from export-import? Discuss the functions of Export Intermediaries. Describe the export-import process and explain the role of various export documentation involved in the process. What is countertrade? Why firms or governments engage in countertrade?
11