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Presentation On Exporting. By:- Himal Thapa 29 Sept 2015. Contents. Introduction about exporting. Advantage and Disadvantage of Exporting. Systematic approach to exporting. Export Documentation. International commerce Terms. Methods of Payment. Sources of export financing.
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Presentation On Exporting By:- Himal Thapa29 Sept 2015
Contents • Introduction about exporting. • Advantage and Disadvantage of Exporting. • Systematic approach to exporting. • Export Documentation. • International commerce Terms. • Methods of Payment. • Sources of export financing.
Sources of Information to Identify potential Intermediaries. Official Procedures for Exporting and Importing. Export Strategy.
Exporting In General. • The term export means shipping the goods and services out of the port of a country. The seller of such goods and services is referred to as an “Exporter” and is based on the country of export whereas the overseas based buyer is referred to as “Importer” . In International Trade. • Export refers to selling goods and services produced in the home country to other markets.
In strategy Management. • Exporting:Strategy of producing products or services in one country (often the producer’s home country), and selling and distributing them to customers in another country. • Export channels: • Independent distributor or agent, or • Firm’s own marketing subsidiary abroad • Exporting is low risk, low cost, and flexible. • Popular among SMEs.
Services Are Exported As Well Examples: architecture, education, banking, insurance, entertainment, information. However, many pure services cannot be exported because they cannot be transported. Retailers offer their services by establishing retail stores abroad, that is, via FDI. This is because retailing requires direct contact with customers. Overall, most services are delivered to foreign customers via entry strategies other than exporting.
Advantages of Exporting Increase sales and profits Increase economies of scale Diversify customer base, reducing dependence on the home market Stabilize fluctuations in sales associated with economic cycles or seasonality Low cost entry strategy Minimal risk Maximal flexibility Develop useful foreign relationships
Disadvantages of Exporting Requires firm to acquire new capabilities and redirect organizational resources. Sensitive to tariffs and other trade barriers. Sensitive to exchange rate fluctuations. Compared to FDI, firm has fewer opportunities to learn about customers, competitors, and the marketplace . Increased costs.E.g. Traveling abroad to obtain orders; High management fees, shipping charges, agent's fees.
Understanding and following import laws and regulations, which vary and change rapidly and dramatically in some cultures. Transportation policy.Shipping rules and regulations complicated Currency. The earlier advantage of a strong currency in exchange for a weak dollar might, in alternative circumstances, prove detrimental to the exporter. Collecting long-standing payments and debts can prove difficult
Types of Export Businesses Export-Manufacturers Manufacturers, producers, assemblers and processors who export their own goods. Export-Traders • Export Management Company • “Typically involved in the whole international trade process, including sales, marketing, invoicing, shipping, foreign receivable risks, customer training and support and even warranty issues. Often the arrangement is on an exclusive basis. A particular EMC will likely focus on specific industries and regions of the world. Most common way of indirect exporting • Export Trading Company • “Similar to EMCs…distinction often lies in the size of the company. ETCs are large and more like to represent competing products.” • Export Commission Agents and Brokers • “Basic difference between an agent or broker and EMCs and ETCs is that agents typically don’t fulfill the order; they simply pass it on to the manufacturer. They act as sales reps but don’t invoice the customer or coordinate the logistics.”
A Systematic Approach to Exporting (1) Assess Global Market Opportunity. Screen for the most attractive export markets; identify qualified distributors; Estimate industry market potential and company sales potential. (2) Organize for Exporting. Assess company resource needs. Establish timetable for achieving export goals. Decide on distribution strategy.
A Systematic Approach to Exporting (cont’d) (3) Acquire Needed Skills and Competencies. Gain new capabilities in areas such as product development, distribution, logistics, finance, contract law, currency management, foreign languages, cross-cultural skills. (4) Implement Exporting Strategy. Devise needed on-the-ground tactics. Adapt products and marketing as needed.
Export Documentation The official forms and other paperwork required to transport exported goods and clear customs. • Quotationorpro forma invoice: issuedon request by potential customers to advise a potential buyer about the price and description of the exporter’s product or service. • Commercial invoice: actual demand for payment issued by the exporter when a sale is concluded. • Packing list: indicates exact contents of a shipment, particularly when there are many goods
Export Documentation (cont.) Bill of lading: basic contract between exporter and shipper. Authorizes the shipping company to transport the goods to the buyer’s destination. Shipper's export declaration: lists the contact information of the exporter and the buyer, full description, declared value, and destination of the products being shipped. Used by governments to collect statistics. Certificate of origin: the "birth certificate" of the goods being shipped, indicating the country where the product originated. Insurance certificate: protects the exported goods against damage, loss, pilferage (theft) and, in some cases, delay.
Inco terms (International Commerce Terms) A system of universal, standard terms of sale and delivery. Commonly used in international sales contracts and price lists to specify how the buyer and the seller share the cost of freight and insurance, and at which point the buyer takes title to the goods.
Methods of Payment Cash in Advance. Risky from the buyer’s standpoint; Unpopular with foreign buyers; Tends to discourage sales. Open Account. Exporter simply bills the customer, who is expected to pay under agreed terms at some future time. Best between buyer/seller with an established relationship. Letter of Credit. Contract between the banks of the buyer and the seller. Essentially risk-free. Immediately establishes trust between the parties.
Some 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 • Focus on one or a few markets. • Need to recognize the time and managerial commitment. • Build strong and lasting relationships. • Keep the option of local production in mind
Sources of Export Financing Commercial banks Distribution channel intermediaries Buyers Suppliers Government assistance programs (e.g., Export-Import Bank, Small Business Administration)
Sources of Information to Identify Potential Intermediaries Country and regional business directoriessuch as Kompass (Europe), Bottin International (worldwide), Japanese Trade Directory, as well as Foreign Yellow Pages. Trade associations such as the National Furniture Manufacturers Association or the National Association of Automotive Parts Manufacturers. Government ministries and agencies such as Austrade in Australia, Export Development Canada, and the U.S. Department of Commerce. Commercial attachésin embassies and consulates abroad. Branch offices of government agencies located in the exporter’s country, such as JETRO, the Japan External Trade Organization.
