International Business Environments and Operations, 13/e Global Edition

International Business
Environments and Operations,
Global Edition
Part 5
Global Strategy, Structure, and
Copyright © 2011 Pearson Education
Copyright © 2011 Pearson Education
Chapter Objectives
• To introduce the ideas of export and import
• To identify the elements of export and
exporting strategies
• To compare direct and indirect selling of
• To identify the elements of import and
importing strategies
• To discuss the types and roles of third-party
• To profile the role of counter-trade
Copyright © 2011 Pearson Education
Exporting and Importing
• Exporting refers to the sale of goods or
services produced by a company based in
one country to customers that reside in a
different country.
• Importing is the converse: the purchase of
products by a company based in one country
from sellers that reside in another.
Copyright © 2011 Pearson Education
World’s Top Trading Countries
Copyright © 2011 Pearson Education
Environmental Factors Influencing
Export and Import Operations
Copyright © 2011 Pearson Education
Export Strategy
• Advantages to exporting
– Requires less expertise, time, and capital
than other modes of entry
– Operational control
– Helps companies expand and diversify
sales as well as achieve economies of
Copyright © 2011 Pearson Education
Questions to Consider
Companies typically consider the following questions in
evaluating the export option:
• What do we want to gain from exporting?
• Is exporting consistent with our goals?
• Will exporting put undue demands on our resources? If so, how
will we meet them?
• Does exporting leverage our core competency?
• Does exporting fit the current configuration of our value chain?
• Do our coordination systems support the needs posed by
• Are the projected benefits of exporting worth the costs?
• Would our resources be better used to develop new domestic
Copyright © 2011 Pearson Education
Characteristics of Exporters
• Although the largest companies are the
biggest exporters, small companies are also
expanding their export capability.
• Firm characteristics moderate its export
intensity. Size plays a role, but often
management commitment, efficiency, and
cost structure matter more.
Copyright © 2011 Pearson Education
Two Views of Export Development
Two views of export shape interpretation:
The slow, sequential dynamic of incremental
internationalization and the instant
internationalization of the born global
Copyright © 2011 Pearson Education
Phases of
Export Development
Copyright © 2011 Pearson Education
Pitfalls of Exporting
Adjusting Financial Management
Adjusting Customer Management
Adjusting for Information Technology
Additional Stumbling Blocks
Copyright © 2011 Pearson Education
Designing an Export Strategy
1. Assess the company’s export potential by
examining its opportunities and resources.
2. Obtain expert counseling on exporting.
3. Select a market or markets.
4. Formulate and implement an export strategy.
Copyright © 2011 Pearson Education
Import Strategy
There are three types of importers:
• Those looking for any product around the
world to import and sell.
• Those looking for foreign sourcing to get
their products at the cheapest price.
• Those using foreign sourcing as part of their
global supply chain.
Copyright © 2011 Pearson Education
Advantages of Importing
Specialization of Labor
Global Rivalry
Local Unavailability
Diversification of Operating Risks
Copyright © 2011 Pearson Education
Import Brokers
• Key Broker Functions:
– Valuing products in such a way that they qualify
for more favorable duty treatment
– Qualifying for duty refunds through drawback
– Deferring duties by using bonded warehouses and
foreign trade zones
– Document and paper-flow management
– Limiting liability by properly marking an import’s
country of origin
Copyright © 2011 Pearson Education
Customs Agencies
• Procedural Assistance
• Efficiency Improvement
Copyright © 2011 Pearson Education
Future: The Technology of Trade
• Advances in transportation and
communication increases trade
• Collaborative software allows smaller
companies to engage in international trade
more efficiently
• 3rd Party Logistics
Copyright © 2011 Pearson Education
Import Documentation
• Bureaucratic Impediments
– The efficiency of importing is challenged by
delays, documents, and fees.
Copyright © 2011 Pearson Education
The Export Process
Principal types of exporting:
• Direct—products sold to an independent
party outside of the exporter’s home
• Indirect exports—products sold to an
intermediary in the domestic market,
which then sells the goods in the export
Copyright © 2011 Pearson Education
Indirect Selling
• Export Intermediaries
– Export Management Companies: operate
on a contractual basis—usually as an
agent of the exporter.
– Export Trading Companies: operate based
on demand rather than supply. They
identify suppliers who can fill orders in
overseas markets.
Copyright © 2011 Pearson Education
Direct Selling
• Direct selling involves sales representatives,
distributors, or retailers.
– Direct Selling to Foreign Retailers and End
– Direct Selling over the Internet
Copyright © 2011 Pearson Education
Export Documentation
Key export documents are:
• Pro forma invoice
• Commercial invoice
• Bill of lading
• Consular invoice
• Certificate of origin
• Shipper’s export declaration
• Export packing list
Copyright © 2011 Pearson Education
Sources of Regulatory Assistance
In the United States, a number of institutions,
most notably the Department of Commerce
and its affiliates, help firms identify and
realize export and import opportunities.
Copyright © 2011 Pearson Education
Freight Forwarders
A foreign freight forwarder is an export or import
specialist dealing in the movement of goods
from producer to consumer.
• Primary transportation modes include:
– Surface freight (truck and rail), ocean
freight, and airfreight.
– Intermodal transportation—the movement
across different modes from origin to
Copyright © 2011 Pearson Education
This is an umbrella term for several sorts of
trade, such as barter or offset, in which the
seller accepts goods or services, rather than
currency or credit, in payment for its products.
Copyright © 2011 Pearson Education
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of the publisher. Printed in the
United States of America.
Copyright © 2011 Pearson Education