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Export and
Import
Strategies
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
exports
To identify the elements of import and
importing strategies
To discuss the types and roles of third-party
intermediaries
To profile the role of counter-trade
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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.
Exporting and Importing
Importing is the
converse: the purchase
of products by a
company based in one
country from sellers that
reside in another.
World’s Top Trading Countries
Environmental Factors Influencing
Export and Import Operations
Export Strategy
Advantages to exporting
 Operational control
 Exporting allows managers to
exercise operational control
but does not let them exercise
much marketing control. An
exporter usually resides far
from the end consumer and
often enlists various
intermediaries to manage
marketing and service
activities
Export Strategy
Advantages to exporting
 Requires less expertise, time, and capital than
other modes of entry such as FDI.
The Internationalization Process
This chart shows
the progression in
internationalization
from licensing
(minimum), to
foreign direct
investment
(maximum).
Why go International?
1. Diversity against home
market risks
2. Tap into growing markets
3. Follow competition
4. Reduce costs
(manufacturing)
5. Overcome trade barriers
6. Protect intellectual property
rights.
Export Strategy
Advantages to exporting
 Helps companies expand
and diversify sales as well
as achieve economies of
scale
 Exporting enables
companies to diversify
their activities, thereby
fortifying their adaptability
to changes in the home
market
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 exporting?
Are the projected benefits of exporting worth the costs?
Would our resources be better used to develop new domestic
business?
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.
Two Views of Export Development
Two views of export shape
interpretation: The slow,
sequential dynamic of
incremental
internationalization.
As a company gains
experience, resources, and
confidence, it progressively
exports to increasingly distant
and dissimilar countries.
Two Views of Export Development
Two views of export shape
interpretation: Born Global
• Rather than slowly learning
about foreign markets, bornglobal companies step straight
onto the world stage, exporting
from day one of operations.
Phases of
Export Development
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Pitfalls of Exporting
Adjusting Financial
Management
The currency and credit
processes of export require
adept financial
management. Companies
often struggle with the fact
that completing an export
sale requires them to help
foreign customers obtain
credit.
Pitfalls of Exporting
Adjusting Customer
Management
Worldwide, customers
demand a greater range of
services from their vendors.
The fact that most products
are available from many
vendors boosts the buyer’s
negotiating power.
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Pitfalls of Exporting
Adjusting for Information Technology
Historically, exports were arm’s-length, ship-itand-forget-it transactions. Contact with
customers relied on hard-copy documents either
faxed or posted overnight. This situation created
useful time lags with which to deal with
customers’ concerns. Now, the ease of
contacting vendors via e-mail or inexpensive
voice-over-Internet-protocol (VoIP) gives
customers real-time access, thereby increasing
demands on the exporter.
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Pitfalls of Exporting
Additional Stumbling Blocks
Insufficient commitment by top management to
overcome the inevitable demands and difficulties
of export
Underestimating the usefulness of public and
private export expertise
Misestimating the costs of shipping and the
complexity of customs regulations and
procedures.
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Pitfalls of Exporting
Additional Stumbling Blocks
Poor selection of local agents to represent the
company abroad
Reacting to orders from around the world
instead of designing a purposeful sales strategy
Neglecting export markets when the domestic
market booms
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Pitfalls of Exporting
Additional Stumbling Blocks
Failure to treat international distributors on an
equal basis with those in the home market
• Unwillingness to modify products to meet other
countries’ regulations or cultural preferences
• Failure to print service, sales, and warranty
messages in local languages
• Bypassing public export assistance when the
company lacks qualified personnel
• Failure to prepare for disputes with customers
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Designing an Export Strategy
1. Assess the company’s export potential by
examining its opportunities and resources.
It identifies whether it can leverage its core
competency overseas. Managers confirm there
is sufficient production capacity, or that they
can develop it, if success comes sooner than
forecast..
Designing an Export Strategy
2. Obtain expert counseling on exporting.
The U.S. government, for example, offers a wealth
of information and advice on the practical points
of exporting—www.export.gov is the official
gateway to trade support provided by the
Commerce Department, the State Department,
and the Small Business Administration.
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Designing an Export Strategy
3. Select a market or
markets.
The incremental
internationalization view
of exporting holds that
companies target
countries that are similar
to their home market.
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Designing an Export Strategy
4. Formulate and implement an export strategy.
Export ambitions ultimately must translate into
precise objectives, planned tactics, hard time
lines, and resource allocations that deliver
products to foreign buyers. The development of
the plan depends on the company, its outlook
toward export markets, and its core competency.
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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.
Advantages of Importing
Specialization of Labor makes export to
and import from countries around the
world more efficient than manufacturing
every product in every country. For
instance, Nike buys shoes manufactured
by companies located in several Asian
countries.
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Advantages of Importing
Local Unavailability
Companies import
products that are,
due to geographic,
policy, or
developmental
reasons, locally
unavailable.
Advantages of Importing
Global Rivalry
In areas such as telecommunications,
automobiles, and business services, pose
relentless pressures. These pressures
often spur a company to combat import
competition by switching to foreign
suppliers whose components enable it to
lower the cost or boost the quality of its
finished products.
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Advantages of Importing
Diversification of Operating
Risks - An importer, like an
exporter, diversifies its
operating risks by tapping
international markets. In
many industry settings,
developing alternative
suppliers makes a company
less vulnerable to fortunes of
a single supplier.
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
provisions
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
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Customs Agencies
Efficiency Improvement.
Long delays, too many
documents, and high
administrative fees boost
trade costs that increase
prices. For those reasons,
customs agents continually
test the latest technologies
and management systems.
Customs Agencies
Procedural Assistance
Successful importing
hinges on knowing
how to clear goods
through customs,
assigning optimal
customs duties, and
complying with
regulations.
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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 . Growing
availability of low-cost overnight
shipping has robbed big firms of a
long-running competitive advantage
third-party logistics, or “3PLs”), like
FedEx and UPS.
Import Documentation
Bureaucratic Impediments
 The efficiency of importing
is challenged by delays,
documents, and fees.
 An irony of growing
globalization is import
inefficiencies due to
delays, documents, and
administrative fees.
The Export Process
Principal types of exporting:
• Direct—products sold to an independent
party outside of the exporter’s home
country.
• Indirect exports—products sold to an
intermediary in the domestic market, which
then sells the goods in the export market.
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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.
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Direct Selling
Direct selling involves sales representatives,
distributors, or retailers.
 Direct Selling to Foreign Retailers and End
Users
 Direct Selling over the Internet
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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
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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.
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
destination.
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Counter-trade
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.
A Little
Electronic
Magic at
Alibaba.com
http://www.alibaba.com
E-Commerce
Before the Internet, international trade was
usually limited to larger companies
Today, companies of all sizes use online
technologies to:
 Find Information
 Source Products
 Identify Suppliers
 Market Products…etc.
Country Specific Portals
The emergence of country specific portals has
accelerated the process of international trading
through online bazaars for international traders
Examples:
 www.koreatradeworld.com
 www.bizeurope.com
E-Trade in China
Alibaba: Chinese Internet company, introduces
Chinese manufacturers to global and domestic
buyers.
Enables an interactive community of buyers and
sellers to meet, chat, and trade online
Most users are SMEs from developing countries
www.Taobao.com
Focus on Small-Medium Companies
Founder Jack Ma’s vision: expand historic
outward flow of Chinese products to the world
Low cost way to search suppliers and
undergo trade deals.
Additional features create further
transparency
Questions
1. Visit www.alibaba.com, go to the “Advanced Search” box, and
enter the product you seek. Select required criteria and click on
“Search.” Review the list of companies that qualify and find a
suitable one. Analyze this process for ease, usefulness, and
potential value.
2. List, in separate columns, the benefits and costs of using sites
like Alibaba to trade internationally. What does your analysis say
to companies like Grieve (our opening case) as they think about
their export strategy?
3. Visit www.alibaba.com, www.trade-india.com, and
ww.tradekey.com. Compare and contrast their features.
4. Is it reasonable to speculate that eventually most trade between
companies might take place in the context of sites like
Alibaba.com?
5. How transparent do sites like Alibaba.com make the importexport transaction? Would you still worry about fraud?
6. How might the global financial crisis create opportunities and
threats for Alibaba.com?