Introduction

Importing Importing, Exporting, and dS Sourcing i

Global Marketing (Global Edition) Chapter 8
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Chapter topics: Export selling and export marketing Organizational export activities National policies on imports and exports Tariff systems Key export participants
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Export Selling vs. Marketing

Reqs for Export Marketing Reqs.

An understanding of the target market environment The use of market research and identification of market potential Decisions D i i concerning i product d design, d i pricing, p g distribution and channels, advertising, and communications

Export selling involves selling the same product, at the same price, with the same promotional ti l tools t l in i a different diff t place Export marketing tailors the marketing mix to international customers
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Orgnal Org nal Export Activities

1. The firm is unwilling to export; it will not even fill an unsolicited export order 2 The firm fills unsolicited export orders but does not pursue 2. unsolicited orders; such a firm is an export seller p the feasibility y of exporting p g (this ( stage g may y 3. The firm explores bypass Stage 2) 4. The firm exports to one or more markets on a trial basis 5. The h firm f is an experienced d exporter to one or more markets k 6. After this success, the firm pursues country- or regionfocused marketing based on certain criteria 7. The firm evaluates global market potential before screening for the best best target markets to include in its marketing strategy and plan 8-5
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Selecting Foreign Markets

... should be based on a number of criteria: market-related characteristics cost-related aspects p the regulatory framework tariffs, tariffs duties & non non-tariff tariff trade barriers the importance of these selection criteria d depends d upon the th industry i d t & the th markets k t taken t k into account
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Market Selection Criteria

1. Market Potential 2. Market Access 3. Shipping Cost & Time 4 Appraising Level & Quality of Competition 4. 5. Service 6. Product Fit
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Potential Export Problems

Government Programs that Support Exports

Tax incentives Subsidies Governmental G t l assistance Free trade zones
The Miami Free Trade Zone, near the airport and port of Miami, manages transactions of over $1 billion of trade a year
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Govtal Actions to Discourage Imports & Block Market Access

Tariffs Import controls Nontariff N t iff b barriers i
Quotas Discriminatory procurement policies Restrictive customs procedures Arbitrary monetary policies Restrictive regulations
Portland Customs Center

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Tariff Systems
Single-column tariff
Simplest type of tariff Schedule of duties in which rate applies to imports from all countries on the same basis

Preferential Tariff
Reduced tariff rate applied to imports from certain countries GATT prohibits the use, with three exceptions: Historical Hi t i l preference f arrangements t already l d existed Preference P f i is part t of ff formal l economic i integration treaty Industrial I d t i l countries t i are permitted itt d to t grant t preferential market access to LDCs
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Two-column tariff
General duties plus special duties apply
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Customs Duties
Ad valorem duty Expressed E d as percentage t of f value l of f goods d Specific duty Expressed as specific amount of currency per unit of weight, volume, length, or other unit it of f measurement t Compound or mixed duties Apply both ad valorem and specific duties on the same items
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Other Duties and Import Charges

Anti-dumping Duties
Dumping is the sale of merchandise in export markets at unfair prices Special import charges equal to the dumping margin

Countervailing Duties Variable Import Levies Temporary Surcharges

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Key Export Participants

Foreign purchasing agents t Export brokers Export merchants Export management companies Export distributor Export E t commission i i representative Cooperative C ti exporter F i ht f forwarders d Freight Manufacturers export t representatives
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Organizing for Exporting in the Manufacturers Country

Exports can be handled
As a part-time activity performed by domestic employees Through an export partner Through an export department Through an export department within an international division For multi-divisional companies, each possibility exists for each division
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Organizing for Exporting in the Market Country

Direct market representation
Advantages: control and communications

Export Financing and Methods of Payment

Documentary credits (letter of credit) Documentary collections (bill of exchange) Cash in advance Sales on open account Sales on consignment basis

Representation by independent intermediaries

Advantages: best for situations with small sales volume

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Flowchart of Documentary Credit

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Customs Trade Partnership Against Terrorism

The US Customs and Border Patrol inspects g cargo C-TPAT aims to have businesses certify their security and that of their partners They get inspection priority
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Duty Drawback
Refunds of duties paid on imports that are processed or incorporated into other goods AND re-exported Reduce the price of imported production inputs Used in the US to encourage exports After Aft NAFTA NAFTA, US reduced d dd drawbacks b k on exports t to Canada and Mexico China Chi had h d to t reduce d drawbacks d b k in i order d to t join j i the WTO
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Sourcing
Must emphasize benefits of sourcing from country cou t y ot other e t than a home o e cou country ty Must assess vision and values of company leadership ad p Advantage can be gained by Concentrating some of the marketing activities in a single location Leveraging company companys s know-how know how Tapping opportunities for product development and R&D
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Factors that Affect Sourcing

Management vision Factor costs and conditions Customer needs Logistics Country infrastructure Political factors Foreign exchange rates
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Methods of Intl Int l Supply

Economic Approach
Behavior of costs (fixed plus variable) for exporting, licensing and foreign direct investment as volume increases Emphasizes rational behavior, with the costs and benefits of strategic alternatives being compared, to identify those options which maximize long-run profits Control is single most important determinant of both risk and return

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Economic Approach

Stages-of-Development Approach
Based on incremental model of internationalization, an evolutionary e ol tiona process p ocess with ith firms fi ms gradually g ad all developing a greater commitment to foreign markets over time with increasing international experience, experience foreign sales, etc. Decisions regarding foreign market entry modes y, with a shift to other entry y taken incrementally, modes occurring only when previous ones have proved inadequate
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Stages-of-Development Approach
Internationalization process involves several stages: p involvement stage: g exporting p g 1. Experimental usually marginal and intermittent 2. Active involvement stage: systematically explore export possibilities in number of foreign markets 3. Committed involvement stage: long-run commitment it tt to i international t ti l marketing k ti 4. Global involvement stage: broad international spread of activities, activities and market market-servicing servicing methods differ widely in pursuit of competitive advantage
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Stages-of-Development Approach

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Business-Strategy Approach
Emphasizes p pragmatic p g nature of decisionmaking in most organizations Because of external uncertainty and political g, organizations g may y nature of decision-making, adopt satisficing or muddling through y approach pp to rather than a rational-analytical decision-making
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Business-Strategy Approach

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