MANAGEMENT OF EXPORT & IMPORTS

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INTERNATIONAL BUSINESS STRATEGIES

There are 3 kinds of Companies: .One who make things happen, One who watch things happen, One that wondered what happened.

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IDENTIFY THE COUNTRIES ON THE MAP

BRAZIL MEXICO

ITALY
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WORLD MAP: One World, One Dream

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WHY GO GLOBAL ???

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WHY GO GLOBAL ???

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GLOBAL MARKET ENTRY STRATEGIES

Wholly Owned Subsidiary

High Extent of Investment Risk

Joint Venture Strategic Alliance (Production/ Marketing) Licensing & Franchising

Exporting

Low Low

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INTERNATIONAL TRADE
National economies are becoming more and more interdependent and integrated even as the world economy and business are becoming increasingly globalized.

Foreign trade or international trade is one in which one country carries on trade with another country that is beyond its own national boundaries. It consists of: Exports: Selling the home countrys goods/ services in a foreign country. Imports: Purchasing & bringing in goods/ services from a foreign country.
The two conditions that apply to export transactions are:

Across national boundary. Payments must be realized in exporter country.

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INTERNATIONAL TRADE
Factors responsible for interdependence among countries: Uneven distribution of factor input (Resources; Technology). Advancement in Information Technology. Division of Labour & Specialization.

IMPLICATIONS
EXPORTS: IMPORTS: Makes available scare/ unavailable resources & technical know-how. Aids to exports. Better relations.

Safest access to new market.

Profits & Foreign Exchange Earnings Market Growth Better utilization of capacity. Improved quality.

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LETs OPEN OUR EYES. GLOBAL STATISTICAL INDICATORS

Population: ANY GUESS?? Economy GDP: (PPP) - $ 80.3 trillions in 2011 GDP - composition by sector: agriculture: 6%; industry: 30.6%; services: 63.4% (2011 est.) Industries Industries: top ten - share of world trade: electrical machinery, including computers 14.8%; mineral fuels, including oil, coal, gas, and refined products 14.4%; nuclear reactors, boilers, and parts 14.2%; cars, trucks, and buses 8.9%; scientific and precision instruments 3.5%; plastics 3.4%; iron and steel 2.7%; organic chemicals 2.6%; pharmaceutical products 2.6%; diamonds, pearls, and precious stones 1.9%. Most of these advances take place in OECD nations Cross-border Yearly exports:$17.97 trillion (2011 est.) Exports - partners: US 12.7%, Germany 7.2%, China 6.4%, France 4.5%, Japan 4.3%, UK 4.2% (2008 est.) Yearly imports: $17.82 trillion (2011 est.) February 2013 Dr DEEPAK SINGH 11 Imports - partners: China 10.3%, Germany 8.7%, US 8%, 16 Japan 5% (2008 est.)

MAJOR TRENDS AND OUTLOOK IN WORLD TRADE

Global growth will pick pace over the next two years, with world GDP rising by 4.8 per cent in 2007; 2.7 per cent in 2008; shrunk by 0.7% in 2009; rose back to 4.6% in 2010.

International trade is growing faster than the world output ( gross world product)
The world economy continued to expand robustly. Growth in the four years ending in 2007 was expected to average 4.8 per cent. The main impetus for the current upturn is coming from outside the OECD. Much of the trade occurs between developed countries (25 countries account for 85% of the world trade; EU+ NAFTA+ Japan equals 2/3 of the world trade).

Growing power of developing countries (Asia will replace Europe in economic power within 20 years). Growing trend of the global outsourcing and production sharing.
Growth of NTBs and regional economic groupings.
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REGIONAL OUTLOOK
North America: slowdown (recession) and uncertainty for the future South and Central America: renewed growth from 1999 Western Europe: growth in the Euro area but slowing activity Eastern Europe: need for structural and institutional reforms in some countries Asia: setback to recovery and underlying structural weaknesses in Japan; irregular pattern of growth in developing nations Middle East: Boosted activity

Africa: growth constrained by war and civil conflict in some countries.

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INDIAN STATISTICAL INDICATORS

Population: ANY GUESS?? Economy GDP: (PPP) - $4.421 trillion (2011 est.) GDP - composition by sector: agriculture: 17%; industry: 26%; services: 56% (2011 est.) Exports & Imports Exports: Chemicals, engineering goods, jewelry, petroleum products, textile goods & apparel Imports: Crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals Cross-border Yearly exports:$307.2 billion (2011 est.) Exports - partners: UAE 12.7%, US 10.8%, China 6.2%, Singapore 5.3%,
Hong Kong 4.1% (2011)

Yearly imports: $475.3 billion (2011 est.) Imports - partners: China 11.9%, UAE 7.7%, Switzerland 6.8%, Saudi
Arabia 6.1%, US 4.9% (2011)

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TRENDS (MAJOR COMPONENTS) IN EXPORTS

1. 2. 3. 4. Agriculture & Allied Products: Constitute around 10.2% of exports; Major of items (37%) are: Rice Tea & Coffee Fish & fish preparations Cashew kernels & Spices Fruits & vegetables/ Processed foods Ores & Minerals: Constitute around 5.2% of exports; Major of item (71%) is: Iron ore/ Mica Manufactured Goods: Constitute around 72% of exports; Major of items (66%) are: Gems & Jewellary Chemical products Engineering Goods Ready made garments Cotton yarn & fabrics made ups Others: Constitute around 13% of exports; Major of items are: Mineral Fuels & lubricants; coal; etc.

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DIRECTIONS OF INDIAS EXPORTS

OECD (Organization of Ecconomic Cooperation & Development): EU (Belgium, France, Germany, UK), US, Canada, Japan, Australia account for 44% of our exports. OPEC: Mainly UAE, KSA, Iran, Kuwait account for 15% of our exports. East Europe: Mainly CIS account for 2% of our exports. Developing Nations: Mainly from Asia, Latin America, Africa account for 39% of our exports.

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REASONS OF POOR GROWTH OF INDIAN EXPORTS

High Costs: Domestic costs Poor Quality Image: Non dependable quality Unreliability: Late supply; poor after sales services Supply problems: Non continuous Faceless presence: No branding Infrastructural bottle necks: Shortage of energy, transportation, telecommunications, etc. Structural weakness: Absence of management, marketing information, planning, etc. Uncertainities, Procedural complexities & Institutional rigidities.

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TRENDS (MAJOR COMPONENTS) IN IMPORTS

Fertilizers Petroleum Crude & Products Pearls, Precious and Semi-Precious Stones Capital Goods: Import of Capital Goods, largely represented by machinery, including Transport Equipment as well as Project Goods Professional Instruments Chemicals and Chemical Materials: Organic and Inorganic Chemical Materials and Medicinal and Pharmaceuticals Products constituted the major components of imports under this category.

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DIRECTION OF INDIA'S FOREIGN TRADE

In dollar terms, Asia and Oceania region comprising South Asian, East Asian, Mid-eastern and Gulf countries accounted for nearly 51.54 % of India's total exports. Share of West Europe and America in our exports stood at 22.99 % and 17.04 % respectively. The share of Asia and Oceania in India's exports has increased as well as the shares of regions like Africa, EU and East Europe. On the contrary shares of North America, South America and Caribbean countries in India's total export showed a decline. As far as individual countries are concerned, Indias largest trade partner, the United States consumes 15% of total Indian exports. Other leading customers for Indian products are the United Arab Emirates (8.7%), China (8.7%), and the United Kingdom (4.4%) In the case of import also, share of Asia and Oceania in India's total import was highest at 62.52 % , followed by West Europe (19.97 %) and America (9.05%). Coming to individual countries, the share of China 10.7%, Germany 9.2%, US 8.3%, Japan 5.1%, France 4%

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International Business Environment

1
Economic forces

2
(Uncontrollable) Customers SocioCultural forces Environmental uncontrollable country market A

(controllable)

Mktg Intermediaries

Resources
Competitors

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International environment

Orgl. Culture

Orgl. Structure

Environmental uncontrollable country market B

Political/legal forces Suppliers Level of Technology

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Environmental uncontrollable country market C

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International Business Environment

Economic environment consists of macro level factors related to the factors of production and distribution of wealth. It includes: a) Economic stages: Low income economies (>$825); middle income economies ($826-$10065); high income economies (<$10066) b) Economic system: Socialist; Capitalist; Mixed economy c) Economy structure: Primary, Secondary, Tertiary d) Economic indices: GDP; Income; BoP; Consumption pattern e) Economic policies: Industrial; Monetary; Fiscal f) Demographic characteristics: Size of population; Growth Rate; Age Distribution; Family Size; Urbanization g) Infrastructure: Transportation; Distribution; Information system; Marketing communication system; Financing h) Geographical Characteristics: Distance; Climate; Natural resources i) Regional Economic Integration: EU; NAFTA; ASEAN; SAARC; ECOWAS; COMESA; OPEC; CARICOM; BRIC

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International Business Environment

Culture is the sum total of all learned behavior that are shared by members of a society and passed on to the next generation. Elements of culture affecting international marketing are: a) Language: There are many forms of formal and informal expressions. b) Customs and Manners: Usage difference of the products may occur, which has to be translated into product form and promotional decisions. E.g. gift exchange; weddings; festivals. c) Values and Attitude: They help determine what we think is right, appropriate, important and desirable (monochronic, polychronic societies); d) Religion: It is internal, psychic and mental behavior that gives rise to external manifestations e.g. beef vs. pork; fasting season; shubh muhurat e) Aesthetics: It refers to the idea of beauty and good taste (performing arts) and appreciation of colour and form e.g. colours. f) Material culture: It is the result of technology and is directly related to how a society organizes its economic activities (in terms of degree of comfort; living conditions; amount of leisure time available) g) Education: It refers to the transmission of skills, ideas, attitude and training. It has implication in IM in terms of marketing communication; availability of trained labour for the local operations in the host country; launch of sophisticated technology.
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International Business Environment

Before we discuss political and legal environment, let us understand Trade Barriers.
TRADE BARRIERS: These are the artificial restrictions imposed by the governments on free flow of goods & services between countries. One of the most important features of the international trading environment is the proliferation of trade barriers. It mainly includes: Tariffs: These are traditional barriers. Refers to the duties or taxes. There are different ways of classifying the tariffs.

Non Tariff Barriers: These are new protectionist (quantitative) measures: 1. Quotas 2. Licensing 3. Voluntary Export Restraints 4. Administered Protection

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REGIONAL ECONOMIC COOPERATION

EU MERCOSUR ASEAN CARICOM EFTA ECOWAS

NAFTA

SAARC
CSN GCC BRIC

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MAJOR GLOBAL MARKETS

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MAJOR DECISIONS IN INTERNATIONAL BUSINESS

Company s Resource s

Environme ntal

Distributi on

Promoti on

Factors

International Business Decisions

Market Selection Decisions

Entry and Operating Decision

Marketing Mix Decisions

Intl. Org. Decisions

Company s Objective s

Product

Market Potential

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INTERNATIONAL ORIENTATIONS (EPRG Framework)

Ethnocentric orientation (Home country Orientation) eg. Nano, Nissan, Harley Davidson, Polycentric orientation (Host country Orientation) eg. Philips Electronics, Regiocentric orientation (Regional Orientation) eg. McDonald,

Geocentric orientation (Global/ World Orientation) eg. Matsushita electronics, Sony,

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INTERNATIONALIZATION STAGES
Domestic Company

International Company

Multinational Company

Global / Transnational Company

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GROUP ACTIVITY: LETs UNDERSTAND OUR NEIGHBOUR

Let us identify a leading product (SMEs) and design the strategic mechanism for export in an emerging market.

GROUPS
Group 1: Agri-business Group 2: Gems & Jewellary Group 3: Handicraft Group 4: Leather & Footwear

..TIME 45 MINUTES..
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LETS CONCPTUALIZE A LITTLE !!

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REGULATIONS FOR INTERNATIONAL TRADE

FOREIGN TRADE POLICY Foreign trade of India is guided by Foreign Trade Policy (EXIM) of Government of India and is regulated by FT (D&R) Act,1992. Prior to 1985, GoI used to announce EXIM Policy annually. To offer more stability & uniformity, it was decided to give the policy a validity of 3 years. EXIM Policy announced on 31st March 1992, gave it the validity of 5 years. Foreign Trade Policy came into force in Aug. 2009. Current FTP shall remain in force till March 2014.

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HIGHLIGHTS OF NEW FOREIGN TRADE POLICY

Special focus initiatives

Sectors with significant export prospects coupled with potential for employment generation in semi-urban and rural areas have been identified as thrust sectors, and specific sectoral strategies have been prepared.
Further sectoral initiatives in other sectors will be announced from time to time. For the present, Special Focus Initiatives have been prepared for agriculture, handicrafts, handlooms, gems & jewellery and leather & footwear sectors. The threshold limit of designated `Towns of Export Excellence' is reduced from Rs 1,000 crore to Rs 250 crore in these thrust sectors.

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PACKAGE FOR AGRICULTURE

Special Focus Initiative for Agriculture includes: A new scheme called Vishesh Krishi Upaj Yojana has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products. Export of these products shall qualify for duty free credit entitlement equivalent to 5% of FOB value of exports. The entitlement is freely transferable and can be used for import of a variety of inputs and goods. Duty free import of capital goods permitted under EPCG (Export Promotion Capital Goods) scheme. Capital goods imported under EPCG for agriculture permitted to be installed anywhere in the Agri Export Zones (AEZs). ASIDE (Assistance to States for Infrastructure Development of Exports) funds to be utilized for development for Agri Export Zones also. Import of seeds, bulbs, tubers and planting material has been liberalized. Export of plant portions, derivatives and extracts has been liberalized with a view to promoting export of medicinal plants and herbal products.
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PACKAGE FOR GEMS & JEWELLARY

Duty free import of consumables for metals other than gold and platinum allowed up to 2% of FOB value of exports. Duty free re-import entitlement for rejected jewellary allowed up to 2% of FOB value of exports. Duty free import of commercial samples of jewellary increased to Rs 1 lakh. Import of gold of 18 carat and above shall be allowed under the replenishment scheme.

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PACKAGE FOR HANDLOOMS & HANDICRAFTS

Specific funds would be earmarked under MAI/ MDA Scheme for promoting handloom exports. Duty free import of trimmings and embellishments for handlooms & handicrafts sectors increased to 5% of FOB value of exports. Import of trimmings and embellishments and samples shall be exempt from CVD (Counter Veiling Duty). Handicraft Export Promotion Council authorized to import trimmings, embellishments and samples for small manufacturers. A new handicraft special economic zone shall be established.

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PACKAGE FOR LEATHER & FOOTWEAR

Duty free entitlements of import trimmings, embellishments and footwear components for leather industry increased to 3% of FOB value of exports. Duty free import of specified items for leather sector increased to 5% of FOB value of exports. Machinery and equipment for effluent treatment plants for leather industry shall be exempted from customs duty.

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EXPORT PROMOTION SCHEMES

Target Plus: A new scheme to accelerate growth of exports called `Target Plus' has been introduced. Exporters who have achieved a quantum growth in exports would be entitled to duty free credit based on incremental exports substantially higher than the general actual export target fixed. (Eg. if the target fixed for 2010-11 was 16%, the lower limit of performance for qualifying for rewards was pegged at 20% for that year). Rewards will be granted based on a tiered approach. `Served from India' Scheme EPCG DFRC (Duty Free Replenishment Certificate) DEPB (Duty Entitlement Pass Book)

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EXPORT PROMOTION SCHEMES

New status holder categorization: A new rationalized scheme of categorization of status holders as Star Export Houses has been introduced. EOUs Free trade and warehousing zone Services export promotion council Procedural simplification & rationalisation measures Pragati Maidan Legal aid Biotechnology parks Board of Trade

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EXPORT PROCEDURE & FORMALITIES

EXPORT PROCEDURE
Essential features are: Export procedure consists of several commercial & regulatory formalities.

These formalities are complex & time consuming and should be prepared & filed at appropriate authorities.
Compliance of rules and regulations should be done not only of India but also of importing countries. Export procedure can be studied as following stages: Registration Stage Pre-shipment Stage Shipment Stage Post shipment Stage

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REALIZATION OF EXPORT INCENTIVES

Procedure for realization of Export Proceeds Presentation of Documents to the Bank for Negotiation (within 21 days) with the following set:
Bill of Exchange

Bill of Lading/ Airway Bill Original L/C Customs Invoice Foreign Exchange Declaration (GR ) Form Shipping Bill Certificate of Origin Marine Insurance Policy Packing List

Dispatch of Documents to Importers Bank (as specified in L/C) Acceptance of Bill of Exchange
Documents against Payments (Sight Drafts) Documents against Acceptance (Usance Drafts)

Letter of Indemnity Realization of Export Proceeds Processing of GR Form (Exporters Bank intimates to RBI)
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REALIZATION OF EXPORT INCENTIVES

Some of the incentives extended to the Indian Exporters are: Duty Drawback (DBK): It refers to refund of custom duty & central excise duty paid on raw materials, components & consumables utilized in the manufacture of goods meant for exports. Generally these rates are expressed as percentage of FOB value of the goods exported.
Whom to Apply: Custom House of concerned area When to Apply: Within 60 days after custom officer issue Let Export Order Documents to be Submitted: Triplicate copy of Shipping Bill becomes an application for claim of DBK & should be accompanied by:
Copy of export contract or L/C Copy of ARE-I form Insurance Certificate Copy of communication (Special Brand Rate) Copy of packing list

Payment of Drawback: By Cheque or by credit in exporters account by Custom House or Central Excise Collectorate

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REALIZATION OF EXPORT INCENTIVES

Exemption from Central Excise: The exporters are totally exempted from central excise duty through any of following methods: Export Under Rebate Export Under Bond
Whom to Apply: Assistant or Deputy Commissioner of Central Excise of concerned area When to Apply: Within 60 days from the date of export Documents to be Submitted: Form C in (Triplicate) accompanied by following documents:
Original Copy of ARE-I duly endorsed by customs officer Duplicate copy of ARE-I duly received from by customs officer in sealed envelop Duly attested copy of Shipping Bill Duly attested copy of Bill of Lading/ Airway Bill Duplicate copy of Central Excise Invoice under which central excise was paid on goods cleared for exports.

Refund of Duty: By Cheque or by credit in exporters account by Chief Excise Accounts Officer.

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REALIZATION OF EXPORT INCENTIVES

Exemption from Octroi Duty: Octroi is a duty paid on goods, when they enter the Municipal limits of a city or town. Export goods are exempted from payment of octroi duty.
Whom to Apply: Application should be submitted to Octroi Office inside the docks as well as Port Shed Incharge. When to Apply: Within 45 days from the date of loading. Documents to be Submitted: Form N along with a by copy of shipping bill. Prescribed application in form C duly endorsed by octroi post inside the docks with following documents:
Octroi Challan (Cash Memo) for having paid duty. Form B (in duplicate) whose content must tally with that of Form C.

Refund of Duty: By Cheque for refund of Octroi.

Rail Freight Rebate: Transport of certain commodities for export by rails to the port of shipment is eligible for freight rebate of 50%. Air Freight Assistance: Air freight assistance is extended to certain notified horticulture and floriculture products.
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EXPORT DOCUMENTS
Aligned Documentation System (ADS): ADS is based on the UN layout key. Under this system, different forms used in the international trade transaction are printed on the paper of same size and in such a way that the common items of information are given the standardized formats. For the purpose of ADS, documents have been classified as under: Commercial Documents: Commercial documents are required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds. These are:
Proforma invoice Packing list Intimation for inspection Certificate of inspection of Quality Control Certificate of Insurance Application of certificate of Origin Shipment Advice collection Commercial invoice Shipping instructions Insurance Declaration Bill of Lading Mates Receipt Certificate of origin Letter to the Bank

for

Regulatory Documents: Regulatory pre-shipment export documents are prescribed by different government departments and bodies in order to comply with various rules & regulations under the relevant laws governing export trade like export inspection, foreign exchange regulation, export trade control, customs, etc.
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BoP
Balance of payments & international trade decision Balance of payment is the record of a countrys transactions with the rest of the world over a period of time, usually one year. Balance of payments accounts:The balance of international payments is listed in four sections: i) Current account - Private Merchandise or (trade balance) - Invisible (services & net investment income) and - Governmental exports or imports and grants ii) Capital account iii) Statistical discrepancy iv) Official settlements

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ARE WE READY?????
Team Project You are required to work in groups of 3to prepare a presentation.
Name of the organisation. Country of operation (Host country) , REG it belongs to & Source of raw material (technology). Major environmental factors (specific to its operation in a country of choice). Export Procedure & Documents. Special (Export promo) schemes that you would avail.

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TEAM PRESENTATIONS

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WE
Wishes you all

BEST OF LUCK
For End Term Examinations
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