slide 1Export routesExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerProfessor W. Tim G. Richardson
slide 2Exporting, different options ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerAdvantages and disadvantages of each optiondiscussed on page 268~269Professor W. Tim G. Richardson
slide 3ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExport -Foreign BuyerAdvantagespage 268~269-costs minimized-can communicate directly with your customerDisadvantages-internal specialists needed-the buyer may not know a lot about the import process-the exporter takes a big riskProfessor W. Tim G. Richardson
slide 4ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExport -Domestic Export Intermediary -Foreign BuyerAdvantages-have specialized expertise so fewer mistakes, can effect costs-your firm’s internal resources not tied up in exporting-some financial risk transferred to export intermediarypage 268~269Disadvantages-export intermediary will cost money, sometimes, than adding this job description on to existing staffyou do not deal direct with the customer and may miss receiving Pimportant feedbackrofessor W. Tim G. Richardson
slide 5ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExport -Foreign Intermediary -Foreign BuyerAdvantages-they have specialized knowledge of the foreign environment -they have good contacts in shipping and government, customs, docks, railines 268~269-they have add in costs which you cannot verify-they can block or hinder direct communication with the customer/buyer-you still have to have the expertise on the export sideProfessor W. Tim G. Richardson
slide 6ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExport -Export Intermediary -Foreign Intermediary -Foreign BuyerAdvantages-staff can focus on core activity of producing the product-almost complete avoidance of risk cause othersDisadvantagespage 268~269-complete reliance on others at both ends-costs are higher when more people involvedProfessor W. Tim G. Richardson
slide 7ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExport -Magazine publisher -Mail Order -Foreign BuyerAdvantages-can control how much you produce (JIT) you ship out-can eliminate many customs procedures for personal orders-you can directly provide custom made service & productDisadvantages-shipping small packages each time is costly-you need some person in the host country to receive rejections, warranty and handle complaints -unless you can do this from homeProfessor W. Tim G. Richardson
Exporterslide 8Foreign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExport -On Line Service -Foreign BuyerAdvantages-costs minimized-you receive their money in advance, usually-can communicate directly with your customer -by email/tel-a lot of info can be provided about using the product(better info on using a product leads to better customer satisfaction)Disadvantages-customer hesistant with payment methods not secureP-rnoofets msoar n yW b. Traimn dG .n Raimcheasrd saovnailable, usually only small companies
Exporting, the optionsslide 9ExporterForeign BuyerForeign BrokerDomestic agentMail orderOn lineorbroker ordistributorsales companytrading companytrading houseInternet basedForeign BuyerForeign BrokerForeign buyerForeign buyerortrading companyForeign buyerExpanded explantion of "Foreign Buyer"DistributorBankLocal transportation company(letter of credit)warehouse companyRetailerProfessor W. Tim G. RichardsonCustomer
slide 10Transportation IssuesTransportation costs are a major consideration in the physical movements of products from point of production to the foreign Major forms Air Transport Electronic Transport Rail Transport -handles 40 foot containers Truck Transport -handles 40 foot containers Sea Transport -handles 40 foot containersProfessor W. Tim G. Richardson
slide 11Payment Methodsan important consideration in the export process payment in advance -eliminates risk to the seller extend credit -encourages the buyer specification of the currency of the paymentProfessor W. Tim G. Richardson
slide 12Export -Documentation Bills of lading Commercial invoices Export page 272licenses Insurance certificates Certificate of product of origin Inspection certificates Payment documents -most common is LC “confirmed and irrevocable”Professor W. Tim G. Richardson
slide 13Product Preparation packaging extremely important so the product arrives in good condition has to arrive at the destination in good shape labeling correct information regarding product standards translation if necessaryProfessor W. Tim G. Richardson
slide 14Intermediate level of foreign involvement Licensing involves granting the right to use patents, logos and trademarks to mfg. a product exactly similar to that made in the home country contracting most contracts involve a licensing agreement as part of the negotiations foreign contractors mfg. products for sale in the host country, and sometimes also produce for the home country franchising have to determine if the market will appreciate the same product/service as home country does can you transfer factors of successProfessor W. Tim G. Richardson
slide 15Advanced level of foreign involvement“Ownership” establishing a subsidiary operation or buying an existing operation both strategies imply a long-term commitment more difficult more expensive more time consuming involves more people from head officeProfessor W. Tim G. Richardson
slide 16Advanced level of foreign involvement“100% Ownership” Advantages more decision making control eliminates need to bargain with local shareholders no sharing of profits Disadvantages greater risk -no local partner for “protection” no sharing of losses may draw hostile attentionP political risk is higherrofessor W. Tim G. Richardson
slide 17Advanced level of foreign involvement“100% Ownership”page 279Public Sale of Shares -selling shares in foreign operations on the open market raises capital from regional people helps to reduce political risk can still maintain control good way to raise additional moneyownership fadeout over time, the company reduces its ownership from a minority position -to eventually zeroProfessor W. Tim G. Richardson
slide 18Ownership Lowp. 280~282 Ownership this option popular when a co. does not have the money to pay for everything, or may not have experienced management and is willing to let a partner leadProfessor W. Tim G. Richardson
slide 19Ownership Joint ventures shared ownership have become quite common in int’l business spreading the initial investment costs helps reduce the risk different skills can be complimentary choosing the right partner is very important Joint Ventures between competitors(Elf from France and Chevron from USA in the Congo)(Beijing Jeep, GMC with Shanghai ???)Professor W. Tim G. Richardson
Ownslide 20ership Joint ventures with government Host Govts often act as local partners in big Joint Ventures•especially true when Host Govt controls access to resources decision making in gov’t depts is slower than in companies problems happen when a change in government occursp. 282-283 political risk ~ nationalization, expropriation govt staff in certain countries need bribesgenerally, host governments are not very goodProfessor W. Tim G. Richardson
slide 21Making JV’s Successful detailed examination of a particular partner want to avoid an unhappy endingKEY CONSIDERATIONS do a limited project first, if possible don’t let your experts get hired away by larger partner legal protection is not enough -there has to be a genuine spirit of co-operation for the better good keep the mission/goals/objectives small and well defined have clear performance measures which are agreed upon ie. by this date we will have this done ...... limit the time frame -sunset date have a “prenuptial” agreement outlining what to do in a breakupProfessor W. Tim G. Richardson
slide 22Strategic Alliancespage 286 involve non-equity arrangements examples, a new product, DVD, a new process technology examples, SONY, HITACHI, TOSHIBA developing a strategic alliance to launch DVD example, several recycling companies developing an alliance to have access to a source of used material provided by local municipal waste management govt Strategic alliances do not create a new company with shared ownershipProfessor W. Tim G. Richardson
slide 23Strategic AlliancesStrategic Alliances are increasing reasons technological change global competition firms do not have enough resources to launch a new product globally shared access to limited resources co-operation to access to new customer some govt legislation prevents such alliances as anti-trust and anti-monopoly -ie. computer software, oil, banking, insurance, shipping and air travelProfessor W. Tim G. Richardson
