Export and Import Strategies

I. Export Strategy

Exporting return on sales may not be as great as

foreign direct investment (FDI), but neither is the
risk (lower return:risk ratio);

Exporting allows significant management

control, but not much marketing control;

A companys strategy for penetrating a

particular market (i.e., export vs. FDI) might
depend on the competitors strategy
A. Characteristics of Exporters

1. The probability of being an exporter increases with

company size, as defined by revenues (though 88% of
U.S. exporters are small businesses);

2. Export intensity, the percentage of total revenues

coming from exports, is not positively correlated with
company size. The greater the percentage, the higher
the intensity is;

Service companies [accountants, advertisers, lawyers,

consultants, programmers, etc.] export their services
abroad (outsourced services).
B. Designing an Export Strategy

1. Assess the companys export potential (market) by

examining its opportunities and resources (production
capacity)

2. Obtain export counseling on exporting from

government agencies, export associations, freight
forwarders, banks, commercial offices of various
embassies, export management cos., traders, lawyers,
etc.

3. Select a market(s) through trade shows;

advertisements, articles in trade publications,
seminars, industry reports
 Philippine Export Environment

a. Department of Trade & Industry: One Stop Shop

b. Philexport at PICC
c. Center for International Trade Exposition Mission (CITEM)
d. Commercial consular offices in embassies
e. Export associations (i.e., food, furniture, dcor,
handicrafts, pottery, etc.)
f. Design Center of the Philippines
g. Service fairs (i.e., IT-related, franchise, etc.)
h. World Wide Web
i. External trade offices (i.e., JETRO for Japan)
B. Designing an Export Strategy

4. Formulate and implement an export strategy:

set export objectives (immediate and long-term),

specific tactics, schedule of activities and deadlines,
allocation of resources (see p.513 table 17-1 Export
Business Plan)

sales forecasts and budgets

marketing mix (pricing, product characteristics,

promotional plans, place: foreign reps) as tactics to
make marketing strategy operational
 II. Import Strategy

Importing is bringing goods and services into a

country and paying money to the exporter in a
foreign country (Services include software,
financial services, consultancy, etc.);

Importing allows availability of products that are

cheaper and better (specialization);

Those who import look for goods or services

that are marketable, cheaper, or part of ones
global supply chain
 III. Third Party Intermediaries

Functions:

Stimulate sales, obtain orders, do market

research

Make credit investigations, collect payments

Handle foreign traffic and shipping

Ask support for company sales, distribution,

advertising staff
 Export Shipments

A. Freight Forwarders

act as agents for exporters;

prepare documents for export;
book space with a carrier;
offer advice about markets, import and export regulations,
best mode of transport, and export regulations, best mode of
transport, and export packing;
supply cargo insurance;
forward all documents to the importer or to the paying bank,
according to the exporters requirements
 Import Shipments

B. Customs Brokers
help importers to import (whereas freight forwarders help
exporters to export), clear goods through Customs, transport
goods to the Buyers warehouse

helps importers minimize import duties by:

valuing products in a way that qualifies for more favorable
duty treatment (e.g., as parts rather than whole products)
using bonded warehouses, and foreign trade zones (both
duty-free areas) until the goods are transshipped, re-
exported, or actually imported into the country
limiting liability by properly marking an imports country of
origin, because governments assess duties based in part on
the country of origin (due to certain bilateral agreements)
 Import Shipments

B. Customs Brokers

must know when imports are subject to quotas and how much
of the quota has already been filled; otherwise, the goods
must be temporarily kept (for the rest of the year) in a bonded
warehouse or a free trade zone, abandoned or resent to
another destination or back to its origin (i.e. fashion clothes)
C. Direct Selling

Exporter sells through sales reps, to distributors, to

foreign retailers, to final end users

Sales representative: commission basis, no

inventory
Distributor: purchases and sells to retailers, carries
inventory
Retailer: large store chains, such as K-Mart,
Walmart, Home Depot, Costco, Toys R Us, etc.
Catalog and Print advertising: direct marketing
Trade show: access to industry buyers in one event
Industry Players: commercial or industrial
companies
Internet (e-commerce): global, efficient, for SMEs
D. Indirect Selling

Exporter sells through an independent domestic

intermediary that exports to foreign markets

Export Management Company (EMC): export arm

of a manufacturer (manufacturers representative),
on commission basis, plus retainer

Export Trading Company (ETC): independent

distributor that matches up buyers and sellers (many
manufacturers)

Trading firm: handles and finances imports and

exports, establishes fully integrated sales
systems, expands marketing activities (shosha)
 IV. Countertrade

Trading goods and services for other goods and

services (when countries dont have enough foreign
exchange)
Barter: goods or services are traded without any
cash (ex.: Indonesian fruits for Thai rice)
Buybacks: exporter is paid in the form of related
products (ex.: minerals for mining equipment; vodka
for Pepsi syrup)
Offset Trade: exporter sells for cash, helps the
importer find opportunities for earning forex, either
direct (related to the export, ex. aircraft for co-
production of parts) or indirect (unrelated to export,
ex. aircraft for other imports from the buying country)