Exporting and Trading

EXPORTING & GLOBAL
INTERNATIONAL BUSINESS & TRADE

SOURCING
NOVEMBER 20,2023
Catulay Mayol
TEAM 5 Ferrer
Hinoguin
Rebano
Rojo
3 BAC INBT Libetario Tacandong
Mabugat Tayurang
ICEBREAKER (4 PICS 1 WORD)
EPRTSAO
SEAPORT
STOMUCS
CUSTOMS
ZIEMA
MAIZE
STIGOLICS
LOGISTICS
UGISOCOTNRU
OUTSOURCING
GNRIPXOET
EXPORTING
OIATNRTASPROTN
TRANSPORTATION
PTMEOURLE
PETROLEUM
CODUTMENTANIO
DOCUMENTATION
FRATIF
TARIFF
OVERVIEW
EXPORTING & GLOBAL SOURCING
What is the difference between exporting and importing?
Exporting is defined as the sale of products and services in

foreign countries that are sourced or made in the home
country.
Importing is the flipside of exporting. Importing refers to
buying goods and services from foreign sources and
bringing them back into the home country.
Importing Is also known as global sourcing.

HISTORY For centuries, importing and exporting
has often involved intermediaries, due
in part to the long distances traveled
and different native languages spoken.
The history of importing and The spice trade of the 1400s was no
exporting dates back to the exception. Spices were very much in
Roman Empire, when European demand because Europeans had no
and Asian traders imported and refrigeration, which meant they had to
exported goods across the vast preserve meat using large amounts of
lands of Eurasia. Trading along salt or risk eating half-rotten flesh.
Spices disguised the otherwise poor
the Silk Road flourished during
flavor of the meat. Europeans also
the thirteenth and fourteenth used spices as medicines. The
centuries. European demand for spices gave rise
to the spice trade.
HOW THEY
AFFECT THE ECONOMY
Exports are incredibly important to

modern economies because they offer
people and firms many more markets for
their goods. One of the core functions of
diplomacy and foreign policy between
governments is to foster economic trade,
encouraging exports and imports for the
benefit of all trading parties.
Countries impose trade barriers, such as
WHY IS GLOBAL SOURCING tariffs and import quotas, in order to
protect their domestic industries.
IMORTANT:
Not all countries have A positive balance is called a surplus. A
negative balance is called a deficit.
the resources and
skills required to In a healthy economy, both imports and
produce certain exports see continual growth. This usually
goods and services. represents a sustainable and strong
economy. When exports and imports
become unbalanced, it can cause either a
trade surplus or a trade deficit.
SYSTEMATIC
APPROACH
TO
EXPORTING
ALTERNATIVE
ORGANIZATIONAL
ARRANGEMENTS
FOR EXPORTING
Indirect exporting is accomplished by contracting with
intermediaries located in the firm’s home market. Smaller
INDIRECT exporters, or those new to international business, typically
hire an export management company or a trading
EXPORTING company based in their home country. These
intermediaries assume responsibility for finding foreign
buyers, shipping products, and getting paid.
Direct exporting is typically achieved by contracting with

intermediaries located in the foreign market. The foreign
DIRECT intermediaries serve as an extension of the exporter,
EXPORTING negotiating on behalf of the exporter and assuming such
responsibilities as local supply-chain management,
pricing, and customer service.
EXPORTING & ITS
RISKS
Exporting:
a business strategy where goods are produced in one nation, and then
distributed/sold to other nations.
most businesses see this as their primary foreign market entry strategy
because it involves:
- risk
- expense
- knowledge of foreign markets and transactions
This entry strategy has produced massive inflows and outflows that
make up global trade to help boost economic growth globally.
Exports provide countries significant foreign exchange earnings.

EXPORTING & ITS RISKS
Advantages of Exporting:
Increases overall sales volume,
improves market share, and generates
profit margins that are often more Minimizes the cost of foreign market
favorable than in the domestic market. entry; the firm can use exporting to test
Increases economies of scale, reducing new markets before committing greater
per-unit costs of manufacturing. resources through FDI.
Diversifies customer base, reducing Minimizes risks and minimizes flexibility

dependence on home markets. compared to other entry strategies.
Leverages the capabilities of foreign
distributors and other business partners
located abroad.
EXPORTING & ITS
RISKS
Disadvantages of Exporting:
Because the company does not establish a physical
presence there (unlike FDI), exporting provides fewer
opportunities to learn about customers, competitors, and
other distinctive aspects of the foreign market.
The firm must acquire and dedicate capabilities to conduct

complex transactions, which can strain organizational
resources. Exporters must become proficient in
international sales contrast and transactions, new
financing methods, and logistics and documentation.
Exporting exposes the firms to tariffs and other trade

barriers as well as fluctuations in exchange rates.
Risks of Exporting:
1. Political Risk - when conducting business in various
nations, exporters can run the risk of significant political
instability.
2. Legal Risk - customs, contracts, currency, as well as the
liability and intellectual property rights associated with
the products they sell are just a few of the business
areas where exporting companies might run into legal
problems.
3. Credit & Financial Risk - the risk of nonpayment or
default by customers is one of the key issues exporters
must deal with. To mitigate these credit risks, exporters
often rely on payment in advance or credit guarantees,
such as letters of credit, before making shipments.
Risks of Exporting:
4. Quality Risk - once goods are shipped, a customer may register
complaints about the quality of those products. This could be a
genuine objection based on the buyer’s specific requirements and
expectations.
5. Transportation & Logistics Risk - sold items must now be

shipped to the customer promptly and safely. This is where
exporters may run into a variety of logistics and transportation risks,
which can change depending on the products being shipped and
needs to do so.
6. Language & Cultural Risk - different cultural mores can impact

everything from “normal business hours” to ethical behavior to
whether customers will want to buy a product.
COUNTERTRADE
Countertrade is where businesses exchange one

set of goods and services for another set of goods
and services; little to no actual money is involved.
EXAMPLE
THE GOVERNMENT MANDATED THAT PEPSICO

USE A PORTION OF ITS LOCAL INCOME TO
BUY TOMATOES WHEN IT WISHED TO ENTER
THE INDIAN MARKET. FOR PEPSICO, WHICH
ALSO MANAGED PIZZA HUT AND COULD
EXPORT THE TOMATOES FOR CONSUMPTION
ABROAD, THIS DEMAND MADE SENSE.
WHY DO COMPANIES ENGAGE IN COUNTERTRADE?
(1) TO SATISFY A FOREIGN-GOVERNMENT MANDATE,
(2) TO HEDGE AGAINST PRICE AND CURRENCY FLUCTUATIONS, AND
(3) TO REPATRIATE PROFITS FROM COUNTRIES THAT LIMIT THE AMOUNT OF

CURRENCY THAT CAN BE TAKEN OUT OF THE COUNTRY.
STRUCTURES IN COUNTERTRADE
BARTER
COUNTERPURCHASE
EXAMPLE
AN ARRANGEMENT IN INTERNATIONAL
TRADE WHEREBY AN EXPORTER CONSENTS
TO BUY A NUMBER OF GOODS FROM A
NATION IN EXCHANGE FOR THE NATION
BUYING THE EXPORTER'S PRODUCT.
Disadvantages of Countertrade
The reputation of countertrade has been damaged by its links to command

economies during the Cold War, when the items received were frequently
useless or of poor quality yet were compelled upon businesses by
command-economy government restrictions.
MINI QUIZ #1
E_ _ _ _ _ _ _ _
A business strategy where goods are

produced in one nation, and then
distributed/sold to other nations.
ANSWER KEY
1. Exporting
MINI QUIZ #2
G_ _ _ _ _ _ _ _ _ _ _ _ _
Also known as importing. This refers to

buying goods and services from foreign
sources and bringing them back into the
home country
ANSWER KEY
2. Global Sourcing
MINI QUIZ #3
L _ _ _ _ _ _ _ and C _ _ _ _ _ _ _ risk
different cultural mores can impact
everything from “normal business hours” to
ethical behavior to whether customers will
want to buy a product.
ANSWER KEY
3 & 4 - Language and Cultural Risk

OUTSOURCING & GLOBAL SOURCING
Outsourcing
The procurement of selected value-adding activities, including production
of intermediate goods or finished products, from external independent
suppliers.
Business process outsourcing (BPO)

The outsourcing to independent suppliers of business service functions
such as accounting, payroll, human resource functions, travel services,
IT services, customer service, or technical support.
Configuration of value-adding activity

The pattern or geographic arrangement of locations where the firm
carries out value-chain activities
Importing / Global sourcing

The procurement of products or services from independent suppliers or
company-owned subsidiaries located abroad for consumption in the
home country or a third country.
The growth of global sourcing has been driven by

three key factors
Technological advances in communications,

especially the Internet and international
telecommunications
Falling costs of international business
Entrepreneurship and rapid economic

transformation in emerging markets
Captive sourcing
Sourcing from the firm’s own production facilities
Contract manufacturing
An arrangement in which the focal firm contracts with
an independent supplier to manufacture products
according to well-defined specifications.
Offshoring
The relocation of a business process or entire
manufacturing facility to a foreign country.
Benefits of Global Sourcing
Cost Efficiency Business process redesign
Ability to achieve strategic goals Increased speed to market
Faster corporate growth Access to new markets
Access to qualified personnel abroad Technological flexibility
Improved productivity and service

Risks of Global Sourcing

Lower-than-expected cost savings Overreliance on suppliers
Environmental factors Risk of creating competitors
Weak legal environment Erosion of morale and commitment

among home-country employees
Inadequate or low-skilled workers
MANAGING IMPORT
& EXPORTS
The main parties involved in export and import transactions
Exporter is the person or entity

sending or transporting the goods out
of the country.
Importer is the person or entity buying

or transporting goods from another
country into the importer’s home
country.
Carrier is the entity handling the

physical transportation of the goods.
MANAGING IMPORT
& EXPORTS
Documentation is crucial for import and export transactions
Customs are administration offices in both the home country and the
country to which the item is being exported are involved in the
transaction.
In the United States, the US Customs Service became the US Bureau of Customs
and Border Protection (CBP)’
After the terrorist attacks on September 11, 2001. The mandate now isn’t simply to
move goods through customs quickly and efficiently to facilitate international trade;
it also ensures that the items coming into the United States are validated and safe
as well.
MANAGING IMPORT
& EXPORTS
Role of Intermediaries
Freight Forwarder typically prepares the documentation, suggests shipping methods,

navigates trade regulations, and assists with details like packing and labeling.
Export Management Company (EMC) is an independent company that performs the

duties a firm’s export department would execute.
MANAGING IMPORT
& EXPORTS
What’s Needed for Import and Export Transactions?
Bill of Lading is the contract between the exporter and the carrier
authorizing the carrier to transport the goods to the buyer’s destination.
Commercial or Customs Invoice is the bill for the goods shipped from the
exporter to the importer or buyer.
Export Declaration is given to customs and port authorities. The declaration

provides the contact information for both the exporter and the importer.
MANAGING IMPORT
& EXPORTS
What’s Needed for Import and Export Transactions?
Certificate of Origin as its name implies, declares the country from which
the product originates. These certificates are required for import duties.
Some governments require the purchase of a license.
Insurance Certificates show the amount of coverage on the goods and

identify the merchandise. Some contracts or invoices may require proof of
insurance in order to receive payment.
Letter of Credit is a legal document issued by a bank at the importer’s (or

buyer’s) request.
TRADE REQUIREMENTS
FOR IMPORT TRANSACTIONS
Importation Permit Bill of Lading (BL or BoL)/Airway Bill

Document stating the company is (Transporter)
accredited in importing a certain Shippers copy of goods in transit
product Goods shipped on a plane will require an
airway bill. This is a contract of carriage
Proforma Invoice (PI) between the shipper and the carrier.
Terms of sale of an order
Certificate of Origin (Form E)
Packing List A declaration of origin for goods imported
Itemized content of a package
Customs Declaration
A list of items imported in the country
required by the BoC to regulate and impose
tariffs on taxable items
TRADE REQUIREMENTS
FOR IMPORT TRANSACTIONS
Letter of Credit Safety Data Sheet (SDS)
A bank will issue a letter of credit, A safety data sheet is an essential

guaranteeing the shipper’s payment. document when shipping goods
Letters of credit require specific internationally. This document includes
documentation and preparation information about handling, storing, and
before the bank sends them out. safely disposing of the items inside the
Therefore, you must comply with shipment. You must follow the
them promptly. International Maritime Organization
regulations if your shipment contains
hazardous or dangerous materials.
TRADE REQUIREMENTS
FOR EXPORT TRANSACTIONS
1. BUSINESS BASICS
Must be a registered company under the Philippine law:
DTI
SEC
Barangay Clearance
Mayor’s Permit
Tax Registration
Employee Registration
Client Profile Registration System (CPRS)
2. SELL TO CUSTOMERS
Market Insights
Market Research
Business Matching
Trade Shows
Market Access
Online Channels
3. ORDER PROCESSING
Pro-Forma Invoice Processing
It is a document sent to a buyer before the sale
is final, to identify products and prices that will be
involved in the transaction
4. PAYMENTS AND AGREEMENTS
Local Banks with International Partners and Affiliates

Telegraphic Transfer
Letter of Credit
Documentary Collection
Consignment
5. FREIGHT SELECTION
Local Banks with International Partners and Affiliates
Telegraphic Transfer
Letter of Credit
Documentary Collection
Consignment
6. APPLY FOR EXPORT DECLARATION

To be submitted to the Bureau of Customs
before shipment to give them a go-signal.
7. EXPORT CLEARANCE FOR PRODUCTS THAT ARE REGULATED
BY THE COMMODITY AGREEMENT AND PROHIBITED PRODUCTS
Specific Industries such as:
Department of Environment and Natural
Resources
Department of Agriculture
8. AUTHORITY TO LOAD
It is the go-signal from the authorities granted by the BOC allowing the
exported goods to board the carriers after going through several
assessments. Before loading, they shall pay the charges to certain
agencies.
9. PROCESS SHIPPING DOCUMENTS
This includes the Bill of Lading or Airway Bill that issues the
details about the exported products, Certificate of Origins for
trade incentives, Export Clearance, Export Declaration,
Commercial Invoice, Packing List, Insurance Policy, and Post
Loading Certificates.
10. MAINTAINING CUSTOMER SERVICES

Maintaining good relationships with your
customers is important so that you can
cultivate long-term business relationships that
lead to more profit.
MINI QUIZ
Includes outsourcing and global sourcing,
managing import & export, and trade requirements
1. The main parties involved in export and import

transactions.
2. Who is the Intermediary in export and import
3. ______ is the sourcing of business service
functions to outside suppliers?
4. _____ is an arrangement where the firm
contracts an independent supplier to produce
goods according to the given well-defined
specifications.
ANSWER KEY
1. Exporter, Importer, Carrier
2. Freight Forwarder
3. Business Process Outsourcing (BPO)
4. Contract manufacturing
PAYMENT METHODS
IN EXPORTING & GLOBAL SOURCING
Cash in Advance - the exporter receives cash in advance, payment is collected before the goods are
shipped to the customer.
Letter of Credit - is a contract between the banks of the buyer and the seller that ensures payment
from the buyer to the seller upon receipt of an export shipment.
Open Account - When the exporter uses an open account, the buyer pays the exporter at some
future time following receipt of the goods. It is similar to the way a retail customer pays a department
store on account for products he or she has purchased.
Countertrade - an international business transaction where all or partial payments are made in kind
rather than cash as discussed in previous slides.
KEY FACTORS INFLUENCE THE ABILITY OF AN EXPORTER OR

IMPORTER TO OBTAIN FINANCING FOR EX- PORT SALES:
Creditworthiness of the exporter.
Creditworthiness of the importer.
Riskiness of the sale
Timing of the sale
CRITERIA FOR EVALUATING EXPORT INTERMEDIARIES
OVERVIEW OF
COMPANIES INVOLVED
IN EXPORTING & GLOBAL SOURCING
OVERVIEW OF COMPANIES
Exporting and global sourcing involve various
companies that play crucial roles in international
trade. Export-oriented companies, often referred to
as exporters, focus on selling goods and services to
foreign markets.
Key Players:
Exporters:
- Multinational Corporations (MNCs)
- Small and Medium Enterprises (SMEs)
- Trading Companies
Global Sourcers:
- Retailers
- Manufacturers
- E-commerce Platforms
CHALLENGES &
CULTURAL DIFFERENCES
CHALLENGES:
3. Communication Barriers: Dealing

1. Logistics and Supply Chain: Managing the
with different languages can lead to
transportation of goods across borders
misunderstandings in negotiations
involves complexities such as customs
and transactions.
clearance, shipping regulations, and reliable
logistics.
4. Currency and Financial Risks:

2. Regulatory Compliance: Navigating diverse international
Currency volatility can affect the cost of
regulations, trade policies, and compliance standards can
goods, profit margins, and overall
be challenging for companies engaged in exporting and
financial stability. Differences in payment
global sourcing
terms and methods can also lead to
financial uncertainties.
CHALLENGES &
CULTURAL DIFFERENCES
CULTURAL DIFFERENCES 3. Negotiation Approaches:
Negotiation styles differ across
1. Communication Styles: High-context cultures (e.g., Asian cultures. Some cultures prefer a
cultures) rely on implicit communication, while low-context collaborative approach, emphasizing
cultures (e.g., Western cultures) prefer explicit relationship building, while others
communication. This affects how instructions and
may adopt a more competitive stance.
information are conveyed.
Flexibility in negotiation strategies is
crucial.
4. Time Perceptions: Punctuality

2. Business Etiquette: Proper etiquette varies and time management
globally. For instance, greetings, gift-giving expectations vary. In some
practices, and the use of titles may differ. Being cultures, meetings may start late
aware of and respecting these cultural norms is or have a more relaxed pace, while
essential for building relationships. others emphasize strict adherence
to schedules. Understanding these
differences prevents
misunderstandings.
TIPS TO ACHIEVE
CULTURAL SUCCESS
TIPS TO ACHIEVE CULTURAL SUCCESS
Achieving cultural success in export and trading
involves understanding and respecting the cultural
nuances of the markets you're dealing with.
Here are some tips to help you succeed:
Market Research Legal and Regulatory Compliance

Build Relationships Cultural Sensitivity
Communication Cultural Training
Adapt Your Products Networking

Packaging and Branding Flexibility
Respect Business Etiquette Continuous Learning
Be Patient Patience and Perseverance
Market Research Build Relationships Communication
Market Research
Conduct thorough research on the cultural, social,

and business practices of your target markets.
Understand the local customs, values, and traditions.

Building Relationships
Cultivate strong relationships with local partners,

distributors, and customers.
Building trust is essential in many cultures.

Communication
Learn the local language or at least

key phrases.
Effective communication is crucial in
bridging cultural gaps.
Adapt your products Packaging & Branding Respect Business Etiquette
Adapt your products
Tailor your products or services to fit

local preferences and needs.
Localization is often a key to
success.
Packaging and Branding
Pay attention to packaging and

branding;
They can convey cultural messages
and influence purchasing decisions.
Respect Business Etiquette
Understand the local business etiquette,

including how to greet, negotiate, and
make deals.
Be Patient
Be Patient
In some cultures, business decisions may

take longer. Patience and persistence are
important virtues.
QUICK RECAP
Market Research Adapt Your Products

Build Relationships Packaging and Branding
Communication Respect Business Etiquette
Be Patient
Achieving cultural success in export and trading
involves understanding and respecting the cultural
nuances of the markets you're dealing with.
Here are some tips to help you succeed:
Market Research Legal and Regulatory Compliance

Build Relationships Cultural Sensitivity
Communication Cultural Training
Adapt Your Products Networking

Packaging and Branding Flexibility
Respect Business Etiquette Continuous Learning
Be Patient Patience and Perseverance
Legal & Regulatory Compliance Cultural Sensitivity Cultural Training
Legal and Regulatory Compliance
Comply with local laws, regulations, and

import/export requirements.
Failing to do so can lead to serious issues.

Cultural Sensitivity
Avoid making assumptions and stereotypes based

on your own culture.
Show respect for local beliefs and practices.

Cultural Training
Consider providing cultural training to your team to

raise awareness and promote cultural sensitivity.
Networking Flexibility Continuous Learning Patience & Perseverance
Networking
Attend local events, join chambers of commerce,

and engage in networking to better understand the
local business landscape.
Flexibility
Be open to adapting your strategies based on the

feedback and preferences of your local partners and
customers.
Continuous Learning
Keep learning about the cultures you engage with

and stay updated on market trends and changes.
Patience and Perseverance
Success in international trade can take time. Be

patient and persevere through challenges.
QUICK RECAP
Legal and Regulatory Networking

Compliance Flexibility
Cultural Sensitivity Continuous Learning
Cultural Training Patience and Perseverance
SUMMARY
Remember that cultural success is an ongoing process, and

it's important to be adaptable and open-minded as you
navigate the complexities of global markets.
Overall, export and trading provide a wide range of

opportunities for businesses to grow, diversify, and contribute
to the economic development of both their home country and
the country they engage with.

Exporting and Trading

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EXPORTING & GLOBAL

INTERNATIONAL BUSINESS & TRADE

What is the difference between exporting and importing?

Exporting is defined as the sale of products and services in

Importing Is also known as global sourcing.

Exports are incredibly important to

Direct exporting is typically achieved by contracting with

Exports provide countries significant foreign exchange earnings.

Diversifies customer base, reducing Minimizes risks and minimizes flexibility

The firm must acquire and dedicate capabilities to conduct

Exporting exposes the firms to tariffs and other trade

5. Transportation & Logistics Risk - sold items must now be

6. Language & Cultural Risk - different cultural mores can impact

Countertrade is where businesses exchange one

THE GOVERNMENT MANDATED THAT PEPSICO

(1) TO SATISFY A FOREIGN-GOVERNMENT MANDATE,

(2) TO HEDGE AGAINST PRICE AND CURRENCY FLUCTUATIONS, AND

(3) TO REPATRIATE PROFITS FROM COUNTRIES THAT LIMIT THE AMOUNT OF

The reputation of countertrade has been damaged by its links to command

A business strategy where goods are

Also known as importing. This refers to

3 & 4 - Language and Cultural Risk

Business process outsourcing (BPO)

Configuration of value-adding activity

Importing / Global sourcing

The growth of global sourcing has been driven by

Technological advances in communications,

Falling costs of international business

Entrepreneurship and rapid economic

Benefits of Global Sourcing

Cost Efficiency Business process redesign

Ability to achieve strategic goals Increased speed to market

Faster corporate growth Access to new markets

Access to qualified personnel abroad Technological flexibility

Improved productivity and service

Risks of Global Sourcing

Environmental factors Risk of creating competitors

Weak legal environment Erosion of morale and commitment

Exporter is the person or entity

Importer is the person or entity buying

Carrier is the entity handling the

Freight Forwarder typically prepares the documentation, suggests shipping methods,

Export Management Company (EMC) is an independent company that performs the

Export Declaration is given to customs and port authorities. The declaration

Insurance Certificates show the amount of coverage on the goods and

Letter of Credit is a legal document issued by a bank at the importer’s (or

Importation Permit Bill of Lading (BL or BoL)/Airway Bill

Letter of Credit Safety Data Sheet (SDS)

A bank will issue a letter of credit, A safety data sheet is an essential

4. PAYMENTS AND AGREEMENTS

Local Banks with International Partners and Affiliates

6. APPLY FOR EXPORT DECLARATION

10. MAINTAINING CUSTOMER SERVICES

1. The main parties involved in export and import

KEY FACTORS INFLUENCE THE ABILITY OF AN EXPORTER OR

3. Communication Barriers: Dealing

4. Currency and Financial Risks:

4. Time Perceptions: Punctuality

Here are some tips to help you succeed:

Market Research Legal and Regulatory Compliance

Adapt Your Products Networking

Market Research Build Relationships Communication

Conduct thorough research on the cultural, social,

Understand the local customs, values, and traditions.