Part Five

Global Strategy, Structure, and

Implementation
Chapter Thirteen
Export And Import Strategies

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 Chapter Objectives
• To introduce the ideas of export and import
• To identify the elements of export and exporting
strategies
• To compare direct and indirect selling of
exporting
• To identify the elements of import and importing
strategies
• To discuss the types and roles of third-party
intermediaries in exporting
• To discuss the role of countertrade in
international business

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 Exports & Imports
• Exporting refers to the sale of goods or
services produced by a company based in
one country to customers that reside in a
different country
• Importing is the purchase of goods or
services by a company based in one
country from sellers that reside in another

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 Advantages of Exporting
• Lower investment way to enter foreign
markets
• Lower risk way to enter foreign markets
• Expands sales
• Achieves scale economies
• Diversifies sales

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 Characteristics of Exporters
• The probability of a company’s becoming
an exporter increases with company size,
but the extent of exporting does not
directly correlate with size
• Companies export to increase sales
revenues, use excess capacity, and
diversify markets

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 Pitfalls of Exporting
• Companies new to exporting (and also some
experienced exporters) often make many
mistakes
• One way to avoid mistakes is to develop a
comprehensive export strategy that includes an
analysis of the company’s resources as well as
its export potential
• Companies can also improve the odds of export
success by working with an experienced export
intermediary

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 Designing an Export Strategy
• As a company establishes its export
business plan, it must:
 assess export potential
 obtain expert counseling
 select a country or countries where it will
focus its exports
 formulate its strategy
 determine how to get its goods to market

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 Types of importers
• Those looking for any product around the
world to import and sell.
• Those looking for foreign sourcing to get
their products at the cheapest price.
• Those using foreign sourcing as part of
their global supply chain.

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 Types of imports
• Industrial and consumer goods to
independent individuals and companies.
• Intermediate goods and services that are
part of the firm’s global supply chain.

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Strategic Advantages of Imports
• Specialization of Labor
• Global Rivalry
• Local Unavailability
• Diversification of Operating Risks

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 Customs Agencies
• Customs agencies assess and collect duties, as
well as ensure that import regulations are
adhered to
• A custom broker helps by valuing products to
qualify for:
 more favorable duty treatment
 qualifying products for duty refunds through drawback
provisions
 deferring duties by using bonded warehouses and
foreign trade zones
 limiting liability by properly marking an import’s
country of origin

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 Principal types of exporting
• Direct: goods and services are sold to an
independent party outside of the exporter’s
home country.
• Indirect exports: goods and services are
sold to an intermediary in the domestic
market, which then sells the goods in the
export market.

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 Indirect Selling
• Exporters may deal directly with:
 agents or distributors in a foreign country
 indirectly through third-party intermediaries,
such as export management companies
 other types of trading companies

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 Direct Selling
• Through distributors who usually deal with
retailers instead of end users
• To retailers and end users
• Internet marketing is a new form of direct
exporting that is allowing many small- and
medium-sized companies to access export
markets as never before

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 Export Documentation
• Key export documents are:
 pro forma invoice
 commercial invoice
 bill of lading
 consular invoice
 certificate of origin
 shipper’s export declaration
 export packing list

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 Export Assistance
• Trading companies can perform many of the functions
for which manufacturers lack the expertise
• Exporters can use the services of other specialists, such
as freight forwarders, to facilitate exporting
• These specialists can help an exporter with the complex
documentation that accompanies exports
• Government agencies in some countries, such as the
Ex-Im Bank in the United States, provide assistance in:
 terms of direct loans to importers
 bank guarantees to fund an exporter’s working capital needs
 insurance against commercial and political risk

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 Countertrade
• Countertrade is when goods and services
are traded for each other. It is used when
a firm exports to a country whose currency
creates barriers to efficient trade
• Common types are: barter, buyback,
offset, switch trading, and counter
purchase

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