Introduction to Export Management

Module 1
Export :
Export are the goods and services produced in one country and purchased by
residents of another country. It doesn't matter what the good or service is. It doesn't
matter how it is sent. It can be shipped, sent by email, or carried in personal luggage on
a plane. If it is produced domestically and sold to someone in a foreign country, it is an
export.
Exports are one component of international trade. The other component is imports.
They are the goods and services bought by a country's residents that are produced in a
foreign country. Combined, they make up a country's trade balance. When the country
exports more than it imports, it has a trade surplus. When it imports more than it
exports, it has a trade deficit.
 Benefits Arising from Export
1. Standard of Living: Governments encourage exports. Exports increase jobs, bring
in higher wages, and raise the standard of living for residents. As such, people
become happier and more likely to support their national leaders.

2. Foreign Exchange Reserve: Exports also increase the foreign exchange reserves.

Foreigners pay for exports either in their own currency or the U.S dollar. A country
with large reserves can use it to manage their own currency's value. They have
enough foreign currency to flood the market with their own currency. That lowers
the cost of their exports in other countries.

3.  Greater Variety of Goods Available for Consumption: International trade brings

in different varieties of a particular product from different destinations. This gives
consumers a wider array of choices which will not only improve their quality of life
but as a whole it will help the country grow.
4. Efficient Allocation and Better Utilization of Resources: Efficient allocation and better
utilization of resources since countries tend to produce goods in which they have a
comparative advantage. When countries produce through comparative advantage, wasteful
duplication of resources is prevented. It helps save the environment from harmful gases being
leaked into the atmosphere and also provides countries with a better marketing power.
5. Promotes Efficiency in Production: International trade promotes efficiency in production as
countries will try to adopt better methods of production to keep costs down in order to remain
competitive. Countries that can produce a product at lowest possible cost will be able to gain
larger share in the market. Therefore an incentive to produce efficiently arises. This will help
to increase the standards of the product and consumers will have a good quality product to
consume.
6. More Employment: More employment could be generated as the market for the countries’
goods widens through trade. International trade helps generate more employment through the
establishment of newer industries to cater to the demands of various countries. This will help
countries to bring-down their unemployment rates.
7. Consumption at Cheaper Cost: International trade enables a country to consume
things which either cannot be produced within its borders or production may cost
very high. Therefore it becomes cost cheaper to import from other countries
through foreign trade.

8. Reduces Trade Fluctuations: By making the size of the market large with large
supplies and extensive demand international trade reduces trade fluctuations. The
prices of goods tend to remain more stable.

9. Utilization of Surplus Produce: International trade enables different countries to

sell their surplus products to other countries and earn foreign exchange.
 Export Management
 Export management means conducting the export activity in an orderly, efficient
and profitable manner. Export management is basically planning, organizing,
coordinating and controlling all activities relating to export of goods and services to
other counties. It involves various activities such as production of exportable good,
collection of orders from foreign buyers and their execution, publicity in abroad,
adoption of sales promotion techniques, price fixation and looking after various
procedures and formalities relating to exporting of goods.
 Export management means finding at opportunities for marketing goods &
services in foreign markets and exporting such opportunists for the benefit of an
exporting firm, subject to existing export rules and regulations.
 Export management is one specific area of business management and it is
concerned exclusively with exporting goods abroad. It is concerned with
international marketing activities and operations.
 According to B. S. Bathor, “Export Marketing includes the management of
marketing activities for products across the national boundary or a country”.
 NEED FOR EXPORT MANAGEMENT

Earning foreign Exchange: Export management enables the country to earn foreign
exchange. The foreign exchange can be utilized for following purposes.

Import of consumer good

Imports of Raw materials, spares and components

Import of capital goods technology

Servicing of External Debts.

International Relations: Export helps to develop international ties with importing

countries due to the following reasons.

a) The international trade brings together the exporters and importers of various
countries.

b) Trade talks take place between nations at international forums like WTO.

c) Also, trade agreements are singed between Governments of participating counties.

Balance of payments: A country’s external economic strength depends upon its
balance of payment position. Naturally, every country would like to have a strong and
favorable balance of payments position since exports bring in foreign exchange, it
helps a country to solve and improve its Balance of payments position.

Employment: Exports help to generate employment in the country Export facilitates.

a) Direct Employment in the export sector

b) Indirect Employment in the supporting sectors such as banking, insurance,

transport etc.

Increase Production Capacity: For every business unit increase production is

necessary, in order to meet domestic demand and export order. Exports are possible
when surplus production is available after meeting domestic demand.
Organizational Efficiency: Export management enables a firm to improve its
organizational efficiency. E.g. firms have to emphasize on training and development of
employees. This helps to improve knowledge, attitudes, skills and social behaviors.
Therefore, the over all efficiency of the organisation improves due to training, research
and other much activities which are encouraged by export management.

Economies of Scale: Because of increase in export there will be large scale production
and distribution. This will result in

I. Economies of large scale production like discount in bulk purchase of material and
reduce cost.

II. II. Economies of large scale distribution such as freight concession on bulk
shipment of goods.
Imports are liberalized: Business organisations exporting on a large scale collect huge
foreign exchange which can be utilised for the import of new technology machinery
and component. This also raises their competitive capacity.
 FUNCTIONS OF AN EXPORT MANAGER

 To decide export objectives of the organization and prepare comprehensive short term
and long term plans and progammes to achieve such objectives.
 To conduct marketing research so that export efforts will be concentrated on certain
commodities and on foreign markets which are highly promising.
 To execute long-term export promotion programmes for the products with promising
overseas demand.
 To analyze the EXIM policy of the government and the current export regulations and
procedures. . (This policy consists of general provisions regarding exports and imports,
promotional measures, duty exemption schemes, export promotion schemes, special
economic zone programs and other details for different sectors).
 To evaluate export incentives/facilities offered by the government and to secure benefits
from them.
 To face the challenges of international competition and changing marketing
environment.
 To evaluate export incentives/facilities offered by the government and to secure
benefits from them.
 Organization Structure of an Export Firm
In-built Export Department – In this type, organization’s activities are divided into
various units like purchase, production, finance, domestic marketing and export marketing
also. The export marketing unit is headed by export manger. He explores export
opportunities, for the organization. He can also take helps of other departments for
arranging the good in export market like production, finance, advertising, distribution etc.
Since this structure is at the initial stage of export, the organization does not have adequate
and efficient staff for export.

Independent Export Division- This may be second stage or organize structure for export.
In this case the business organization may have a separate export division. It will have its
own full fledged competent staff. All the activities of export are handled by the export
division. The export division may be located near the port so that all the necessary
formalities like clearing or forwarding of documents can be easily done. The export division
can also take help from export promotion organisations and other government officers.
Export Subsidiaries in several markets- Where the exports are on a large scale and
more of long term nature, then the exporter may start an export subsidiary to undertake
export activities in connection with marketing research, product planning and
development, pricing, promotion, physical distribution as well as marketing of export
goods. However a subsidiary can be introduced only for the purpose of export
marketing.
Export Subsidiary In Importer’s Country - When the organization has been
developed in MNC. It has large investment and technology then it will be suitable to
establish an export subsidiary in the foreign country to undertake export marketing.
The foreign subsidiary may undertake production and marketing activities or only
export marketing which ever is suitable.
Geographic Structure of Export Organization- This is again one step forward. The
export organization can be divided into various department e.g. there can be
departments looking after export marketing in specific export areas, like departments
looking after export to ASIAN countries EEC countries, Middle East countries etc.

Product Organization Structure: In this case the export organization can be decided
on the basis of product levels. Thus there can be separate, department for each product
line. E.g. there can be a department monitoring exports of engineering goods,
readymade garments etc.
 Export Prospect for Small Firms
Change in the past several years has taken many forms. Broad changes are affecting
international trade, such as the Uruguay Round Agreement and the establishment of the
World Trade Organization (WTO). In addition, three major issues have recently
emerged that influence export promotion: Growing interest in the environment
,sustainable development and the importance of small and medium-sized
enterprises (SMEs) as exporters, and the scope for increasing trade.

The export potential of small and medium-sized firms has been a growing subject
of interest. Why should today's export promotion strategies focus on SMEs, rather
than on large or micro enterprises?
Strong growth potential: Only a small percentage of SMEs in developing countries are now
engaged in export trade, yet they account for approximately 40% of export earnings. The
current trend points strongly towards a sustained growth in this share, supported by
expanding output and employment. Recognizing their growth potential, most governments in
developing countries are giving priority to SMEs through policy support and other
incentives.
New legal framework: The WTO Agreement has created a framework for a more open
global trading system, which has implications for smaller firms. An appropriate export
strategy could provide the corresponding internal framework to enable smaller businesses to
engage more successfully in external trade and meet international competition. By reducing
tariff and non-tariff barriers and ensuring non-discriminatory treatment in foreign markets,
the smaller exporters have been offered the same market access that was previously available
to larger companies with resources to set up local operations to beat the tariff walls.
Shifting comparative advantage: Globalization of trade, investment and production
has substantially altered comparative advantages between large and small firms. The
smaller enterprises that have responded flexibly and adapted to the new environment-
often linking with new partners and forming new alliances-are positioned for strong
growth. These types of smaller firms generally enjoy advantages over large enterprises:
they are usually able to preserve better labour relationships, bring a personal touch to
their operations, cater to specialized market segments and have smaller capital
investment requirements. The constant market pressure to stay competitive also spurs
them to be inventive, innovative and flexible in their business operations. This makes it
much easier for them to adjust quickly to changing economic conditions and market
requirements.
Relative impact: Large enterprises are more likely to have the means to promote their
own activities; most have resources to establish marketing channels, trade information
systems and trade representation offices. A trade support institution will probably make
only a marginal contribution. Furthermore, some large companies regard government-
supported promotional activities as interference with their business decisions and may
therefore be unwilling to cooperate.

SMEs, on the other hand, are almost entirely dependent on outside trade service
providers. The impact of easily accessible and efficient services at affordable cost is
correspondingly greater for them. This is crucial at the stage of initial market
development efforts when SMEs need to commit scarce financial resources in advance
without any guarantee of returns.
 Sources of Export Information
UN Statistical Yearbook: Published by the United Nations Statistics Division, the
yearbook provides international trade information on both products and nations.
Widely considered to be one of the most complete statistical reference books available,
it contains data for 220 countries and territories, detailing economic and social subjects
such as population, agriculture, manufacturing and export-import trade.
Worldcasts: An eight-volume annual series that presents 60,000 forecasts for products
and markets covering 150 countries. The forecasts are typically one-line entries
providing short- and long-range predictions for consumption, capacity, employment
and production country by country. Each quarter a product volume and a regional
volume in published.
Organisation for Economic Cooperation and Development (OECD): The OECD, whose
mission is to support economic expansion, produces surveys covering each of the 24
member countries individually. Such surveys provide a narrative description and assessment
of particular markets, presented alongside relevant statistics. They are usually based on
original research and interviews. Each one contains a detailed analysis of developments in
demand, production, employment, prices and wages.
The Federation of International Trade Organisations (FITA): FITA, along with its sister
website GlobalTrade.net, provides the most comprehensive database of international trade
web resources on the internet, with more than 8000 links annotated and indexed.
Information is available on topics from international market research to product licensing
and international transportation and logistics. GlobalTrade.net allows visitors to find service
providers, trading companies and market analyses. Other examples of electronic databases
providing specific marketing information include the PIER service of the Journal of
Commerce and DIALOG
Export Shipping Manual: Another annually published manual, this one is updated
weekly to keep it relevant. A three-volume reference service, it contains up-to-date,
country-by-country shipping and market research information and analyses. For each
country, social, political, economic and commercial conditions and profiled, with
policies, regulations, issues, development and laws relating to commerce and foreign
trade also detailed. Though similar to the more general yearbooks listed above, the
information listed here is more trade specific and aimed at the export trade in
particular.