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The Exporting Process

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					                  The Exporting Process

Exporting               Physical Distribution   Importing Country
Considerations          Considerations          Considerations

Check for U.S. export   Packing & marking       Tariffs, taxes
  requirements
                        Documentation           Non-tariff Barriers
Arrange for payment
                        Logistics




                                                                      1
     Check Export Requirements
• Department of Commerce, Bureau of Export
  Controls (http://www.bxa.gov)
• What types of products have restrictions:
   – primarily weapons, technology, defense related
• U.S. boycotts:
   – Iran, Iraq, Cuba, __________




                                                      2
                Getting Paid:
        Foreign Commercial Payments

   Risk to                               Cost to
Exporter/Seller                       Importer/Buyer
    Least         Cash in Advance        Highest

                  Letters of Credit
                     Forfaiting
                  Bills of Exchange
   Highest         Open Accounts          Least




                                                   3
          Logistics Specialists

Intermodal Marketing Companies (IMCs)
   IMC arranges entire distribution system from factory to
   customer’s port of entry
   a broker: takes a percentage of the cost
Foreign-Freight Forwarder
 arranges documentation
                                 checks export restrictions
 advises on scheduling, routing
 & rates                        offers insurance
 checks consular, licensing, & provides warehouse storage
 labeling requirements           will pack/containerize



                                                              4
            Check on Import Restrictions
Tariffs - taxes/duties levied against imported goods.

Exchange Permits - due to rationing of host country
  currencies; permit allows exchange for U.S. $

Quotas - limits quantity of goods allowed in the host country

Import Licenses - like quota, but on a case-by-case basis

Boycotts - U.S. law prohibits U.S. firms from complying with
  unauthorized boycotts of certain countries

Standards - health, quality, safety; protects citizens

Voluntary Agreements - reciprocal limits between 2 countries
   to avoid penalties

Other Restrictions - e.g.., language laws, product labels,
  religious conventions, etc..                                  5
 International Channel-of-Distribution
             Alternatives
       Home Country                            Foreign Country
                                   The foreign marketer or
                                   producer sells to or through
                                                                  Foreign
Domestic producer                                                 consumer
or marketer sells to
or through



Open distribution via                            Foreign agent
                                                                    Foreign
domestic wholesale      Exporter   Importer      or merchant
                                                                    retailers
middlemen                                        wholesalers


Export management
company or company
sales force
       Variations in international
         distribution patterns
l   Services provided by intermediaries

l   Line Breadth: variety of related products carried

l   Costs and Margins: due to infrastructure & traditions

l   Channel Length: number of intermediaries involved

l   Nonexistent Channels: e.g., parts of China

l   Blocked Channels: through gov’t protection or power
    among distributors

l   Stocking: getting intermediaries to carry adequate
    inventories

l   Power and Competition
Factors Affecting Channel Choices

•Cost

•Capital

•Control

•Coverage

•Character

•Continuity
    Locating, selecting & motivating
             intermediaries
Locating Middlemen - lists provided by gov’ts,
   chambers of commerce, business publications,
   etc.
Selecting Middlemen - screen carefully, be precise
   about what functions you want performed
Terminating Middlemen - be aware that some
   countries have provisions to protect
   intermediaries from termination
Motivating Middlemen - provide incentives
  Monetary incentives for motivating
           intermediaries

Inventory Financing
Cumulative Rebates
   – for larger quantities, early payments, achieving sales targets,
     maintaining inventory levels, performing sales promotions, etc.
Returns of Unsold Merchandise
Promotion & Merchandising Assistance
  Displays
  Advertising
  In-store Displays
  Financial Assistance

				
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