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Summary International Management (6013B0536Y)
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International Management summary for the exam
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Week 1:Exporting:
Why do firms export? it is low commitment (no need for setting up subsidiaries etc.)
The increased volume of exporting is facilitated by:
- A decline in trade barriers and increases in regional economic agreements
- Advances in technology and communication (it is a lot easier to have large, global supply
chains)
The promises and pitfalls of exporting:
- Large revenue and profit opportunities in foreign markets for most firms
- Economies of scale
- Large firms tend to be proactive about exporting
- However, medium-sized and small firms tend to be reactive this is because they are
unfamiliar or intimidated by foreign market opportunities. They want to serve the domestic
market first. They also miss opportunities for the domestic market because of benefitting less of
economies of scale for instance.
Product readiness and company readiness to export or import:
,Improving export performance:
A barrier to exporting is the simple lack of knowledge of the opportunities available
- You need to collect information on how different countries operate
- Other countries may have more experience in trade
- You can go to information sources such as the department of commerce in the U.S.
You can also use service providers to improve export performance:
- Freight forwarders they combine small shipments into a single large shipment to minimize
shipping costs. They do the documentation, payment, and carrier selection.
- Export management companies deal with export documents and operate as the firm’s
agent and distributor
- Export trading companies provide comprehensive exporting services, including export
documentation, logistics, and transportation
- Export packaging companies advise companies on appropriate design and materials for the
packaging of their items. They also assist companies in minimizing packaging to maximize the
number of items to be shipped
- Customs brokers offer a firm a complete package of services that are essential in dealing
with potential pitfalls when a firm is exporting to a large number of countries
- Confirming houses (buying agents) represent foreign companies that want to buy your
product
- Export agents and merchants buy products directly from the manufacturer and package
and relabel the products
- Piggyback marketing one firm distributes another firm’s products
- Economic processing zones include foreign trade zones (FTZ’s), special economic zones,
bonded warehouses, free ports, and customs zones
Export strategy to improve export performance
1. Hire an export management company or at least an experienced export consultant to
identify opportunities and navigate the paperwork and regulations in exporting
2. Initially focus on one market or a handful of markets
3. Enter a foreign market on a small scale to reduce the costs of any subsequent failure
, 4. Recognise the time and managerial commitment involved in building export sales and
hire additional personnel to oversee this activity
5. Devote attention to building strong and enduring relationships with local distributors
and/or customers
6. Hire local personnel to help the firm establish itself in a foreign market
7. Be proactive about seeking export opportunities
8. Retain the option of local production
Company readiness to export:
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