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International Business

International Business . Chapter Thirteen Export and Import Strategies. Strategy of the Multinationals. Price. Competitive Advantage. Quality. Export Strategy of the Firm. Why Export…. Profitability-increase revenues Productivity-achieve economies of scale, alleviate excess capacity

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International Business

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  1. International Business Chapter Thirteen Export and Import Strategies

  2. Strategy of the Multinationals Price Competitive Advantage Quality

  3. Export Strategy of the Firm • Why Export…. • Profitability-increase revenues • Productivity-achieve economies of scale, alleviate excess capacity • Diversification-minimize risk and diversify markets • Advantages of the Firm…. • Ownership advantages • Location advantages • Internalization advantages

  4. Export Intermediaries Export can be conducted directly, indirectly or through third party intermediaries. Export management company (EMC):a firm that either acts as a manufacturer’s agent or buys merchandise from manufacturers for international distribution. Export trading company (ETC): a large, independent broker whose primary purpose is to match suppliers to foreign customers for a fee. Various types of Customs Brokers/Agents, Freight Forwarders

  5. Import Strategy of the Firm • Why import? Strategic advantages of import…. • Specialization of labor • Global rivalry • Local unavailability • Diversification of operation risks

  6. Export Import Process Ships Exporter Importer Bill of lading Receives payment Payment Opens Letter of Credit Informs Reimbursement Importer’s Bank Exporter’s Bank Informs

  7. Types of Exports Documents • Pro Forma Invoice: outlines the terms of sale, price, and delivery details, it is the basis for Commercial Invoice • Shipper’s Export Declaration: used to monitor exports and compile trade statistics • Bill of Lading: a detailed receipt from the carrier transporting the cargo • Consular Invoice: required to monitor imports • Certificate of Origin: determines the tariff • Export Packing List: lists the cargo details • Commercial Invoice: details of sale according to Pro Forma Invoice, it is legal document

  8. Countertrade • Costs and Benefits of Countertrade • Examples of countertrade transactions…. • barter [based on clearing arrangements used to avoid money-based exchange] • buybacks, offsets, and counter purchase [all of which are used to impose reciprocal commitments] • Still popular…

  9. Chapter 13: Discussion Questions • Explain why firms export or import. What are their competitive advantages for export or import? • Discuss the functions of Export Intermediaries. • Describe the export-import process and explain the role of various “export documentation” involved in the process. • What is countertrade? Why firms or governments engage in countertrade?

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