Export Management
December 14, 2006
Export versus Import
Why would countries have problems with
more imports than exports?
 How are these two affected by political
actions?
 What does Fair Trade have to do with all
of this?
The export process
Information search
Canvassing
Negotiation
Transport / Carriage
Payment
Common export techniques

Canvassing: choice of actions, insurance…

Negotiation: objectives, phases…

Transport: export documents, incoterms…

Payment: bank documents, documentary
credit…
Canvassing

What is it?
Search for potential partners (intermediaries)
and/or potential clients
 Closely related to the choice of entry mode


Objectives:
Qualitative: choice of partner, relationship,
coherency…
 Quantitative: numbers, sales potential,
profitability, margins…

Identifying potential partners and clients

Events organized by UE, France, and
other countries to help exporters

Use embassy commercial services
(Missions économiques)

Buy list from private providers (Kompass,
Europages…)
Choice of actions
Search for partners in
France
Actions in France
Actions abroad
-Direct
marketing in
France (mail, phone, email…)
-Participate in trade
fairs and other events
in France
Search for potential
partners/clients
abroad
-Direct
marketing aimed
at foreign
partners/clients
-Contact with foreign
delegations
-Invite future partners to
France
-Trade
missions in
foreign market
-Participate in trade
fairs and other events
in foreign markets
Choice of actions
COSTS
Low
Mail
Low
High
Phone
Mission
France
Invitation
Mission
abroad
EFFECTIVENESS
Trade
fair in
France
Trade
fair
abroad
High
Costs are high and effectiveness
low –
we may want to carry insurance
So, in other words if possibly the
outcomes maybe negative rather than
positive you are gambling on losing
everything without insurance…
 Think about it personally – why should we
carry insurance on items?

Canvassing insurance

Most governments offer some type of
canvassing insurance to their exporters

Coface – insures financial costs and risks
related to the search of foreign partners/clients

For firms with sales < 150 million €

Concerns all costs: market research, product
adaptation, participation in trade events,
advertising, HR costs…
Other financing/insurance options

Banks

Other types of
regional/national/international
companies
After canvassing comes…

Negotiation
International negotiation

What is negotiated or negotiation?

In international business, partners have a different
perception of negotiation, a different way of
thinking and acting

Cultural dimension: openness and understanding
of other cultures, effective communication in spite
of differences…
How to persuade someone…
In negotiation isn’t there persuasion?
 How to you get someone to think like you?
 How do you get them to instantly like you?
 Aren’t these the million dollar questions?
 Let’s see what Dr. Lierberman would say
on the subject? (Not Dr. Phil)

Negotiation phases

Pre-negotiation: determine who, what, when, where…
date and agenda

Introduction: first impressions and positions

Observation: collect information on partner and
objectives

Adjustment/Concession: heart of negotiation,
negotiation strategies, consensus in compliance with
initial goals

Conclusion: formalize and finalize agreement
Styles of negotiation
France
-Debate,
conflict
-Protocol, etiquette
-Affectivity, emotions
-Important hierarchy
-Philosophical
reasoning
-Lively conversation
-High involvement
-Precision expected
-Centralized decisions
-Expect to wait
USA
Japan
-Problem-solving,
business is business
-Horizontal relations
-Informal, direct, verbal
-Logical process
-Check-list
-Short term orientation
-Competitive
-Limited flexibility
-Written agreement
-Importance of group,
team
-Vertical relations
-Rituals (cards, gifts…)
-Importance of nonverbal
-Time-consuming
-Long term orientation
-Buyer dominates
-Manipulation of
information
-Search for consensus
Incoterms

Incoterms = international commercial terms (1936, 2000)

ICC: “international rules that are accepted by governments,
legal authorities and practitioners worldwide for the
interpretation of the most commonly used terms in
international trade”, “they are at the heart of world trade”.

Rights and obligations of the parties to the contract of sale
with respect to the delivery of goods sold

Reduce or remove uncertainties arising from differing
interpretations of terms in different countries

Delivery, transfer of risks, division of costs…
Incoterms

Three letter abbreviation, followed by a destination (named place).
Ex: EXW Angers

13 Incoterms divided into 4 categories

E: the seller only makes the goods available to the buyer at the
seller’s own premises.

F: the seller is called upon to deliver the goods to a carrier appointed
by the buyer

C: the seller has to contract for carriage, but without assuming the risk
of loss or damage to the goods or additional costs due to events
occurring after shipment or dispatch

D: the seller has to bear all costs and risks needed to bring the goods
to the place of destination
Important documents

Bill of lading (B/L): proof of carriage and title of
goods (evidence of title to the goods for collection by
the purchaser)





Airway bill (AWB): proof of board and carriage




Issued after mate’s receipt
Straight consignee or to order (negotiable instrument)
Reserves: clean/dirty
Fiata B/L when issued by transit agent
Joint/groupage: collective AWB
Exclusive: house AWB
Signature and flight number
Carriage documents (CMR, trucking B/L, railroad
B/L): proof of carriage


Proof of instructions to carrier
Signature, require at each border
International payments

International bank transfer: from one account to another




Check



Swift (Society for Worldwide Interbank Financial
Telecommunication)
Ipi transfer (International payment instruction)
Credit card
Company check
Bank check
Letter of credit: documentary credit is very popular in
international trade
Documentary credit


Documentary credit: a bank’s written agreement
for payment to an exporter against presentation of
export documents (B/L, AWB, Rail B/L, Truck
B/L…)
Nature of the credit:

Revocable/irrevocable



Revocable by issuing bank (provides least security to seller)
Irrevocable cannot be altered without the beneficiary’s consent
(provides more security)
Confirmed/unconfirmed

A second bank adds its endorsement to the credit, indicating
that it too will make payment against the specified documents
(gives beneficiary additional assurance that payment will be
made)
Steps of the confirmed documentary credit
1.
Buyer and seller enter into the underlying contract
2.
Buyer applies for a letter of credit from issuing bank (buyer may
pay for letter now or later, depending on credit standing)
3.
Issuing bank instructs confirming bank to pay seller on the letter
of credit on seller’s presentation of required documents to
confirming bank
4.
Confirming bank pays seller and sends documents to issuing
bank
5.
Issuing bank presents documents to buyer
6.
Buyer presents documents to shipper in exchange for goods
International product policy

Existence of global product?
International standard?

Three common strategies




Straight extension
Product invention
Product adaptation


Technical adaptation
Commercial adaptation
Factors influencing
standardization/adaptation
Factors affecting
standardization
Reduced costs
Better use of know-how
Global image
Coherent marketing strategy
Better coordination and
control
“Shrinking” of world market
Factors affecting
adaptation
Cultural differences
Govt. and regulatory
restrictions
Differences in infrastructure
Local competition
“True” to marketing concept
“Think global, act local”,
global / local paradox
Elements of a product
Installation
Tangible
product
Packaging
Brand
name
Delivery
and credit
Augmented
product
Core
product
Features
Core
benefit
or
service
Quality
Aftersale
service
Styling
Warranty
Adapt or
standardize?