Global Marketing Management, 5e
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Chapter 16
Export and Import
Management
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Chapter Overview
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1.
2.
3.
4.
5.
6.
7.
8.
Organizing for Exports
Indirect Exporting
Direct Exporting
Mechanics of Exporting
Role of the Government in Promoting Exports
Managing Imports—the Other Side of the Coin
Mechanics of Importing
Gray Markets
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Introduction
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Exporting is the most popular way for many
companies to become international.
Exporting is usually the first mode of foreign entry
used by companies.
Selling to foreign markets involves numerous high risks,
arising from a lack of knowledge about and
unfamiliarity with foreign environments, which can be
heterogeneous, sophisticated, and turbulent.
Furthermore, conducting market research across
national boundaries is more difficult, complex, and
subjective than its domestic counterpart.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Introduction
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With every export transaction there is an import
transaction.
Aside from differences between the procedure and
rationale for exports and imports, both are largely
the same the world over
For successful development of export activities,
systematic collection of information is critical.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
1. Organizing for Exports
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
Research for Exports:
First use available secondary data to research
potential markets.
 The
identification of an appropriate overseas market
involves the following criteria:
1. Socioeconomic characteristics
2. Political and legal characteristics
3. Consumer variables (lifestyle, preferences,
culture, taste, purchase behavior)
4. Financial conditions
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
1. Organizing for Exports
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It is also noted that export research for markets such
as China and the Commonwealth of Independent
States must still be done largely in the field, because
very little prior data exist, and even when available,
they are often not reliable.
Export Market Segments
 Homogeneous
market segments and clusters
 Geographical and psychographic segments
 Issues of standardization vs. adaptation
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
2. Indirect Exporting
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Indirect exporting involves the use of independent
middlemen to market the firm’s products overseas.
Combination Export Manager (CEM)
Export Merchants
Export Broker
Export Commission House
Trading Companies (sogoshosha)
(See Exhibit 16-1.)
Piggyback Exporting
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-1: Major Types of Trading
Companies and Their Countries of Origin
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
3. Direct Exporting
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Direct exporting occurs when a manufacturer or
exporter sells directly to an importer or buyer
located in a foreign market (Exhibit 16-2).
Export Department
Export Sales Subsidiary
Foreign Sales Branch
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-2: Comparison of Direct and
Indirect Exporting
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Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
4. Mechanics of Exporting
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
The Automated Export System (AES) on the Internet
 In
the U.S., the AES which was launched in October
1999, enables exporters to file export information at
no cost over the Internet. AES is a nationwide system
operational at all ports.

Legality of Exports- can be proactively dealt with
 Export
license (general or validated license)
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-3: U.S. Government Departments and
Agencies with Export Control Responsibilities
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 17
4. Mechanics of Exporting
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
Export Transactions
 The
terms of sale
 Monitoring the transportation and delivery of the goods
to the assigned party
 Shipping and obtaining the bill of lading
 Bill
of lading
 A straight bill of lading
 A shipper’s order bill of lading
 Commercial
invoice
 Freight forwarders
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
4. Mechanics of Exporting
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
Terms of Shipment and Sale
 INCOTERMS
2000 (International Commercial Terms)
 Terms of Shipment (Exhibit 16-4):
 Ex-Works
(EXW) at the point of origin
 Free Alongside Ship (FAS)
 Free on Board (FOB)
 Cost and Freight (CFR)
 Carriage Paid To (CPT)
 Cost, Insurance and Freight (CIF)
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-4: Terms of Shipment
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 17
4. Mechanics of Exporting
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Payment Terms (Exhibit 16-5)
 Advanced Payment
 Confirmed irrevocable letter of credit
 Unconfirmed irrevocable letter of credit
 Documents Against Payment (D/P)
 Documents Against Acceptance (D/A)
 Open account
 Consignment
Currency Hedging
 Done through a banker or the firm’s treasury to
counter foreign risk in the export transaction.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-5: Terms of Payment in an
Export Transaction
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 17
5. Role of the Government in
Promoting Exports
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Export promotion activities generally comprise:
1. Export service programs
2. Market development programs
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Export Enhancement Act of 1992
Some governments encourage inward FDI as a way to
increase their exports (e.g., Argentina)
Export - Import Bank (Ex-Im Bank)
Tariff Concessions
 Foreign
Trade Zone
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
5. Role of the Government in
Promoting Exports
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American Export Trading Company
 The Export Trading Company Act of 1982
Export Regulations
 The Trade Act of 1974
 The Foreign Corrupt Practices Act (FCPA) of 1977
 COCOM (Coordinating Committee for Multilateral Exports)
 U.S. Antitrust Laws
 Tariffs and local laws of foreign governments which may
include: tariffs, local laws relating to product standards and
classification, and taxes.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
6. Managing Imports – the Other
Side of the Coin
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For organizations in the United States, importing is
considerably easier than for most firms in the rest of
the world.
About 60 percent of the world’s trade is still
denominated in U.S. dollars.
Most of the time, a U.S. importer does not have to
bother with hedging foreign exchange transactions
or with trying to accumulate foreign currency to pay
for imports.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-6: Model of Importer Buyer
Behavior
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 17
6. Managing Imports – the Other
Side of the Coin
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 Model
of Importer Buyer Behavior
Stage 1. Need recognition and problem
formulation
(triggered by competition and
unavailability)
Stage 2. Search (guided by country
characteristics, vendor characteristics, and
information sources)
Stage 3. Choice (vendors evaluation and selection)
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
7. Mechanics of Importing
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
Steps in Importing
 Finding a bank that either has a branch in the exporter’s
country or has a correspondent bank
 Establishing a letter of credit with the bank
 Deciding on the mode of transfer of goods from exporter to
importer
 Checking compliance with national laws of the importing
country
 Making allowances for foreign exchange fluctuations
 Fixing liability of payment of import transactions and
warehousing
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
7. Mechanics of Importing
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Import Documents and Delivery
 Entry documents filed by the consignee:
 The bill of lading
 Customs form 7533
 Customs form 3461
 Packing list
 Commercial invoice
 Also accompanied by evidence that a bond is posted with
customs to cover any potential duties, penalties, and taxes
 For Special Permit for Immediate Delivery, use Customs form
3461 for fast release after arrival.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
7. Mechanics of Importing
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Import Duties in the United States
 Ad valorem duty
 Specific duty
 Compound duty
 Antidumping import duty
 Countervailing duty
 Duty drawback:
 Direct identification drawback
 Substitution drawback
 All countries have procedures allowing for the
temporary of goods across their borders.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
8. Gray Markets
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Gray market channel refers to the legal
export/import transaction involving genuine products
into a country by intermediaries other than the
authorized distributors.
From the importer side, it is also known as parallel
imports.
Three conditions are necessary for gray markets to
develop:
1. Products must be available in other markets.
2. Trade barriers must be low enough for
parallel importers.
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
8. Gray Markets
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3. Price differentials among various markets must
be great enough to provide the basic motivation
for gray marketers. Such price differences arise
for various reasons:
 Currency fluctuations
 Differences in market demand
 Legal differences
 Opportunistic behavior
 Segmentation strategy
 The WWW’s information transparency
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
8. Gray Markets
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
How to Combat Gray Market Activity
(See Exhibit 16-7.)
 Reactive
Strategies
 Strategic
Confrontation
 Participation
 Price cutting
 Supply interference
 Promotion of gray market product limitations
 Collaboration
 Acquisitions
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
8. Gray Markets
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 Proactive
Strategies
 Product/service
differentiation and availability
 Strategic pricing
 Dealer development
 Marketing information systems
 Long-term image reinforcement
 Establishing legal precedence
 Lobbying
Copyright (c) 2009 John Wiley & Sons, Inc.
Chapter 16
Exhibit 16-7: How to Combat Gray Market
Activity
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 17
Exhibit 16-7: How to Combat Gray Market
Activity, cont’d
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Copyright (c) 2007 John Wiley & Sons, Inc.
Chapter 17