Chapter 8
International Marketing
Channels
8.02 Exporting and Logistics
International Marketing
© Thomson/South-Western
Warmup--Logistics
Connect to each of these videos (in order)
to use as a warm-up (approx. 20 min.):
http://www.youtube.com/watch?v=qDbnx6
nLrQo&feature=related
http://www.youtube.com/watch?v=Wlrf32i
U9pc&feature=relmfu
Chapter 8
Slide 2
International Business
© Thomson/South-Western
Lesson 8.2
Exporting and Logistics
Goals
 Explain what is involved in the
exporting process.
 Discuss the importance of having an
efficient logistical system.
Chapter 8
Slide 3
International Business
© Thomson/South-Western
Terms
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exporting
importing
indirect exporting
direct exporting
customs
customs broker
intermodal transport
Chapter 8
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International Business
© Thomson/South-Western
EXPORTING
 Exporting
 The process of shipping a product to
another part of the world for trade or sale
 Includes:
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Chapter 8
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Identification of customers
Preparing products for shipment
Arranging documentation
Clearing customs
Planning shipping/delivery of products
International Business
© Thomson/South-Western
EXPORTING (continued)
 Indirect exporting
 For a company not fully committed to
international marketing
 Uses a broker or agent to help find
customers and export products
 Extra middle-men can increase total cost
Chapter 8
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International Business
© Thomson/South-Western
EXPORTING (continued)
 Direct exporting
 For a company fully committed to foreign
markets
 a company actively controls finding
markets and exporting products
 Importing
 receiving products exported from another
country
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International Business
© Thomson/South-Western
Intermediaries that assist in
exporting:
 Export trading company
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Buy and sell products
Conduct market research
Overseas distribution
Provide funding and financing
Coordinate shippers, suppliers, and
manufacturers
 International freight forwarder
 Travel agent for cargo
 Ships products directly to foreign customers
Chapter 8
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International Business
© Thomson/South-Western
Documentation for clearing
customs
 Customs
 immigration control for products entering
the country
 Inspect shipments to insure proper
documentation
 Collect customs fees
 Insure restricted products do not enter
 E.g., dangerous items, embargoed products,
fake products, endangered species products
Chapter 8
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International Business
© Thomson/South-Western
Documentation for clearing
customs (cont.)
 Customs broker
 An intermediary that specializes in moving
products through customs
 Licensed by U.S. Department of Treasury
 May also work with Dept. of Agriculture,
Environmental Protection Agency, or Food
& Drug Administration
Chapter 8
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International Business
© Thomson/South-Western
Documentation requirements
 Bill of lading
 Issued by carrier (transporter) to shipper
(exporter) acknowledging receipt of goods
 Describes type and quantity of goods
 Describes how goods will be shipped
 Identifies destination
 http://www.youtube.com/watch?v=nmosREOfkXw
 Bill of lading video
Chapter 8
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International Business
© Thomson/South-Western
Documentation requirements
 Certificate of origin
 Document that identifies the country in
which exported goods are obtained,
produced, or processed
 Helps determine import duties or whether
the products may be legally imported,
depending on country of origin
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International Business
© Thomson/South-Western
Foreign Trade Zone
 Foreign Trade Zone (FTZ)
 an area designated by a country as a
specialized zone where products may be
exempt from duties
 Products in FTZ’s may be stored,
modified, displayed without paying duties
 Products exported out of FTZ’s no import
duties are paid where the FTZ is located
 http://www.youtube.com/watch?v=uFxTKV7_LLM
 http://www.youtube.com/watch?v=w2rmuKHlU3A
 Foreign trade zone videos and china
Chapter 8
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International Business
© Thomson/South-Western
INTERNATIONAL LOGISTICS
 Logistics involve the transportation and
storage of products between producer
and consumer
 Modern technology makes logistics
easier than in the past:
 GPS allows ships to avoid bad weather
 Easy to track individual shipments
Chapter 8
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International Business
© Thomson/South-Western
Logistics and the Total Cost
Concept
 Transportation costs are a major portion of
total exporting costs
 Other cost factors to consider:
 Products shipped by water or land arrive with less
certainty than by air
 Greater chances for spoilage, loss, or obsolescence
 Warehousing and insurance costs may be higher
 Air freight enhances security, limits shipping time,
assures faster delivery
Chapter 8
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International Business
© Thomson/South-Western
Logistics and the Total Cost
Concept
 Other costs factors to consider (cont.):
 Free on board (FOB)—determines where
the shipper pays the transportation costs
 FOB destination—seller pays shipping costs to
the buyer’s delivery point
 FOB Origin—buyer pays shipping costs from
the seller’s departure point
 May include cost, insurance, and freight (CIF)
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International Business
© Thomson/South-Western
Transportation Modes
 Water transportation
 Within a continent—utilize rivers and lakes
 Cargo containers used for overseas
shipping
 Good for bulk items such as grain or
minerals
 Half of all U.S. imports arrive via cargo
container—over 9 million containers yearly
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International Business
© Thomson/South-Western
Transportation Modes
 Air cargo
 Containerized jumbo jets can carry over 90
tons
 Costs are higher than other transportation
 Fast delivery avoids need for warehousing
 Less opportunity for theft
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International Business
© Thomson/South-Western
Transportation Modes
 Land transportation
 Two main modes: rail and truck
 Rail typically used for bulk products
 Usually require land connections to air or
ferry
 Long-distance land shipments increase
chance of loss, damage, delivery
uncertainty
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International Business
© Thomson/South-Western
Transportation Modes
 Pipelines
 Primarily for energy-related products (oil
and natural gas)
 Coal can also be put into a liquid mixture
(slurry) and shipped through pilelines
Chapter 8
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International Business
© Thomson/South-Western
Intermodal Transport
 Intermodal transport involves a
combination of transportation modes.
 Fishyback
 Containerized shipping between trucks & ships
 Piggyback
 Shipping between truck and rail
 Birdyback
 Shipping between truck and air cargo
Chapter 8
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International Business
© Thomson/South-Western