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Export Performance Improvement Factors
Government information sources
– US: various parts of the Dept. of Commerce
– Other countries: similar entity
– Embassies and consulates: commercial
sections
Export management companies
– Act as the export department of firms
– Experienced specialists
– Not exclusive
Focused export strategy
Some Successful Export Strategies
Enter on a small scale to reduce risks
Add product lines after export
operations begin to be successful
Hire locals to promote the firm’s
products
Exporting Strategy
It helps to hire an EMC or, at least, someone with
experience.
Focus on one or a few markets.
Enter markets on a fairly small scale until you ‘learn the
ropes’. Add new lines after initial success.
Need to recognize the time and managerial commitment.
Build strong and lasting relationships.
Hire locals to help firm establish itself.
Keep the option of local production in mind.
© McGraw Hill Companies, Inc., 2000
Export Process
Evaluate export potential
financial resources
management capability/experience
competitive advantages abroad
Steps in the Export Process
Evaluate export potential
Do market analysis
market size/product potential
distribution channels
needs for re-engineering etc. =
localization
Steps in the Export Process
Determine entry method
goal of entry
select distribution “partner”
determine channel length
assess risks
determine costs
Steps in the Export Process
Determine entry method
Barter
Counterpurchase
Offset
Switch Trading
Compensation or Buyback
Barter
International Reciprocal Trade Association
(IRTA) – the industry trade organization - almost
a half a million small businesses use commercial
barter exchanges every year.
Almost $10 billion in sales is transacted each year
by the commercial barter industry.
Trades where no intermediary is used and the
global barter market may be 10 times that amount.
Barter
International Reciprocal Trade Association
estimates that in 1998 over 470,000 companies
actively participated in barter in the US for a total
of over $16 billion in annual sales.
Over 65% of the corporations listed in the New
York Stock Exchange are presently using barter to
reduce surplus inventory, bolster sales, and ensure
that production facilities run at capacity.
U.S. Department of Commerce estimates that 20
to 25% of world trade is now barter, and corporate
barter is now a $20 billion industry.
Barter
Conserve cash -- preserve cash-flow
Strengthen cash reserves -- use barter for the
goods & services most needed
Increase buying power -- access to goods &
services for growth
Increase customer base – may add new clients
Move surplus inventory
Finance -- new businesses can build credit
through barter Employee Incentives -- travel,
entertainment, gifts, perks & bonuses
Compensation
Barter with a combination of goods and
convertible currency
Less risk than in straight barter
Counterpurchase – Parallel
Barter
Parties pay cash of goods
Seller agrees to buy products/services
unrelated to its business
Seller then sells products to third parties
Offset Purchase
Usually large projects, often involving
expenditure of buying government’s money
A % of the selling price is required to be
purchased or sourced from the buying
country
Buyback
Theseller agrees to buy a negotiated
quantity of the output from the buyer’s
output
Clearing Agreement
A third party brokers transactions between
parties, maintaining accounts for all
participants
Typically are legal documents which
specify the details of the arrangements:
Electrical power companies
Stock brokers, on-line traders
Switch Trading
Buyer pays hard currency for unwanted
goods/services from seller
Broker buys unwanted goods
Broker sells goods to third parties