Indirect Export Channels

With indirect channels, the firm exports through an independent local middleman that as­sumes responsibility for moving the product overseas. Indirect exporting entails reliance on another firm to act as a sales intermediary and to assume responsibility for marketing and shipping the product overseas. The manufacturer incurs no start-up cost, and this method provides small

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Direct Export Channels

With direct channels, the firm sells directly to foreign distributors, retailers, or trading com­panies. Direct sales can also be made through agents located in a foreign country. Direct exporting can also be expensive and time consuming. However, it offers manufacturers op­portunities to learn about their markets and customers in order to forge better relationships

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Locating, Contacting, and Evaluating Export Agents and Distributors

Once the firm has identified markets in which to use agents and distributors, it can locate these intermediaries by using various sources: government trade offices (the Department of Commerce in the United States), chambers of commerce, trade shows, international banks and other firms, trade and professional associations, and advertisements in foreign trade publications. After

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Contracts with Foreign Agents and Distributors (Representatives)

It is estimated that about 50 percent of global trade is handled through overseas agents and distributors. Laws governing agents and distributors are complex and vary from country to country. In certain countries, protective legislation favors local representatives with respect to such matters as market exclusivity and duration or termination of contracts. In the

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Major Clauses in Representation Agreements

1. Definition of Territory The contract should define the geographical scope of the territory to be represented by the agent or distributor and whether the representative has sole marketing rights. In exclusive contracts, the agreement has to clearly specify whether the firm reserves the right to sell certain product lines to a specific class

Maintaining and Motivating Overseas Representatives

Agents and distributors can be motivated in many ways to do the best possible job of market­ing and promoting the firm’s product. This could be accomplished by, for example, develop­ing good communications through regular visits from the home office, the organization of conferences, or provision of inexpensive free trips for representatives during a given

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Export Channel Decisions of Two U.S. Companies

1. Wayne Engineering Wayne Engineering is a leading manufacturer of side loaders, recycling vehicles, and recycling and garbage trucks. It uses Tradesur Inc. to handle the promotion, marketing, and distribution of its products in overseas markets. TradeSur is an export management company (EMC) located in San Diego, California, with more than eighteen years of

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The Internet and Exporting: A Focus on Developing Countries

A business that would like to succeed in export markets needs information about market prospects and must continually fine-tune its marketing skills, which in­cludes the use of the Internet and Web-based resources to sell and promote products as well as generate new clients. For example, an export company that plans to participate in an

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International Logistics

Logistics is a total systems approach to management of the distribution process that includes the cost-effective flow and storage of materials or products and related information from point of origin to point of use or consumption. There are two categories of business logistics: Materials management: In the context of export-import trade, logistics applies to

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External Influences on Logistics Functions in International Trade

A number of external factors influence international logistics decisions: regulations, compe­tition, and technology. 1. Regulations Governments in many countries encourage their domestic carriers to handle their exports or imports since the provision of such transportation services contributes to the nation’s bal­ance of payments. This can be illustrated by U.S.-China trade, which is mostly transported

Typical Logistics Problems and Solutions in International Trade

Each export-import firm must use a logistics system that best fits its product line and cho­sen competitive strategy (see Table 6.1 for differences between domestic and international logistics). Example 1 Arturo Imports Incorporated, a firm based in Boca Raton, Florida, specializes in the importation of gift articles from South America and the Caribbean. It

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The International Logistics Proces

In export-import transactions, the following steps represent the approximate order of physi­cal movement and distribution of goods to a foreign buyer. Step 1 As a result of previous correspondence between the prospective seller and buyer, the prospec­tive customer (buyer) places an order to purchase the desired merchandise, including such essential items as terms of

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Logistics Functions in International Trade

1. Labeling Importers are required to comply with domestic labeling laws. Even though an imported product may comply with the labeling requirements of the country where it was manufac­tured, it may not comply with the labeling laws of the importing country. Labeling require­ments are imposed in many countries to ensure proper handling (e.g., “Do

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Risks in Foreign Trade

Businesses conducting export-import trade face a number of risks that may adversely impact their operations, such as the following: Political risk: Actions of legitimate government authorities to confiscate cargo, war, revolution, terrorism, and strikes that impede the conduct of international business Foreign credit risk: Nonpayment or delays in payment for imports Transportation risk: Loss

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Marine and Aviation Insurance

Export-import firms depend heavily upon the availability of insurance to cover against risks of transportation of goods. Risks in transportation are an integral part of foreign trade, partly due to our inability to adequately control the forces of nature or to prevent human fail­ure as it affects the safe movement of goods. Insurance played

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Claims and Procedures in International Trade

1. Claims Shippers can claim from carriers or insurers with respect to loss or damage to their cargo. Shippers often attempt to recover from carriers when they have a reasonable basis to believe that the loss or damage was caused by the negligent act or omission of the carriers that was easily preventable through

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Determinants of Export Prices

A number of variables influence the level of export prices. Some of these are internal to the firm; others are factors that are external to the firm. A major internal variable is the cost that is to be included in the export price. The typical costs associated with exports include market research, credit checks,

Pricing in Export Markets

The export price decision is distinct from the price decision in the home market. The export decision has to consider variations in market conditions and the existence of cartels or trade associations, as well as the existence of different channels of distribution. The presence of different environmental variables in export markets militates against the

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Export Pricing Objectives

An exporter’s pricing objectives have an important influence on its pricing strategy. If a firm prefers an aggressive expansion strategy into foreign markets, it may opt for a lower profit margin than it accepts for domestic sales. It will charge minimum prices in all markets to generate the highest volume of sales. This means

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Calculating the Export Price

Calculating Landed Cost and Distributor/Retail Price There are two steps involved in calculating the export price: Calculating the landed cost: Landed cost is the total cost of a product once it has arrived at the buyer’s door. It includes the original cost of the item, all brokerage and logis­tics fees, complete shipping costs, customs

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