Keywords: MBA of International Trade Management low cost business university business culture

MBA of International Trade Management

These are some brief notes on International Trade Management - 1

Dr.  S.  Maurer,  
MBA Professor

If you have found that direct mail has paid off for you at home,  chancës are good that it will also help you reach buyers in foreign markets.

Delivery is the placement of the vehicle in a position for unloading.

* Similarities in business culture,  practices and the law.  * Language and other possible communication barriers.  * Spending habits.  * National traditions.  * Religious beliefs.  * The stability of the market's economic and political environment.  * Direct and indirect barriers to initial market entry.  * Product standards in the quality,  safety and technical areas.  * Current market size and growth potential.  * Existing domestic and foreign competition.

Many times,  additives must appear on the label in the list of ingredients.  Your labeling and packaging may have to be altered to comply with the country's labeling or environmental regulations.

If you choose to export directly,  you must be willing to devote more time,  money,  personnel and other enterprise resources.

As tariff barriers [tariffs,  duties and quotas] are eliminated around the world in accordance with the requirements of participation in the World trade Organization [WTO],  other non-tariff barriers,  such as product standards,  are proliferating.

One area in which you should definitely seek assistance is market research.  You can get up-to-date information from the U.S.  Commerce Department's trade information Center and the SBA.  The SBA and its volunteer offshoot,  the Service Corps of Retired Executives [SCORE],  can also help you with marketing or distributing your commodity.

Buyer preferences in a foreign market may also lead an exporter based in more advanced countries to modify its product.

Most owners of small businesses venturing overseas often don't have the extra capital they need and must turn to outside financing sources.  In recognition of the importance of exporting building at all governmental levels,  new sources of funding are springing up.

In view of this phenomenon,  the decision to be made by the exporter should not rest on whether or not it should adapt.  The decision,  more appropriately,  should track,  “What aspects of product offering should we adapt and what aspects should we standardize.”

Common engineering changes needed to conform to the country specific requirements.

Once a letter of credit [LC] is issued and the beneficiary has had a chance to review the document,  the need for an amendment may become apparent.  Or perhaps the applicant realizes they made an error when they completed the application after the letter of credit has already been issued.  Whatever the circumstances may be,  it isn’t unusual for someone involved in a transaction to need to amend an existing letter of credit.

For doing business overseas,  you will want to choose one that offers short-term and medium-term export financing,  foreign credit,  commercial letters of credit,  collection or discount export drafts,  and purchase and sale of foreign exchange.

Regulations for food additives,  for example,  differ from country to country.  The U.S.  Generally Recognized as Safe [GRAS] additives may have maximum content levels or may be prohibited altogether in foreign countries.

Quality packaging for shipment is vital,  even in this day of containerization and air-freight systems.  Poor quality packaging can mean poor quality product,  costly delivery and storage,  and failure to meet legal requirements.

These are some brief notes on International Trade Management - 2

Dr.  S.  Maurer,  
MBA Professor

Companies in lesser dëveloped countries that have achieved local success may find it necessary to adopt an “up-market strategy” whereby the product may have to be designed to meet world class standards.

Similar to domestic expansion,  moving into international markets requires capital.  You need funds for inventory,  receivables and promotion activities.  In addition,  if you intend to open foreign branch offices,  you'll need cash for facilities and related operating expenses.

For doing business overseas,  you will want to choose one that offers short-term and medium-term export financing,  foreign credit,  commercial letters of credit,  collection or discount export drafts,  and purchase and sale of foreign exchange.

Some exporters believe the domestic product can be exported without significant changes.  Others seek to consciously develop uniform products [global product design strategy] that are acceptable in all markets with little or mo modification.

To successfully establish your niche,  you should target a few selected countries.  You will want to investigate national wealth and any cost barriers,  such as tariffs and import regulations,  as well as taxation laws and restrictions on foreign investments.

Delivery is the placement of the vehicle in a position for unloading.

Sell the standard products you make for your country market in as many foreign markets as will accept them.  Adapt your standard products to meet foreign market needs more closely.  Adapt your products to meet both foreign and domestic market criteria at the same time,  i.e.  create a universal [global] product.

For consumer products the pack might have various functions: protective,  informative,  merchandising and conforming to legal requirements and buying habits [e.g.  Americans tend to buy less frequently than Europeans,  so the largest size is more popular in the United States].

If a country's standard of living is lower than that of the United States,  a manufacturer may find a market for less sophisticated product models that have become obsolete in the United States.

Engineering changes needed: Knowledge of legal and operating requirements will help the exporter to determine whether that ‘special’ that is selling well in the home country needs to be substituted or should an arrangement be made to offer a different drive ratio to achieve the desired operating revolutions per minute.

In Intech,  Inc.  v.  Consolidated Freightways,  Inc.,  836 F.2d 672 [1st Cir.  1987],  the carrier had transported a machine and its accessories in two containers from California to Acton,  Massachusetts.  Upon arrival of the first container at the consignee’s facility,  there was a dispute as to who was responsible to unload the machine.  The container sat there for some six months before C.F.  finally came back and removed it.  Damage was discovered five months later,  when the consignee went to inspect the machine at C.F.’s yard.

Let’s assume that we have a buyer,  a broker/middleman,  and a supplier/manufacturer.  At the request of the broker,  a buyer applies for a letter of credit,  but this time there is no mention of the letter of credit needing to be transferable?

Motivating Factors for Product Adaptation Marketers often find the need for some changes to be obvious while other changes may require in-depth analysis of societal customs and cultures,  the local economy,  technological sophistication of people living in the country,  customers’ purchasing power and purchase behavior.

Fred Budetti's United Steel Products of Corona,  New York,  is now a 50 percent partner in a Russian joint venture thanks to his relationship with a Russian engineer once assigned to his government's New York mission.  The manufacturer of steel security products,  such as commercial rolling doors and grills,  enjoyed a 15-year relationship with the mission prior to doing business overseas.

If you advertise to your U.S.  market,  you may also want to consider advertising to a new overseas one.  However,  the decision to include paid-for advertising in your budget depends on the extent you believe advertising influences your end customers.

These are some brief notes on International Trade Management - 3

Dr.  S.  Maurer,  
MBA Professor

Some export programs are tiëd into state or local economic development funds; while others have special funding sources dedicated to supporting exports.  All of the existing programs are designed to streamline access to available funds,  to support programs of federal agencies,  or both.

Local customs,  such as religion or the use of leisure time,  often determine whether a product will gain market acceptance.  The sensory impact of a product,  such as taste or visual impact,  may also be a critical factor.  The Japanese consumers’ desire for beautiful packaging,  for example,  has led many U.S.  enterprises to redesign cartons and packages specifically for this market.

When establishing your export price,  begin by taking into account your customers' perception of value,  what differentiates your product from that of your competitors and the role price will play in sales volume and profit.

Buyer preferences in a foreign market may also lead an exporter based in more advanced countries to modify its product.

According to NFIB statistics,  almost every international market is growing faster than the U.S.  For example,  Latin America is experiencing annual growth of five percent; the Middle East,  nearly that.  The Four Tigers - Hong Kong,  Singapore,  South Korea and Taiwan - and their neighbors Thailand,  Malaysia and Indonesia,  are averaging six percent growth annually - and that's when they're having an unremarkable year.

With the Assignment in place,  once the supplier turns over the merchandise to the broker/middleman,  the supplier does lose control of the transaction.

In Intech,  Inc.  v.  Consolidated Freightways,  Inc.,  836 F.2d 672 [1st Cir.  1987],  the carrier had transported a machine and its accessories in two containers from California to Acton,  Massachusetts.  Upon arrival of the first container at the consignee’s facility,  there was a dispute as to who was responsible to unload the machine.  The container sat there for some six months before C.F.  finally came back and removed it.  Damage was discovered five months later,  when the consignee went to inspect the machine at C.F.’s yard.

American enterprises are more sophisticated and much more capable in many dimensions,  including marketing techniques,  technology,  experience and access to a lot of high quality products.

Foreign distributors and sales representatives generally work on commission,  assume no risk or responsibility,  and are under contract for a specified period.

In a survey of 328 of the U.S.'s fastest growing enterprises,  globally focused enterprises anticipated 1992 growth rates of 26.4 percent compared to 22.5 percent for firms that aren't involved in selling internationally.

Sell the standard products you make for your country market in as many foreign markets as will accept them.  Adapt your standard products to meet foreign market needs more closely.  Adapt your products to meet both foreign and domestic market criteria at the same time,  i.e.  create a universal [global] product.

Keep in mind most letters of credit are irrevocable,  meaning that no change can be made to the LC without the agreement of all parties.

Common engineering changes needed to conform to the country specific requirements.

Certain high-technology products are inappropriate in some countries not only because of their cost but also because of their function.  For example,  a computerized industrial washing machine might replace workers in a country where employment is a high priority.  In addition,  these products may need a level of servicing that is unavailable in some countries.

Fred Budetti's United Steel Products of Corona,  New York,  is now a 50 percent partner in a Russian joint venture thanks to his relationship with a Russian engineer once assigned to his government's New York mission.  The manufacturer of steel security products,  such as commercial rolling doors and grills,  enjoyed a 15-year relationship with the mission prior to doing business overseas.

These are some brief notes on International Trade Management - 4

Dr.  S.  Maurer,  
MBA Professor

If you choose to sell your commodity directly,  you can markët your goods through direct mail,  advertising and promotions in magazines with overseas circulation as well as in local publications and other media.

To successfully establish your niche,  you should target a few selected countries.  You will want to investigate national wealth and any cost barriers,  such as tariffs and import regulations,  as well as taxation laws and restrictions on foreign investments.

In order to speed up the amendment process,  the issuing bank may be tempted to add a clause to their amendment indicating that the beneficiary has a certain timeframe to either accept or reject the amendment.

If you have found that direct mail has paid off for you at home,  chances are good that it will also help you reach buyers in foreign markets.

A manufacturer of laser transmission systems,  the enterprise has to alter each system it sells to meet the specific product standards of its client countries.  So does Cenogenics Corp.,  a New Jersey manufacturer of medical diagnostic kits.  Not only has the firm become adept at changing its products to suit local needs,  but it has also had to change its packaging.

Often recent immigrants understand the international trade advantages best.  Not only have they had a chance to compare U.S.  goods with those of our foreign competitors firsthand,  they also maintain ties to their homelands.  These ongoing relationships give immigrant entrepreneurs a natural and almost immediate market,  and they obviously don't have to worry about learning the nuances of the importing culture.

If a country's standard of living is lower than that of the United States,  a manufacturer may find a market for less sophisticated product models that have become obsolete in the United States.

The availability,  performance and level of sophistication of commercial infrastructure will warrant a need for adaptation or localization of products.  For example,  an exporter may decide not to market its frozen line of food products in countries where retailers do not have adequate freezer space.

As the shipment approached Chicago,  Lowe’s customs agent,  Fritz enterprises,  directed Hanjin to release the shipment to a motor carrier so that it could be taken to a U.S.  Customs facility for an intensive customs examination.  After the inspection had been completed,  the container sat for over a week in Channel’s unprotected yard,  and was eventually stolen.

Establishing local customer preferences and evaluating competitive products and enterprises in the target market is elemental.

California has overseas trade offices in five countries and its State Department of Food and Agriculture and California Energy Commission [to name just two agencies] sponsor trade shows and offer financial assistance to prospective exporters.

The commitment and expertise of the distributor are paramount to us, stresses Cenogenics owner Michael Katz.  Once we've found the right person,  the country is no longer difficult.  We have a guide through the maze.

Perhaps you think you've tapped out your market in the U.S.  and believe exporting could breathe some life back into your product.  Before you start pouring in time and other resources,  step back and candidly assess your potential for success.  This assessment should include a look at manufacturer trends,  your firm's domestic position in the manufacturer,  the effect exporting will have on your present operations,  the status of your resources and the anticipated demand for your commodity.

If you advertise to your U.S.  market,  you may also want to consider advertising to a new overseas one.  However,  the decision to include paid-for advertising in your budget depends on the extent you believe advertising influences your end customers.

The way you market your product in the United States can provide helpful clues for developing methods of selling it internationally.