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42 Cards in this Set

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Exporting
*the most popular way for many companies to become international
*usually the first mode of foreign entry used by companies
*involves numerous high risks, arising from a lack of knowledge about and unfamiliarity with foreign environments.
*manufactured goods accounted for almost 60 percent of the exports of developing countries
Research for exports
*the first step is to use availablesecondary data to research potential markets.
Critera for the identification of an appropriate overseas market
*Socioeconomic characteristics: demographics, economic, etc
*Political and legal characteristics
*consumer variables: lifestyles, preferences, culture, etc)
*financial conditions
Export Market Segments
*the grouping of countries and regions among countries enables the firm to link various geographical areas into one homogeneous market segment that the firm can cater to in meeting its export objectives.
*develop a product strategy for the selected export markets by clustering regions
*At a regional level within nations there would be geographical and psychographic segments
*issues of standardization v adaptation
Issues of standardization v. adaptation
*standardized product is the easiet to sell abroad
*if it is not possible to sell standardization products, the firm may need to adapt its products for the overseas marketplace.
Indirect Exporting
*least costly
*involves the use of independent middlemen to market the firm's products overseas.
*comibnation export manager
*export merchants
*export brokers
*export commission house
*trading companies
*piggyback exporting
Combination Export Manager (CEM)
Indirect Exporting
*acts as the export department to a small exporter or a large producer with small overseas sales.
*have lots of experience
*a vanishing breed
Export Merchants
Indirect Exporting
*buy and sell on their own accounts and assume all the responsibilities of exporting a product
*manufacturers do not control the sales activities of their products.
Export Broker
Indirect Marketing
*someone who brings together an overseas buyer and a domestic manufacturer for the purpose of an export sale and earns a commission for establishing a contact that results in a sale.
*brings the buyer and the seller together
Export commission house
Indirect Exporting
*places orders on behalf of its foreign client with US manufacturers and acts as a finder for its client to get the best buy.
*acts on behalf of its clients and does not buy on its own behalf.
Trading companies
Indirect Marketing
*large foreign organizations engaged in exporting and importing.
*they buy on their own account in the US and export the goods to their country of origin.
Piggyback Exporting
Indirect Exporting
*the practice where firms that have established export departments assume, under a cooperative agreement, the responsibility of exportine the products of other companies.
Direct Exporting
*occurs when a manufacturer or exporter sells directly to an importer or buyer located in a foreign market
*Export deparment
*export sales subsidiary
*foreign sales branch
Export department
Direct Exporting
*largely self-contained and operates independently of domestic opertations
*may be structured internally onthe basis of function.
Export Sales subsidiary
direct exporting
*must purchase the products it sell sin the oversears markets from its parent manufacturer.
Exporting
*the most popular way for many companies to become international
*usually the first mode of foreign entry used by companies
*involves numerous high risks, arising from a lack of knowledge about and unfamiliarity with foreign environments.
*manufactured goods accounted for almost 60 percent of the exports of developing countries
Research for exports
*the first step is to use availablesecondary data to research potential markets.
Critera for the identification of an appropriate overseas market
*Socioeconomic characteristics: demographics, economic, etc
*Political and legal characteristics
*consumer variables: lifestyles, preferences, culture, etc)
*financial conditions
Export Market Segments
*the grouping of countries and regions among countries enables the firm to link various geographical areas into one homogeneous market segment that the firm can cater to in meeting its export objectives.
*develop a product strategy for the selected export markets by clustering regions
*At a regional level within nations there would be geographical and psychographic segments
*issues of standardization v adaptation
Issues of standardization v. adaptation
*standardized product is the easiet to sell abroad
*if it is not possible to sell standardization products, the firm may need to adapt its products for the overseas marketplace.
Indirect Exporting
*least costly
*involves the use of independent middlemen to market the firm's products overseas.
*comibnation export manager
*export merchants
*export brokers
*export commission house
*trading companies
*piggyback exporting
Combination Export Manager (CEM)
Indirect Exporting
*acts as the export department to a small exporter or a large producer with small overseas sales.
*have lots of experience
*a vanishing breed
Export Merchants
Indirect Exporting
*buy and sell on their own accounts and assume all the responsibilities of exporting a product
*manufacturers do not control the sales activities of their products.
Export Broker
Indirect Marketing
*someone who brings together an overseas buyer and a domestic manufacturer for the purpose of an export sale and earns a commission for establishing a contact that results in a sale.
*brings the buyer and the seller together
Export commission house
Indirect Exporting
*places orders on behalf of its foreign client with US manufacturers and acts as a finder for its client to get the best buy.
*acts on behalf of its clients and does not buy on its own behalf.
Trading companies
Indirect Marketing
*large foreign organizations engaged in exporting and importing.
*they buy on their own account in the US and export the goods to their country of origin.
Piggyback Exporting
Indirect Exporting
*the practice where firms that have established export departments assume, under a cooperative agreement, the responsibility of exportine the products of other companies.
Direct Exporting
*occurs when a manufacturer or exporter sells directly to an importer or buyer located in a foreign market
*Export deparment
*export sales subsidiary
*foreign sales branch
Export department
Direct Exporting
*largely self-contained and operates independently of domestic opertations
*may be structured internally onthe basis of function.
Export Sales subsidiary
direct exporting
*a separete legal entity
*must purchase the products it sell sin the oversears markets from its parent manufacturer.
Foreign Sales Branch
Direct Exporting
*not a separate legal entity.
*handles all sales, distribution and promotional work throughout a designated market area and sells primarily to wholesalers and dealers.
Mechanics of Exporting (for direct exporting)
*automated export system (AES)
*legality of exports
*export transactions
Automated Export System (AES)
Mechanics of Exporting
*in the us, the AES which was launched in October 1999, enables exporters to file export information at no cost over the Internet. AEC is a nationwide sstme operational at all ports
Legality of Exports
Mechanics of Exporting
*Export license: gernal or validated
*General license: permits exportation within certain limits requiring that an application be filed or that a license document be issued
*Validated License: permits exportation with specific limitations; it is issued only on formal application
Export Transactions
Mechanics of Exporting
*the terms of sales
*monitoring the transportation and delivery of the goods to the assigned party
*bill of lading
*commerical invoice
*freight forwarders
*shipping and obtaiing the bill of lading.
Bill of lading
*contract between the exporter and the shipping company, indicating that the shipping company has accepted responsibility for the goods, indicating that the shipping company has accepted responsibility for the goods and will provide transfortation in return for payment.
*a straight bill of lading
*a shipper's order bill of lading
Commerical invoice
Export transactions
*a bill for the goods stating basic infomration about the transaction, including a description of the merchandise, total cost of the goods sold, addresses of the buyer and the seller and delivery and payment.
Freight Forwarders
Export Transactions
*shippings agents and specialists in handling export documentation
Terms of Payment in an Export Transaction
*Advance Payment
*Confirmed irrevocable letter of credit: letter of credit by importer's band, confirmed by the exporter's bank
*Unconfirmed irrevocable letter of credit: etter of credit by importer's bank
*Documents against payment: importer pays bills and obtains documents and then goods
*Documents against acceptance: importer accepts bills to be paid on due date and obtains documents and then goods.
*Open account: no draft drawn.pay when specified
*Consignment: shipment helpd my importer until products have been sold then payment is due
Currency Hedging
Mechanics of Exporting
*is done through a banker or the firm's treasury in case there is a foreign risk in th export transaction.
Managing Imports
*for organizations in the US, importing is considerably easier for most firms in the rest of the world.
*about 60% of the world's trade is still denominated in US dollars
*most of the time, a US importer does not have to bother with hedging foreign exchange transactions or with trying to accumulate foreign currency to pay for imports.
Steps in importing
*finding a bank that either has branches 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