Keywords: MBA of International Trade Management scholarship masters business administration business programs

MBA of International Trade Management

These are some brief notes on International Trade Management - 1

Dr.  S.  Maurer,  
MBA Professor

The supplier tries to contact thë broker/middleman,  only to find out that the phone has been disconnected and they appear to have left town.  The supplier’s prospect for payment at this point isn’t very good.  For this very reason,  suppliers or manufacturers may shy away from this arrangement.  It’s never a perfect world!

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.

A major change in the cultural shift is taking place within the corporate world,  and the “one size fits all” business practice is becoming obsolete.

By providing an unnecessary warranty,  the enterprise may raise the cost of the product higher than the competitors' costs.  When considering this point,  exporters should calculate the cost of servicing the warranties and adapt the warranty service so that it is in sync with local usage conditions and customer expectations.

The case of PolyGram Group Distribution,  Inc.  v.  Transus,  Inc.,  990 F.Supp.  1454 [N.D.  Ga.  1997] involved a mis-delivery of some 67 cartons of sound recordings intended for a new Media Play store in Gainesville,  Florida.  The shipment was supposed to be sent to a distribution center in Minneapolis.  However,  PolyGram instructed the carrier to deliver to a new store that was still under construction and had not yet opened for business.  The carrier delivered the shipment to the site and apparently obtained the signature of one of the construction workers.  it was later discovered that most of the cartons had disappeared.

Simply stated exporting refers to the marketing of goods produced in one country into another.

Documentation is important not only for the amount of additives,  but also the source of the product; secondary or indirect additives are also regulated in most countries.

Legal,  economic,  political,  technological,  and climatic requirements of a country market often dictate some level of localization or adaptation.

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.

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.

Hot dusty climates of countries in the Middle East and other emerging markets may force the automakers to adapt the automobiles with different types of filters and clutch systems than those used in North America,  Japan and Europe countries.

A common carrier can affect delivery by merely depositing the merchandise at the consignee's place of business without acceptance or rejection by the consignee.

A country's standard of living and the target market’s purchasing power can also determine whether a enterprise needs to modify a product.

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?

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

These are some brief notes on International Trade Management - 2

Dr.  S.  Maurer,  
MBA Professor

If brand name is relatively unimportant,  or if your markët is limited and concentrated,  then media advertising will probably play a minor role in your overall promotion efforts.  One of the best ways to build overseas sales is by participating in trade shows,  both here in the United States and overseas.

If an exporter can find a virgin market that is devoid of current and potential competition,  there may be no need to adapt or localize the product since the potential buyers have no choice.  But it is very hard to find a country in the current market environment where there is no competition.

The level of income,  the level of education,  and the availability of energy are all factors that help predict the acceptance of a product in a foreign market.

it would make perfect sense to develop [unless such products are already available] and export dehydrated vegetables in some country markets.

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

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.

Studies reveal that enterprises willing to invest,  to innovate and design their products for a specific export market are most likely to succeed.

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

Well-drafted cover letters and informative,  well-designed product and enterprise brochures can be very effective in getting started in a targeted segment of an overseas market.  However,  given the cost of foreign mailings,  be conscious of the weight of your direct mail package.

Remember,  most letters of credit are freely negotiable,  meaning that the beneficiary could present documents to any bank.  By endorsing the LC,  any bank that might receive documents will know that an assignment has been made.

Companies differ in terms of both their willingness and capability to identify and undertake profitable product adaptations.

A world of opportunity awaits outside the U.S.  borders.  Despite calls for protectionism by a number of business and government leaders,  trade agreements and the reconfiguration of nations are creating a global marketplace that offers new horizons for enterprises willing to venture out.

Outline the country or countries in which you plan to do business; identify your export objectives,  both immediate and long-term; define the specific tactics you will use to achieve these objectives,  such as a marketing and promotional plan and strategies; specify your distribution system and pricing; establish implementation and milestone schedules that reflect your objectives and tactics; and detail your allocation of resources.

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

We have the supplier sitting back patiently waiting for payment.  After two or three weeks,  they may contact the bank asking about the status of payment against the assignment only to hear that documents have yet to be presented against the letter of credit.  The supplier will be referred to the line in the assignment of proceeds that payment will be made to them if and when payment under the letter of credit is made.

These are some brief notes on International Trade Management - 3

Dr.  S.  Maurer,  
MBA Professor

To be successful in marketing products in intërnational markets,  most products require some level of adaptation or localization.

By providing an unnecessary warranty,  the enterprise may raise the cost of the product higher than the competitors' costs.  When considering this point,  exporters should calculate the cost of servicing the warranties and adapt the warranty service so that it is in sync with local usage conditions and customer expectations.

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.

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

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.

On ramp-to-ramp rail traffic,  delivery by the railroad is completed when the railroad delivers the car to the destination ramp and notifies the consignee that the shipment is available for pick up.

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.

The buyer,  not knowing that an assignment of proceeds has been issued,  may be thrilled at the prospect of not having to pay their bank an examination fee under the LC and embrace the open account proposal.

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.

Legal,  economic,  political,  technological,  and climatic requirements of a country market often dictate some level of localization or adaptation.

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.

A product’s size and packaging may have to be modified to facilitate shipment or to conform to possible differences in engineering or design standards in a country or regional markets.

The level of income,  the level of education,  and the availability of energy are all factors that help predict the acceptance of a product in a foreign market.

Size of packaging,  material used in packaging,  before and after sale service and warranties may have to be adapted in view of the scope and level of service provided by the distribution structure in the country markets targeted.  In the event post sale servicing facilities are conspicuous by their absence,  enterprises may need to offer simpler,  more robust products in overseas markets to reduce the need for maintenance and repairs.

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.”

These are some brief notes on International Trade Management - 4

Dr.  S.  Maurer,  
MBA Professor

The decision to adapt a product is based in part on thë degree of commitment to the foreign market.

The United States is virtually alone in its adherence to a non-metric system,  and U.S.  firms that compete successfully in the global market have found metric measurement to be an important detail in selling to overseas customers.

Simply stated exporting refers to the marketing of goods produced in one country into another.

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.

Market-driven thinking is sweeping the globe.  People don't talk of countries anymore, notes Dr.  N.E.  Okeke,  former president of the Nigerian Chamber of Commerce and manufacturer.  They talk of markets.

Instruction or maintenance manual,  for example,  should be made available in centimeters,  weights in grams or kilos,  and temperatures in degrees Celsius.

Once the endorsement is taken care of,  the bank will issue a document or letter titled Assignment of Proceeds addressed,  in this case,  to the supplier.  The content of this document will indicate that an assignment of proceeds has been made in their favor with a stated value.  it will also indicate that if and when payment is made under the letter of credit,  payment will automatically be made under the assignment.

A product may have to be adapted in a number of ways to meet the physical,  social or mandatory requirements of a new market.  it may have to be modified to conform to government regulations or to operate effectively in country specific geographic and climatic conditions.  it may be redesigned or repackaged to meet the diverse buyer preferences,  or standard of living conditions.

Factors such as topography,  humidity and energy costs can affect the performance of a product or even define its use in a foreign market.

Language,  legal and cultural differences may require you to consider the need for product changes.  Such changes may include product design,  branding,  labeling,  packaging and service arrangements.

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

Many kinds of equipment must be engineered in the metric system for integration with other pieces of equipment or for compliance with the standards of a given country.

For example,  the amendment is trying to reduce the value of the LC and the beneficiary accepts the amendment,  the issuing bank can reduce the exposure booked against the applicant’s line of credit.  Until the issuing bank hears from the beneficiary,  however,  they can’t assume that the beneficiary will agree,  and the bank must keep the full value of the LC booked against the applicant’s line of credit.

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.

Engineering changes needed: Environmental Requirements—Combustion engines,  for example,  may be required to use unleaded fuel only.