Keywords: MBA of International Trade Management low cost master business administration business start up plan

MBA of International Trade Management

These are some brief notes on International Trade Management - 1

Dr.  S.  Maurer,  
MBA Professor

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

Product adaptations may even include changes in one or more combinations of brand name,  color,  size,  taste,  design,  style,  features,  materials,  warranties,  after sale service,  technological sophistication and performance.

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.

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.

Let’s imagine that the amendment appears to restrain the beneficiary.  For example,  the amendment might reduce the dollar value of the LC,  shorten the life of the LC by adding an expiration date,  or change the tenor of the LC from a sight draft to a time draft with no mention of who would pick up the expense of accepting or discounting the draft.

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.

The question of how you will sell,  deliver and service your product abroad is far more important than you may realize.  In answering this question,  the first decision you will want to address is method of distribution.

Today,  the miracle of the marketplace - fax machines,  modems,  international 800 telephone numbers and credit cards - has brought a new accessibility.  The new technology enables small and medium-size organizations to move to areas where they can prosper as surely as people in the 1800s were able to move to new territories using barbed wire,  windmills and other technology of their times.

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

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.

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.

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.

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.

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.”

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.

These are some brief notes on International Trade Management - 2

Dr.  S.  Maurer,  
MBA Professor

Local product market scanning,  competitive product sampling and ëvaluation are also needed to determine the appropriate level of warranties in country markets where the products are being exported.

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.

While many enterprises recognize the potential of the global marketplace,  the idea of taking it on can be extremely daunting.  Experts agree that the process starts with a deep commitment.  And with that commitment come resources of money,  time and effort to research markets,  learn about new cultures and create a strategic business plan that specifically addresses the new realities.

Transportation is not completed until a shipment has both arrived at its destination and has been delivered.  Danciger v.  Cooley,  248 U.S.  319,  327 [1919].

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.

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

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

If the bank doesn’t hear from the beneficiary during the stipulated timeframe,  it will automatically assume the beneficiary has agreed to the amendment.  From the issuing bank’s perspective,  this arrangement is nice and tidy,  as they can adjust their customer’s liability for the LC at the end of the timeframe without having to do any follow up if they haven’t heard from the beneficiary.

The international market average rate for the 90s has been two percent,  topping 2.3 percent under the best of circumstances

These numbers don't mean that the U.S.  isn't growing,  but rather that other countries are growing so much faster.

When an LC amendment is made,  the beneficiary has the right to either accept or reject the amendment in its entirety.  However,  nowhere is it stipulated just how long the beneficiary has to make this decision.

The mere arrival of goods at their destination does not reduce the liability of the carrier where anything remains to be done by the carrier to effectuate delivery.  Seaboard Allied Milling Corp.  v.  Consolidated Rail Corp.,  unreported,  [D.  Colo.  1980]; Keystone Motor Freight Lines v.  Brannon-Signaigo Cigar Co.,  115 F.2d 736 [5th Cir.  1940].

* 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.

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.

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.

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.

These are some brief notes on International Trade Management - 3

Dr.  S.  Maurer,  
MBA Professor

When potential customers havë limited purchasing power,  the exporter may actually need to develop an entirely new product [innovation] designed to address the market opportunity at a price point that is within the reach of a potential target market.

Worst case scenario would be that the supplier goes ahead and ships the merchandise to the buyer but also contacts them proposing that they not use the LC as the method of payment.  They might even suggest that instead of the LC,  they would be happy to offer open account terms.  They may propose that after the buyer has received the merchandise,  they could wire transfer payment.

Many of the same organizations that sponsor trade shows and fairs - such as the SBA,  manufacturer groups and government agencies - also sponsor trade missions to target countries that enable you to hear from local officials and meet prospective buyers.

Engineering changes needed: Measurement Systems—specifications,  manuals,  instructions,  labels,  dimensions,  and parts may need to be converted to the metric system.

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.

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

Strong warranties may be required to break into a new market,  especially if the enterprise is an unknown supplier.  In other cases warranties similar to those in the home country market may not be expected.

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.

The court also reversed the lower court’s finding that O’Hare Services and Channel Distribution were not liable,  and remanded the matter back for further proceedings to determine if they could be liable under Illinois law as bailees,  since there was evidence of very lax security precautions.

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.

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.

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.

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.

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.

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

These are some brief notes on International Trade Management - 4

Dr.  S.  Maurer,  
MBA Professor

Transportation is not completed until a shipment has both arrivëd at its destination and has been delivered.  Danciger v.  Cooley,  248 U.S.  319,  327 [1919].

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.

Worst case scenario would be that the supplier goes ahead and ships the merchandise to the buyer but also contacts them proposing that they not use the LC as the method of payment.  They might even suggest that instead of the LC,  they would be happy to offer open account terms.  They may propose that after the buyer has received the merchandise,  they could wire transfer payment.

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

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.

You may want to test your product's appeal by advertising in the U.S.  Department of Commerce's catalog-magazine,  Commercial News USA.  A manufacturer of emergency oxygen packs did just that and received inquiries from every continent.  Today,  40 percent of the enterprise's products go to foreign markets.

Pricing can be one of your most effective competitive weapons,  but it is often the most challenging for new exporters to use effectively.

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.

Some export programs are tied 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.

'Made in America' is still a high-powered statement.  And the low value of the U.S.  dollar means that our goods are currently so cheap,  we have an even greater competitive edge.

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.

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

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.

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

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.