ĐẠI HỌC FPT CẦN THƠ

Chapter 4 c

Planning and
Preparations for Export
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 Contents
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• Assessing and Selecting the Product

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• International Market Research

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• International Market Assessment

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• Developing an International Business Plan

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• Export Counseling and Assistance

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• Overseas Travel and Promotion

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WHY HAVE AN EXPORT PLAN?

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AN EXPORT PREPARATION

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1. Assessing and Selecting the Product
Establishing Export Potential for Product or
Service

S u c c e s s i n
domestic markets
Participation in
oversees trade
shows
Advertising and
market data
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 1. Assessing and
Selecting the Product
The export decision
E xperience

 Wi t h w h a t countries is trade b e i n g c o n d u c t e d ?
 W h i c h product lines are most in d e m a n d a n d w h o are the buyers or likely buyers?
 W h a t is the trend in sales?
 W h o are the m a i n domestic a n d international competitors?
 W h a t lessons have been learned from past experience?

Management and Personnel

 W h o w i l l b e r e s p o n s i b l e f o r t h e e x p o r t d e p a r t m e n t ’s o r g a n i z a t i o n a n d s t a f f ?
 H o w m u c h management time should or could be allocated?
 W h a t o rg a n i z a t i o n a l structure is su i t a b l e ?

Production Capacity

 W h a t i s t h e f i r m ’s p r o d u c t i o n c a p a c i t y ?
 W h a t is the effect of exports o n domestic sales a n d production capacity a n d cost?
 Is a m i n i m u m order quantity required?
 W h a t are the design a n d pac k agi ng requirements for exports?

Financial Capacity

 What a m o u n t of capital is tied u p in exports?

 What level of export department operating costs c a n be supported?
 What a re the initial e x p e n s e s of export efforts to b e allocated?
 When sh o u l d the export effort p a y for itself?
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 Approaches to Selecting
a Product for Export

 Systematic: Based
on demand and
growth trends,
statistical sources,
familiarity, proximity
to producer, etc.
Reactive: Based on immediate market need,
publications, proximity, etc.

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 Factors in Selecting the
Export Product
Shifting Spending patterns: Emphasis on
products/services that consumers regard as
“luxuries” due to spending in response to rising
incomes.
Products to be excluded from the list:
Products that compete against large firms;
fashion-oriented market (too volatile);
multimillion-dollar overseas projects that
require development of training facilities.
Emphasis on quality and niche marketing
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 2. International
Market Research
 Primary research
 Provides specific information. Conducted by
collecting data directly from the foreign
marketplace:
 interviews, focus groups,
 observation,
 surveys,
 experimentation with representatives and/or potential
buyers.
Can be expensive and time consuming.
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 2. International
Market Research
Secondary market research
 Based on data previously collected and
assembled for a certain project other than
the one at hand.
 Such information can often be found inside
the company or in the library, or it can be
purchased from public or private
organizations that specialize in providing
information, such as overseas market
studies or market surveys.
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3. International Market Assessment

Preliminary screening (basic

needs): Environmental conditions such
as climate, topography, or natural
resources.

Secondary screening (financial and

economic condition): Trends in
inflation, interest rates, exchange rate
stability and availability of credit and
financing.

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3. International Market Assessment
Third screening (political and
legal): Entry barriers, limits on profit
remittances, taxes and price controls as
well as protection of intellectual property
rights.

Fourth screening (sociocultural):

Customs, religion and values that may
have an adverse effect on the purchase
or consumption of certain products
-Examples include sales of pork and its
derivatives or alcohol in Muslim countries.
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3. International Market Assessment

Fifth screening (competitive): level

and quality of competition in potential
markets.

Final selection (field trip): Trade

missions or trade fairs in order to
corroborate gathered facts and
supplement currently available
information.

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 4. Structure of an International
Business Plan
 Executive summary
 General description of industry and company
 Target market
 Marketing and sales strategy
 Management and organization
 Long-term development plan
 Financial plan
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 5. Sources of Export Counseling
And Assistance
Public sources:
- The U.S. Department of
Commerce
- Small Business
Administration (SBA)
- U.S. Department of
Agriculture
- State, government, and
city agencies

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 5. Sources of Export Counseling
and Assistance
 Private sources:
- Commercial banks
- Trading companies
- World trade clubs
- Chambers of commerce and
trade associations
- Consultants

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 6. Overseas Travel and Promotion
Planning and Preparing for the Trip
Make prior arrangements
Acquire basic knowledge of host country
Obtain the ATA carnet: For
exporters that take product
samples for a temporary
period, the ATA carnet helps
avoid duties and
burdensome customs
formalities.
Business negotiations
Documentation1717
Promotional Tools

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 A typical export transaction
Step 1-- The exporter establishes initial
contact by responding to an overseas
buyer’s advertisement (ad ) for a product that
she/he can supply. Such ads are available in
various trade publications.
Step 2 -- The prospective buyer responds to
the exporter’s letter or fax by specifying
the type and quantity of product needed,
with a sample where appropriate. The
potential importer also sends his/her trade
references.
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 A typical export transaction
Step 3 -- The exporter checks with the
consulate of the importer’s country to
determine a )whether the product can be
legally imported and any restrictions that
may apply, and b) any requirements that need
to be met .
Step 4 -- The exporter ( if an agent )
contacts manufacturers of the product to a)
establish if the given product is available for
export to the country in question, b) obtain
and compare price lists, catalogs and
samples.
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 A typical export transaction
Step 5 -- The exporter selects the product
from responses submitted by manufacturers
based on quality, cost and delivery time. The
sample selected is sent by airmail to the
overseas customer to determine if the product
is acceptable to the latter. In the meantime,
t h e e x p o r t e r p re p a re s a n d s e n d s a p r i c e
quotation suggesting the mode of
transportation and letter of credit terms. The
price quotation should include commission and
markup.
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 A typical export transaction
Step 6 -- The exporter obtains a positive
response from the overseas customer, and is
requested to send a pro forma invoice to
enable the latter to obtain an import and
foreign exchange permit. The exporter sends
the pro forma invoice.
Step 7 -- The overseas customer receives the
pro forma invoice, opens a confirmed
irrevocable letter of credit for the benefit of
the exporter, and sends an order to the latter
to ship the merchandise.
<tPlanning and Preparations for Export><Trương Thị Huyền Trang 2
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 A typical export transaction
Step 8 -- The exporter verifies with its bank
about the validity of the letter of credit and
finds that it meets the agreed conditions in
the export contract and that it will be honored
by the bank if the exporter meets the terms.
The exporter ships the merchandise, and submits
the required documents (such as bill of lading,
commercial invoice, consular invoice, certificate
of origin, packing list etc.) to the bank with a
request for payment. The exporter is paid, the
merchandise is on transit, and the transaction is
completed.
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 QUIZ
1. Which statement is incorrect ?
A.In secondary market research, information can be purchased from
public or private organizations
B.Primary market research is conducted by collecting data directly from
the foreign market place through interviews, focus groups, observation,
surveys
C.Primary market research can be less expensive and time consuming
than secondary market research
D.Primary market research often provides more specific information and
more matching with research purpose than secondary market research
2.In market research, which issue(s) should be examined when assessing
financial and economic condition?
A. Climate
B. Trends in inflation, interest rates, exchange rate stability
C. Religion and culture of that market
D. Natural resources of that market
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 QUIZ
3. ……….provide a preliminary indication of markets for a particular
product in most countries.
a. Trade statistics b. Foreign investment data
c. Statistical data d. Data measurements
4. The difference between a systematic approach and a reactive
approach is:
a.The systematic approach involves the selection of a product based on
immediate market need, whereas the reactive approach is based on
overall market demand.
b.A systematic approach involves the selection of a service based only
on immediate market need, whereas a reactive approach is based on
the selection based on overall market demand.
c.A systematic approach involves the selection of a product and service
based on overall market demand, whereas a reactive approach is based
on the selection on the basis of immediate market demand.
d. None of the above
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 QUIZ
5.Lack of focus on a given product or market and absence of a long-
term relationship with an importer are disadvantages of using:
a. Systematic approach
b. Reactive approach
c. a and b
d. None of the above
6. Some of the limitations to using secondary sources are that:
a. Information often meets and exceeds one's specific needs
b.Similarities in the definition of terms or units of measure that make it
difficult to categorize or compare the research data
c.Difficulties associated with the assessment of the accuracy of the
information because little is known about research design or techniques
used to gather the data
d. Difficulties associated with data collection

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 QUIZ
7.Countries with high inflation rates should be carefully considered because
they may limit:
a. The volume of imports by restricting the availability of foreign exchange
b. The volume of exports by restricting the availability of foreign exchange
c.The volume of money supply by restricting the availability of foreign
exchange
d.The volume of exports, imports, and money supply by restricting the
availability of foreign exchange
8. World trade clubs provide:
a.Education programs on international trade and organization of
promotional events
b.Advice on all aspects of exporting ranging from domestic to foreign
regulations
c.Market research and promotion, shipping and documentation, financing
sales, and appointment of overseas distributors
d. All of the above
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 QUIZ
9. The business contact programs provided by the
Department of Commerce include:
a. ADS
b. NCUSA
c. CPI
d. OPT
10. In Southeast Asia, what is the most effective way of
promoting the sale of industrial goods?
a. Advertising
b. Trade missions
c. Direct mail
d. Personal selling
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 Questions
1.Discuss the two major approaches to selecting a product for exports. Why
is it important to participate in overseas trade shows?
2.What are the disadvantages of the reactive approach to selecting a product
for exports?
3.Explain the importance of the following factors in the selection of products
forexports: shifting spending patterns, quality, and niche marketing.
4. Do a country’s imports completely measure the market potential for a
product? Discuss.
5.Why should an export firm consider financial and economic conditions in
importing countries?
6.What is the importance of political and legal forces in international market
assessment?
7. Identify the public sources of export counseling in the United States.
8. Discuss three private sources of export assistance. What is the gold key
service?
9. Explain the steps involved in a typical export transaction.
10. What is SCORE?
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ĐẠI HỌC FPT CẦN THƠ

Chapter 4

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