Chap013 - Chapter 13 - Exporting, Importing, and...

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Chapter 13 - Exporting, Importing, and Countertrade Exporting, Importing, and Countertrade INTRODUCTION A) This chapter is concerned with the nuts and bolts of exporting (and importing). Exporting is not just for large enterprises, many small firms have benefited significantly from the moneymaking opportunities of exporting too. B) The volume of export activity in the world economy is increasing as exporting has become easier. The gradual decline in trade barriers under GATT and now the WTO along with regional economic agreements such as the European Union and the North American Free Trade Agreement have significantly increased export opportunities. C) Despite the opportunities for exporting, it remains a challenge for many firms. The firm wishing to export must identify export opportunities, avoid a host of unanticipated problems that are often associated with doing business in a foreign market, familiarize itself with the mechanics of export and import financing , learn where it can get financing and export credit insurance, and learn how it should deal with foreign exchange risk. THE PROMISE AND PITFALLS OF EXPORTING A) The potential benefits from exporting can be great. Regardless what country a firm is based in, the rest of the world is a much larger market than the domestic market. While larger firms may be proactive in seeking out new export opportunities, many smaller firms are reactive and only pursue international opportunities when the customer calls or knocks on the door. B) Many novice exporters have run into significant problems when first trying to do business abroad, souring them on following up on subsequent opportunities. C) Common pitfalls include poor market analysis, poor understanding of competitive conditions, lack of customization for local markets, poor distribution arrangements, bad promotional campaigns, and a general underestimation of the differences and expertise required for foreign market penetration. D) Exporters also must deal with a tremendous amount of paperwork and other formalities associated with exporting. IMPROVING EXPORT PERFORMANCE A) There are a number of ways in which inexperienced exporters can gain information about foreign market opportunities and avoid some of the common pitfalls that tend to discourage and frustrate novice exporters. An International Comparison 13-1
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Chapter 13 - Exporting, Importing, and Countertrade B) One big impediment to exporting is the simple lack of knowledge of the opportunities available. The way to overcome ignorance is to collect information. Both Germany and Japan have developed extensive institutional structures for promoting exports. In addition, Japanese exporters can take advantage of the knowledge and contacts of sogo shosha , the country’s great trading houses. Information Sources
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Chap013 - Chapter 13 - Exporting, Importing, and...

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