Episode11PPTSlidesVideo - Episode 11 Global Operations II...

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Episode 11 Global Operations II
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Global Operations II – Key Questions When purchasing goods, what types of protection do you have from… …poor quality? …breach of contract? …concealed damage? What can you do to protect your interests when buying goods from an unknown party or distant supplier? 2
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Part 1 Terms of Trade
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When thinking of exports, most people focus on these flows and activities… Packing Loading Preliminary Transportation Export Clearance Handling Outbound Insurance Unloading Final Transportation Handling Inbound Import Clearance International Transportation Cumulatively, these processes can last a couple of days or a couple of months
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However, three intertwined export prep activities must occur before moving freight Negotiate the Details Terms of trade Control Risk mgt 5 • Shuffling the Paper • Required docs • Key information • Accuracy • Protecting the Goods • Insurance • Packaging • Compliance Must coordinate activities and take a process approach
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Critical Issue 1 – Terms of Trade ToT determine the seller’s and buyer’s respective obligations concerning responsibilities and charges for the transportation of goods from the seller’s premises to the buyer’s place Why? To avoid any misunderstanding in the following questions : Who is responsible for what ? Who is going to pay for what ? Where do my responsibilities begin and end? Who assumes risks?
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Why is it important to spell out these ToT? During the course of international transactions, US law is not necessarily enforceable Can’t force foreign firms to comply Need standard rules to play by Need to manage risks Need to assign responsibilities Need to reduce uncertainty 7
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How are these ToT spelled out? IN ternational CO mmercial TERMS International rules that are accepted by governments, legal authorities and practitioners worldwide for the interpretation of the most commonly used terms in international trade. They either reduce or remove altogether uncertainties arising from differing interpretations of such terms in different countries. ICC, 2001
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What are INCOTERMS? INCOTERMS are three letter acronym accompanied by a specifically named place. .. FOB Oakland CIF Antwerp DEQ Dubai physical goods payment legal title Determine responsibility for insuring the goods paying for transportation services control, care for the goods 9
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How many INCOTERMS are there? 13 in all but some apply to certain modes of transport. 10
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Departure Terms EXW The seller minimizes his risk by only making the goods available at his own premises. 11
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This note was uploaded on 05/19/2011 for the course BUSINESS MKT taught by Professor Johnston during the Spring '11 term at Missouri State University-Springfield.

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Episode11PPTSlidesVideo - Episode 11 Global Operations II...

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