Professional Training in

International Business

September of 2021
ADVICE TRAIN & TRADE !
THE TRAINER
Frédéric CHARLET has 30 years of
experience in management and
international business development.
Director of SARBAKANE CONSEIL which, in
its brokarage activity, manages the worldwide
trading of 2000 tons of goods.

He previously managed the international

development of a world leader in its sector:
€100M in export sales, a team of nine
commercial executives, more than 30
international representations, numerous office
openings in Asia and Europe. 70% of the
business with the world's major retailers.

He also managed the Central American

activities of a French-Guatemalan company
specialising in the distribution of European
wines and food products.

He holds a Master's degree from KEDGE

"Grandes Ecoles de Commerce", and is
trilingual in French, English and Spanish.

His work received the MOCI Food Export

Award in 2014.
Let’s keep in touch !

Mobile : (+33)603 99 55 55
Fix : (+33)524 32 11 90

contact@sarbakaneconseil.com
www.sarbakaneconseil.com

608 route de Hauterive

47380 Saint Etienne de Fougères
FRANCE
 INTERNATIONAL BUSINESS
DEVELOPMENT / E.S.C. BACHELOR 3
 The context
 Two of the main objectives of ESC PAU B.S. and its International
Business Program are the quality of training and the training of
analytical, creative and operational “Tomorrowers” students

 France is losing its position on the world market: 4% market share

today, 6.5% in the 1990s and only 3% of French companies export.
The international development of French companies remains a priority
and an opportunity for future consulting students

 The International Business course has been designed with these

objectives and opportunities in mind
 Learning objectives
 Development objective:
- To professionalize the skills and know-hows of the ESC students in
the international development of a company’s business
- with the purpose of making them operational and applicable
immediately in business

 Training's objectives :
- to acquire the necessary concepts, skills and tools to analyze and
build a company's internationalization process
- to learn how to diagnose the skills, evolution needs and risks to
which it is subjected
- to know how to build and implement an internationalization strategy
with geographic priorization and partership building
 Description of the program
1.

PART ONE: GENERAL FRAMEWORK OF INTERNATIONIAL

BUSINESS
1 – About country wealth and attractiveness
1.1 The nation richness and attractivity concepts throughout the centuries
1.2 The limits of the concepts

2 – World Trade Organisation

2.1 UN
2.2 WTO
2.3 The regional free trade agreements in the world

3 - Mapping of global and French international trade

3.1 Mapping of international business
3.2 Mapping of French world business and national organizations export supporting

4 - Internationalization strategies and risk management

4.1 Internationalization strategies
4.2 International risk management
•- Main
1.

Description of the program

PART TWO : THE INTERNATIONALIZATION PROCESS OF A COMPANY
1 – Is the company ready to export ?
1.1 Why export?
1.2 The business model or value proposition
1.3 The audit of company’s resources

2 – Export areas prorization and market business plan

2.1 Country rating grid
2.2 The country sheet
2.3 The international business plan

3 – Product adaptation to the international markets

3.1 Focus on the price strategy
3.2 Focus on the product adaptation
3.3 Focus on the international brand and communication
3.4 Focus on the packaging adaptation
3.5 Targeting and positioning

4 – Routes to markets strategies

4.1 The international logistic and supply chain strategies
4.2 The transport strategies : modes and Incoterms
4.3 The commercial strategies : the selection of international partner
4.4 Define your objectives according to the targeted export markets
 At the end of the program, you
will be able to :
 Integrate the global trade environment and national assistance to
export into your internationalization strategy

 Diagnose a company's ability to internationalize : its key success

factors and its development needs

 Prioritize international development according to geographic zones

and the society's strengths

 Conceive and implement the internationalization business plan and

development strategy roadmap for the company
 Bibliography
 "Internal Audit and Risk Reference System": SCHICK, VERA,
BOURROUILH, Dunod

 "International Reference Framework for Internal Audit": I.F.A.C.I.

 "Les Outils de l'Audit Interne" : Eyrolles

 "International Trade: Theories, Policies and Perspectives": NYAHOHO,

PROULX, P.U.Q.

 "Le Commerce International" : Michel RAINELLI, Le Livre de Poche

 “Exporter, 27ème edition” : Team France Export

 PART ONE: GENERAL
FRAMEWORK OF
INTERNATIONAL BUSINESS

Payée le 03 08 21
PEDAGOGY : the Moving Debate

Is international trade always a source of

wealth for a country ?
Three rows :
> Those for
> Those against
> Those doubts
1 – About country wealth and
attractiveness
 1.1 The richness of the nation concepts
WHO ? WHEN ? WHAT ? A FEW MORE DETAILS
1 - Traditional theories
The Republic
PLATO 424-347 BC (dialogues dealing Wealth should be distributed in an egalitarian way
mainly with justice)
Satisfaction of the needs : natural, legitimate, and part of 'economics'
(OIKONOMOS in Greek : Home Administration) , which has only one object:
The chrématistic human well-being
ARISTOTE (SOCRATE) 384-322 BC (acquisition of Condemnation of the confusion between economics with chrematistics by
richness) forgetting the human finality and taking wealth as the finality
Wealth should be distributed in proportion to the effort of each person /
Socrate theory of skills
Reconciling the economy and merchants with the Bible (MAMON) ; birth of
first "currency exchange contract"
Scholastic
SAINT THOMAS AQUINAS Middle Age
philosophy
Needed justice in voluntary transactions, including market exchange : no
fraud or violence
Notion of a fair price and the prohibition of usury
The wealth of a country is the wealth of the state : it combineS the
enrichment of merchants with the political power of the state, measured by
the stocks of gold and silver it possesses
Commercial supremacy is ensured by military power.
The order of the church's economic concepts is replaced by the market order.
XVI century >
The British favour international trade and particularly maritime: limiting
Antoine de Montchrestien / Industrial
Mercantilism imports and increasing exports.
William PETTY Revolution
The French favour manufacturing industries, foreign currencies influx and key
1789
role of the state as a regulator
The Spanish : the power of the nation rests on the mass of precious metals,
mainly by plundering the Latin American colonies > they neglected their
industry, unable to satisfy the growing demand > Imports, external deficit « économie politique»
and impoverishment of the country.
Alors 1.1 The richness of the nations concepts
 Mercantilists see foreign trade as a zero-sum game, the classics see free trade as a positive-sum
 The classics appear with the birth of industrial society 1789 : birth of large-scale international trade
- work becomes the fundamental value : the work included makes the value of the goods
- diamond and water paradox (A. Smith)
- use values constitute wealth and take over exchange value : the use value of the
final product is the essential element, and then the exchange value (the price)
- universal and timeless laws govern the production and exchange of wealth

2 - Classical theories
A country should not hesitate to buy abroad what foreign producers can produce cheaper than domestic
Absolute advantages
Adam SMITH 1776
theory
producers. The country that sells a certain product cheaper than all other countries has an absolute
advantage in that product. It should specialise on it and buy all the other goods.

A country can benefit from specialisation by producing the goods for which it has a comparative advantage,
even if it has an absolute disadvantage for all the goods it produces. David Ricardo assumes that labour is
the only factor of production and that this factor is mobile within the country but immobile internationally.
Comparative
David RICCARDO 1772 - 1823
advantages theory
Example : Portugal has an absolute advantage over England for two goods, i.e. a case where, in Adam
Smith's theory, exchange could not take place. By reasoning on comparative and not absolute costs, he
demonstrates that it is advantageous for each to specialise in the production for which it has the strongest
advantage (P. wine) or the weakest disadvantage (English cloth).

Theory must become practical

Socio-economic analysis capitalist mode of production : the capital is the value that allows the exploitation
of workers and the generation of surplus value.
Karl MARX Middle Age The Marxism
The surplus-value means the additional value produced by the labour of the workers, a value which the
capitalist appropriates without paying any financial compensation to them
Class struggle : the antagonism between social groups whose interests are irreconcilable
Alors 1.1 The richness of the nations concepts
 The questioning of the “doux-commerce” – Montesquieu,
N. de Condorcet, JJ Rousseau or Wiliam Godwin >
they believe in a harmonious and stable "self-adjusting"
balance of free trade

 Thomas R. MALTHUS (1766 – 1834) :

- the industrial revolution enriches England but not the poor
- different from Smith : the increase in national wealth does
not benefit the poorest
- control of births

“By acquiring new productive

forces, men change their mode of
production, and by changing the
mode of production, the way they
earn their living, they change all
their social relations. The hand
mill will give you society with the
suzerain; the steam mill, society
with industrial capitalism.”
Alors 1.1 The richness of the nations concepts
3 - Neoclassical theories
H.O.S. Why do countries trade goods and services and why does trade benefit all parties?
1919 -
(Heckscher- Production International trade is based on differences in the endowment of factors of production capital-
1943 -
Ohlin- 1950
factor theory labour according to the countries (and not only the labour as for the Classicals)
Samuelson) Criticism: reality shows that the IC is mostly between rich countries + US exportations paradox

An economic paradox that emerges when a country with a high financial capital endowment
exports goods that have a lower capital/labour ratio than its imports, i.e. when it exports labour-
Wassily Leontieff's
1953 intensive rather than capital-intensive goods.
Leontief paradox
The US has a comparative advantage in labour resources : highly skilled workforce that is a
capital resource > US exports are human capital intensive.
4 - Macroeconomic contemporary theories
Traditional analyses : only production capacities of a country and demand is neglected.
Steffan Countries no longer specialise according to their factor endowments but to their internal demand.
Burestam 1961 Demand theory When this demand becomes saturated, the company looks for new export markets.
Linder The international market is nothing more than an extension of the national market.

Ephemeral nature of this advantage : when the product has reached its mature phase, it becomes
International intensive in low-skilled labour > the price of factors regains its importance
Raymond
60' product life Vernon has shown the ephemeral nature of this advantage. When the commoditised product has
Vernon cycle theory reached its mature phase, it becomes intensive in low-skilled labour
Alors 1.1 The richness of the nations concepts
5 - The firm theories
No longer a question of mass producing homogeneous products but producing in more
limited series differentiated articles, either in a specialisation or a diversification strategy
Bernard The international division of labour or IDL : extension of the division of labour applied to
Imperfect international trade : countries specialise in the production of certain goods and exchange
Lassudrie- 70' /
competition their production with each other.
Duchêne 80'
and IDL This analysis moves from a simple comparative advantages concept to a further
Paul Krugman decomposition of the value chain, or international division of the production process (IDPP).
Analysis of the impact of economies of scale in international trade.
Krugman is one of the most fervent supporters of free trade and opponent to protectionism
Internationalisation strategies depend on a combination of macro (nation), meso
(industry), and micro (firm) conditions
Multination
O : Owner advantage represents the intangible assets arising from the size and position of
al firm
1977 / the firm on the international scene
John Harry Dunning theory or
1988 L for Foreign location : advantage incorporating the spatial attractions and constraints of
the OLI
the targeted market
paradigm
I for Internalisation advantage : the benefits that the firm can derive from its own
transaction system
Process of internationalisation is an interactive system of four elements of the national
environment of the company:
- the country's endowment of production factors in terms of skilled labour, infrastructure,
etc.
- the nature of domestic demand
The - the strategies, structure and nature of intra-firm competition at the national level
Diamond - the coexistence nationaly of upstream industries and competitive related industries
Mickael Porter 1993
Porter International success of a company is predetermined :
model - by the quality of its national environment, this is a necessary but not sufficient condition.
Two other variables are called upon to play a role:
- the State, which has the means (fiscal, monetary, legal) to stimulate upstream and related
industries (public subsidies), to modify competition (anti-trust laws), to improve the quality
of factors (training) or to stimulate domestic demand (taxation)
- chance
 1.2 The limits of the concepts
6 - Theories of domination
"Impoverishing growth" : developing countries do not benefit from their
comparative advantages like the rich ones
1970 till Inequality
Jagdish Bhagwati Raw material producing countries have experienced a deterioration of trade :
today theory
these countries are "forced" to export more and more in order to import less
and less. Economies get caught in the trap of primary specialisations.

A country initiates the industrialization process in four phases :

- first, on a low-tech product, the country imports
Kaname Akamatsu Wild goose - then it substitutes imports by domestic production
1937
Shinoara flight - third it becomes an exporter of this product
1982
theory - finaly, it abandons it for a higher value-added product
This "abandonment" allows the relocation of these activities to other lower-
cost countries : another country begins its own industrialization process.

1896 - 1974
Alors 1.2 The limits of the concepts
 The development of international trade is today an established and irreversible fact : it
remains a source of peace, moral and economic wealth if well controled
 The new theories of the IC:
- there are no longer theories of exchange, just a set of special cases
- defining wealth is above all a political question
 The specialization of countries in their most profitable activities, the search for new
markets, the extension of the product life cycle… have contributed to a quite successful
international free trade for many countries
 But this liberalization and international competition :
- has been hardly hitten by Covid19 pandemy : -9,6% on international exchanges +
distrust > re-localisation and frontiers closure
- is quite unfair and can only be fair if limits and rules are imposed on them
 New models of sustainable international development, more respectful of people and
the environment, need to emerge to avoid frontiers closure and ecological disasters !
 An institutional framework favourable to the development of international trade has
therefore gradually been put in place
 Multinationals and companies : new approaches to value creation with relocation and
dematerialization of production for less risk and environmental impact + higher decentralization of
decision-making
1.2 The limits of the concepts

Clasical and Neoclasical : free

trade is always beneficial !

Towards deep and general

questioning of border
porosity for goods and
human beings…
2 – The world trade organisation
 2.1 UN – United Nations

 Brings together most of the world's international governing entities.

 1919, the League of Nations is founded on the initiative of US President W. Wilson with the aim
of establishing a lasting peace

 Failure which gives rise to the UN

-1942: the first foundations of the United Nations in
Washington
- Franklin D. Roosevelt: preventing war

 The Yalta Conference, February 1945, Roosevelt,

Stalin and Churchill:
- compromise one of the important points : the right
of veto
- a right that would also be granted to France and
China
- these five nations are the only permanent members of the Security Council till today

 The San Francisco Conference, June 1945, defines the aims and functions of the UN:
- the 50 founding states sign the UN Convention.
- the majority of these countries ratify the text: official birth of the UN
 2.1 UN

 John Maynard Keynes : the central thesis of Keynesianism

is that markets left to their own devices do not necessarily lead to the
economic optimum, and that the state has a role to play in the
economic field to compensate for market failures.

1944, Bretton Woods, creation of the IMF,

International Monetary Fund :
- cooperation
- expansion of the international trade
- and currency stability

 World Bank: establishment of an open

and predictable international commercial
and banking system

 UNCTAD or United Nations Conference

on Trade and Development :
competition policy
 2.2 WTO World Trade Organisation
 1995, Marakech Treaty/Uruguay Round,
takes over from GATT: 1947, liberalisation of
of world trade

 Goals of the WTO :

- pursue free trade
- fight against discrimination: most favoured
nation clause must be applied to all countries
that have signed the agreement

 Missions of the WTO :

- manage trade agreements
- settle trade disputes
- review state policies and help developing countries
- cooperate with all international organisations

 Major global treaties :

- GATT: lower tariffs, non-tariff barriers ...
- GATS (Doha, 2001): all services except public services and air rights
- TRIPS (Trade-Related Aspects of Intellectual Property Rights):
intellectual property
 2.3 The main regional free trade agreements (RTAs)
 303 RTAs in force worldwide
2.3 The main regional free trade agreements (RTAs)
 The three main (RTA): 60% of worldwide business

July 2020 : ALENA / NAFTA becomes USMCA

3 - Mapping of global world trade and
French international business
 3.1 Mapping of global trade

 A world that continues globalizing

- 9.6% on total world trade!

• 3.1 Mapping of global trade
 3.1 Mapping of global trade

 USA, China, Germany, PB, France, Russia and Japan : the world's largest exporters

 France 3% market share today, 6.5% in the 1990s

COUNTRY 2019 EXPORTATIONS BI. $

2 800
CHINA
2500
USA
2000
GERMANY
950
NEDERLAND

France
800/ 900
JAPAN

UK

 Only 3% of French companies export, while

Germany nearly 40%
• 3.2 Mapping of French international trade


• 3.2 Mapping of French international trade

 Ministry of the Economy, Industry and Digital Affairs

or Ministry of Foreign Affairs
as has been the case since 2014

 Rank of Minister of State, Minister, Minister Delegate,

Secretary of State, Deputy Minister, Secretary of State:
exact title set at each nomination
 3.2 Mapping of French international trade

 TEAM France EXPORT :

- Business France
- BPI
- International Chambers
of Commerce

> Management of export

assistance measures :
- grouping all assistance on a single site:
www-teamfrance-export.fr
- Supporting exporters in their processes
and setting up business abroad
- market studies
- commercial prospecting, collective initiatives
such as trade fairs
- financing for prospecting and internationalisation
(with COFACE)
 3.2 Mapping of French international trade

 Management of the International Volunteers in Enterprise or VIE

 Civic service carried out abroad for a French

company or for a foreign company linked to a
French company by recently graduated students

 Period of activity in France possible - training - but

at least 183 days/year abroad

 Must be between 18 and 28 years old and an EU

national

 Missions of 6 to 24 months, renewable once

 The VIE receives a fix wage and an additional allowance depending on the country, to which
the company contributes:
- monthly allowance: €723.99 exempt from income tax, CSG and CRDS
- additional allowance: amount depends on the country of the mission,
964.99 in Tunisia and €3,873.98 in Angola.
4 – Internationalisation and global
risk management strategies
 4.1 Focus of the internationalisation strategies

COMPANY WILLING TO
GO INTERNATIONAL

Indirect exports :
Development in
> broker
partnership :
Direct exports : > External growth :
> consortium of
> remote importer/wholesaler/dis > creation of a
exporters
> direct tributor subsidiary ex-nihilo
> piggy-backing
settlement > trading houses > company buy-out
> franchising
> retailers int. buying
> joint venture
offices
 A - Direct remote exports

 The exporter carries out the entire commercial transaction with the foreign buyer, either through
a direct link or through controlled representation

 The company dictates the rules to be followed (the exporter)

 Direct sales from the company's headquarters: cheap but little control > to test a market,
respond to an opportunity > often the first phase

 Sales agent: prospecting, product portfolio, conclusion of sales and follow-up of the company
"on behalf of" > cheap but not enough control > 1st phase

 Own local staff

- staff detached from abroad
- VIE good option to start, then hire
- second phase
 A - Direct exports through direct establishment
 Branch office or small representative office to test the market: own office or partner office
to receive your staff
- no legal and fiscal personality of its own; efficient and inexpensive set-up.
- market trial and possibilities to transform the VIE contract into a permanent contract (CDI)

 Establishing abroad a commercial subsidiary:

- company legally independent of the parent company and majority controlled (51%) by the
parent company
- the most complex but the most effective because it is close to the market
- permanent presence, commercial and administrative operations but strategy at headquarters
 B - Indirect exports

 All sales formulas without having control over the destination market and its final customers,
marketing or distribution types:
- quick fix
- cheap use of qualified intermediaries

> The international broker: independent intermediary, puts

In contact companies wishing to enter into business
transactions together :
- paid with commissions
- network of contacts for business opportunities
- quick and inexpensive solution, contractors know each other
but little added value in the medium term

> The wholesaler importer/distributor: buys and resells the goods

- mutual commitments: sharing of communication costs,
join participation in trade fairs, etc.
- can offer a wide range of products - too many, don't get lost ! -
to meet the needs of foreign buyers
- fast, efficient, value-added but not controlled, totally independent from the exporter.
 B - Indirect exports
 Trading houses: very large companies with a strong presence abroad, negotiators of
primary products;
- they can carry out related activities ranging from transport to financing
- CFAO and SUMITOMO
- Fast moving volumes, may be long-term sales but low value added

 International buying groups of the world's major retailers:

- complex sales, fast volumes but little

control over final destination countries
- value added but low margin levels
- economic risks, notably commercial dependence
 C - International partnerships

 The complexity of the export project > developing it with

several actors, combining the strengths of each:
cooperation and collaboration!

> The exporter grouping or consortium :

- the companies develop a common work infrastructure and staff,
and may or may not determine common objectives and action plan
- interesting, shared experience and risks
- no development of projects in own name,
but in the name of the consortium

> Piggy-back:
- a small exporter joins the network or an activity carried out
by another larger and better known company in the targeted
market
- start international development even with limited skills
 C - International partnerships

 Commercial franchise: a temporary and exclusive contract

for marketing of products or services in a defined country,
- defined territory, use of certain industrial property rights,
sharing of know-how and communication tools
- in return for a fee
- complex model, time-consuming and proven model on
the national market
- but fast international development without too much cash

 Joint venture:
- two or more companies invest and create a new
separate legal entity or business acquisition : 50/50
- they share the revenues and expenses of this entity
- complex: need strong trust + finance + difficultites in deciding
- but allows strong market power
 D - Direct and autonomous investments abroad

 Creation of independent subsidiaries or takeover of companies: mainly for large groups, very
often the first step in the creation of a multinational or local production

 Creation ex-nihilo of subsidiaries: in partnership or alone, the company sets up in a

new country, creates and produces new products specifically for the local market
- choice of country according to production costs and labour force, skilled or not
- development of the manufacturing process on a global scale: WID
- costly and extensive skills required

 Takeover of foreign companies: purchase of a

company in a targeted country :
- quick development
- you buy an existing company
- need many skills
- high risks: financial (paying the right price?)
and management (foreign/national staff)
D - Direct and autonomous investments abroad

VENTILATION
MONDIALE DES
RISQUES
ECONOMIQUES !
1.1 Gestion des fournisseurs et produits De là, on classe les fournisseurs en trois catégories :
- les 20% des fournisseurs qui représentent 80% des achats
- les 40% des fournisseurs qui représentent 15% des achats
- les 40% des fournisseurs qui représentent 5% des achats

 A chacune des catégories, on applique un différent niveau d’exigence fournisseur :

3.4 Focus on the strategies

A FOUR-COUNT WALTZ Low

JUST DIRECT OR INDIRECT EXPORTS WITHOUT
ESTABLISHMENT
JUST DIRECT OR INDIRECT EXPORTS WITHOUT
FIRST
ESTABLISHMENT
COUNT
MIX OF DIRECT AND INDIRECT EXPORTS
WITHOUT ESTABLISHMENT
ESTABLISHMENT FOR DIRECT EXPORTATIONS
SECOND
CREATION OF PARENT DEPENDENT SUBSIDIARY
COUNT AND DIRECT EXPORTS
CREATION OF PARENT INDEPENDENT
SUBSIDIARY WITHOUT LOCAL PRODUCTION
CREATION OF PARENT INDEPENDENT
THIRD
SUBSIDIARY WITH LOCAL PRODUCTION
COUNT
BUYOUT OF LOCAL COMPANY, WITH OR
WITHOUT PRODUCTION
control
Responding to opportunities (GMS),
learning about the market and
customers
Direct supermarkets via private
labels and exclusive branded
importers
Office with V.I.E.
More complex because of local
accounting and HRM
Excellentbit it need financial skills
and funds
TOP : local production for local and
adjacent market
Rapid access to market share but
complex, expensive and risky

Multinational company but strongly

FOURTH
D.T.I. challenged by environmental issues
COUNT and Covid19
Strong
control
4.2 Focus of the internationalisation risks management
 A - Credit and transfer risk

 Credit risk: non-payment of invoices

 Non-transfer risk: currency cannot leave the country

Parade
Risk generator
Possible Consequences
fact
> financial fragility
Client > late payments > buyer information
> bad faith > country information
> political and social instability > do not go to buyer and/or
> international tensions country if doubts
> armed conflicts > automatic measurement of
Politic > economic and financial blockade: non customer receivables
transfer > credit insurance: COFACE,
> nationalisations HEULER HERMES, etc.
> natural disasters > banking solutions: documentary
> poor internal situation credit, only with first class banks
> hyperinflation > towards factors: factoring
Economic > lack of foreign exchange reserves
> implementation of internal
> measures to control financial
company solutions: risk
movements
management
> failure or negligence of purchasing
Bank bank
> chain of bank failures
 A - Credit insurance

 Lower coverage compared to credit

insurance but cheaper cost

 Never cross the credit limit ! CUSTOMER ACCOUNT FREE

85 000
 Only the following are covered: CUSTOMER X CREDIT POSSIBILITY

- customer insolvency -15 000 RESULT

-liability recognized by commercial court PAYMENTS INVOICES
TOTAL 85 000 100 000 TOTAL
 Insurance premium: % of export mai-21 Payment 5 15 000
AMOUNT COVERED €
15 000 New Invoice 2
turnover avr-21 Payment 4 10 000 ON THE CUSTOMER 20 000 New Invoice 1

 Generaly 10% franchise on

mars-21
fev-21
Payment 3
Payment 2
15 000
25 000
_ BY COFACE + 65 000
DUE AMOUNT
BY THE
100 000 € CUSTOMER
janv-21 Payment 1 20 000
refundable due amount
 A – Letter of credit
 If no credit insurance on the client and/or the prospected area :
- cash payment before shipment
- irrevocable letter of credit confirmed by first class banks : top of the line guarantees ;
- can be cash payment (documents presentation) or credit
 B - Exchange risks management

 Purchases and/or sales in a foreign currency

 The foreign currency rate may vary between the time of pricing and the invoice payment date:
- upward variations
- downward variations

 Variations in margin assumptions > potential danger for the whole company:
- if large customer
- impacts 100% of unpaid turnover

 Foreign exchange risk :

- transactional: risks linked to buying or selling
- patrimonial: variation in the balance sheet value of
assets or liabilities held abroad
- economic: potential competitiveness of the
company, strategic decision of the CEO
 B - Exchange risks management

 Currency exchange risk

for exporter :

 Currency exchange
risk for importer :
 B - Exchange risks management
Risk Covering Techniques WHAT ?
INTERN COVERING TECHNIQUES
"> if buying and selling in foreign currency: internal compensation
Self-coverage
> but amounts never match 100%: keep part of the risk
"> act on payment deadlines or collection
Termising > difficult: act on customer and supplier payment times
> dangerous alone, in addition to other protections".
"> in a multinational group between subsidiaries
Multilateral netting
> several customers and suppliers in the same country
"> price indexation on exchange rate or "not to exceed..."
Contractual exchange rate clauses > sharing of the variation between partners Main banking products :
> freedom of choice of currency at time of payment
"> loan and borrowing exchange contract in the same group of different currencies, fixed rate - Forward currency sales
> amounts exchanged at the beginning and end of the swap
Currency swaps
> exchange difference: interest received".
- currency options
BANKING PRODUCTS
> contract with the bank which defines the terms of the forward exchange (cash in or cash out):
amounts, rates and fixed dates
Forward selling or purchasing of currency
> payment of a "premium
> does not benefit from favourable currency movements
> treasury operations
Currency loan and borrowing contracts
> and exchange rate coverage
> benefit from a favourable currency trend and protect against an unfavourable one
> right and not obligation to buy or sell currency at a fixed price
Currency exchange option
> large transactions, fairly expensive product".

BPI INSURANCE PRODUCTS (for French companies only)

Foreign exchange rate insurance
Contract foreign exchange insurance
Invoice flow exchange insurance
"> 100% protection against potential exchange rate losses
> "with profit": take advantage of up to 70% of the increase".
> same as above but contract, no negotiation
"> aerospace only"
 C - Legal and commercial international risks management

 Potential multiplicity of applicable commercial laws, different national laws

 Contract is the basis of economic organisation in Western countries

 Not the case where the state is at the service of politics and/or religion

 Not the case in Asia: seeks harmony rather than balance of interests

 Private international law of a state: sets the rules for managing conflicts of law

 International conventions :
- bilateral conventions
- and multilateral conventions: Vienna
Convention on international sales
contracts
 C - Legal and commercial international risks management

INTERNATIONAL DISPUTES RESOLVING METHOD

METHOD OPTION POSSIBILITIES THE PLUSES AND MINUSES
> direct conciliation between parties
Friendly Flexibility and confidentiality
> appeal to a third party

> courts of the partner country or

Recourse to state courts its own for decision Reflecting strength, imbalance
> what about enforcement?
Neutralité, confidentialité,
> ad hoc arbitrators
Arbitration professionalisme, "quickness"
> court of arbitration: CCI Paris
A privilégier pour IC
C - Legal and commercial international risks management

 International
business failure

 No insurance for
this, apart from
prospecting insurance

 Limit the risk by

preparing well and
auditing your
development needs

 Don't go into export

if the audit reveals
inadequacies: financial
and psychological
downfall!
PEDAGOGY : the 6x6 Philips

What are the six key risks that a

company must take into account
before entering a foreign market and
prospect / customer ?
 RISK MANAGEMENT SYNTHESIS

8 - LA GESTION DES RISQUES

> Auto-assurance
Risque politique
> Assurance crédit
> Auto-assurance
Risque crédit client > Assurance crédit
> Crédits documentaires…
> Pas de couverture
> Compensation interne
Risque de change
> Ventes à terme et options de
change
> Auto-assurance
Risque prospection
> Assurance prospection COFACE
> Assumé
Risque juridique > Avocat
> Traducteur, spécialiste local…
> Règles de voyage
Risques physique et corruption
> Code de bon comportement
 PART TWO : THE
INTERNATIONALISATION PROCESS
OF A COMPANY
1 - Is the company ready to export ?
 1.1 Why export?

NO

Ego !
Love to travel
Personal/family decision
Décision personnelle/familiale A long-term approach that requires
long-term vision, financial means,
Safety valve
Sales/purchasing opportunities international expertises and mastery
React to competition exporting or entering the of the national market.
Seek volume and/or margin from abroad Endurance, pugnacity, agility and open-
mindedness.
Diversification of economic and geopolitical risk
Strategic vision: long-term view of the company's
sustainable development

YES
1.1 Why export?

NO REQUIREMENTS TO GO
INTERNATIONAL!
JUST DIFFERENT LEVELS TO BE IDENTIFIED
BECAUSE OF DIFFERENT CONSEQUENCES
IN TERMS OF MEANS AND SKILLS.

e
And the planning…
1.2 The business model or value proposition
 Can you replicate internationally the business model that has made you
successful at national level? Or will you have to adapt it to new markets?
 You will be competing with global players:
- do you know them?
- what is their level of offer and competitiveness: range, price, services...?
- have you already "rubbed shoulders" with them?
 Your products and services must therefore be innovative and stand out from
the international competition, not only the national one !
The three arrows of Sarbakane's business model: marketing the skills and address
book of an international specialist
 1.3 Audit of company’s ressources

SERVICES POINTS D'AUDIT RECOMMANDATIONS

> objectives: qualitative and quantitative If the boss is motivated, and with
GENERAL > level of willingness to internationalise and export know-how you he or she will open the doors
DIRECTION > level of budgets more quickly.
> level of personal support Keep the board informed of the
progress.
> free production capacity
> age of real estate and equipment 10 to 20% free production capacity
PRODUCTION
> Level of flexibility of production teams for export
> English spoken ?

> quality control system and R&D/innovation policy

> differentiated offer: benchmark with the competition
Paying attention to international
> specifications and adaptable quality
QUALITY credentials and information
> processing legal information for the international market
gathering capacities
> quality certifications
> English spoken ?
 1.3 Audit of company’s ressources

> control of the international purchasing process

> stocks for additional sales?
> interest in internationalisation? What areas? If Purchasing is interested, work
PURCHASES > currencies handled? Potential compensation
on joint internationalisation
> audit and certification of service providers
> suppliers ready to follow in export markets?
> foreign languages spoken?
> expertise in customs and export documentation
> sufficient staff ? Speak English
Key point: the level of service to
SUPPLY CHAIN > confirmation of orders, invoices... in English
> EDI practice your export partner
> international logistics practice and service providers
> international planning skills and know-how

> currency management and exchange rate protection

Push for currency exchange rate
FINANCES > credit protection: banking products protection: securing cost
prices/margins and collections
> foreign currency accounting ?
 1.3 Audit of company’s ressources

> capacity to recruit Required for employment or

HR
> ability to conclude an employment contract abroad settlement abroad

> international experience and level of English

> access to information
> international budget
> traditional and electronic communication abroad: website, social
networks... Try to get a dedicated export
MARKETING
> international promotional tools: brochure, point of sale person in the department
equipment...
> adaptation and follow-up of packaging
> organising exhibitions abroad
> suppliers' capacity to follow export markets

> international sales statistics: what, where, who, how much? % of

total sales "Reorganise, develop skills
> current organisation and staff: sales managers and sales (training) and encourage the
assistants hiring of new people if necessary
EXPORT
> international know-how (markets/areas) and foreign languages Don't start until you have the
> free working capacities export department 100% ready".
> documentation: sales materials, contracts, general sales
conditions, price lists, etc.
1.3 Audit of company’s ressources

COLLECTION OF INFORMATION ON MARKETS AND ACTORS

FRENCH SOURCES
Studies, monitoring, list of importers,
TEAM France EXPORT
competitors...
ICC Formalities, HR, establishment...
COFACE Country/political and client risk
ECONOMIC INTELLIGENCE Dum & Bradstreet, Pouey...
PRAMEX Country files, investments
Banks, logisticians, MOCI, insurance,
OTHER SOURCES
exporters...
FOREIGN SOURCES
Same as Team France Export in country Statistics, market information...
CIA World Factbook, JETRO… Country Fact Sheet
WTO, OECD, WORLD BANK... Country analysis and traded volumes
PRIMARY PERSONAL INFORMATION
Offer, consumer habits, store check,
Market observation
competitors...
Precise information on potential,
Future international partenerships interrrogation objectives, opportunities and
constraints...
THE source of information on its sector of
Trade fairs and exhibitions
activity
Your own opinion ! Nuance the factors above
1.3 Audit of company’s ressources

SWOT ORIENTE SUR L'ENTREPRISE ET CAPACITE A

S'INTERNATIONALISER
FORCES / STRENGHTS
Savoir-faire export
20% capacité production libre
Gamme large et qualitative
Motivation direction
FAIBLESSES / WEAKNESSES
Pas assez staffé
Ensacheuses peu modernes
Segmentation non adaptée international
Pas de gestion du risque de change

OPPORTUNITIES CONTRAINTES / THREATS

Elargir développement export Budegt technique : Xm€

Forte croissance mondiale de la Embaucher une personne export + former
demande pour… deux autres Supply : coût de Xm€
Adaptation produits et gammes légère Sourcer de nouvelles matières premières
Un client du marché X est intéressé Migration crisis
 Ready to go ?

 if not…
2 - Export areas prioritization and
market business plan
 PAYS PAYS A (Royaume Uni exemple) NOTE
• 2.1 Country rating grid CRITERES PARAMETRES 79
0> 50M 50 > 100M > 100M > 200m
POPULATION
1 2 3 4 2
10> 30m$/an/tête 30 > 50m$ > 50m$
PNB/HABITANT
1 4 6 4
JAUNE NEUTRE BLEU
FACILTE BUSINESS
1 3 6 6
 Note the countries POROSITE FRONTIERES
Droits douane + barrières Droits douane RAS

you would like to see 1

NON
2
OUI
5 5
ZONE LIBRE ECHANGE
1 3 3
INTERCONTINENTAL CONTINENTAL
 Countries and/or ELOIGNEMENT GEOGRAPHIQUE
1 2 2
FAIBLE MOYENNE BONNE
geographical areas INFRASTRUCTURE LOGISTIQUE PAYS
1 2 4 4
PETITE MOYENNE GROSSE
TAILLE MARCHE TOTALE
1 5 7 5
 Compare and rank CROISSANCE MARCHE
FAIBLE MOYENNE FORTE
1 3 5 3
countries according to PETITE MOYENNE GROSSE
CONSOMMATION / TÊTE
scores 1
BAS
5
MOYENNE
7
ELEVE
5
PRIX MOYEN
1 5 7 7
FAIBLE MOYENNE FORTE
 Set 3 to 5 priorities INTENSITE CONCURRENTIELLE
7 4 1 1

maximum CONCENTRATION RESEAUX DISTRIBUTION

FAIBLE
1
MOYENNE
3
FORTE
6 6
FAIBLE MOYENNE FORTE
OUVERTURE MARCHE NOUVEAUTE
1 3 6 6
FAIBLE MOYENNE FORTE
CONTACTS CLIENTS
1 3 6 3
H1 H2 H3
POTENTIEL MARCHE VOLUMES
2 4 7 4
H1 H2 H3
POTENTIEL MARCHE MARGES
2 4 7 7
DOUTE A VOIR MOTIVATION
VOTRE OPINION
0 2 6 6

PAYS B NOTE
2.1 Country rating grid
 LA FICHE PAYS
• 2.2 The country sheet
Connaître culture du pays.
Impact climat sur consommation, répartition
1 - Bref historique, géographie
population, distance de mon marché, logistique,
proximité d'autres marchés, impact sur les prix

 Do not go into
2 - Population et croissance Taille, configuration et potentiel de développement
detail about your
Analyser impact sur produits et politique marketing,
action plan yet 3 - Culture et religion
l'image des Français

Le niveau de richesse des consommateurs

 Dynamic analysis: 4 - Niveau, répartition et évolution du PIB
Produit correspond-il à un secteur en croissance ?
how these elements
will potentially impact 5 - Degré d'ouverture au commerce Nature et volumes échanges, zones libre-échange,
international barrières à l'importation, partenaires étrangers...
my business ?
Restrictions/embargo, inflation, emploi
6 - Risques économiques et performance pays Niveau intégration de la distribution : GMS vs.
 Synthetic analysis commerce traditionnel, organisation réseaux…
Président et "couleur" politique, prochaines
7 - Risques politiques et juridiques
élections, contexte social favorable ?
Solidité du système bancaire, transferts de fonds,
8 - Risques financiers
devise, taux d'intérêt
Liberté de fixation des prix et de passation des
9- Risques legaux marchés, protection intellectuelle,
jugement/arbitrage

10 - Présence française/européenne,
expérience et réseaux de l'entreprise dans le Possibilité d'appui commercial, recherche infos…
pays visé
2.2 The Country sheet
2.2 The Country sheet

 11th largest economy

in the world: $1.3bn
GDP

 Ease for doing

business but corruption

130M inhabitants,
30% middle class

 5th largest consumer

of … in the world

 Potential market of
XM€ for our products

 Gateway to the USA

2.3 The business plan
1 - Faire l'audit de l'entreprise souhaitant s'internationaliser
> état actuel face aux projets d'internationalisation : primo-exportateur… (2ème partie, §1 du cours)
> motivations de la Direction en priorité (2ème partie, §2)
> audit des autres services
Conclusion diagnostic interne : SWOT entreprise + plan évolution société

2 - Priorisation marchés (2ème partie, §3)

> grille rating pour choisir marchés prioritaires parmi un certain nombre
> prioriser 3 à 5 marchés maximum
> fiche pays et niveau d'accessibilité des marchés
Conclusion : SWOT marché(s)

3 - Etude du(es) marché(s) priorisé(s)

3.1 La demande
> taille du marché (chiffre d'affaires et/ou tonnages) et évolution sur 3 ans
> personae consommateur type et attentes
> géographie et autres caractéristqiues de la demande
3.2 L'offre
> les concurrents : qui sont-ils ?
> les produits des concurrents : analyse selon les "5P"
> les réseaux de distribution
3.3 La "gap analysis"
> identifier les trous, les manques dans l'offre actuelle du marché face à demande
> proposer le remède : vos produits adaptés au marché

4 - La stratégie commerciale pour atteindre la cible

> bâtir sa gamme de produits/offre et l'adapter techniquement "5P" au marché
> définir clairement les cibles et son positionnement
> stratégie de pénétration marché
> définition des objectifs
> choix des partenaires
A – The executive summary

Retail market at Produce : Price penetration.

120 M € turnover.
Retailers own labels.
10 000 tons sold/year by
Wider range, better quality,
hyper/supermarkets.
organic.
+30% in 4 years.

Consumers Produce retail prices Competition

6 million regular. Flavoured : 10 > 12€ / kg Croc’Frais
Paris and South France. Stuffed : 12 > 16€/kg Tropic Apero
CSP+ at 70%. 250g punnet : 2,49€ Atelier Blini
« Indulge » purchase.
B - The demand study

A - MARKET DEMAND OR POTENTIAL

Apparent consumption : D = P+I-X
1 - Quantitative
Estimation by analogy with other markets or products
evaluation Trends in demand
Cultural characteristics, openness to new things
2 - Qualitative Buying behaviour:consumption: how, what, when, where
evaluation Geography of consumption: urban, north/south, summer/winter...
Relevance of national range segmentation > adaptable?

Stablish a persona
B – The demand study
 Market size, customs fees duties and distribution networks

MARKET SIZE National production + Imports - Exports 10 000

Eurostat industrial production Eurostat for Europe
INSEE for France WITS rest of the world
Dumb & Bradstreet
SOURCES STATISTA
Team France Export
Banque : SG, Pramex
WEB

CUSTOMS FEES TARIFDOUANIER.EU / PORTAIL Européen Douanes

Retail 60% 6000
Food service 15% 1500
DISTRIBUTION Food industries 10% 1000
E-commerce 10% 1000
Traditional channels 5% 500
B – The demand study
B – The demand study

PRODUCT OLIVES, PREPARED OR PRESERVED OTHERWISE THAN BY VINEGAR OR ACETIC ACID, NOT FROZEN

FRANCE
PERIOD Jan.-Dec. 2018 Jan.-Dec. 2018 Jan.-Dec. 2018 Jan.-Dec. 2018

FLOW IMPORTATION IMPORTATION EXPORTATION EXPORTATION

PAYS VALUE_IN_EUROS QUANTITY_IN_100KG TONS VALUE_IN_EUROS QUANTITY_IN_100KG TONS

BELGIQUE (et LUXBG) 12786786 23272 2327 478076 1937 194

SUISSE 19263 31 3 3092808 4676 468

Allemagne 1599684 2617 262 728827 2445 245

ESPAGNE 52106828 345302 34530 109035 430 43

ROYAUME-UNI 29108 76 8 1481801 4838 484

MAROC 49681667 420293 42029 32903 207 21

PAYS-BAS 837547 3434 343 138192 199 20

TOTAL 129919183 847181 84548 11700557 36881 3688

1,5 3,2
 C – The offer study

B - THE OFFER OR COMPETITIVE ANALYSIS

National: identity, size and business model
1 - The competitors International
Compatriots
Product: ranges offered and gap analysis
Policy of the brand: producer brands, private labels, etc.
Packaging: packaging, overpackaging and palletisation
2 - Products: 6P Price: average prices according to the range offered
analysis Placement or distribution: distribution channels to reach
consumers and intermediaries used
Promotion: media used in communication, level of digitalisation,
product promotion and points of sale...

C - GAP ANALYSIS
3 – The distribution of the products
C – The offer study

 Knowledge of the competition and adjacent offer : IN VIVO, web sites and the press
 D - The technique of « Gap Analysis »
COMPETITION MY OFFER
6Ps
COMPETITOR STRENGHT WEAKNESS STRENGHT WEAKNESS
PRODUCT Competitor 1 Range, taste, appearance
Competitor 2
Competitor 3
PACAKGING Competitor 1
Competitor 2
Competitor 3
PRICE Competitor 1
Competitor 2
Competitor 3
PLACEMENT Competitor 1
Competitor 2
Competitor 3
PROMOTION Competitor 1
Competitor 2
Competitor 3
PEOPLE Competitor 1
Competitor 2
Competitor 3

Analysis :
 By competitor
 By items
 Both !
E - The SWOT synthetic analysis of the market

SWOT ORIENTE MARCHE

STRENGHTS WEAKNESSES
Big population Not an easy business area
Attractive countries and people Crimes and corruption
Competitive cost of labours Untrained workforce
European and Franch "lovers" Red tape
Rich people Low average income
English, Spanish and Portugueese speaking National governance
Latin culture Weak infrastructure
OPPORTUNITIES THREATS
Quick developing MARKET ALBA future
PA + MERCOSUR ? Anti-white people feeling
Emerging middle class : 40M people Growing social instability
Weak competition Cheap rpices
Target : 10% market share within 3 years,
Level of margins under Europe
Xm€ turnover and margin
Strenghtening currency Growing huge social disparities
In search of foreign investment Migration crisis
Apetite for added value imported products Covid19 impact
 PEDAGOGY : the Delphes technique

You are an executive in the business development

department of a French hotel group that has prioritized
European Union in its international expansion. High quality
“green” hotels and rooms, which emphasizes service quality
and conviviality /social relations in its hotels

You must present to the General Management :

 The three EU countries you favor for the 5 coming years
development
The 5 main reasons for this decision (country sheet)
 A synthetic route to market plan
3 – Product adaptation to the market
3.1 Focus on the price policy
 Price strategy has a triple target :
- reach the end consumers : commercial / marketing aspect
- ensure your profitability : financial aspect
- competition management : follow, status-quo or
attack !

 Be careful with international logistic costs : don’t

underestimate them ! Take care of the negotiated
Incoterms

 Highly political arbitration, usually assigned by

the CEO of the company

 Be uncompromising about payments and protect

them
3.1 Focus on the price policy

What are the 7 key market factors that influence

export prices calculation ?

 Growth targets

 Manufacturing, transportation, administrative

and other costs

 Profit margin required

 Competition in the market

 The ability to pay of the targeted market

segment in the targeted country

 The structure of the distribution network,

from home to foreign customer/prospects

 Laws and regulations in force

3.1 Focus on the four main price policies
A – Market oriented policies
 The penetration strategy :
- product at a very low price
- but not lower than its cost of production
- > quickly take over a good market share,
economies of scale, then move price up

The skimming strategy :

- offering prices high to benefit from the best possible margin
- competition “absent” from the market
- > profit maximized during a short period of time, call for new competitors

The fixed price strategy :

- products at the same price (excluding logistic costs) to all its
customers
- simple to administer but a lack of flexibility
- may push competitors to a price penetration strategy

The variable pricing strategy :

- different prices to customers according to a volume discount grid to avoid
embarrassing situations
- more benefits compared to fix price, more flexibility and more fair for the
customers
3.1 Details about the pricing policies : the price and quality ratio
 Coordinate internationally your price policy : ideally, same product, same volume,
same conditions = same price on an ex-works basis ideally

 But exceptions are possible !

3.1 Focus on the four main price policies : determining prices
B – The financial methods
Four main financial methods for determining prices:

 Marginal cost method : exporting is considered as an

activity that adds to the domestic market to cover its
fixed costs

 National “cost plus” method ; this method considers

that export adds to the domestic market to cover its
fixed costs :
- by subtracting local sales and marketing costs
- and adding transportation and marketing costs
directly related to export

 Full cost method takes into account :

- fixed and variable production costs
- as well as the variable costs associated with exporting

 Foreign market price method is mainly used for products with little
differentiation : the export price is adjusted to to the foreign market price.
3.1 Focus on the price policy

ITEM PRICE/KG REMARK

Recommanded
10 Always start here
retail price

VAT 9,5 x 0,95

Retailer margin 5,7 40% on retail price
Logistic costs 5,3 Including or not RHD
Promotional cost 4,1 30%
Adapt company policy if
Your margin 0,4
necesary
Cost price 3,7 Am I profitable ?
Start with the highest posible price
Easier to pass a new price than to increase it
Easier to increase by 50% than by 2% !
3.1 The calculation grid
CALCULATION GRID
Raw materials, packaging costs, other inputs,
EX-FACTORY PRODUCT PRICE IN € 1
variable costs and fixed costs
EVENTUAL SUBSIDIES 0,9 Export incentives of 0,1€/kg
SELLING, ADVERTISING AND
5% in this case ; a part may be paid by
PROMOTIONAL EXPENSES FOR 0,945
marketing
EXPORT
CUSTOMER PROMOTIONAL BUDGET 0,992 5% in this case ; a part may be paid by customer
1% in this case ; check exchange rate guarantee
BANK CHARGES 1,002
costs with Financial Dept.
MY COMMERCIAL MARGIN 1,054 5% > divide by 0,95
3% : to be paid on the ex-works price basis >
INTERMEDIARY COMMISSION 1,086
divide by 0,97
OTHER COMMISSIONS 0% : no other business middleman
TRANSPORTATION COST >
1,336 0,25€/KG on a del. New York base from France
INTERMEDIATE LOGISTICIAN
FREIGHT FOWRDER COSTS 1,403 Customs freight forwarder : 0,5%
CUSTOMS FEES 1,403 0% > no customs duties on French pasta
INTERMEDIATE LOGISTIC DEPOT COST
> reception & storage 1,703 0,30€/kg
> handling / order preparation
> delivery Walmart depots
SELLING PRICE TO WALMART DDP 1,703
35% > mark rate (on retail price) and not margin
Estimated reatil price 2,62
rate (on purchase price) > divide by 0,65
To have a quick approach of the retail price of your products on a foreign market, take your ex-
works price and multiply it by 2,5 / 3 !
 PRUNE TENDER NQ 202102536
Date 01/09/2021
3.1 The calculation grid Salesman FC
COMPANY NAME X
BUYER CONTACT Y
ADRESS Z
COFACE guarantee 60 000 €
SELLING PRICE CALCULATION
Payment conditions : 30 days invoice date
Product : pitted Agen prunes 30/40 1 % discount for cash payment
Packaging : 10kg bulk carton Method of payment : SWIFT
Over packaging : 80x120 palets, 64 cartons/palet Currency : USD
Quantity : 19 200kg
Incoterm : CIF Izmir 40 feet full paletized Reefer Container
1 - Ex-works price € / KG
1.1 Raw material 0,65
1.2 Production inputs (packagings, preservatives, energy…) 0,05
1.3 Labour 0,25
1.4 Fixed costs coverage 0,05
Ex-works price (1 > 4) 1,00
2 - Export price (ex-works)
2.1 Sales, advertising and promotion costs for exporting 0,08
2.2 Export documentation 0,03
2.3 Bank charges 0,01
2.4 COFACE average cost 0,005
2.5 Letter of credit / Docuemntary credit (if no COFACE) 0,00
Gross export price (19>23) 1,13
Commercial margin 0,20
Broker commission (2%) 0,027
Ex-works export price (26>28) 1,352
3 - CIF Izmir export price
Road transport > Marseille 1 500€
Reefer TC container CIF Izmir cost : 2500€
Total transport cost : (30+31)/19 200 kg 0,21
Selling price to the customer in € 1,562
US conversion (1€=1.19$ today) 1,21
4 - Selling price to the customer in $ 1,890
Agreed final price 1,907
3.2 Focus on the adaptation of the products

 Double objective :
- to be allowed to enter the market
- to meet the needs of the local clientele
 Potential source of conflict in the company between
production and commercial services
 Compliance with national regulatory standards :
- technical and/or qualitative reference framework
drawn up by a public body for the general interest
- may also serve the unspoken objective of protecting
a market or favoring a domestic industry

 The "Hygiene Package“, 2006, European Commission :

- a set of European regulations applicable in all Member States
- it applies to the entire food supply chain
3.2 Focus on the adaptation of the products
 Always start from the consumer habits :
- dominant taste : not too sweet in China example
- cultural, religious, sociological…
- is your product integrated in typical food plates
of the country ?
- last consumption trends : organic, 100Kcal
healthy snacks…

 Know the market environment : particular

geographical and climate constraints ?

 Push the global quality of your products :

French know-how and global recognition in addition

 Show your quality : consumer certifications

And always study

carefully the price policy !
3.2 Single or range of products ?

 Single or product range ? Give visibility to your

products

 Minimum 4 products : mix the colors

 Products of the same brand displayed all

together or according to the product family

 If not, a single product can be a

“Trojan Horse”

 Products trials and range optimization :

- panel of stores selected by merchandiser
- three to four month trial
3.3 Focus on the international brand(s) and communication concepts
The international global brand :
- the same all over the world : strong impact and eco of scale
- global, with or not little local adaptation
- strong national brand and reference to France, simple, easy to
understand everywhere

 The umbrella brands and the brand portfolio

- portfolio : an international brand + local brands
- bring under the same name a panel of brands and products belonging to different categories,
each offering a specific promise : each product is independent and has its own image
- the umbrella brands benefit from the reputation and notoriety of the strong brand ; and the
strong brand is nourished/enriched/warmed up by the smaller brands

 Co-branding,
generical and
collective brands
3.3 Focus on the international brand(s) and communication concepts

 Integration of foreign symbolic meanings and taking into account the

local cultural context

 Push "tradaptation“ : not a simple translation of messages but

a linguistic work to adapt the message to the local culture

 The success of the international communication policy is based on :

- the possible bridges with national communication : international trade fairs, websites...
- its treatment not as an ad-hoc operation but as a long-term commitment with financial means

 The international communication strategy of the company depends of :

- its size : middle/small size companies rarely have enough financial means to support a globalized
communication policy > partially rely on the importer budget > no global policy
- the level of internationalization of the company : product, brand or company image promotion ?
- its consumers behaviors that may transcend borders : young people and international executives
- the maturity of its brand and its message, particularly on the national market
 Double communication :
- end consumers : traditional and digital medias, in-store activities…
- professionals > specialized communication : professional magazines, web site and digital medias,
exhibitions, prescribers…
3.3 Focus on the international brand(s) and communication concepts

LOCAL ADAPTATION OF THE FOOD COMMUNICATION

ADVANTAGES DISADVANTAGES
Communication is adapted to the market : consumer May blur the company image : one
demand, local cultural and legal aspects identity per market
"Cheap" communication, optimized costs because
No communication costs masification
know-how, often shared with the local partner
Easy to launch and follow up Hard transposition of policy from one
Local partner motivation market to the other
CONCLUSION : mainly for SME companies
STANDARDIZATION OF THE INTERNATIONAL COMMUNICATION
Global marketing and communication with little
Needs important fiancial and human
regional / local adaptation : EVIAN, 152 countries
means
"Live Young"

Less adaptation to consumers than a

Stenghtening globaly the brand and company image
100% local communication

Not the same communication tools

Massification of creation and distribution costs
in all the countries
CONCLUSION : mainly for big and globalized companies
3.3 Focus on the international brand(s) and communication concepts

 Mass consumption products are often :

- produced by middle size companies : limited budget !
- dealt in supermarkets : focus on this medium for product communication/promotion
- followed on the web : focus on this medium for brand image and sales eventually
 Communication will mainly rely upon :
- for end consumers : product and in-store promotional activity + digital + press
- for professionals : professional exhibitions, specialized press and web site / social network
- non-media communication : company brochures, catalogues, power points for presentations etc.

 Military strategy: when you don't have many soldiers, concentrate them and don't disperse them !

Isandhlwana battle in S.A. (1879)

3.3 Focus on the international brand(s) and communication concepts : the profesional exibitions

 One of the best solutions to meet importers, large-scale buyers, providers

 A few thousand exibitors (5000 on average) and till 100 000 visitors

 A huge source of informations : competition, new products, new trends…

 Can exibit on your own, French pavillions organized by TeamFranceExport,

consortium of exporters, with your local or international partner…

 The biggest international food exibitions in the world :

- the S.I.A.L. in Paris every two years : generalist
- the ANUGA in Cologne every two years : generalist
- The GULFOOD in Dubai every year : generalist, ideal for
Arabic world, Africa and Asia prospection
- the FHC in Shangai : generalist, good for Asia
- the PLMA in Amsterdam every year : specialized on own labels
3.4 Focus on the packaging adaptation
3.4 Focus on the packaging adaptation
 Food packaging is a pack that contains a food product : any inner layer of the
packaging in contact with food must be "suitable for food contact“, as well as inks

To prepare consumer portions already packed, labelled and price targeted

To isolate it from its environment, protect and preserve it : may enable atmosphere modification

 To ease its transport and protection during this operation

 To enhance the product for commercial or aesthetic purposes :

- real “jewel case”
- ergonomic aspects to ease the “grip” and the consumption : snacks
- to differentiate your products from competition

 Information tool : the packaging must show the weight, ingredients, nutritional information and the
use-by /best before dates
3.4 The international adaptation of the designs

 Check the relevance of the name and adapt if necessary

(without adapting the logo)

 Check whether the combinations of ideas, colors,

typography, layouts... of the national market adapt to
the international market(s)

Take into account the cultural context to avoid

big mistakes !

 Rely on a designer from the targeted country

or specialized agency with local partners
3.5 Targeting and positioning
CIBLAGE CLIENTELE : SYNERGIES CLIENT

Conseil

Formation

Courtage
3.5 Targeting and positioning
MON POSITIONNEMENT : BOOSTER DE DEVELOPPEMENT
INTERNATIONAL

Spécialiste reconnu
Importantes directions grands groupes
30 ans
Culture opérationnelle du résultat
10 > 100M€, 5 à 20 000 tonnes
2 cadres > 10 + 2+ 30 représentations

Aquitain proche dirigeants S.O.

Proximité géographique , culturelle
Accessibilité des tarifs
Carnet adresse opérationnel
Fournisseurs, partenaires, clients
40 pays sur 5 continents

Un pro forme des pros

30 ans formation terrain
Conférencier confirmé
Théorie illustrée par expérience
4 – Routes to market strategies
4.1 The international logistic and supply chain strategy

 Activities for setting up :

- a quantity of goods (or people!),
in the right place, at the lowest cost
and when demand exists
- procurement of raw materials/components,
manufacturing and transport/distribution

 Supply chain management :

- more global approach than logistics :
integrates sales/purchasing back-office
(data entry) and customer service:
statistics, after-sales service, etc.
- from operational functions to strategic
functions
- dual concern: cost optimization and
customer service

 Success of this is based above all on :

- excellent circulation of information
- management by flow and not by operation
4.1 The international logistic and supply chain strategy : transport selection

 You must choose :

- mode of transport: road and sea mainly
- incoterm: ex-works, FOB, CIF, DDP mainly used
- possibly customs outside the EU
- packaging and over-packaging: long distance,
heat and humidity, on or off on pallets or not,
displays...
- insurance
And organise these operations...

 Depending on :
- the distance between the buyer and the exporter
and the geography
- the nature of your international partner :
importer/wholesaler, retailer...
- the nature, quantities, dimensions and value of the product
> the particularities of fresh products
- the delivery time
- the risk of damage and theft
4.1 The international logistic and supply chain strategy : transport selection
 Intercontinental exports/imports :
- sea transport is the most frequently used means : the cheapest
- sea and road transport combination very often
- air in case of short shelf life and urgencies : the quickest but most expensive

 Continental :
- road mainly – cheap- but trains developing – “green”
- even sea (UK, Ireland, Greece…)
- even air : short shelf life food and/or urgencies
4.1 The international logistic and supply chain strategy : warehousing strategy
 Consumer goods: smaller and faster daily deliveries to retailers:
- scarcity (and cost) of space: selling rather than storing
> just on time deliveries !
- financial lock-in

 Requirements for frequency and size of deliveries:

- large volume deliveries at low frequency: "large export" or large volume export
to central warehouse abroad (importer, distributor, logistician...)
- small and frequent deliveries: retailers and export trials

 Warehousing strategy :
- own warehouses and/or subcontracting
- a single warehouse for a whole country or sub-continent
- and intermediate stocks: regional, national and/or continental

 Deporting a centralized warehouse :

- cost savings
- faster deliveries of smaller quantities "Just on Time”
- example LIDL and GEFCO, UNIVEG and UK GMS

 Retailers are integrating their logistics more and more:

- from import to in-store distribution
- with a centralised system: longer but cheaper deliveries
 4.1 The international logistic and supply chain strategy : the warehousing strategy
 The two main logistics channels: short (25%) and long (75%)

 Rely on a professional logistician and/or a colleague in the same area as you

 Combination of the two for export: long at the beginning, short at the end.

Entrepot
GMS

Central

Magasins
Magasins

Circuits courts Longs circuits

4.2 The transport strategy : sea transport
 The container (TC) :
- suitable for both sea and land transport
- rectangular shape : easy handling particularly during transhipment
- 20 feet or 40 feet size : 10 to 20 tons roughly per container
- Dry (ambient °) or Reefer (6/7°) or frozen
- full container load (FCL) or partial : groupage transport

 Loaded without palet for cost savings but time waste

 Intercontinental transport time : 3 to 4 weeks

 Be careful of heat and humidity : container blocked

 Average transport cost : roughly 0,20€/kg

 The world leading shipping companies

 Becoming interesting again in EU : UK,

Ireland, Greece and Scandinivia
 Rotterdam, Antwerp and Hamburg
4.2 The transport strategy : the road transport
 The truck is the preferred means of transporting goods within the continent : flexible, quick and
cheap till roughly 1000kms deliveries

 Full truck loads – from 10 to 21 tons - and partial loads

 One to three days to deliver all Europe

 Palet sizes :
- globally : 80x120cm
- UK and Switzerland : 100x120cm

 Average transport cost : roughly 0,15€/kg,

under 0,10€/kg in France and neighbor countries

 The leading food hauliers companies in Europe :

STEF, KUEHNE & NAGEL, XPO, GEFCO
4.2 The transport strategy : the rail transport
 Ideal for shipping large volumes of goods over long distances

 For food, rail transport is particularly suitable for the transportation of products such as grains
(wheat, barley, oats or other cereals), live animals and produces

 Lower costs than other modes + lowering costs

 Longer transit time and increased + higher risks of

damage : frequent coupling, uncoupling and shunting
of wagons > numerous shocks

 National rail companies : Deutsche Ban (30Bns€),

SNCF (25Bns), JR EAST
4.2 The transport strategy : the air transport
 The fastest and safest means of transport : 12 to 72 hours to cross the world

 Preferred choice for the shipment of perishable goods and emergencies

 Fresh flowers, prepared fruit, fish products, etc.

 Air container : from 500kg to 7000kg

 Above 1€/kg on average

 World leaders : DHL (2M tons), Kuehen & Nagel,

Schenker, DSV Panalpina
4.2 The transport strategy : the incoterms, documentation and intermediaries
 The INternational COmmerce TERMS (Incoterms) are an international language, codification, the
official rules dictated and managed by the International Chamber of Commerce (www.iccwbo.org) for
the interpretation of the most commonly used commercial terms and conditions in international trade

 They are applicable to the different types of transport and define the rights and obligations of the
parties to a sales/purchase contract : delivery place, transport organisation, payment of transport
and insurance


1.3 The incoterms

Ex-works / FCA

 DAP /Franco

 DDP

 FOB

 CIF (CAF) ou
CFR
4.2 The transport strategy : the incoterms, documentation and intermediaries
 Carriers are paid on the basis of weight and volume and not on the value of the goods : their
liability cannot apply to the goods : importers and exporters must "manage their risk" by taking out
cargo insurance themselves or through their freight forwarder

 Cargo insurance is important for the following reasons:

- to cover their interests in the event of a loss : total loss, damage, strikes, riots, looting
- to meet the terms and conditions of sale
- to obtain quick claims handling

 Packaging defects and delays are not covered

 Cost :
- CIF+10%
- insurance rate : around 0,5%

> Brokers : Filhet-Allard, Gras-Savoye, AON…

4.2 The transport strategy : the incoterms, documentation and intermediaries
 The transport broker : an intermediary who takes charge of the delivery of the shipper's goods and
to find the appropriate carrier(s) to bring them to their destination

 The customs broker :

- area of expertise is customs regulations
- he clears goods through customs and transport
them to their destination eventually

 The forwarder/fowarding agent : acts as an agent for the exporting or importing company with
carriers and other subcontractors
- transport consultant : advices on hauliers, packagings, insurance…
- can be an agent (obligation of means) or commissioner (results)
- prepares international documentation
- transport organisation and coordination
- he takes care of customs formalities
- tracking of shipments

 The freight consolidator : no full container

4.2 The transport strategy : the incoterms, documentation and intermediaries

 Establish the customs nomenclature for your product egories/commerce-exterieur/nomenclatures

https://www.douane.gouv.fr/la-douane/opendata/categories/commerce-exterieur/nomenclatures

 No customs inside EU : DEB

 Export/import customs declaration for outside

EU : the D.A.U.
4.2 The transport strategy : the incoterms, documentation and intermediaries
 The commercial invoice

 Bill of lading :
- the document which is given by the sea carrier to the
shipper in recognition of the goods that his ship will carry
- it is negotiable and confers ownership of the goods it
represents

 For international road transport, the consignment note or

CMR : the contract between the carrier and his customer

 The EUR1 / Origin certificate :

- issued by the ICC
- movement certificate from EU to outside UE : which
country and goods can benefit from lower (or none)
duty taxes

 According to the countries :

- technical file
- certificate of conformity to standards
- pre-shipment inspection certificate : SGS QUALITEST
- licence, certificate for wood packaging, visas…
4.2 The transport strategy :
the incoterms, documentation and
intermediaries
4.3 Commercial strategy : the effective search for partners

Digital prospecting Physical

prospecting

Society
Inbound Outbound Trade fairs Personal information /
Website E-Mails and network
Social
prescriber
phoning Presence Relay
Media Meetings

Moving to foreign markets ideally targeted!

 4.3 Commercial strategy : the effective search for partners

 Small market : one or two channels, no establishment except for particular advantages
(human, geographical, etc.)

 Large market > work via multiple channels because of the multitude
of sales channels to consumers :
- independent retailers/wholesalers outside the chain
- RHD / Food service networks
- large companies: IAA for example
- ethnic and/or community networks
- e-commerce, TV shopping...

 Commercial representation :
- global and/or by channel
- the question of exclusivity and contracts: don't give away
for nothing

 No. 1 works with No. 1 :

- importance of size : no too big partner, not too small The word of a salesman
- importance of position : share business culture and “specially no exclusivity”
mentality
 4.3 Commercial strategy : the effective search for partners

1.2 Choosing your Analyse the following Sales

business partner points within the Sales force N°1 works with N°1 !
targeted partner Sales territory Work via multiple chanels and
Companies represented eventualy different representatives by
Range of products channel
Facilities and equipments Make your own opinion
Marketing policy
 4.3 Commercial strategy : the effective search for partners
Assessing the capabilities of a potential intermediary through analysis :

 Sales: Revenues? Profitability? Sales trend over 5 years: steady growth?

Sales targets for the coming year? How were they set and how will they be achieved?

 Sales force: how many salespeople? Organisation of the sales department? Your
contacts? Will the potential partner need to hire staff to meet your needs? Would they be
willing to do so? Remuneration policy?

 Sales territory: how big is the current territory? Does it match your target market?
Willingness and ability to expand? Branches in the target territory?

 Companies represented: how many are currently represented? How would you position
yourself in relation to other suppliers? Conflict of interest?

 Product or service range: how many product or service lines are represented? Conflict of
interest? Representation of other French / European companies? What is the sales target for
your products?
4.3 Commercial strategy : the effective search for partners

 Facilities and equipment: are storage facilities and offices satisfactory? Computer
compatibility with your own (EDI)? Need to buy equipment? Cost distribution?

 Marketing policies: % of turnover? % of marketing budget spent on communication?

Website and social networking policies? Capacity to conduct market research? What kind
of materials and people for promotion? Sharing of communication costs? Translations?

 Other means...
- interviewing other French / European companies in the market
- economic intelligence companies: Dumb & Bradstreet, Pouey
- credit insurance companies: COFACE, HEULER, SFAC...
- your bank, ideally if it is international: BNP, Pramex BP, CA,
Société Générale...
- social media and web pages
- contacts with your partner to make your own opinion
4.4 Define your objectives according to the targeted export markets

DEFINITION OBJECTIFS PART DE MARCHE

NIVEAU DE CONCENTRATION Plus elle est oligopolistique,
DE LA CONCURRENCE plus c'est compliqué
MOYENS FINANCIERS DE
L'ENTREPRISE POUR LE "Faut pas Rêver !"
MARCHE EXPORT
NIVEAU INNOVATION /
AVANTAGE CONCURRENTIEL
Point clef
NIVEAU OUVERTURE MARCHE
ET CONSOMMATEURS
LOCAUX
HUMILITE : DE 1 à 10% MAX. DE PDM POUR
PRODUITS DE GRANDE CONSOMMATION
> Comparez la PDM objectivée avec la PDM de
l'entreprise sur marché national et autres marchés
export
> Chiffrez la PDM visée et comparez avec le CA total de
l'entreprise
4.4 Define your objectives according to the targeted export markets

Specific Measurable Achievable Relevant Time bound