UNDERSTANDING THE CONCEPT OF

EXPORTING, GLOBAL SOURCING AND

OTHER INTERNATIONAL TRADING.
 Definition of Terms

DOCUMENTATION

refers to the official forms and other
paperwork required in export transactions for shipping and
customs procedures.
AGENTS are independent individuals or firms who are

contracted to act on behalf of exporters to obtain orders on

a commission basis.
DISTRIBUTORS are one who buy the product from the
manufacturer and so take the market risk on unsold
products as well as the profit.
 Definition of Terms

DIRECT
MARKETING is a promotional method where seller
establishes a direct means of communication on its
potential customer. It does involve middlemen and ca be
done through mail, email, telephone, and the like.

VALUE-CHAIN ACTIVITIES is a series of activities which

firm carries out to add value to its customers.
INTERMEDIATE GOODS are semi-processed goods which
are held as input to create a final product.
 EXPORTING AS
A MARKET
ENTRY STRATEGY
EXPORTING is a form of international trading where goods and
services are transported to sell abroad.

DIRECT EXPORTING refers to trading activity where firm assumes

all the responsibilities in exporting its products.

INDIRECT EXPORTING, on the other hand, is a form of exporting

where intermediaries are involved and are contracted by the
exporting firm to facilitate distribution and selling to the exporting
country.
TOP 10 EXPORTING COUNTRIES AND PRODUCT CATEGORIES AS OF 2019
TOP 10 EXPORTING COUNTRIES AND PRODUCT CATEGORIES AS OF 2019
TOP 10 EXPORTING COUNTRIES AND PRODUCT CATEGORIES AS OF 2019
TOP 10 EXPORTING COUNTRIES AND PRODUCT CATEGORIES AS OF 2019
TOP 10 EXPORTING COUNTRIES AND PRODUCT CATEGORIES AS OF 2019
ADVANTAGES AND
DISADVANTAGES
OF EXPORTING
 ADVANTAGES OF EXPORTING

Less financial resources involved, less complex thus the easiest

way to gain entry in international market, increases economies
of scale, proactive and reactive motivation, and less risky.

DISADVANTAGES OF EXPORTING
Less contact to foreign markets where products are being sold,
exporting is generally restricted if there are import restriction.
SYSTEMATIC
APPROACH TO
EXPORTING
 Step 1
Assess Global Market Opportunity. It should
assess as such as possible the capability
to the firm in engaging and competing to other firms
existing in the industry.

Step 2
Organize for exporting. It should also determine if it
would go into direct of in indirect type of exporting and
consider the intermediaries to be involved.
 The Following are Some Intermediaries.
Foreign Distributor- Works Under for an exporter , takes title to, and
distribute the

exporter product in a national market or territory often
performing marketing Function such as Sales, Promotion, and after-
self service.
Manufacturer Representative- contracted by the exporter to

represent the sell its merchandise or services.

Trading Company- engages in import and export of a variety of
commodities , products and services.
Export Management Company- that acts as an import agent on
behalf of a client Company. Various sources that would help in
finding appropriate and available export intermediaries.
 Step 3
Acquire Needed skills and competence. Determine the
availability and hire whose who are specialized in the
general operations.

Step 4
Implement Exporting Strategy. The entity should
identify and adopt the appropriate exporting strategy.
Manager should see to it that the product being exported
would be able to its costumers and the product can
compete to its existing competitors.
 MANAGING
EXPORT-IMPORT
TRANSACTIONS


MANAGING EXPORT-IMPORT TRANSACTIONS

Managing international trading requires a rigorous effort not

just on tracking and detailing the activities involved from

inquiring the product until it reaches its destination.
The common documents required on the transaction for both
exportation and importation;

A. During Enquiry Process

QUOTATION DOCUMENT is a document which consists of
product details and pricing information.

It specifies the quality of
the product and mode of incoterms.
INCOTERMS are universally accepted terms of sale that
effectively specify what is and is not included in the price of a
product sold internationally.
INCOTERMS APPLICABLE TO ANY MODE OF TRANSPORTATION:

EXW (Ex Works) means the seller has fulfilled its obligation when
the goods are made available to the buyer, usually at the seller’s
location.

FCA (Free Carrier) means the seller loads the goods on

thebuyer’s transport at the seller’s premises, or the seller
delivers them to another named place.
CPT (Carriage Paid To) means the seller is responsible for
clearing the goods for export and delivering them to the first

carrier or another person stipulated by the seller at a named

place of shipment, at which point risk transfers to the buyer.

CIP (Carriage and Insurance Paid To) means the seller is

responsible for delivering goods to the first carrier or another
person stipulated by the seller at a named place of shipment, at
which point risk transfers to the buyer.
DAP (Delivered at Place) means the seller is responsible for all
charges and risks in transit until the goods reach their destination, at
which point the

risk transfers to buyer.

DPU (Delivered at Place Unloaded), previously named Delivered at

Terminal (DAT), means the seller is responsible for clearing the goods

for export and bears all risks and costs associated with delivering the
goods and unloading them at the named port or place of destination.

DDP (Delivered Duty Paid) puts the maximum risk and responsibility
on the seller.
 Incoterms applicable to sea and inland waterway transport only:
FAS (Free
Alongside Ship) means the seller has fulfilled its
obligation when the goods are made available alongside the
vessel.

FOB (Free on Board) means the seller has fulfilled its obligation
when the goods are loaded on the vessel nominated by the buyer
at the named port of shipment.
.
 Incoterms applicable to sea and inland waterway transport only:

CFR (Cost and Freight) means the seller has fulfilled its obligation
when the goods are delivered and loaded on the vessel they’ve
nominated at the named port of shipment.

CIF (Cost, Insurance, and Freight) means the seller is responsible

for loading properly packaged goods on board the vessel they’ve
nominated, cost of carriage to the named port of destination on
the buyer’s side, and insurance to that point.
B. During Ordering Process Documents

Purchase Order is a document that serves as the initial contract

between the buyer (importer) and seller (exporter).
Proforma Invoice is a document
which contains information
about the price at which the exporter is ready to sell the goods.
Order Confirmation is a document issued by the seller
(exporter) to the buyer (importer) when new order takes place.
C. During Shipping Process Documents

Shipper’s
Letter of Instruction is a form which indicates the
detailed instruction on what the shipper will do in moving
successfully the goods.
Verified Gross Mass is a document
that is required only if the
goods are being shipped by full container.
Bill of Lading is a document that serves as a binding contract
between the seller and the products' carrier. It acts as proof that
the shipping business accepted the items to transport them to the
specified location
 Commercial Invoice is the actual demand for payment the

exporter issues when a sale is made.

Packing List is a shipping document which indicates the
content of the exported goods.

Packing Declaration is a document which indicates the kind and

type of packaging materials used in exporting the product.
Certificate of Origin is a birth certificate that identifies the
country of origin of the products being shipped.
 OUTSOURCING,
GLOBALSOURCING,
AND OFFSHORING

 OUTSOURCING

Refers to the procurement of selected value-adding

activities, including production of intermediate goods or
finished products, from external

independent suppliers.
For example, Harley Davidson sources motorcycle
helmets from suppliers in China.
 GLOBAL SOURCING

Relies on a contractual relationship between the buyer (the

focal firm) and a foreign source of supply. It is also called
‘importing’, ‘global procurement’, or ‘global purchasing’. It is

a low-control stratttegy in which the focal firm sources from

independent suppliers through contractual agreements as
opposed to the high-control strategy of buying from company-
owned subsidiaries.

The growth of global sourcing is mainly driven by the

following factors:
(a) technological advances in communications, especially the
Internet and international telecommunications

(b) falling costs of international business’s

(c) entrepreneurship and rapid economic transformation in
emerging markets
Firms adapting global sourcing benefits the following:
(a) cost efficiency

achieve strategic goals
(b) ability to
(c) faster corporate growth
(d) access to qualified personnel abroad

(e) improve productivity and service

(f) business process redesign
(g) increased speed to market
(h)access to new market
(i) technological flexibility
Despite of the benefits gained in adapting global sourcing,
however, unexpected complications arises which includes the
following:

(a) lower than expected cost savings;

(b) environmental factors
(c) weak legal environment

(d) inadequate or low skilled workers

(e) overreliance on suppliers
(f) risk of creating competitors; and
(g) erosion of morale and commitment among home-country
employees.

OFFSHORING
- is the relocation of a business process or entire
manufacturing facility to a foreign country. It is common in

the service sector, including banking, software code writing,

legal services, and customer-service activities.
GLOBAL SOURCING
STRATEGY AND
SUPPLY CHAIN
MANAGEMENT

In order to reduce, if not control, the risk associated in

global sourcing, appropriate strategies
should be employed by a firm.
A strategic supply chain management would be helpful
in gaining advantage of doing global sourcing.
The following are managerial guidelines for global outsourcing:
• Go offshore for the right reason.
• Get employees on board
•Choose carefully between a captive operation and contracting
with outside suppliers.
• Choose suppliers carefully
•Emphasize communications and collaboration with suppliers.
• Safeguard interests
THANK YOU!