Keywords: MBA of International Trade Management low cost business school business sample

MBA of International Trade Management

These are some brief notes on International Trade Management - 1

Dr.  S.  Maurer,  
MBA Professor

If an exporter can find a virgin market that is dëvoid of current and potential competition,  there may be no need to adapt or localize the product since the potential buyers have no choice.  But it is very hard to find a country in the current market environment where there is no competition.

According to NFIB statistics,  almost every international market is growing faster than the U.S.  For example,  Latin America is experiencing annual growth of five percent; the Middle East,  nearly that.  The Four Tigers - Hong Kong,  Singapore,  South Korea and Taiwan - and their neighbors Thailand,  Malaysia and Indonesia,  are averaging six percent growth annually - and that's when they're having an unremarkable year.

You need to weigh many of the same factors you would when pricing for domestic markets,  such as the costs of production,  packaging,  transportation and handling as well as promotion and selling expenses.

Transportation is not completed until a shipment has both arrived at its destination and has been delivered.  Danciger v.  Cooley,  248 U.S.  319,  327 [1919].

An important component in making your export commitment is figuring out whether you have anything an international market would want to buy.

If a country's standard of living is lower than that of the United States,  a manufacturer may find a market for less sophisticated product models that have become obsolete in the United States.

An example: While the issue centered on whether a claim was timely filed,  the court discussed the issue of the carrier’s liability,  and noted that there would have been no delivery so long as anything remained to be done by the carrier,  such as unloading.  However,  the court granted summary judgment for the carrier due to the claimant’s failure to file a claim within nine months from the date delivery should have been made.

If the bank doesn’t hear from the beneficiary during the stipulated timeframe,  it will automatically assume the beneficiary has agreed to the amendment.  From the issuing bank’s perspective,  this arrangement is nice and tidy,  as they can adjust their customer’s liability for the LC at the end of the timeframe without having to do any follow up if they haven’t heard from the beneficiary.

Many kinds of equipment must be engineered in the metric system for integration with other pieces of equipment or for compliance with the standards of a given country.

A thorough corporate self analysis or self audit is needed to understand to what extent the exporter is willing to gather information and invest in adaptation of the product for customers in a specific country market or region of the world.

Quality packaging for shipment is vital,  even in this day of containerization and air-freight systems.  Poor quality packaging can mean poor quality product,  costly delivery and storage,  and failure to meet legal requirements.

it would make perfect sense to develop [unless such products are already available] and export dehydrated vegetables in some country markets.

Because of the warming of relations with the West,  the Vietnamese market is opening up.  Many of the Vietnamese living here have strong links with family and friends still living in their native country.  The same is true of the Hispanic population.  Owners of small businesses should be looking at an Hispanic workforce as a strategic opportunity.

The case of Indemnity Insurance Co.  of North America v.  Hanjin Shipping,  348 F.3d 628 [7th Cir.  2003] involved a shipment of tools from Shenzhen,  China,  to a Lowe’s facility in North Vernon,  Indiana,  moving under a through multimodal ocean bill of lading.

The beneficiary knows that their supplier wants some type of assurance that they will be paid,  but the beneficiary wants to maintain a maximum amount of control over the transaction.  An Assignment of Proceeds might just be the answer.

These are some brief notes on International Trade Management - 2

Dr.  S.  Maurer,  
MBA Professor

The question of how you will sell,  dëliver and service your product abroad is far more important than you may realize.  In answering this question,  the first decision you will want to address is method of distribution.

Delivery is the placement of the vehicle in a position for unloading.

What flies off the shelves in Chicago may not necessarily be a great seller in Munich.  Cultural differences and varying product standards can present serious barriers if you aren't willing to adapt your commodity to your new target market.

Once a letter of credit [LC] is issued and the beneficiary has had a chance to review the document,  the need for an amendment may become apparent.  Or perhaps the applicant realizes they made an error when they completed the application after the letter of credit has already been issued.  Whatever the circumstances may be,  it isn’t unusual for someone involved in a transaction to need to amend an existing letter of credit.

Size of packaging,  material used in packaging,  before and after sale service and warranties may have to be adapted in view of the scope and level of service provided by the distribution structure in the country markets targeted.  In the event post sale servicing facilities are conspicuous by their absence,  enterprises may need to offer simpler,  more robust products in overseas markets to reduce the need for maintenance and repairs.

Some export programs are tied into state or local economic development funds; while others have special funding sources dedicated to supporting exports.  All of the existing programs are designed to streamline access to available funds,  to support programs of federal agencies,  or both.

Many firms still hold onto the frontier mentality left over from the railroads.  But the frontier has moved offshore.  Only one-third of U.S.  small businesses export and they do it incidentally,  not as a purpose.  In Europe,  every other transaction is a foreign one.

One area in which you should definitely seek assistance is market research.  You can get up-to-date information from the U.S.  Commerce Department's trade information Center and the SBA.  The SBA and its volunteer offshoot,  the Service Corps of Retired Executives [SCORE],  can also help you with marketing or distributing your commodity.

Simply stated exporting refers to the marketing of goods produced in one country into another.

The issuing bank needs to track the amendments to determine if the beneficiary has either accepted or rejected the change.  If the beneficiary accepts the amendment,  it can change the liability the applicant has with the LC.

Trademark protection and patent law comprise another critical area that requires your attention.  A vexing problem for many U.S.  enterprises doing business abroad,  especially in developing countries,  has been the pirating of intellectual property.  The Western idea of owning an idea is as foreign to many cultures as the idea of private property.

Studies reveal that enterprises willing to invest,  to innovate and design their products for a specific export market are most likely to succeed.

Let’s assume that we have a buyer,  a broker/middleman,  and a supplier/manufacturer.  At the request of the broker,  a buyer applies for a letter of credit,  but this time there is no mention of the letter of credit needing to be transferable?

Similar to domestic expansion,  moving into international markets requires capital.  You need funds for inventory,  receivables and promotion activities.  In addition,  if you intend to open foreign branch offices,  you'll need cash for facilities and related operating expenses.

Regulations for food additives,  for example,  differ from country to country.  The U.S.  Generally Recognized as Safe [GRAS] additives may have maximum content levels or may be prohibited altogether in foreign countries.

These are some brief notes on International Trade Management - 3

Dr.  S.  Maurer,  
MBA Professor

American enterprisës are more sophisticated and much more capable in many dimensions,  including marketing techniques,  technology,  experience and access to a lot of high quality products.

To successfully establish your niche,  you should target a few selected countries.  You will want to investigate national wealth and any cost barriers,  such as tariffs and import regulations,  as well as taxation laws and restrictions on foreign investments.

If a beneficiary has a certain timeframe to either accept or reject the amendment and the bank doesn’t hear from the beneficiary during the stipulated timeframe,  this practice is seen as trying to change the nature of the irrevocable letter of credit,  and may even be contrary to the laws in the country of the beneficiary.  As a result the practice is strongly discouraged.

The beneficiary knows that their supplier wants some type of assurance that they will be paid,  but the beneficiary wants to maintain a maximum amount of control over the transaction.  An Assignment of Proceeds might just be the answer.

Fred Budetti's United Steel Products of Corona,  New York,  is now a 50 percent partner in a Russian joint venture thanks to his relationship with a Russian engineer once assigned to his government's New York mission.  The manufacturer of steel security products,  such as commercial rolling doors and grills,  enjoyed a 15-year relationship with the mission prior to doing business overseas.

Domestic,  regional and multinational corporations are scanning the globe to source and market their products,  which is forcing the exporter to critically evaluate the kind and level of adaptation needed for various country markets.

The decision to market your product directly or indirectly should be based on several important factors: the size of your firm,  the nature of your product,  previous export experience,  and business conditions in your selected overseas market.

There's another side to the owner-distributor relationship that causes many exporters to urge caution.  Distributors frequently demand exclusive market rights to your product while reserving the right to service your competitors, warns an article in World trade magazine.  Don't expect commitment.

The buyer,  not knowing that an assignment of proceeds has been issued,  may be thrilled at the prospect of not having to pay their bank an examination fee under the LC and embrace the open account proposal.

Now that the supplier is holding the Assignment of Proceeds they may feel confident that they will receive payment and release the merchandise to the middleman/beneficiary.

Product adaptations may even include changes in one or more combinations of brand name,  color,  size,  taste,  design,  style,  features,  materials,  warranties,  after sale service,  technological sophistication and performance.

Most owners of small businesses venturing overseas often don't have the extra capital they need and must turn to outside financing sources.  In recognition of the importance of exporting building at all governmental levels,  new sources of funding are springing up.

Sell the standard products you make for your country market in as many foreign markets as will accept them.  Adapt your standard products to meet foreign market needs more closely.  Adapt your products to meet both foreign and domestic market criteria at the same time,  i.e.  create a universal [global] product.

Worst case scenario would be that the supplier goes ahead and ships the merchandise to the buyer but also contacts them proposing that they not use the LC as the method of payment.  They might even suggest that instead of the LC,  they would be happy to offer open account terms.  They may propose that after the buyer has received the merchandise,  they could wire transfer payment.

Engineering changes needed: Environmental Requirements—Combustion engines,  for example,  may be required to use unleaded fuel only.

These are some brief notes on International Trade Management - 4

Dr.  S.  Maurer,  
MBA Professor

In Seaboard,  a carrier temporarily lëft a railroad car in constructive placement on some side rails to await orders for the car to be moved for actual placement to the unloading spot.  While the carrier was waiting for orders,  the car was vandalized.  The court held the carrier liable since the car had not been delivered before the damage occurred.

A product may have to be adapted in a number of ways to meet the physical,  social or mandatory requirements of a new market.  it may have to be modified to conform to government regulations or to operate effectively in country specific geographic and climatic conditions.  it may be redesigned or repackaged to meet the diverse buyer preferences,  or standard of living conditions.

The decision to market your product directly or indirectly should be based on several important factors: the size of your firm,  the nature of your product,  previous export experience,  and business conditions in your selected overseas market.

Studies reveal that enterprises willing to invest,  to innovate and design their products for a specific export market are most likely to succeed.

Foreign distributors and sales representatives generally work on commission,  assume no risk or responsibility,  and are under contract for a specified period.

The great complaint of most exporters is distributors who are poised to hop aboard the fastest train and move whatever product is currently hot

However,  the savviest exporters manage to make the relationship work.

The packaging design should be based on the customer needs.  In industrial products the pack should be considered for its usage and for its amenability to storing,  pouring,  re-use,  etc.

Industry trade associations are also useful,  as are private consulting firms [such as Terence Barber's BHP Associates] and the business departments located within major universities.

In Intech,  Inc.  v.  Consolidated Freightways,  Inc.,  836 F.2d 672 [1st Cir.  1987],  the carrier had transported a machine and its accessories in two containers from California to Acton,  Massachusetts.  Upon arrival of the first container at the consignee’s facility,  there was a dispute as to who was responsible to unload the machine.  The container sat there for some six months before C.F.  finally came back and removed it.  Damage was discovered five months later,  when the consignee went to inspect the machine at C.F.’s yard.

Domestic,  regional and multinational corporations are scanning the globe to source and market their products,  which is forcing the exporter to critically evaluate the kind and level of adaptation needed for various country markets.

Once a letter of credit [LC] is issued and the beneficiary has had a chance to review the document,  the need for an amendment may become apparent.  Or perhaps the applicant realizes they made an error when they completed the application after the letter of credit has already been issued.  Whatever the circumstances may be,  it isn’t unusual for someone involved in a transaction to need to amend an existing letter of credit.

As tariff barriers [tariffs,  duties and quotas] are eliminated around the world in accordance with the requirements of participation in the World trade Organization [WTO],  other non-tariff barriers,  such as product standards,  are proliferating.

Physical Infrastructure: it is often necessary for an exporter to adapt its product to account for geographic and climatic conditions.

Product adaptations may even include changes in one or more combinations of brand name,  color,  size,  taste,  design,  style,  features,  materials,  warranties,  after sale service,  technological sophistication and performance.

If a country's standard of living is lower than that of the United States,  a manufacturer may find a market for less sophisticated product models that have become obsolete in the United States.