Keywords: MBA of International Trade Management free master of business administration all business

MBA of International Trade Management

These are some brief notes on International Trade Management - 1

Dr.  S.  Maurer,  
MBA Professor

Levels of expëctation for product warranties vary from country to country depending on its level of development,  competitive practices,  and the activism of consumer groups,  local standards of production quality,  and differing usage frequency and patterns.

Certain high-technology products are inappropriate in some countries not only because of their cost but also because of their function.  For example,  a computerized industrial washing machine might replace workers in a country where employment is a high priority.  In addition,  these products may need a level of servicing that is unavailable in some countries.

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.

You should also research existing treaties and any currently under development,  such as GATT and the North American free trade Agreement [NAFTA].  [These trade agreements are still evolving,  so be sure to monitor them closely.]

A country's standard of living and the target market’s purchasing power can also determine whether a enterprise needs to modify a product.

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

Carrier liability ends when delivery has been completed.  Again,  this is a question of fact that often involves a “dropped” trailer.  When it is the carrier’s duly to unload the trailer,  dropping the trailer in the consignee’s premises does not constitute delivery.

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.

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.

We believes that even though there's an obvious benefit to designing products to meet a variety of standards,  the idea of a fully standardized global product that is identical all over the world is a near myth.

Firms that market their products and services internationally expect higher growth rates than those which concentrate exclusively on domestic markets,  reports financial consulting firm Coopers & Lybrand.

Companies in lesser developed countries that have achieved local success may find it necessary to adopt an “up-market strategy” whereby the product may have to be designed to meet world class standards.

When an LC amendment is made,  the beneficiary has the right to either accept or reject the amendment in its entirety.  However,  nowhere is it stipulated just how long the beneficiary has to make this decision.

U.S trade Representative Carla Hills say: A new world order of trade is on the horizon

With this new order come opportunities for small enterprises that now find their domestic markets have matured or are even shrinking.

These are some brief notes on International Trade Management - 2

Dr.  S.  Maurer,  
MBA Professor

Strong warranties may be requirëd to break into a new market,  especially if the enterprise is an unknown supplier.  In other cases warranties similar to those in the home country market may not be expected.

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.

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.

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.

Foreign government product regulations now common in international trade are expected to expand in the future.

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.

If the consignee is to unload the trailer,  this is customary when deliveries are to be made after normal business hours when no employee of the consignee is on duty.  If,  however,  there is a watchman or guard on duty with authority to sign for deliveries,  the carrier should obtain that person’s signature to prove delivery.

Local customs,  such as religion or the use of leisure time,  often determine whether a product will gain market acceptance.  The sensory impact of a product,  such as taste or visual impact,  may also be a critical factor.  The Japanese consumers’ desire for beautiful packaging,  for example,  has led many U.S.  enterprises to redesign cartons and packages specifically for this market.

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.

* Similarities in business culture,  practices and the law.  * Language and other possible communication barriers.  * Spending habits.  * National traditions.  * Religious beliefs.  * The stability of the market's economic and political environment.  * Direct and indirect barriers to initial market entry.  * Product standards in the quality,  safety and technical areas.  * Current market size and growth potential.  * Existing domestic and foreign competition.

When establishing your export price,  begin by taking into account your customers' perception of value,  what differentiates your product from that of your competitors and the role price will play in sales volume and profit.

California has overseas trade offices in five countries and its State Department of Food and Agriculture and California Energy Commission [to name just two agencies] sponsor trade shows and offer financial assistance to prospective exporters.

Remember,  most letters of credit are freely negotiable,  meaning that the beneficiary could present documents to any bank.  By endorsing the LC,  any bank that might receive documents will know that an assignment has been made.

A product’s size and packaging may have to be modified to facilitate shipment or to conform to possible differences in engineering or design standards in a country or regional markets.

If brand name is relatively unimportant,  or if your market is limited and concentrated,  then media advertising will probably play a minor role in your overall promotion efforts.  One of the best ways to build overseas sales is by participating in trade shows,  both here in the United States and overseas.

These are some brief notes on International Trade Management - 3

Dr.  S.  Maurer,  
MBA Professor

If brand name is relatively unimportant,  or if your markët is limited and concentrated,  then media advertising will probably play a minor role in your overall promotion efforts.  One of the best ways to build overseas sales is by participating in trade shows,  both here in the United States and overseas.

In order to speed up the amendment process,  the issuing bank may be tempted to add a clause to their amendment indicating that the beneficiary has a certain timeframe to either accept or reject the amendment.

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.

Local product market scanning,  competitive product sampling and evaluation are also needed to determine the appropriate level of warranties in country markets where the products are being exported.

If you have found that direct mail has paid off for you at home,  chances are good that it will also help you reach buyers in foreign markets.

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.

Working with distributors or representatives can offer distinct advantages.  These individuals can often provide the initial contacts you need in a foreign country.  They have already established relationships with buyers of related items and know the local market,  which is important in any sales effort.

For consumer products the pack might have various functions: protective,  informative,  merchandising and conforming to legal requirements and buying habits [e.g.  Americans tend to buy less frequently than Europeans,  so the largest size is more popular in the United States].

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.

We have the supplier sitting back patiently waiting for payment.  After two or three weeks,  they may contact the bank asking about the status of payment against the assignment only to hear that documents have yet to be presented against the letter of credit.  The supplier will be referred to the line in the assignment of proceeds that payment will be made to them if and when payment under the letter of credit is made.

Carrier liability ends when delivery has been completed.  Again,  this is a question of fact that often involves a “dropped” trailer.  When it is the carrier’s duly to unload the trailer,  dropping the trailer in the consignee’s premises does not constitute delivery.

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.

Your bank can also be an excellent resource if you choose one that has an international department and is committed to serving small business.  Such an institution can help you with all aspects of an export transaction and introduce you to the federal and state government export financing programs that actively support small firms.  State governments are another prime source of assistance.

When potential customers have limited purchasing power,  the exporter may actually need to develop an entirely new product [innovation] designed to address the market opportunity at a price point that is within the reach of a potential target market.

Companies differ in terms of both their willingness and capability to identify and undertake profitable product adaptations.

These are some brief notes on International Trade Management - 4

Dr.  S.  Maurer,  
MBA Professor

Some export programs are tiëd 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.

In Seaboard,  a carrier temporarily left 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.

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.

Today,  the miracle of the marketplace - fax machines,  modems,  international 800 telephone numbers and credit cards - has brought a new accessibility.  The new technology enables small and medium-size organizations to move to areas where they can prosper as surely as people in the 1800s were able to move to new territories using barbed wire,  windmills and other technology of their times.

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.

If all goes according to plan,  the beneficiary arranges shipment,  obtains the documents necessary to draw against the LC,  presents these documents to the bank,  and the bank makes payment to both the beneficiary and to the holder of the assignment of proceeds.  Again,  this may sound like the perfect solution for the buyer,  broker/middleman and supplier,  but could something go wrong with this approach? Unfortunately,  yes.

Engineering changes needed: Electrical Requirements—cycles and voltages.

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.

Remember,  most letters of credit are freely negotiable,  meaning that the beneficiary could present documents to any bank.  By endorsing the LC,  any bank that might receive documents will know that an assignment has been made.

Carrier liability ends when delivery has been completed.  Again,  this is a question of fact that often involves a “dropped” trailer.  When it is the carrier’s duly to unload the trailer,  dropping the trailer in the consignee’s premises does not constitute delivery.

Scope of Product Adaptation Product adaptation deals with a whole range of issues,  ranging from quality and appearance of products,  to materials,  processing,  production equipment,  packaging,  style and modeling.

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.

The bank will require the original letter of credit be presented along with the written request for the assignment.  The bank needs the original LC so it can endorse the backside of the LC indicating that an assignment has been made to the named party and the value of the assignment.

Companies differ in terms of both their willingness and capability to identify and undertake profitable product adaptations.

Doing business in foreign markets can be very different from doing business here at home,  so don't be afraid to ask for help.