International Marketing chapter 14,15,16,18&19

international transactions: political risk

-AKA sovereign risk -the inability of your customer to pay the receivable in full and on time due to government action -unlike domestic sales, international transactions always come with some element of political risk -level of risk generally associated with political stability and out look of government foreign buyer -also includes the risk of expropriation

nonnegotiable bill of landing

-AKA straight bills -carrier can only deliver goods to consignee

EXW costs

-Raw or processed products -standard packaging -pallets, banding, shrink wrap, slip sheets, slings, one-ton big bags -special labeling -translation and printing -inspection certificates -bracing or inspecting a container -export packaging -can also include shipping, freight forwarder fees, documentation fees and banking fees

What are the benefits of containerism?

-Reduced costs -reduced damage to products -reduction of shipping risk -more likely to arrive at destination faster and on time

Letters of credit (irrevocable)

-Risk of seller: little to none -risk to buyer: little- no shipment... no payment -buyer receives goods: can be before or after payment -cost: can be high, related to value transaction

types of L/C

-UCP 600 -sight draft -time draft

international trade document: electronic export information (EEI) filing through AES direct

-US exports only (except to Canada) -issued by seller and accompany shipment -mandatory if shipment value of a single commodity is at least $2,500 -use to be known as Shippers Export Declaration (SED) -exporter is legally responsible for this not the forwarder although forwarders usually prepare them -common mistake is using wrong harmonized code -if exporter license is required then EEI is required too

international transactions: foreign exchange risk (FX risk)

-a change in the foreign exchange rate from the time the sales price was established and accepted to when payment is made -best known risk specifically associated with international sales

expectations of your customers

-a product that works and a service that meets needs * foreign buyers expect to know the truth about glitches and quirks and want the tools to deal with the problem -good communication and service *treat foreign buyer like an extension of your domestic office -lack of discrimination *international customers will keep you honest. They will notice if your campaign/ pricing favors domestic market significantly over foreign market -great prices *may need to lower foreign prices more than domestic prices due to international price escalation.

modification to domestic advertising

-add modification to domestic advertisements which might catch attention of foreign marketers who will contact you -highlight any modifications or technical considerations that are an outcome of your international activities

FCA costs

-all in EXW -inland transportation to the port of exit -insurance cost for inland transport -additional freight forwarders and documentation fees

trade shows: business cards

-always bring plenty -translate business card into local language on one side and english on the other

methods to manage distribution channel

-appreciating the unique role of foreign distributors -a product that works -good communication -lack of discrimination -great prices

trade shows: visual aids

-bring visual aids that communicate product features and benefits -be considerable about potential import duties

horizontal trade mission

-brings together participants from many industries with a common desire to increase trade with the target market -more likely to be headed by prominent dignitaries such as government officials because the opportunities and political paybacks are greater -more common internationally

negotiable bill of landing

-can be bought, sold or traded while goods are in transit -means exporter endorse bill over to bank, bank edorses bill to foreign bank, foreign bank endorse bill to foreign buyer

air cargo pallet

-cargo is secured to pallet with plastic nets or straps -doesnt offer security of a sealed container it is often the only option on smaller aircraft

international payment methods

-cash in advance -letters of credit (irrevocable) -collections -open account

basics of trade mission

-categorized as either vertical or horizontal

guideline for cooperative advertising

-co-op rate: rate at which your foreign buyer accrue advertising co-op dollars -match requirement: to increase effectiveness be sure to require some local match for each co-op accrued -allowable expenses: be sure to spell out exactly which marketing expenses are allowable and which are not -claim process: have a clearly written procedure including what evidence of marketing expense must be submitted

direct international advertising

-companies do this when publication is either too broad or too expensive for the foreign buyer -or pre conference journals or exhibition guides that can be particularly expensive and benefit more than one distributor

risks contained in the company's financials

-companies that offer unsecured open accounts to foreign buyers clearly have more financial risk than those that offer only cash-in-advance -company that is overly reliant on one international country or region or has a sporadic international sales pattern will have higher risk -banks would rather rely on domestic success -US Small Business Administration and ExIm bank's Export Working Capital Program, provide government backed guarantees to banks to counter their international financial risk concerns

US state department of state/ the directorate of defense trade control (DDTC)

-controls the exports of defense, military and munitions articles -international traffic in in arms regulations (ITAR) *set of regulations that control products under DDTC -commodity jurisdiction

considerations when selecting trade missions

-cost -the right trade show? -last minute opportunities

Air cargo containerization

-cost saving -increases speed of loading and unloading -minimizes exposure of cargo to potential damage or theft -ensures efficient use of cargo area

information seller needs to include in an international quotation

-costs of goods -cost of export packaging in cases where special packaging of pallets is required -cost of special labeling, translation or printing if required -inland freight if the freight forwarder is not arranging the transportation to the port of exit -handling charges, inspection or other certificates or any specific charges important to your quotation -other factors to consider: taxes, warranty, expiration, other limitations

establish global brand guidelines

-create advertising kits of support materials to give to your foreign buyers *should include electronic clip art of your brand logo and artwork. state rules for how these clips can be used -help foreign representative achieve advertising and PR goals *be sure marketing staff has good relationship with overseas buyers so issues such as brand usage and advertising themes are more easily coordinated

what are the international financial risks?

-credit reporting can be slow, incomplete and expensive -no common currency -incomplete international data -greater likelihood of procedural errors -events outside the company's control (currency devaluation) -company financials contain risk

trade shows: USA and state pavilions

-dedicated group of booths -have your own booth but it is adjoined with other firms -can save money -can increase profile and credibility because pavilions are generally in the middle of the trade show

what are the different lists to check in concern of BIS

-denied persons list -unverified list -debarred list

modifications to marketing materials

-depending on industry some foreign buyers prefer materials created by the manufacturer because they seem more dependable -in some cases modifications to marketing materials will be minor and are best done by the manufacturer -product specifications sheets, warranty statements and competitive comparisons are best modified or produced by your foreign buyer especially if the changes are exclusive to a particular market and foreign language

key information contained in standard documents for international trade (11)

-description of the goods -mode of transport -terms of sale (which party pays for what) -value of goods -country of origin for the goods -identity of the seller/shipper -identity of the buyer -terms of payment -shipping instructions -evidence of shipment -compliance with related trade controls

details you need before contacting a freight forwarder

-description of the goods to be shipped -packaging details (dimensions, weight) -value of shipment -destination -shipping terms

export working capital program

-designed exclusively to assist exporters with cash flow constraints due to international growth or orders -offered by small business administration and ExIm Bank *SBA used for deals less than $1 million. ExIm bank used for over $1 million. loan guarantee that SBA or ExIm will pay back up to 90% of loan if company cant

What are incoterms used for

-determines who is responsible for what between parties -Is part of international law -Establishes the geographic location at which the buyer becomes responsible for the goods

follow up forms

-develop forms to classify visitors as end-users, distributors or agents

Problems with L/C

-discrepancies -date of shipment -partial shipments -costs

trade shows: pricing

-dont hand out pricing info -be sure to have at least estimated landing costs for your products for meeting with potential buyers

US department of the treasury/ Office of foreign assets control (OFAC)

-enforce US trade sanctions -apples to not only US exporter but to agents and distributors as well

typical applications of an FX risk management strategy to occur

-exporting products or services and the established sales price is in foreign currency -importing equipment or materials and the establishment purchase price is in foreign currency -receiving dividends or royalties from overseas subsidiares or investments that are denominated in foreign currency -funding an overseas investment, acquisition or expansion

Commerce Control list (CCL)

-find if an ECCN exist for your product

Incoterms first letter

-first letters matter -E, F, C, D- Order matters; starts with the least responsibility to the greatest

cooperative advertising

-for every dollar of product purchase by your foreign agent or distributor it earns co-op dollars that can be applied toward marketing expenses -motivates foreign buyers to localize marketing efforts for your product -allows manufacturer to prioritize the particular expenses preferred -forces partnership between the manufacturer and the foreign buyer while empowering the foreign buyer to act locally in making marketing decisions

corporate risk management policy phase 3

-fully involved global company -FX management is fully integrated into all business aspects including tax, accounting and finance

international trade document: packing list

-generally issued by seller and accompany shipment -should include weights and measurements and type of package -if packing list is required it is a good idea to affix a signature

international trade document: commercial invoice

-generally issues by seller and accompany shipment -essentially sales documents -number of elements to this invoice that require information supplied from outside the company -forms the basis for various decisions along the way -if terms of payment are a letter of credit make sure to read L/C and highlight any specific requirements for the invoice -research must be done to determine if the destination country has any specific requirements -for US exports should have an export control statement at the bottom -may act as a certificate of origin

netting

-has low cost -fits phase 1, 2 and 3 -fits all transaction size

forward contract

-has low cost -fits phase 1, 2 and 3 -fits all transaction sized -a contract with another party (typically a bank) to deliver a fixed amount of one currency in return for a fixed amount of another currency at an agreed on future date -available for trading currencies 30, 60 ,90 and 180 day deliveries -more flexible

futures contracts

-has low to moderate cost -fits phase 2 and 3 -fits transactions over $1 million -forward contracts trade on financial exchange -highly inflexible -come in fixed amounts with standard deliver duties

currency options

-have moderate to high costs -fits phase 2 and 3 -fits transactions over $1 million -the right but not the obligation to deliver a fixed amount of one currency in return for a fixed amount of another currency by an agreed future date -does not have to be exercised -downside: brokerage fee and premium must be paid either way

US customs and boarder protection

-helps maintain AES direct along with US census and other federal agencies -help protect from illegal import of goods meaning if someone violated your trademark or patent with a product they would stop them from entering US

transaction risk

-if sales price is in US dollars the risk is on the foreign buyer -if sales price is in local currency of foreign buyer then risk is placed on US seller

ATA carnets

-if traveling to multiple countries consider ATA carnet -passport for products -allow free passage of goods in over 50 countries

simplified network application process redesign (SNAP-R)

-if you need a valid export license you request it through SNAP-R

CIP costs

-includes those of EXP, FCA, and FOB -ocean freight or air freight -war risk (ocean) -harbor maintenance fee -fuel adjustment factor (FAF) -bunker surcharge or bunker adjustment factor (BAF) -currency adjustment factor (CAF) -destination delivery charge (DDC) or container service charges (CSC) -cargo insurance

FOB costs

-includes those of EXW and FCA -port charges -costs of loading goods on board ship -heavy lifting charges

other documents that might be required

-inspection certificates -shipper's letter of instruction

services offered by freight forwarders (17)

-international freight quotations -booking inland and international freight movements -containerization and consolidation of freight -providing scheduling of carriers -transshipments -export and import documentation -applying for export licenses -overseas documentation and foreign government requirements -pre shipment inspections -marine and air insurance -warehousing -export packing -supervising freight movements -assisting with insurance claims -overseas logistics strategies such as free trade zones and warehousing -computerized tracking of international freight movements -import customs clearance/brokerage

international trade document: bill of landing

-issued by carrier -issued by trucking, railroad and shipping lines -when issued by airlines bill is called air waybill -two types of document: negotiable, nonnegotiable

international trade document: quotations

-issued by seller before sale is confirmed 1. confirms the selling price of the goods to the buyer 2. clarifies the various costs that the buyer will have to pay in addition to the product costs

international trade document: certificate of origin

-issued by seller but not always required -required to determine import tariff treatment -used to establish the country of origin so when the good reaches its foreign destination local customs can determine the appropriate import duty or other applicable taxes -depending on country a generic form is acceptable -some cases origin must be certified by chamber of commerce -some cases very specific formats are required

international trade document: drafts

-issued by sellers bank but not always required -an unconditional order (instruction) in writing from one party to another party

international trade documents: pro forma invoice

-issued by the seller before sale is confirmed -confirms to the interest buyer the cost of goods and all other related cost items -importers will request this to open a letter of credit -help foreign buyers obtain necessary import documents -may take the place of a quotation -difference is pro forma is a document and quotation is a letter, email or fax

international trade document: insurance certificate

-issued by various parties -important seller ensures insurance has been arranged even if buyer is paying *often buyer will expect seller to arrange insurance and add it to the invoice -certificate may be issued by seller, freight forwarder or insurance company

during foreign visits try to investigate:

-key accounts *go with agent to key account and observe how they sell your product -blind sales calls *visit a retail shop or customer of your agent to see if it is truly carrying your product -media visits *if you are traveling with a key executive plan a visit to an industry magazine or local business press -training events *keep training agents so they are increasingly effective in representing your company

Ex-Works (EXW)

-least responsibilities for the exporter -price includes only those costs agreed upon -foreign buyers responsibility to clear goods for export

translation risk

-losses or gains that can result from restating the values of these assets and liabilities -encompass all of the company'f foreign exchange risk exposure both assets and liabilities -significant to outside users of the financial statements such as lenders and shareholders

What are the two categories of air cargo containers

-lower deck containers -air cargo pallet

trade shows: develop potential buyer database

-maintain database of contact developed during months leading up to exhibition and send pre- exhibition materials to them before the show

difference between editorial staff and advertising staff

-maintain distinction between advertising and editorial staff

placing international advertising

-maximize purchase power -negotiate the price -last minute placement -use your foreign buyers

International AD copy

-may have translation issues -AD's that work in US probably wont work in other countries -creating an international AD can be plan and expensive

NAFTA certificates of origin

-most complicated -designed so that products shipped between NASFTA countries only receive benefits if the product is actually manufactured in US, Canada or Mexico

Delivered duty paid (DDP)

-most responsibilities for the seller -mostly used for samples or warranty repairs -seller responsible for all freight charges, insures shipment to named place, all import customs fees and duties in foreign country

when to move to nonexclusive contract

-moving to nonexclusive is primarily an issue of market maturity -going nonexclusive after being exclusive can backfire but as companies grow and become more involved in their foreign markets they will usually move from exclusive to nonexclusive

how to prepare documents

-no set format for international trade documents -layout doesnt matter as long as structure is the same and information is easy to locate -consistency and accuracy is essential -best not to use abbreviations

format of an international quotation

-no standard format

foreign trade shows

-offer unique opportunity to meet with potential representatives and visit competitors all in one location and product offerings -opportunity to collect literature and compare representation lists

Third party logistics (3PLS)

-offers ability to outsource logistics with another company -provide complete global solutions, including product shipping, warehousing, sales fulfillment and customer support functions

list to check

-official to search for companies or parties that are of concern of BIS

obtain foreign receivables insurance

-one most powerful techniques -offered by Export-import bank (ExIm)

reasons for incomplete international data

-one of the main reasons is decisions often must be made using incomplete information -Dun and Bradstreet (dnb.com) and Coface (coface-us.com) offer credit information on international buyers -overnight currency devaluation

PR activities for small to midsize companies

-only advertising cost dollars (editorials and press are free) -meeting with editorial staff -plan public relations events -press releases -global consistency -deal with problems -know the difference between editorial staff and advertising staff

PR activities: planning public relations events

-participate in events -have representative plan events around your visits

why participate in trade missions

-power in numbers -increased exposure to government industry and country experts -potential cost savings of non travel expenses -peer-to peer learingn

Export Control Classification Number (ECCN)

-products that are controlled under EAR are given ECCN -strictly used in context of US export controls -under BIS

machine translation

-professional translation rates rage from 20 to 30 cents per work -machine translation is an alternative -has proven track record to improve relationship with global customers and increase revenue

minimizing commercial risk

-relatively easy to identify -require payment in advance -require letter of credit -open account -obtain foreign receivables insurance

corporate risk management policy phase 1

-represents companies in initial global expansion -only involved in exporting -adverse -rely heavily on outside assistance -pricing in US dollars- payment in secure forms

minimizing political risk

-research on government and political environment of the foreign buyer -expot.gov and GlobalEdge offer political risk information on countries -euler hermes (eulerhermes.ub) offers country specific reports and a global report on political and economic risk -if risk is high enough payment options should be adjusted -prepayment is best to avoid political risk

economic risk

-results from the potential for an international company to become noncompetitive due to changes in the exchange rate between its base of operations and that of its customers -when dollar strength increases it takes more of a foreign currency to purchase same amount of dollars

cash in advance

-risk to seller: none -risk to buyer: very high, relies solely on god faith of seller to ship -buyer receive goods: after payment -cost: low, not related to value of transaction -most common international payment method -payment by foreign buyer typically sent by wire (AKA Society of Worldwide Interbank Financial Telecommunications (SWIFT transfer))

collections

-risk to seller: potentially high if foreign bank or forwarder is unreliable -risk to buyer: similar to L/C; low buyer receives goods: after fulfilling payment terms cost: low -AKA documentary collection, cash against documents and payment against documents -when product is shipped seller forwards the documents to the foreign buyers bank which holds the documents until the payment term is met -at sight

open account

-risk to seller: potentially very high -risk to buyer: little to none -buyer receives goods: immediately -cost: low -shipping "on credit" -method is simple and inexpensive for both seller and buyer -all risk that buyer will pay seller

information required on EEI

-shipment information: origin state, country of destination, departure date, conveyance name -USPPI: US Principal Party in Interest -ultimate consignee -commodity line -when all information is entered in AES system will generate a International Transaction Number (ITN)

minimizing commercial risk: open account

-shipments with no guarantee in place other than stopping future shipments if payment is not paid -used when company wants to move beyond first two option

Free on Board (FOB)

-signifies a precise ship and ocean port location where the product is loaded on an ocean carrier -only applies to sea or water transportation -should only be used with "roll-on, roll-off"

Carriage and Insurance Paid to (CIP)

-signifies seller clears the goods for export, arranges and pays the ocean or air freight and other freight charges to a named place in the foreign country -sellers insures shipment to named place -seller not responsible for any import customs fees or duties

considerations when terminating an agent/ distributor

-some distributors just do not have the experience or infrastructure to take sale beyond a certain point -even if contract allows for dissolution by either party, local laws may not -legal issues associated vary from country to country -nonlegal issues; inventory considerations, public relations and choosing new distributor

lower deck containers

-specifically designed to fit the dimensions of the lower deck of a wide body jet and lock directly into the planes structure -typically metal and can be sealed -another version are box-type containers

social media

-strong international presence is important -you should control your social media tools

international transactions: commercial risk

-the ability or inability of your customer to pay the receivable in full and on-time -most often recognized with any transaction -no credit risk associated with a transaction if no credit is extended -also risk that foreign buyers break contract

elements of a pro forma invoice

-the goods -terms of sale -terms of payment -validity date -shipping date -documentation -weight/ dimensions -mode of transportation -banking charges or information -country of origin -other terms -sellers correct name and address -sellers pro forma reference number and any buyer references -any specific inclusions -any type of packaging -the request for partial shipments and/or transshipments

who solves all the problems in foreign markets

-they do -this puts more pressure on manufacturer to provide adequate materials and tools to empower the importer so it can duplicate functions conducted by manufacturer

why importers want exclusive contracts

-they put a lot of work into campaign for your product and they want protection against another company sweeping in and reaping the benefits of their hard work

DDP costs

-those included in EXW, FCA, FOB and CIP -all imported costs including customs fees and duties

corporate risk management policy phase 2

-tolerant -company begins to expand global activities -offer foreign currency pricing and less restrictive payment terms like open accounts -develop international expertise to manage FX risk

vertical trade mission

-trade mission is focused on one or two particular industry or related industries -Benefit: all of the foreign events, visits and dignitaries are all related to the common theme of the target industry -most familiar in US

trade shows: language issues

-translate essential product materials in local language -invest into a local translator

PR activities: meeting with editorial staff

-you will have ore access to international press than domestic press -call prior to departure, explain reason for visit, suggest a short meeting -once representation has been established continue meeting with editorial staff

what are the 4 US government agencies tht play huge role in export controls

1. bureau of industry and security (BIS) bis.doc.gov 2. US department of the treasury/ office of foreign assets control (OFAC) treasury.gov 3. US state department of state/ the directorate of defense trade controls (DDTC) pmddt.state.gov 4. US customs and boarder protection cbp.gov

What two ways can the 11 incoterms be grouped in?

1. by the freight cost items that are included in the term 2. by the appropriate mode of transportation for their usage.

3 risks that should concern company's going global

1. commercial risk 2. political risk 3.foreign exchange risk (FX risk)

bureau of industry and security has 2 primary goals

1. control the export of technology and nonmilitary products that if improperly exported could pose a threat to national security 2. control the exports to specific individuals or companies for which BIS has a concer

NAFTA preference criteria

1. goods wholly obtained or produced entirely in the territory 2. transformation 3. good produced entirely in territory 4. special circumstance when product is not transformed because of harmonized codes 5. certain automatic data processing goods and their parts not originate become originated upon importation into territory 6. used in special circumstance in the agricultural industry

when to participate in trade missions

1. new to market 2. support existing market activities 3. networking

What are the 9 essential international trade documents

1. quotations 2. pro forma invoice 3.commercial invoice 4. packing list 5. electronic export information (EEI) 6. bill of landing or air waybill 7. certificate of origin 8. insurance certificate 9. drafts

bill of landing will be issued by carrier to serve what purposes

1. receipt for the cargo 2. as a contract for transportation goods 3. as a document of title (possession)

products qualify for NAFTA benefits by

1. the product itself originates within the territory 2. product transformed within the territory 3. product assembled using only originating materials

types of FX risk

1. transaction risk 2. economic risk 3. translation risk

Free Carrier (FCA)

1. used when exporter wants least responsibilities but takes on the responsibility of clearing goods for export 2. used when goods are loaded on board an inland carrier at a location beyond the factory -terms of sale can include delivery of goods to a freight forwarder, railway terminal, or container yard in a city beyond the exporter -signifies a precise location where the product is turned over to a carrier or person who will ensure freight

what are the three main US export control concerns

1. who imports 2. what is exported 3. where exports are going

who are your international finance partners

1. your bank- will do most of the work 2. your local trade resource- can train and assist you through the initial steps 3. the federal government- has the financial strength to offer products such as foreign credit insurance

What is the freight capacity of containers?

2,376 cubic feet

Containers are generally how many feet long?

20 or 40 feet. *40 feet are most popular

What is the weigh limit of containers?

60,350 lbs *mat be lower if container is transported by truck

how to state CIP

CIP named place, state/province/country

you must confirm that your product is not on what list?

Commerce Control List (CCL) *if it is you need a license

Which terms should you avoid quoting and why?

D terms because of risks

how to state DDP

DIP named place, country

in US every export has to file what?

Electronic Export Information record (EEI)

How to state EXW

Ex-Works town, state/province/country

how to state FCA

FCA named place state/province/country

how to state FOB

FOB ship's rail ocean port of exit, state/province/country

Who are US freight forwarders regulated and certified by?

Federal Maritime Commission

FX management is not limited to what kind of companies

Fortune 500 companies

Port-to-port service (LCL)

LCL= less than container loads goods from one shipper is combined with goods from another *done by forwarders, consolidators or the carrier *less cost effective and does not offer same product protection

what organizations are many freight forwarders apart of?

National customs brokers and Forwarders association of america, Inc. (www.ncbfaa.org)

Containers were first used

Post WW2 for military to transport family goods

What company was the first to use containers commercially?

Shipping line Sea-Land

T/F Exporters and importers don't usually own containers

True usually they just use them for shipment and return them to a pool to be used by others

C-TPAC and CSI are managed by who?

US Customs and Border Protection

Who adopted containers as a standard and what did they call them?

US military. Called them conex containers which were smaller than todays

Customs Trade Partnership against Terrorism (C-TPAC)

a voluntary program available to US manufacturers to certify their commitment to best practices in supply chain security *can lower the number of cargo inspection when importing goods

High cube containers

additional foot in height and typically 48 feet long

open top containers

allows products to be loaded from the top. may or may not have a top

box-type containers

another version of lower deck containers -made of wood, fiberglass, plywood, fiberboard, metal or a combination.

trade missions

any coordinated international travel where individuals from various companies make joint visits to foreign markets

How were goods shipped before containers?

as breakbulk cargo *goods were exposed to outside elements

PR activities: press releases

be sure to coordinate both domestically and internationally about press releases

documents against acceptance

buyer must accept the agreement to pay invoice within a certain amount of time

L/C is a commitment by who?

by bank to pay amount of L/C if certain conditions are met by seller

regional value content

calculation used to determine in dollars the percentage of originating materials in a product compared to nonoriginating materials

with exclusive contracts you have the ability to

cancel or not renew contract

board bill of landing

certifies cargo has been placed on board a certain vessel and is signed by the master

fourth rule when using incoterms

charges omitted in the quotation come out of the sellers pocket. otherwise the seller must re-invoice which would probably not be accepted by buyer. seller will seem inexperienced

if advertising sells products then public relations sells

companies

Export Management System (EMS)

companies participating in compliance with export control document policies and procedures to remain compliant with export control

FX management is what kind of tool?

competitive and strategic

Door-to-door service

container will be delivered directly from your door to the door of your foreign buyer *this option is most desirable

If your shipment can fill up at least 1/2 a container it is better to

contract a full container

SWIFT transfer

cost of transfer low- around $50 ea.

parties

countries that signed NAFTA

minimizing foreign exchange risk

create corporate risk management policy (3 phases)

foul bill of landing

damages or shortages are discovered by the carrier

Foreign buyer can only open L/C account by

depositing full amount invoiced or existing credit line meaning buyer may still need to come up with the amount weeks before they receive the product

C/D incoterms

do include main international freight

seventh rule when using incoterms

do not assume anything

fifth rule when using incoterms

do not assume buyer knows all the regulations

E/F incoterms

do not include main international freight

each shipment has a certain number of what

documents *such as commercial invoice, packing lists, certificate of origin, inspection certificate

advising

domestic bank verifies that foreign bank actually did issue L/C

combining containerization and intermodalism has had a major impact on what service?

door to door

when exchange rate is changed it impacts who?

either the buyer or the seller

integrated marketing communication

ensuring your sales, marketing, public relations, social media, brand, staff and corporate culture are all unified and consistent to support your corporate strategies and goals

include your international activities in your company's

entire advertising strategy so international and domestic activities are sync

transformation

final product made up of other products which are turned into a final project

confirmed letter of credit

foreign bank pays a fee to guarantee L/C payment as long as goods are shipped and documents are provided

when order of (negotiable) bills of landing

foreign buyer are typically unable to obtain possession of goods before payment is made

forward rate

foreign exchange rate quoted between 2 currencies for delivery in the future. Typically quoted for 30, 60 and 90 days delivery. calculation based on known factors mostly using bond rates

spot rate

foreign exchange rate quoted between two currencies for transactions that require either immediate delivery or delivery within two days

territory

geographical boundaries of the parties to the agreement

international trade shows

good opportunities to meet with important industry contacts and assess competitors

currency devaluation

government imposed currency controls and hyperinflation can all affect a foreign buyers ability to pay

expropriation

government takes over the assets of a private company

Global shipping costs have become increasingly affordable because

growing use of containerization and intermodalism combined with technology

international agen/ distributor meetings

have an annual international meeting for all of your distributors/ agents

side loading containers

have door on the side when end loading is not easy Ex: containers on rail cars

flate rack containers

have two or more sides missing for transporting machinery, vehicles, bulky items, lumber and mill products

You should ask the freight forward what?

how freight is calculated

most countries offer temporary

import bonds- pay for products when enter country and get money back when you leave as long as you still of the products with you

combining containerization and intermodalism has

increased efficiency and lowered the costs of shipping globally

URR525

international agreement covering how international reimbursements are made -one way to avoid L/C problems

ocean bill of landing

issued by an ocean carrier for sea freight

clean bill of landing

issued when shipment is received by carrier with no indication of damage or shortages

minimizing international financial risk

key is to first identify risk then take steps to minimize

trade missions and trade shows are not just for

large companies

UCP 600

law that made L/C irrevocable

what payment terms should be used when obtaining an international freight quote

letter of credit (L/C) or collections c

you must confirm that your buyer is not on what list?

list to check *if they are you need a license

Uniform customs and practices for documentary credit number 600 (UCP600)

lists a number of rules and understandings that apply in case of misunderstandings, disputes of mistakes. -one way to avoid L/C problems

Commerce Country Chart

lists each country and indicates when an export license is required

time draft L/C (usance L/C)

longer period payment is negotiated between seller and buyer

PR activities: global consistency

maintain image and message

US forms the second largest category of

marketing expenditure. *second to advertising

FX management must always be linked to other aspects of a company's operation including

marketing, logistics, tax and finance

exclusive contracts put you in a better position to

motivate and mange your agents and distributors

intermodalism

moving containerized freight between different modes of transport such as truck to rail to ocean to rail and then truck

containerization

moving freight in standard containers

incoterms must have ?

named place Ex: EXW Dallas, TX

trade shows: marketing materials

need at least one inexpensive marketing handout to give to visitors

non containerized cargo

not all cargo can be containerized. some need to be transported in specialized vessels that are fitted for particular products. These are sometimes referred to as "ro-ro" or "roll on; roll off"

direct marketing

one of the most powerful tools to increase international sales -goal is to not make the sale but create n environment that generates sales -requires less infrastructure -can use to manage distribution network

Can file EEI through

online portal callad AES direct (aesdirect.gov) *portal administered by US census and US customs and border protection *no cost to file EEI

incoterms mode of transportation matters

out of the 11 terms, 4 are for ocean and inland waterway: FAS, FOB, CFR, CIF

annex 401

part of NAFTA that describes how a product can qualify for NAFTA benefits

nonoriginating materials

parts, raw materials, components or finish products not from a NAFTA country

originating materials

parts, raw materials, components or finish products that have been determined to be from a NAFTA country

sight draft L/C

payment made to seller as soon as the documents verifying shipment are presented to bank

what certificates are needed for agricultural products of animals?

phytosanitary or health certificates

if bringing product samples check for

potential import custom duties

insulated containers

prevent fluctuations in temp through ventilation or use of heating system

hedging

process of protecting against the potential of foreign exchange loss due to currency exchange rate fluctuations

denied parties screening/ restricted parties screening

process of searching for companies or parties on BIS list check

preferential treatment

product being allowed into NAFTA country at a lower tariff

a export license will be required if

product is deemed sensitive to security, political and related concerns of US government

qualify for preferential treatment

product mets requirements in annex 401 so it qualifies for benefits

Refrigerated containers (reefers)

refrigeration features for perishable goods

commodity jurisdiction

request a formal decision from DDTC about their product

dont judge success of trade shows/ missions based off of

sales. based it off of market knowledge gained, competitive information uncovered and relationships developed with potential buyers

Container Security Initiative (CSI)

seeks to identify potentially high-risk freight in foreign ports prior to arriving into the US

sixth rule when using incoterms

seller is ultimately responsible for ensuring the inclusion of costs, timely shipping, compliance, documentation and payment

first rule when using incoterms

seller must clearly define terms and conditions for shipment, payment, which port, time frame and all other issues

third rule when using incoterms

seller must determine what charges are included in the quotation as based upon terms of sale and geographical location

Export Administration Regulations (EAR)

set of authorizing regulations under which BIS operates

incoterms

set of transportaion temrs set by the International Chamber of Commerce (ICC)

domestic trade shows

should participate in US trade shows too

exclusive contracts =

single most powerful motivational tool

Containers are usually how many feet in width and height?

slightly more than 7 1/2 feet

inspection certificates

some shipments require inspection of goods before they leave the manufacturers or exporters facility

effective public relations can be an important tool to

successfully expand globally even for small companies

obvious benefit to trade show

that hundreds/ thousands of potential buyers all come under one roof

at sight

the buyer must pay prior to taking possession of goods (known as documents against payments)

It is legally who's responsibility to make sure documentation for exports is done correctly?

the exporters

incoterms are from who's prospective?

the exporters *describes what the exporter is responsible for

second rule when using incoterms

the farther the geographical place is from warehouse (EXW) the higher the costs of getting the product to the site

customers of foreign agent or distributor will few who as manufacturer?

the foreign agent or distributor

what is one of the most power features of direct market entry?

the wealth of market feedback available from your agents and distributors

$5000= 50,000 pesos if peso weakens from 10 peso/ per dollar to 12 peso/ per dollar

then company would only receive $4,167 (50,000/12)

incoterms and title transfer

title transfer is determined by contract between exporter and importer

why do companies eventually increase their international involvement?

to include foreign direct investment which gives them more control and feedback and additional financial risk

many trade missions are planned around

trade shows. but the do not need to be

freight forwarder

trained and equipped to handle the entire process from the initial freight cost quotation and shipping arrangements to related documentation and customs clearance

red flags

used so companies can have staff trained to recognize these flags which may indicate the buyer is attempting to circumvent US export controls

shipper's letter of instruction

used to convey key information about shipment including all the fields required on the EEI

ventilated containers

ventilation through one or both ends may include powered air- circulation fans *used for cargo that generates heat or is susceptible to sweating

General average act

when a vessel in danger the ship's master has the right to sacrifice property and/or incur reasonable expenditure

when does financial risk start increasing

when companies move to direct exporting

deemed exports

when technology otherwise covered by EAR is released to foreign nationals while in US *it is considered an export and must have a license to do so