Keywords: MBA of International Trade Management scholarship distance learning business examples

MBA of International Trade Management

These are some brief notes on International Trade Management - 1

Dr.  S.  Maurer,  
MBA Professor

To successfully establish your niche,  you should targët 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.

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.

Levels of expectation 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.

Common engineering changes needed to conform to the country specific requirements.

If you advertise to your U.S.  market,  you may also want to consider advertising to a new overseas one.  However,  the decision to include paid-for advertising in your budget depends on the extent you believe advertising influences your end customers.

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.

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.

After determining that your product is highly exportable,  you need to identify your potential customers.  The best way to do this is through market research.

'Made in America' is still a high-powered statement.  And the low value of the U.S.  dollar means that our goods are currently so cheap,  we have an even greater competitive edge.

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.

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.

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.

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.

By providing an unnecessary warranty,  the enterprise may raise the cost of the product higher than the competitors' costs.  When considering this point,  exporters should calculate the cost of servicing the warranties and adapt the warranty service so that it is in sync with local usage conditions and customer expectations.

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.

These are some brief notes on International Trade Management - 2

Dr.  S.  Maurer,  
MBA Professor

We have the suppliër 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.

Michael Gura,  a Russian living in Orange County,  California,  is the founder of Ortex,  an international trading enterprise,  Gura exports stereos,  personal computers,  cars and other Western goods to his native country.  His business has become so successful that he now employs 250 people in nine offices around the world.  And Gura is not one of a few isolated examples of immigrants in the international trade field.

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.

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.

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 court also reversed the lower court’s finding that O’Hare Services and Channel Distribution were not liable,  and remanded the matter back for further proceedings to determine if they could be liable under Illinois law as bailees,  since there was evidence of very lax security precautions.

You may want to test your product's appeal by advertising in the U.S.  Department of Commerce's catalog-magazine,  Commercial News USA.  A manufacturer of emergency oxygen packs did just that and received inquiries from every continent.  Today,  40 percent of the enterprise's products go to foreign markets.

For example,  the amendment is trying to reduce the value of the LC and the beneficiary accepts the amendment,  the issuing bank can reduce the exposure booked against the applicant’s line of credit.  Until the issuing bank hears from the beneficiary,  however,  they can’t assume that the beneficiary will agree,  and the bank must keep the full value of the LC booked against the applicant’s line of credit.

Some exporters believe the domestic product can be exported without significant changes.  Others seek to consciously develop uniform products [global product design strategy] that are acceptable in all markets with little or mo modification.

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.

On ramp-to-ramp rail traffic,  delivery by the railroad is completed when the railroad delivers the car to the destination ramp and notifies the consignee that the shipment is available for pick up.

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.

Even shampoo and cosmetic product makers have to chemically reformulate their shampoo and cosmetic products to make them more suited for people living in hot humid climates.

The availability,  performance and level of sophistication of commercial infrastructure will warrant a need for adaptation or localization of products.  For example,  an exporter may decide not to market its frozen line of food products in countries where retailers do not have adequate freezer space.

Buyer preferences in a foreign market may also lead an exporter based in more advanced countries to modify its product.

These are some brief notes on International Trade Management - 3

Dr.  S.  Maurer,  
MBA Professor

We have the suppliër 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.

If an exporter can find a virgin market that is devoid 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.

Cultural considerations and customs may influence branding,  labeling and package considerations.  Certain colors used on labels and packages may be found unattractive or offensive.

'Made in America' is still a high-powered statement.  And the low value of the U.S.  dollar means that our goods are currently so cheap,  we have an even greater competitive edge.

The United States is virtually alone in its adherence to a non-metric system,  and U.S.  firms that compete successfully in the global market have found metric measurement to be an important detail in selling to overseas customers.

The letter of credit is issued,  sent to the advising bank who in turn advises it to the beneficiary,  also known as the broker or middle man.

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.

While many enterprises recognize the potential of the global marketplace,  the idea of taking it on can be extremely daunting.  Experts agree that the process starts with a deep commitment.  And with that commitment come resources of money,  time and effort to research markets,  learn about new cultures and create a strategic business plan that specifically addresses the new realities.

Establishing local customer preferences and evaluating competitive products and enterprises in the target market is elemental.

If the consignee is to unload the trailer,  the issue then involves whether there was an agreement that delivery was to be accomplished without obtaining a signed delivery receipt.

Pricing can be one of your most effective competitive weapons,  but it is often the most challenging for new exporters to use effectively.

Factors such as topography,  humidity and energy costs can affect the performance of a product or even define its use in a foreign market.

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

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.

You may want to test your product's appeal by advertising in the U.S.  Department of Commerce's catalog-magazine,  Commercial News USA.  A manufacturer of emergency oxygen packs did just that and received inquiries from every continent.  Today,  40 percent of the enterprise's products go to foreign markets.

These are some brief notes on International Trade Management - 4

Dr.  S.  Maurer,  
MBA Professor

What flies off the shelvës 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.

By providing an unnecessary warranty,  the enterprise may raise the cost of the product higher than the competitors' costs.  When considering this point,  exporters should calculate the cost of servicing the warranties and adapt the warranty service so that it is in sync with local usage conditions and customer expectations.

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.]

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

Those who do decide to venture abroad must realize that exporting success is not achieved overnight.  The requirements are the same as when you first started your business in this country.  That is,  you must be willing,  even enthusiastic,  about making a long-term commitment,  agree many experienced exporters.

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.

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.

The court also reversed the lower court’s finding that O’Hare Services and Channel Distribution were not liable,  and remanded the matter back for further proceedings to determine if they could be liable under Illinois law as bailees,  since there was evidence of very lax security precautions.

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

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.

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.

In the final analysis the extent of adaptation will be driven by the corporate culture,  customer and market orientation,  the market potential for the product scheduled to be exported and the importance of international marketing for corporate growth and survival.

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.

With the Assignment in place,  once the supplier turns over the merchandise to the broker/middleman,  the supplier does lose control of the transaction.

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.