The main activity of international
marketing is the export-import procedure. This procedure involves the actual
and operational procedures of export and import trade. Within the procedures
you will come across issues such as;
·
Documentation
·
Procedures for export
and imports.
·
Excise clearance
·
Foreign exchange etc.
Export
Procedures
Under export procedures, there are
several activities which can be classified into five different stages;
1. Preliminaries
& Inquiry, Offer and Receipt of Confirmed Orders.
2. Production/Procurement
of Goods.
3. Shipment
4. Documents
5. Export
Incentive
Import
Procedures
Importing refers to the purchase of
foreign products for consumption or sale in the home country. Comprise five
stages;
1. Preliminaries
2. Enquiring
and Placing the Indent.
3. Obtaining
Foreign Exchange.
4. Arrangement
for Payment.
5. Payment
of Customs Duties and Taking Delivery of Goods.
Finance
Techniques
International business agreements are
concerned with other issues at international level in addition to the issues
involved in domestic trade. Issues involved such things as;
·
Currency to be used.
·
Creditworthiness of the
Importer.
·
Methods of Payment
(Payment in Advance; Open Account and Documentary Collection, Letter of Credit)
Import
Procedures Simplified
Under these procedures, countries are
taking steps in simplifying procedures to ensure imports are efficiently
processed and on a timely basis.
·
Import licences.
·
Custom Clearance.
·
Use of courier services
etc.
Export
Promotion
Export businesses basically earn foreign
exchange for the country and as much as possible products exported should be
promoted in other countries and in foreign markets. Things that can be promoted
are in terms of;
·
Institutional
infrastructure.
·
Level of Export.
·
State Organizations.
Acquisition
of Resources
Procuring
To produce goods, there need to be a
good number of varieties of inputs; raw materials, parts, components etc.
Procuring is the set of process and steps firms uses to acquire various
resources it needs to create its own products. Procuring is also called
sourcing. For international businesses, they have to procure resources
carefully as it affects the cost of product, quality of products, delivery of
products and demand on finances.
·
Vertical
Integration
Vertical
integration is adding new products and or services which are complimentary to
the existing product and or services lines. Some international companies tend
to develop their own internal sources for procuring raw materials. In vertical
integration, new products are sometime produced to provide complementary
products to existing products.
Time
Issues
Another important factor to be
considered is the timing of shipments and receipts of supplies. It is important
because international company look at other cost factors such as; shipping
costs, carrying costs, risks of running of stock etc.
Location
Decisions
It is also important to international
businesses when it is considering locations for its warehouse, plant, markets.
Management have to look at decisions such as trade-offs between concentration
and dispersion of the manufacturing facilities and marketing facilities.
·
Inputs
versus markets
Most
international businesses draw its resources example; raw materials, human resources,
components etc. from different countries and sell their products in specific
countries. Most of the time, location of plant and warehouse are located closer
to available resources and delivery facilities such as wharfs, roads links etc.
·
Concentrated
versus Dispersed Location
International
businesses may put their facilities such as warehouses and plants in a few
places or spread them across different location in several different countries
wherever they have markets. When facilities are place closer to each other, it
is called concentrated location. When facilities are spread out in so many
different countries, it is called dispersed locations.
|
Concentrated
Locations
|
|
|
Benefits
of Concentrated Locations
|
Drawbacks
on Concentrated Locations
|
|
·
Efficiency or productivity can be
maximized
·
Products can be standardized
·
Company can enjoy large-scale
economies
·
Cost of production can be minimised
·
Administrative system can be
simplified
|
·
Enhance the price of products due to
high cost of transportation
·
Take up a lot of time to make the
products available for sale after it is produced
·
Adds complexity to the business
process system
·
Leads to inefficiency and complexity
due to large size
·
May suffer from political uncertainty
in countries where facilities are located.
|
|
Dispersed
Locations
|
|
|
Benefits
of Dispersed Locations
|
Drawbacks
on Dispersed Locations
|
|
·
Adaptation of product, marketing etc.,
based on location
·
Company can be flexible.
·
Inputs may vary from one supplier to
another
·
Company can go for customization in
production and marketing.
·
Political risks, commercial risks can
be minimised.
|
·
Cost of production per unit is high
due to small scale production at each location.
·
Cost of administration also increases
due to management of multiple locations.
|
Decisions on locations sites can be done
on the following approaches;
1. Country related
– various factors in a country such as availability of raw materials &
other inputs, costs and infrastructures.
2. Product related
– Product value to weight ratio etc. and production technology as well as
customer feed backs.
3. Government Policies
– Policies like land policies, tax concessions, incentives etc.
4. Organizational issue
– cost as per organizational structure have to be considered such as
manufacturing capabilities, inventory levels etc.
International
Logistics Management
When discussing international logistics
management, we are looking at the mechanism of getting inputs from their
sources to the manufacturing centre and taking the finished products from the
manufacturing centre to the customers. Such mechanism can be simple or it can
be very complex.
It may be simple when it is closer to
the sources of inputs and also the customers, otherwise if it is far away from
the resources and customers then logistics can be complex.
Domestic
and International Materials Management
There are differences between Domestic
and International Material Management in the following factors;
Distances involved in shipping as compared
to one form of transportation in domestic situation.
Logistic
Management involves the following factors;
·
Material management
costs.
·
Warehouse costs
·
Packaging
·
Transporting
·
Distributing goods
·
Inventory carrying
costs
·
Competitive levels of
services to foreign customers
Information
Technology and Logistics Management
There has been increased efficiency in
logistic management due to improved business processes through re-engineering,
re-arrangements and links of business operations from improvement in
technology, electronic mail and communication systems and different mode of
transports that has made it easier and faster to deliver goods and services for
international as well as domestic business.
Business
Process Re-engineering and Supply-Chain Management
Business Process Re-engineering and
Supply-Chain Management have a great impact on international production and
logistics management from customer enquiry to procurement etc.
Students are encouraged to read further
on the above topics to enhance your knowledge into the various issues
mentioned.
Sources:
International Business Environment by
Francis Cherunilam, (2009) Himalaya Publishing House.
International Business by P Subba Rao,
(2012) Himalaya Publishing House.
Business Ethics by Andrew Crane, Dick
Matten, (2007) Oxford University Press or other related text books and
materials.
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