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1、 thirteen Export and Import Strategies Objectives To introduce the ideas of export and import To identify the elements of export and exporting strategies To compare direct and indirect selling of exports To identify the elements of import and importing strategies To discuss the types and roles of th
2、ird-party intermediaries To prole the role of countertrade When one is prepared, difficulties do not come. Ethiopian proverb GrieveA Small-Business Export Strategy The biggest exporters, such as Boeing, Caterpillar, and General Electric, generate about a third of merchandise exports from the United
3、States.1 Their smaller shipments are usually much larger than the largest shipments of smaller companies. Still, small and medium-size enterprises (SME), namely companies with fewer than 500 workers, account for 97 percent of all U.S. exporters. In addition, SMEs account for more than 98 percent of
4、the growth in the exporter population. Moreover, in terms of volume, SMEs are responsible for at least half of all U.S. exports to 85 countries. One such SME is Grieve of Round Lake, Illinois. Grieve manufactures laboratory and industrial ovens, furnaces, and heat-processing systems. Grieve-built eq
5、uipment is found in many product markets, including commercial heat treating, drug discovery, and integrated circuits. The company began operations in 1949 with “one goal in mind . . . to create a line of industrial heat-processing equipment our customers could believe in.” The company has always ta
6、ken pride in offering complete custom-engineering design and manufacturing services. To this day, Mit believes it builds “ovens and furnaces for which there simply are no equals.”2 Since 1949, Grieves primary business has been to design and manufacture laboratory and industrial ovens and furnaces fo
7、r industries worldwide. Over time, Grieve has built core competencies in meeting customers particular requirements, ofcially aiming to be “more than manufacturers but, rather, problem solving professionals who take the time to understand your needs.” Grieve operates out of its 100,000-square-foot fa
8、cility in Round Lake, Illinois, which houses its corporate headquarters, sales, engineering, research, and manufacturing divisions. The company applies its knowledge and experience to build industrial ovens and furnaces ranging from routine heating applications to state-of-the-art systems that meet
9、the clean-room specifications of semiconductor and pharmaceutical environments. The customized design rivals and construction of each product goes hand-in-hand with rigorous testing. Then, before crating a unit for shipment, management quality-checks more than 100 features. Improving customer respon
10、siveness led Grieve to expand its Web site. The site showcases the companys proficiency in the design, manufacture, and delivery of standard, as well as custom, heat-processing equipment and systems. The site details over 400 standard ovens and furnaces; it displays the range of product customizatio
11、n through hundreds of examples, each with a photograph and a description of the unit and its application. The Web site allows one to index equipment photographs by feature or style. Customers can submit online their particular heat-processing requirements and receive a price quote from Grieve. Becau
12、se Grieve sells its equipment worldwide through a network of manufacturers representatives, its Web site allows a customer to enter a zip code into the “rep locator” area to get contact information. As a rule, Grieve representatives are experienced engineers. The Changing Game Over time, Grieve has
13、run into problems when some of its customers moved their manufacturing overseas. Initially, Grieve supplied those customers via exporting. However, customers purchases often faded as they began sourcing from less-expensive local providers. Despite more than a few lost sales, three reasons had dissua
14、ded Grieve from aggressively exporting: 1 The nature of its product. Industrial ovens and furnaces, besides being relatively expensive, are large and bulky. Top management assumed that the products size and resulting high shipping costs would prove prohibitive. For example, shipping a fully automate
15、d furnace system from the factory in Round Lake to a customer in the Philippines cost more than $40,000 2 Doubts about chances of success abroad. Management also assumed that Grieve, as a small businessSME, lacked the resources needed to support a successful export program. Serving customers in the
16、domestic market kept the company quite busy. They struggled to see how they could stretch their already-thin management structure to develop and direct export activity. 3 General concern about competition. Grieve battled seasoned exporters from Germany, Japan, and the United Kingdom. These companies
17、 were fierce rivals that made good products for a good price. Even within the United States, Grieve ran into strong competition from the local operations of these rivals. Eventually, Grieve confronted the issue of expanding overseas. Not only was the company losing customers to local suppliers, but
18、it was also facing growing competition from foreign competitors in the U.S. market. Management realized that it needed to respond or risk its market position. In addition, Grieve regularly shipped its products to both California and Connecticut. Both have strong local competition and high transporta
19、tion costs. Management reasoned experiences here prepared the company to expand overseas. Mindful of these issues, Patrick Calabrese, Grieves president, attended a trade seminar that featured market analysis and trade reports on countries in the Association of South East Asian Nations (ASEAN specica
20、lly, as seen in Map 13.1, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam). Since exports promote economic growth, policymakers and government agencies offer extensive assistance, such as these sorts of market seminars. Listening to the opening
21、 presentations, Mr. Calabrese again wondered whether it made sense to build an export strategy to serve Asia. By the time the nal presenter spoke, Calabrese believed there might be market opportunities for his rm in one of the worlds fastest-growing regions. However, his unfamiliarity with the ASEAN
22、 region compounded the complication of his companys lack of local sales representatives. He was also concerned about how Grieve would engage British, German, and Japanese rivals who commanded strong positions in those markets. To test the waters, Grieve decided to sample potential interest by advert
23、ising in industry reports and trade publications that circulated in Southeast Asia; ads were run in the Asian Industrial Reporter, Asian Literature Showcase, and World Industrial Reporter. To learn more about the market, Calabrese worked with a representative from the International Trade Administrat
24、ion of the Chicago Export Assistance Center. This center, like others in major metropolitan areas in the United States, is a one-stop shop ready MAP 13.1 The Association of South East Asian Nations (ASEAN) Russia Pacific Ocean Kazakhstan Mongolia N. Korea Japan Kyrgyzstan S. Korea Tajikistan Afghani
25、stan China Pakistan Nepal Taiwan Bhutan Bangladesh India Myanmar Laos Thailand Cambodia Sri Lanka Brunei Malaysia Maldives Singapore Indonesia Philippines East Timor to provide SMEswhich, unlike large rms, depend on government export-promotion programswith export assistance. Officially, this center
26、houses representatives of the U.S. Small Business Administration, the U.S. Department of Commerce, the U.S. Export-Import Bank, and similar organizations. Representatives of the Chicago Export Assistance Center helped Calabrese plan his trip to Asia by arranging for interpreters at each stop on his
27、itinerary and by coordinating meetings at U.S. embassies in ASEAN markets. The goals of Calabreses trip were to assess market potential and begin recruiting sales representatives. He had received inquiries from distributors familiar with Grieves product line, but disinterest in export at the time ha
28、d led Grieve not to respond. However, Calabreses staff had begun ling correspondence and sales contacts by country, rather than using their earlier system of sorting them according to company name. This game him a start on locating potential customers. Calabrese also tapped the Department of Commerc
29、es Agent/Distributor Search to get leads on possible distributors. This service helps SME exporters enlist commercial specialists at U.S. embassies and consulates to search the market for qualied agents, distributors, and representatives. Armed and ready, Calabrese departed for Asia. During his mont
30、hlong odyssey he interviewed 28 potential agents. The trip was successful: Calabrese signed exclusive trade representatives in several countries. Calabreses travels and discussions conrmed that Grieve must cut shipping costs. If not, shipping products from the United States would wipe out prots. Wit
31、h a new sense of urgency, workers back in the United States began streamlining packaging and rethinking shipping logistics. In addition, Calabreses trip conrmed his sense of the need to nd time to visit customers in Asia personally rather than relying on the local sales representatives. As he explai
32、ned: The one thing that I found is that almost to an individual, Asian customers are very keen on a personal association. If I were to give anybody advice, I would never send a second-level individual. Never send a marketing manager or sales manager; I would send a top manager. If your company isnt
33、too large to prohibit it, I would send the president or chairman. On the other end, you are talking to the owner of a small distributor or the president of a small manufacturing company, and youve got to meet that person on an equal level. My limited experience is these people are very cognizant of
34、this; in other words, they are pretty much attuned to a president talking to a president. They also like to feel secure that they are dealing with someone who can make decisions. Another thing I found is that potential customers want to feel that you are nancially secure and that you have sufcient f
35、unding to continue to work with them for a period of years, because it takes some time and some money on our end to get these people going. Follow-up is incredibly important. I heard all kinds of stories about American businesspeople who would come over and spend a day and talk to potential customer
36、s and leave catalogs. Then the rst time the potential customers would send a fax asking for information, they didnt hear from them for two weeks, and that just turns them right off. True to its tradition of engineering solutions, Grieve found ways to adapt its products for export markets. Still, Gri
37、eve struggled with transport costs and competition from local rivals. Throughout it all, top management stayed optimistic, condent that they had top-notch products. As Calabrese points out, “Our strength is that we are selling engineered products, using our 45 years of expertise to build something f
38、or them.” Through his experiences in Southeast Asia, Calabrese learned some lessons about the keys to exporting successfullyspecically: 1. Know your products well. Many people who go to Asia from the United States know little about their own products. Far removed from the factory oor, some executive
39、s cannot pinpoint product features. In some cases, potential agents who have studied company brochures know more about the products. 477 e2. Learn about the competition in the foreign market and the potential sales for your products. Keep an open mind: You may have to adjust your selling strategyor
40、often your productto appeal to customers. 3. Jump-start your brand image. A plan to build acceptance slowly can lead to getting lost in fast-changing markets full of hard-charging rivals. 4. Work hard. Many executives, when scouting foreign markets, play golf or see sights. Demonstrate your work eth
41、ic, showing locals that time zones, jet lags, and general fatigue will not slow you down. 5. Build a strong response base back home. Many foreign customers complain about poor factory backup, lengthy delays in getting correspondence answered, and delays in getting quotations. Set up the systems to r
42、eply quickly, precisely, and authoritatively. 6. Arrange for your own transportation, and do not rely on the potential representative to solve your problems for you. Get ready to plug through the trenches. Communicate your commitment to making things happen. 7. Make someone at the home ofce the prin
43、cipal contact for the representative. People need someone who will answer questions and provide assistance. Give local customers a persons name, not a title or a department, to contact. 8. Learn the customs and business etiquette of the countries you visit. Once again, the U.S. Department of Commerc
44、e, among other government agencies, offers assistance. Qualified officials are there, courtesy of your tax dollars, to help youprovided you ask. 9. Have the authority to make decisions and commit the company. If you are going to meet with the top person as a potential customer, have the authority to
45、 make the same sorts of decisions as she would. Otherwise, you are wasting her and your time. 10. Be prepared. Before hopping on a plane, determine the right market for your company and think about how you will service overseas customers. Map it out before you depart, revise as you go along, and pla
46、n to learn. Calabreses initial foray overseas led to a new appreciation of the rewards and pitfalls of exporting. On balance, though, he realized that export was no longer an option: Exporting had to become part of Grieves strategy. Gradually, as Grieve gained experience in Asian markets, it expande
47、d export activity to other countries. By 2007, Grieve listed Latin America/Caribbean, South America, Western Europe, Africa, Middle East, Europe, Canada, and Mexico as export markets. Although exporting has created challenges, it CRN Case Review Notehas also helped Grieve gain greater success. Intro
48、duction Our look at Grieve highlights that exporting is loaded with opportunities and challenges. Once a company identies the product it wants to sell abroad, it must assess the many market options in the world. Table 13.1, in listing the top exporting and importing countries, gives a rst cut of the markets that managers face. Next, the company determines how to prepare the product for the market, optimize transporting logistics, market and sell it, receive payment, and respond to service calls and warranty claims. Complicating m
