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Chapter 1 Intro

The document defines export as the act of sending goods or services out of India for sale, contributing to the nation's economy. It outlines the essentials, functions, benefits, and challenges of exporting, as well as strategies and methods for successful export operations. Additionally, it categorizes goods for export and highlights the scope of various sectors involved in international trade.

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8 views30 pages

Chapter 1 Intro

The document defines export as the act of sending goods or services out of India for sale, contributing to the nation's economy. It outlines the essentials, functions, benefits, and challenges of exporting, as well as strategies and methods for successful export operations. Additionally, it categorizes goods for export and highlights the scope of various sectors involved in international trade.

Uploaded by

vanshtaneja2004
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is Export?

As per Section 2 (e) of the India Foreign Trade Act (1992), the
term export may be defined as ---

• ‘An act of taking out of India any goods by land, sea or air
and with proper transaction of money’.

• To send goods or services across national frontiers for the


purpose of selling and realizing foreign exchange.
• A function of international trade whereby
goods produced in one country are shipped
to another country for future sale or trade.
The sale of such goods adds to the producing
nation's gross output. If used for trade,
exports are exchanged for other products or
services. Exports are one of the oldest forms
of economic transfer, and occur on a large
scale between nations that have fewer
restrictions on trade, such as tariffs or
subsidies.
Essentials of Export
Goods must leave
Export country
Goods must pass the
custom clearance
process
The payment of the
exported material must
realize in the exporting
country itself
Functions of Export
 Procurement of Export
order
 Planning for Export
order execution
 Directing for exports
 Export order execution
 Importer Liaison
 Export order Evaluation
 Reprogramming
 Reporting on Export
order Execution
Benefits from Exports
• Market Diversifications
• Additional source of
Revenues
• Use of excess production
capacity
• Minimizing the effect of
seasonal fluctuations in sales
• Business operation stability
• Product improvement
• Lower unit costs
• Untapped markets
• Economies of scale
Major Problems in Exporting
• Failure of markets in accepting the
product
• Problem of distances
• High cost of transport
• Exchange rate instability
• Political instability
• Tariffs and other commercial obstacles
• Cultural diversity
• Technological piracy
• Market information
• Heavy documentation
• Foreign trade quotations
Export Marketing Strategy
It defines the selection of a target
market and determination of a ideal
blend of product, price, promotion
and distribution mix.
Component of Export Strategies
13 P’s that are a part of Export strategy are:

Product- What we have to market.


Price – What price strategy to be followed.
Promotion- How to promote the product
Place – How and where to deliver the product
Payment- What would be the payment terms
Personnel – What special skills are required
for staff
Planning - What are the future plans of the
company
Paperwork – Are all documentation formalities are
complete…domestic as well as International
 Practices – Has company make all the plans to deal with
different cultures.
 Partnerships – Has the company selected a partner
abroad to create strong market
 Policies – Current and planned policies of the company
to tackle int. market properly
 Positioning – How does a company want to position its
products and services in the international market.
 Protection – Assessment of the risk and steps to protect
itself and its intellectual property.
Factors affecting selection of Entry Strategy
in International Markets
External Factors
• Market Size
• Market Growth
• Government Regulations
• Level of Competition
• Level of Risk
• Production and shipping Costs
Internal Factors

• Company’s Objectives
• Availability of Company’s Resources
• Level of Commitment
• International Experience
• Flexibility
Factors considered in Exporting
Strategy
• Government Policies

• Marketing Factors

• Logistical Considerations

• Distribution Issues
Methods of Exports/
Modes of Entry

• Direct Exporting

• Indirect Exporting
Direct Exporting

A method of exporting goods directly to


the foreign buyers by the manufacturer
himself or through his agent situated in
the foreign country.
Options available
• Build a home-based export department or
division
a. Built-in export department
b.Separate export department
c. Export sales subsidiary
d.Co-operative export company
• Have its own branch or plant in a foreign market
• Employ travelling salesman for foreign markets
• Exclusive agents in overseas markets
Advantages of Direct Exporting
• First hand information

• Direct Control

• Export Incentives

• Reputation and Goodwill

• Profitability

• Higher Prices
Disadvantages of Direct Exporting
• High degree of Risk

• Higher Investment

• Lack of specialisation

• Requires a vast knowledge

• Not suitable for small manufacturers

• Diseconomies of distribution
Indirect Exporting
• When an exporter instead of exporting directly or
through an agent uses services of either merchant
exporter, Export houses or trading houses to export their
products.
• Middlemen in indirect exporting:
a) Merchant exporters
b) Overseas import houses
c) Export houses
d) Visiting or resident buyers
e) Trading houses
f) Co-operative export trading organizations
g) Government buying agencies
Advantages of Indirect Exporting

• Less Risk
• Less investment
• Specialisation
• Technical Guidance
• Suitable for small firms
• Concentration on production
• Valuable market information
Disadvantages of Indirect Exporting

• Second hand information


• Lack of Control
• Less or no Export Incentive
• Excessive dependence
• Availability of middleman
• Sharing of profits
Factors of successful Exporting

 Clear understanding and detail knowledge of


products to be exported.
 Full research of foreign market.
 Design and product must be studied properly
and considered carefully.
 Familiarize yourself with state, federal, and
international laws.
 Pricing
Reasons for Exporting Goods
 Primary reason for export is to earn foreign exchange.
 Companies that export their goods are believed to be
more reliable than their counterpart domestic
companies.
 Free exchange of ideas and cultural knowledge opens
up immense business and trade opportunities for a
company
 By exporting goods, an exporter also becomes safe
from offset lack of demand for seasonal products.
 International trade keeps an exporter more
competitive and less vulnerable to the market
Categories of Goods for Export
• Prohibited Goods: Which are not permitted,
export licence will not be given. (Beef, peacock
leather)
• Restricted Goods: can be permitted for export
under licence or are subject to compliance of
stipulated procedures
• Canalised Goods: are permitted to be exported
through state trading enterprises (STE)
• Free Goods: are other than those indicated in
the export licensing schedule and are freely
exportable
Scope of Exports
 Export of Agricultural
Products
 Export of Electronic
Goods
 Export of Jewellery
 Export of
pharmaceuticals
 Export of textile
 Export of Services
 Export of projects
Thank You

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