Export Management Theory PDF

Anabels gate Notit2E enx❤port management Introducing in this minor AEXM 10 - Assessment writing a export plan Book: Export planning Deadline first learning task: 30. sep. a theory therefore is A...

Anabels gate Notit2E enx❤port management Introducing in this minor AEXM 10 - Assessment writing a export plan Book: Export planning Deadline first learning task: 30. sep. a theory therefore is AEXM 03 AEXM 07: I don't have to be there and also have no exam Export plan - Introduction/Lesson 1 Exporting? product from A to B another country tarifes Trade marketing collaboration transport laws (trade) ☑ definition: Marketing, selling, distributing goods or services in other countries Internationalisation? Activities across borders Export plan? 'Strategic plan: long term plan, direction to which way it has to go 'No strategic plan ☑ NL more ^ than 2 also China & USA Germany biggest exporter (more than NL), biggest economic in EU Most important countries: China, NL, United States & Germany Market attractiveness BRIC countries are developing fast Mature markets of western Europe, Japan, NAFTA are stagnating Drivers for export development (reason for export) market development as strategy need to follow the customer competition (Japan) opportunities more? cheap production; producing conditions (not every plant can produce in the country itself); company introduce product to world, the country don't like it so they exported it Export planning (mission, vision) Learning task 1 : Why? i Chapter 1-3 → introduce the company, strategy,analysis Learning task 2: where? i Chapter: 4- 6 → market entry analysis Learning task 3: How? i Chapter: 7- 9 → marketing plan Learning task 4: When? i Chapter: 10-12 → Implementation Possible Exam question Which faces...? Bonus assignment 1. What is the biggest competitive threat facing Carrefour as it expands in global markets? in France the competitor Aldi & other local retailers came in the market the needs of the customer  2. Carrefour is currently the top global retailer in China. What must it do to maintain its leadership position as Wal-Mart operations here? improving the service to convince the customer (lower prices) being flexible in design ◦ trying new formats (Mini-Hyper & Carrefour Express) Lesson 2 Internal & external analysis 1. Company overview vision: provide a big picture perspective of'who we are, what we do,where we are headed' long-term direction Mission: describe how to fulfil the vision, focus on present: what is the current business,what new things will we do the coming 5-10 years normally do everybody first mission & then vision → correct is the other way around Business definition: describes in what business the company is active, whom they service, how they do that → Model with 3 dimensions of Abell 1. the needs of the customer (what) 2. the customer groups which have these needs (who) 3. the technology used to fulfil these needs (how) objectives: long-term (> 5 years), mid-term (2-4 years) & short-term (1-2 years) describe how the company wants to execute its mission product lines & markets (main competitors) ◦ history 2. Internal analysis ◦ organisation structure: shows how a company is structured in terms of its function, regions & decision line → organigramm 75-model: describe 7 factors to organise a company in a holistic & effective way,together they determine the way in which a firm operates 7 factors: hard → strategy, structure, system soft + staff, style, skills, shared values Winfluence the capabilities of a company capabilities: 4 categories - size of the firm - Experience of the firm - company culture - Type of product ☑ all in all has to show the strenghts & weaknesses of the company 3. external analysis DESTEP -analysis: might have influence on the current & future growth of the different divisions/product lines of the company - Demographic - Technology - Economic - Ecological - Social - Political trend-analysis: result of DESTETS; is a summary of 2 most important trends impacting the business & what conclusion can be drawn for the future of the firm's division/product line  4. Business strategy: describe the strategic course of the company SWOT- analysis: combines the internal analysis with the external analysis strenghts & weaknesses opportunities & threats TOWS matrix: is a confrontation matrix in which strategic options for the company can be formulated → on factor (S1) combined with another factor (01) → scale: very positive (t), positive (t), neutral (), negative (-), very negative (--) Lesson 3 Business strategy & internationalisation Strategic question for a company How does the organisation want to develop in the long run? How do you react to your competitors? What are your core competences & how do you create a competitive advantage? How do you manage the different product lines? Competitive environment 5 forces model of Porter (not a strategic model) analyse the environment of a company & mention what impact it has to the profitability of company analyse industry attractiveness consists of 5 competitive factors: entry barriers, substitutes, customers, suppliers & industry rivalry outside -in thinking (external environment define business strategy) Growth strategy 1. Ansoff growth model (it is a strategic model) = define in 4 segments, or product/market combinations, how it plans to grow the business 4 segments: product innovation strategy, market development strategy, Diversification strategy & Penetration inside-out-thinking: company determines what is best or needed for the markets focus on products, which could be very static  2. Core competences model of Hamel & Prahalad based on Ansoft growth model, but not with focus on products → core competences focus on developing internal strenghts by means of the organisation's capabilities 4 segments: The best in 10 year's time, super chance, open spaces & white spaces super chances = blue ocean strategys i focus on developing uncontested markets (new markets) open spaces = red ocean strategy i refers on competing in an existing, known market Product life cycle & product portfolio management (no strategic models) 1. Boston consulting group (BCG-matrix) analyse the performance of the individual product lines or SBU's within a company 4 categories: question mark, star, cash cow, dog need a good mixture of product lines with high growth & high need for cash or product lines with low growth but high cash 2 dimensions: market growth & market share 2. General Electric (GE-matrix)/McKinsey - matrix) 2 dimension: market attractiveness & competitive strenght of SBU to determine the exact position of the SBU on the total grid when you have the position → indicate the size of the market, the market share of the SBU & the movement direction Competitive strategy & value proposition 1. Porter's generic competitive strategies 3 strategies: differentiation strategy, cost strategy & focus strategy 2 strategic dimension: competitive advantage (create basis for competitiveness) competitive scope (determines wheter the company will target the whole industry or just a smaller segment (focus on strategy) of the industry) 2. Treacy & Wiersema's competitive strategies 3 disciplines: operational excellence, product leadership & customer intimacy ↓ these are based on a certain value proposition 4 elements to create the value proposition: product, process, price & effort to acquire ↓ within each element a set of differentiating features can be formed to create the unique value discipline with its unique offering  3. Benchmarking tool (not a strategic model) compares the attractiveness of the individual features of your offering to that of the competition different visualisation of value proposition → focus more on 4 P's of marketing mix 4. Ohmal: ways to create a competitive advantage 4 different ways: key success factors, Aggressive new initiatives, Use relative superiority, Create strategic freedom based on 2 dimension: Product (refers to existing & new products) Competition (refers to strategies based on strengths of the corporation & strategies based on fulfilling the needs of the customers/consumers You bigger your company idesto cheaper is the producing (Economies of scale) Lesson 4 Country analysis approach (compare countries on specific criteria) using a three-phase filter model 1. Pre-filter you compare 12 countries to these criteria: import restrictions/import duties too high, Transportation costs too high, Risks of disasters & use of common sense Welfare level too low, Reasons for internationalisation you select some data based on facts → add a weight factor to each criteria → interpret score's correctly after collecting data, you rank the scores → highest score - rank 1 (to number 12) → after this you have to make borders (good, middle, bad) → countries with good & middle will be taken to the next filter, countries with bad will be selected from the country analyses 2. Filter 1 5 criteria: political environment, economic environment, social environment, climatic & topographic environment, other (experts & unforseen) DESTEP - analysis for the countries in filter 1 (you compare the trends & developments from the market where your company is located with the current market of the countries in filter 1) BERI analysis/index instead of DESTEP or together with DESTEP evaluates the political risk of entering a country measures the general quality of a country's business climate has more financial focus 16 criteria you do the same proces as the pre-filter within the table (with the 8 countries, at end 3 still left → filter 2) 3. Filter 2 5 criteria: market data, import restriction, competition, trade promotion, product demands collect facts for each criteria, define weighting for each criteria, define the ranking, calculate the weighted ranking score per country 4. Proposal & choice market expansion: BCG & GE-matrix give a hint → products in the categories star & cash cow are candidates for international expansion BCG & GE- matrix = to determine the country selection/ positioning for specific product line or SBU → you need sufficient, fact-based information → you have different criteria after the three filter model you have to make a country selection → evaluation form Value chain & supply chain setup 1. Supply chain = trading of goods or services takes place within a network of suppliers & sellers 3 flows: goods flow, information flow & financia flow → deal with supply chain organisation buy from suppliers & their pre-suppliers → upstream, supply side & selling to customers & their customers → downstream, demand side from a logistics (goods flow management) perspective you split into inbound & outbound logistics (goods flow to distribution centre and from dc to customers) complete infrastructure setup & management of supply chain = supply chain management Each party in supply chain has its own role & valued-adding function use supply chain to differentiate from their competitors: create a specific focus on these operational elements → quality, reliability, on time, flexibility, responsiveness, speed & costs 2. Value chain analysis developed by Porter & is a tool to analyse value creation through a company's activities 9 general value-creating activities: infrastructure, Human resource management, Technology developement, Procurement/ Sourcing → four secondary activities Inbound logistics, operations, Outbound logistics, Marketing & sales, Services → five primary activities identifying ways to create more customer value company's success not only depends on how well each department performs its work, but also how well the activities of various departments is coordinated Focus on core business processes can be identified: Product development process, inventory management process, Order-to-payment process, customer service process Idea behind model is to identify which capabilities are crucial in this specific industry & how the company can apply these activities to create a competitive advantage The whole set of activities (output value) should be larger than the cost value → leaves a margin for company → gross profit  For every company is the use & application different The choice of the company's competitive strategy defines how to set up & apply the 9 value activities several value drivers can be help to determine the set up: cost percentage, Relative cost compared to the competition, Factors influencing the cost, sources of value differentiation, value differentiation compared to the competition 3. Right business process model company's who follows a product leadership strategy are demand -driven (outside-in, product offering/value proposition) → 1- an operational excellence or cost leadership strategy are supply-driven (inside-out, resource tase) Supply-driven: design & produce basic products, have been accepted by customers, produced in bigger volumes, sell at lowest possible price, company accept risk of not being able to sell every goods at its full price → follow a push-principle (companies produce based on forecasted and sales-driven supply) → make-to-inventory Demand-driven follow a pull -principle (companies produce based on customer demand) → make-to-order 4. Identify key processes relevant for the internationalisation of a company push-principle: requires a lot attention for buying process to be able to provide best value-for money products, sales operation process is important to push products into market pull-principle: requires a greater focus on supply chain, planning process & IT systems to enable short time-to-market & replenishment Different key processes: Design & Product, Sourcing & Buying, Supply chain & Logistics, Wholesale/Order mgt, Retail operations, E- business/Mail order, Finance, HR & Administration Management of key processes is doing the company not alone → focus & support from partners in supply chain 5. supply chain setup companies who starts internationalisation need to rethink their supply chain set up & need to prepare a supply chain infrastructure that fully support the requirements of the export markets  6- Where to build a warehouse? 1. Location decisions Dominant factors in manufacturing: Favorable labor climate, Proximity to markets, Quality of life, Proximity to suppliers & resources, Proximity to the parent company's facilities, Utilities, taxes & real estate costs, other factors Dominant factors in services Impact of location on sales & customer satisfaction: Proximity to customers, Transportation costs & proximity to markets, Location of competitors, site-specific factors 7. Center of Gravity method good starting point find ✗ coordinate, ✗ *, by multiplying each point's ✗ coordinate by its load (1) , summing these products Ilixi, and dividing by Ili the center of gravity's y coordinate, y', found the same way generally not the optimal location I/- ✗ I' - liyi * = Eli y#= Ili Lesson 5 Export market strategy & entry options 1. Export market strategy defining the company's export market strategy requires the assessment of the 3 main elements & their sub-elements → organisation, industry & foreign country define the strategic focus of the company regarding internationalisation → 9 strategic windows model ↓ 2 dimensions: Preparedness of the company for internationalisation & industry globality 9 windows: Entry new business, Prepare for globalisation, Strenghten your global position, consolidate your export market, consider expansion in internat. markets, seek global alliances, stay at home, seek niches in internat. Markets, Prepare for a buy-out 2. Export market entry options 2 options/modes: direct: selling directly to their customers by exporting out of its home or through local subsidiary or stores indirect: selling indirectly to their customers through a middleman (agent, distributor, piggyback,joint venture) → wholesale channel OR equity: want to purchase a local company in export market or want to set up a joint venture with local partner? non-equity: want to start selling,but does not want to aquire/invest in companies abroad ☑these options can be more clarified with 5 export market entry options/modes → exporting, contract agreement, joint venture, acquisition, greenfield investment W each of them has different ad-& disadvantages 3- Market entry risk analysis 3 types: country risk: Titer-model was the first start which country is best → still risks 4 elements to analyse: political risk, economic risk, financial risk & socio-cultural risk marketing & market control risk: relating to make mistakes in product features, communication, branding, marketing promotions & pricing Each entry mode has their different control (distributor not much) supply chain & payment risk: covers operational execution risks & risk not being able to enforce payment for export product/service delivery unreliable, late, incorrect, unpaid delivery impact success of opening new export market 4. compare market entry options & choice of market entry 5 export market entry options on 4 levels: implementation, risk, investment & time horizon → the more market control the company wants, the more implementation & higher investment is needed 2 useful methods: export market entry decision plot: determine company's strenghts, weaknesses, opertunities & threats in relation to entry consists of 9 elements (9 windows) position your company on scale 1-5 (high → best i low → less able to entry) the further the line from firm, the more you choose for indirect distribution channel  export market entry evaluation: 5 criteria: time horizon, easy, risk, market control, investment cost 2 views: impact of each criterion when choosing a specific market entry option/mode ranking weighting factor can be added as well → highest overall score is the best option for the company entry evaluation Marketing mix & competitive positioning 1. Analyse your international strategy of market developement take a systematic approach → theoretic overview of creating an internat. strategy of market developement 5 phases: mission, business definition, segmentation of target groups, creation of the competitive strategy & internat. expansion after this reviewing your strategic thinking process → template from Ohmae & Leeman → 5 steps: general strategy development, strategic thinking process, issues-diagram, product action-diagram & profit-diagram 2. Consumer needs & consumer positioning 4 external trends: mass → individual, producer → customer, indirect → direct, push → pull ↓ more fragmented market, become more demand-driven products/services must be based on needs of customer companies needs to create value proposition that fits each different customer group go from push environment to pull environment, from supply-driven to demand-driven Wold" marketing mix (4 P's) change to marketing mix focus on consumer (4C's) → 4 P's are: Product, Price, Place, Promotion → 4 C's are: Customer, Cost, Convenience, Communication you have to look at a specific situation to identify the needs, than you differentiate the needs into core product, actual product & augmented product > total package of benefits i together with quality, image & chosen price level determine the brand positioning of the product/service  different customer profiles: business traveller, holiday traveller & commuter (home-work traveller) → they get different product/service packages which results in 3 segmented customer value propositioning for each customer value proposition a brand positioning needs to be chosen high-end, full service package → high brand positioning each service package for each customer profile should fulfil the 4C's 3. Assortment planning & competitive positioning assortement planning determines the overall competitive positioning of product/service planning based on value proposition, which includes the price/value relation, ease of use, effort the customer has to invest to utilize the product 5 product elements clarify customer benefits: usefulness, ease of use, level of communication, level of bonding & process comfort goal is to strategically position in assortment for each targ & group to remain competitive product/price positioning diagram 'focus on building a sustainable competitive positioning 4. Marketing mix setup Can be based on 4P's or 4C's Product (above is more information) Place: what channel? 3 different distribution channels → retail channel (selling via company's own stores) ↓ yields the highest gross margin, incorporates the highest risk, all store costs, inventory costs & markdown risk, stock fall to company itself, high investment in store → brake on growth → wholesale channel (selling via intermediates/resellers: distributors or retail stores) a yields a low gross margin, incorporates a lower risk, already sold to reseller → eliminates store costs, inventory costs & markdown risk, no big investments needed, build up distribution network faster → e- tailing (selling via internet: own website or reseller's website)  5. Price setup refers to the price calculation & price setting in home country & in selected target market(s) 3 steps: 1. determine the value chain & channel setup 2. define the base price points per product category range 3. calculate the consumer price, wholesale (customer) price & landed cost & buying price for the manufactured product depending on distribution channel choice, the price setup & gross margin will be different for each chosen distribution channel Lesson 6 Logistics & organisation/Finance, Logistics & custom aspects of the export transaction 1. Logistics structure & distribution setup (Chapter 8) depends on market entry option (with a partner (distributor) much easier; alone → difficult) elements of logistic setup: warehousing, inventories, transportation, procurement (sourcing & purchasing) → for each element decision have to be make SCOR-model (supply Chain Operations Reference) used to describe the processes of the supply chain set up & logistics infrastructure of an organisation main elements: Plan, Source, Make, Deliver & Return raw material, finished products or services → can be push -driven & pull-driven → after found out which point fits the company, you can make your logistics infrastructure (delivery flow & return flow) The developement of a fast,flexible & cost efficient supply network requires a set up of: a) a physical supply chain infrastructure (to create a pipeline) b) an IT systems network to have a smooth flow within the pipeline When supply chain setup & logistics infrastructure is known, a capacity planning needs to be developed to provide a forecast of sales, volumes, requirements for sourcing & manufacturing, shipping & warehouses, inventory levels, headcount & equipement 2. Organisation structure setup (chapter 8) market entry strategy/options determines the need for the organisation structure setup 4 types: by function, product line, region & matrix depending on me & stage internat. there will be a * or ↓ need for centralisation or decent. of specific activities & functions influencing the success of company in selected market 3. Identify cultural issues & resource requirements (Chapter 8) not only focus on hard facts, but also soft facts, on how to deal with cultural differences Geert Hofstede defined culture as'the collective programming of the mind that distinguishes the members of one category of people from those of another' → 5 culture dimensions: power distance index (pdi), individualism (idr), masculinity (mas), uncertainty avoidance index (nai), long-term orientation (Ito) analyse in new market → than reflecting on own market, products, beliefs & attitudes of customers 4. Determine delivery & payment terms (Chapster M) 2 financial elements finalising export sales: inco terms & payment terms incoterms focus on delivery terms: terms that specify who takes care of the delivery of the goods & how this will be done payment terms, specify how payment will be organised & when this should be done incoterms: 3 elements which deal with who has to pay for certain costs (freight cost, insurance cost, handling cost) 2 organisations have put together standards for delivery terms: incoterms 2010 as put forward by the International Chambers of Commerce (ICC) & the American Uniform commercial Code (focus on USA) are administered & overseen by ICC 11 incoterms in 2010 & also 2020 4 groups: seller minimises risk by making goods available at factory seller provides goods at local consolidation point, but main carriage isn't paid by seller main carriage is paid by seller seller pays up to arrival of goods at country of destination for each delivery term the following is described: who pays the carriage of cost (freight cost), who will insure the goods (insurance cost), who will pay for handling & consolidation of goods (handling cost) before/after shipping  payment terms: conditions of payment set by seller for a sale 4 groups: open account (seller trusts that buyer will pay goods after delivery) documentary collections (buyer can only obtain documents to clear goods at destination after payment is organised & guaranteed confirmed (Letter of Credit (UC)) (buyer establishes a commercial credit throug his/her bank & specifies conditions of payment to named seller cash in advance (CIA) (is full advance payment to offset potential risks for seller in payment or foreign currency exchange risks in total the payment terms: cash in Advance (CIA), cash with Order (CWO), Letter of credit (UC), Documents against acceptance (DIA) Document against payment (DIP), open account (30 days net) Financial plan & legal issues (Chapter 9) 7 steps: 1. Price setup win-marge PP=/direct costs + indirect costs) * (1 + Markup percentage) 2. Volume forecast Vp = market size * % age group × % can afford to buy ✗ % target market share ✗ % market growth 3. Sales Plan sp (turnover) = Price ✗ Volume 4. Investment list & depreciation method linear depreciation = (Total investment-Residual value) /Number of years (depr. years) 5. Profit & Loss statement (income statement) P&L (EBIT) = Selling price (Sp) - costs (direct, indirect & DA → Depreciation & Amortization) 6. cash Flow statement CF = EBIT + DA 7. Investment analyse 1. Payback period: initial "Investment amount / annual cash flow 2. ROI: Total cash flow - INV / INV 3. NPV/DCF: - INV + (CFyre/(Itr)'+ CFyrn/(Hr)") Milestones & Implementation (Chapter 10) 1. Milestone list Important steps to be taken by the company, in order to realise the export plan → milestone list: date or deadline, description of step, who is responsible first milestone always decision to roll out export plan Yes/No last milestone always successful delivery of first sale/shipment 10 steps are necessary (between steps focus on complementation of production setup, marketing, sales, IT & logistics &/or human resources Expectation vs. experience 4C's to create a promise towards potential customers/consumers = Expectation When customer buy product/service, they will experience the delivery of the product (actual performance) = 5P's → each P can linked to C 4 C's are: Customer (wants,needs), cost (price, effort, usage), convenience (buying preference & distribution Channel), communications (interactive, relationship developement) 5 P's are: Product (used usefulness), Performance (outperform → competitor), Partners (know-how Ireach), People (skills), Perseverance/PDCA (ability to learn) provides learning cycle (Plan, Do, Check, Act) 2. CRM & sales plan concentrate on front-end of business customer Relationship Management (how put- customer centraal in company's process, how develop long-term relationship not suitable for all types of products/services → most B2B & non FMCG (almost all of your companies) main crm elements: there are 10 steps, but main steps are: CRM plan & contact strategy Required organisation & processes Geert Hofstede Culture Dimension Theory 1. Power Distance: Measures the extent to which less powerful members of organizations and institutions accept and expect power to be distributed unequally → say something about the people on the top high PDI: tend to accept hierarchial order and centralized authority; subordinates are less likely to question authority low PDI: emphasize equality, flat structures & participative decision-making 2. Individualism vs. Collectivism? describe the degree to which individuals are integrated into groups ^ people are expected to look after themselves & their immediate family only. Independence & personal achievements are valued 2 individuals are integrated into strong, cohesive groups, often extended families, that offer protection in exchange for loyalty 3. Motivation towards archievment and success: measures the value a culture places on traditional traits like competitiveness and assertiveness vs. traditional traits like care & quality of life high score: emphasize competition, success & archievment. Personal ambition, material wealth, & career advancement are highly valued low score: value cooperation, modesty, & quality of life. social harmony,relationship. & well-being are prioritized over material success 4. Uncertainty Avoidance: Measures how comfortable a society is with uncertainy, ambiguity & risk high: prefer clear rules,structured situations, strict codes of behaviour to minimize ambiguity low: are more relaxed & open to change, ambiguity & innovation 5. L o n g - t e rm ' u s. s h o rt - t e rm ' o r i e n t a t io n : F o c u s e s o n t h e e x te nt t o w h ic h a c u lt u re e m p h a s iz e lo n g - t e r m p la n n i n g & p e r s e v e r a n c e v s. im m e d ia t e o u t c o m es & r e s p e c t f o r t r a d it io n s ^ v a lu e p e r s e v e r a n c e ,t h r i f t & f u t u re - o r ie n t e d t h i n k in g 2 p r io r it iz e t r a d it io n , s o c i a l o b lig a t io n s & im m e d ia t e r e s u lt s o v e r lo n g - t e r m b e n e f it s 6. In d u l g e n c e " v s r e s t r a in t ? D e a ls w it h t h e d e g re e w h ic h a s o c ie t y a llo w s o r s u p p r e s s e s t h e g r a t if ic a t io n o f d e s ir e s & p le a s u re s ^ s o c ie t i e s t h a t e n c o u r a g e f re e g r a t if ic a t io n o f b a s ic h u m a n d e s ir e s re a t e d t o e n j o y in g lif e & h a v in g f u n 2 s o c ie t ie s t h a t s u pp r e s s g r a t if ic a t io n o f n e e d s I r e g u la t e it t h r o u g h s t r ic t s o c ia l n o r m s y o u c a n d o t h is g r a p h a ls o f o r o t h er c o u n t r ie s & t h e o v e r v ie w o f e v e ry c o u n t ry T im i is in in t e r c u l t u r a l c la s s w i th K a t a