EXPORTING AND COUNTERTRADE

Why Companies Export

Expand total sales when domestic markets saturated

Diversify sales across countries

Low-cost, low-risk way to gain international experience

Developing an Export Strategy

Four steps:

1. Identify potential market

Focus on culturally similar country at first

2. Match company abilities to market needs

3. Initiate meetings with local players

Build relationships and trust

4. Commit resources

Assign export manager, state objectives, estimate resources

needed

Degree of Export Involvement

Direct Exporting

Company sells directly to buyers in target market

Local sales reps or distributors

Indirect Exporting

Sell through intermediaries who resell to buyers

Agents: Represent indirect exporter, paid commissions

Export management companies (EMCs): Export on company's

behalf, have deep knowledge of target markets

Export trading companies (ETCs): Provide export services,

develop distribution channels, offer financing, manufacturing

Countertrade

Selling goods/services paid with other goods/services, not money

Types:

Barter

Counterpurchase

Offset

Switch trading

Buyback

Provides market access when importer lacks hard currency

Risk from fluctuating commodity prices