4. WHAT IS INTERNATIONAL BUSINESS ?WHAT IS INTERNATIONAL BUSINESS ?
The exchange of goods & services, Resources, Knowledge
& Skills , among individuals & businesses in multiple/two or
more countries.
Transaction that are carried out across national borders to
satisfy the objectives of individuals and organization
5. Selling In International MarketSelling In International Market
A company may decide to sell its product in international market
due to one or more of the following reasons-
It has a good market domestically where the growth is limited.
International market offer large and profitable opportunities.
The company has excess capacity, which the domestic market
cannot absorb.
6. Selling In International MarketSelling In International Market
Trade between countries occurs because of following reasons-
A particular product is unavailable.
There are cost advantage by buying the product instead of
manufacturing locally.
The product offered is differentiated from the local product.
7. Selling In International MarketSelling In International Market
The company has a considerable cost advantage over its
international competitors.
The company foresees increased competition in the
domestic market and seeks to mitigate the risk by
diversifying.
8. Entry Strategies For International MarketEntry Strategies For International Market
Agent
Distributor
Government
Overseas Subsidiary
Trading Company
Export Management
Piggyback
Overseas Subsidiary
9. Entry Strategies For International MarketEntry Strategies For International Market
Foreign Production
Licensing
Joint Venture
Contract
Manufacture
Ownership
Export Processing
10. Organizing For International SellingOrganizing For International Selling
The type of organization a company
adopts for International sales
DEPENDS ON
The size and nature of its
international business
12. Types of Distribution ChannelsTypes of Distribution Channels
The type of distribution
channel chosen
The nature of the product
and its positioning
Depends on
Distribution Channel
Up market
Stores
Exclusive
Stores
Supermarkets
and
Hypermarkets
13. Profile of an International SalespersonProfile of an International Salesperson
International salesperson need to have the following additional
qualities-
The ability to speak in one or more international languages.
The ability to adapt to foreign culture.
The ability to act independently and decisively.
A pleasant and amiable personality.
The ability to understand not only the product and pricing, but
also financing of the sales, the instrument of payment, and
foreign exchange risk.
14. Pricing and Payment TermsPricing and Payment Terms
Pricing of product for international markets can be done on
various terms. Some of the commonly used term are-
6. CIF6. CIF4. FOB4. FOB 5. C&F5. C&F
1. Ex Works1. Ex Works
2. FOT2. FOT
3. FAS3. FAS
FOT- Free on Truck
FAS- Free alongside Ship
FOB- Free on Board
C&F- Cost and Freight
CIF- Cost, Insurance and Freight
15. Packing and ShippingPacking and Shipping
The packing should be-
Light and Strong.
Must be appealing for the end users.
Usually buyers tend to specify the type of packing required.
Packing should show the contents and specify origin, weight
and quantity of the item inside.
Most shipment these days are done in containers which is
safer and easier to handle.
16. Market Intelligence and ResearchMarket Intelligence and Research
Collecting primary data is very expensive and not feasible for
most companies.
Secondary data is available from no. of sources such as-
Embassies
EXIM bank
Trade journals and publication
Internet websites
Commercial banks, etc.
17. SALES-Quotation / Pro Forma InvoiceSALES-Quotation / Pro Forma Invoice
1) Seller's and buyer's names and addresses
2) Buyer's reference number and date of inquiry
3) Listing of requested products and a brief description
4) Price of each item (It is advisable to indicate whether items
are new or used and to quote the price in U.S. dollars to
reduce foreign exchange risk.)
5) Appropriate total cubic volume and dimensions packed for
export
6) Appropriate gross and net shipping weight
18. SALES-Quotation / Pro Forma InvoiceSALES-Quotation / Pro Forma Invoice
7) Trade discount (if applicable)
•Delivery point
•Terms of sale
•Terms of payment
•Insurance and shipping costs
•Validity period for quotation
•Total charges to be paid by customer
•Estimated shipping date from port or airport or export
•Currency of sale
20. IncotermsIncoterms
Most common:
Ex-works: Buy picks up cargo from seller; all shipping costs
for buyer
FAS/FOB: Seller delivers to port / Seller loads cargo on vessel,
buyer pays for shipping
CFR/CIF: Seller pays for shipping to port of import /with
insurance, buy pays for arrival charges, import duties, taxes, and
transport from port.
23. NegotiationNegotiation
Win-Lose VS. Win-Win
Win — Lose: From each deal, there is a winner and a loser
Win — Win: In each deal, both parties gain
J. Salacuse survey:
100% of Japanese > Win — Win
33% of Spanish > Win — Win
Contract or Relationship
Win — Lose or Win — Win approach is tied to overall goal.
For a one-off trade, Win-Lose is likely
24. What does the International Manager reallyWhat does the International Manager really
do?do?
Coordinate their company's activities and resources across
international boundaries.
Represent their company overseas:
Purchasing
Sales
Production
Logistics
So, can anyone (or any manager) be an International manager?
29. WHICH
MARKETS TO
ENTER
External Analysis
Political factors
Economical factors
Social factors
Technological factors
Environmental factors
Legal factors
Industry Example- UNO MindaIndustry Example- UNO Minda
USA
Government Stability
IPR Laws
Stable Currency
Free Market
Lifestyles Product
Recreational Uses
Product Performance
Improvement in life
Competition
Market Growth
Competition
Market Growth
30. Based on the above marketing tools we short
listed, a company known as Polaris in USA was
prospected over mails and telephonic
conference. A meeting was organized in USA to
showcase our capabilities along with
demonstration of our existing products.
Subsequently high level engineering team visited
our plants and asses our ability and potential to
achieve the product performance required by
them.
Once this was stablished we have be final round
of price negotiation to conclude the agreement
for design, engineering, tooling, manufacturing,
testing and validation for the product.
Finally packaging and shipping were discussed
and the prices were arrived on FOB basis.
Case StudyCase Study
32. The relationship with customer grew over a period of next
3-5 years resulting in many other orders for new parts.
What started as initially a small order of few hundred
dollars as now resulted into a multimillion supply to this
and many other similar companies in the US
Future OpportunitiesFuture Opportunities
33. FOREIGN TRADE POLICY 2015-20FOREIGN TRADE POLICY 2015-20
FOREIGN TRADE POLICY OF INDIAFOREIGN TRADE POLICY OF INDIA
34. FOREIGN TRADEFOREIGN TRADE
Types of Foreign Trade
Import Trade : Import trade refers to purchase of goods by one
country from another country or inflow of goods
and services from foreign country to home
country.
Export Trade: Export trade refers to the sale of goods by one
country to another country or outflow of goods
from home country to foreign country.
India’s Foreign Trade i.e. Exports and Imports are regulated by the
Foreign Trade (Development and Regulation) Act 1992.
Presently Foreign Trade Policy 2015-20 is effective from 1st April,
2015.
Export is defined as an act of taking out of India any goods by land,
sea or air.
35. HOW TO EXPORTHOW TO EXPORT
Starting Exports
Establishing an Organisation:
To start the export business, first a sole Proprietary concern/ Partnership
firm/Company has to be set up as per procedure with an attractive name
and logo
Opening a Bank Account
A current account with a Bank authorized to deal in Foreign Exchange
should be opened..
Obtaining Permanent Account Number (PAN)
It is necessary for every exporter and importer to obtain a PAN from the
Income Tax Department.
36. Obtaining Importer-Exporter Code (IEC) Number
An IEC is a 10 digit number.
Mandatory for undertaking export/ import.
Issued by DGFT .
Pricing/Costing
Export proceeds on the basis of terms of sale
Free on Board (FOB),
Cost, Insurance & Freight (CIF),
Cost & Freight(C&F).
Registration cum membership certificate (RCMC)
Mandatory for availing import/ export benefit or concession under FTP
2015-20
Issuing Authority Export Promotion Councils/FEDERATION OF INDIAN
EXPORT ORGANISATIONS (FIEO)/Commodity Boards.
HOW TO EXPORTHOW TO EXPORT
37. EXPORT BENEFITSEXPORT BENEFITS
1. EXPORT PROMOTION SCHEMES
Foreign Trade Policy 2015-20 and other schemes provide promotional
measures to boost India’s exports.
Brief of these measures are as under:
1.1 Exports from India Scheme
I - Merchandise Exports from India Scheme (MEIS)
Under this scheme, exports of notified goods/ products to notified markets.
Listed in Appendix 3B of Handbook of Procedures of FTP.
Benefit will receive in form of Duty credit scrips.
Benefit rate (2-5%) on FOB value of exports.
The Duty Credit Scrips can be used for the following requirements:
Payment of Customs Duties for import of inputs or goods.
Payment of excise duties on domestic procurement of inputs or goods.
Payment of service tax on procurement of services.
Payment of Customs Duty.
38. All countries divided into A, B, C categories.
A- Traditional markets like US, Europe.
B- Emerging markets like Africa, Latin America CIS etc.
C- Others.
Example: Exports to Sri Lanka. Handle Bar Switch TVS.
HS code of Switch is 85365090.
S. No. ITC(HS) Code Description of goods MEIS rates based on
Appendix 3B
Country groups
A B C
4396 85365090 Othr Switches 2% 2% 2%
2% benefit will receive on FOB value.
ITC(HS) Code: Indian Trade Clarification (Harmonised Systems)
The Harmonized Commodity Description and Coding System generally
referred to as "Harmonized System" or simply "HS" is a multipurpose
international product nomenclature developed by the World Customs
Organization (WCO).
EXPORT BENEFITSEXPORT BENEFITS
39. II- Service Exports from India Scheme (SEIS)
Service providers of notified services are eligible for duty credit
scrip @ 3-5% of net foreign exchange earned.
a) Service providers defined as those located in India
b) On Net Foreign Exchange earned on specified services
Eligible services include service for
a- Business. – 5%
b- Construction and related Engineering. – 5%
c- Educational – 5%
d- Environment- 5%
e- Health & Social- 5%
f- Tourism and Travel related-
Hotel & Restaurants- 3% &
Travel agencies and Tourist guides services -5%
g- Recreational, Cultural and sports – 5%
h- Transport- 5%
EXPORT BENEFITSEXPORT BENEFITS
40. Example: List of Services:
S.No. SECTORS Central product Classification Code
Admissible rate in % (on Net (CPC)
Foreign Exchange earnings)
1 BUSINESS SERVICES
A. Professional services
a. Legal services 861 5%
b. Accounting, auditing and bookkeeping services 862 5%
2 COMMUNICATION SERVICES
Audio-visual services
a. Radio and television services 9613 5%
b. Motion picture projection service 9612 55
3 CONSTRUCTION AND RELATED ENGINEERING SERVICES
A. General Construction work for building 512 5%
B. General Construction work for Civil Engineering 513 5%
% will be calculate on Net Foreign Exchange earned on specified services
EXPORT BENEFITSEXPORT BENEFITS
41. 2. DUTY EXEMPTION & REMISSION SCHEMES
These schemes enable duty free import of inputs for export production with export
obligation. These scheme consists of:-
2.1 Advance Authorization Scheme (AA) for Raw Material
Under this scheme, duty free import of raw materials are allowed.
Material must be physically use in the export product with minimum 15% value
addition.
AA normally have a validity period of 12 months for the purpose of making imports
And a period of 18 months for fulfilment of Export Obligation (EO) from the date of
issue of AA.
AA is issued either to a manufacturer exporter or merchant exporter tied to a
supporting manufacturer(s).
EXPORT BENEFITSEXPORT BENEFITS
42. 2.2 Duty Drawback of Customs/Central Excise Duties/Service Tax
The scheme is administered by Department of Revenue.
Under this scheme products made out of duty paid inputs are first exported and
thereafter refund of duty is claimed in two ways:
i) All Industry Rates : As per Schedule
ii) Brand Rate : As per application on the basis of data/documents
Example: Exports Handle Bar Switch of TVS
HS code of Switch is 85365090.
Duty Drawback
ITC-HS Code Description Duty Drawback Code
Drawback Rate
85365090 Other switches: Other 853601 2.5%
2.5% incentive receive on FOB value and directly send by customs to Export’s bank A/c.
EXPORT BENEFITSEXPORT BENEFITS
43. 3.1 Zero duty EPCG scheme
Under this scheme import of capital goods at zero custom duty is allowed for
producing quality goods and services to enhance India’s export competitiveness.
Import under EPCG shall be subject to export obligation (EO) equivalent to six
times of duty saved in six years.
Scheme also allows indigenous sourcing of capital goods with 25% less export
obligation i.e. equivalent to four & half times of duty saved in six years.
Example: If total duty saved INR 100.00 then EO will be INR 600.00 in case of
imported machinery.
If total duty saved INR 100.00 then EO will be INR 450.00 in case of
indigenous machinery.
3.2 Post Export EPCG Duty Credit Scrip Scheme
A Post Export EPCG Duty Credit Scrip Scheme shall be available for exporters who
intend to import capital goods on full payment of applicable duty in cash.
3. EXPORT PROMOTION OF CAPITAL GOODS (EPCG SCHEME)
EXPORT BENEFITSEXPORT BENEFITS
44. Under the EOU scheme, the units are allowed to import or procure locally without
payment of duty
All types of goods including capital goods, raw materials, components, packing
materials etc..
In the case of EOUs engaged in agriculture, animal husbandry, floriculture,
horticulture, and poultry
5. OTHER
SCHEMES
5.1 Marketing Development Assistance (MDA) Scheme
Financial assistance is available for exporters having an annual export turnover
upto Rs. 30 crores for trade fairs, buyer seller meets organized by EPC’s/ Trade
promotion organizations. MDA guidelines available at www.commerce.nic.in
4. EXPORT ORIENTED UNITS (EOU)
EXPORT BENEFITSEXPORT BENEFITS
