Page 210 - DMGT547_INTERNATIONAL_MARKETING

Unit 12: Export Procedures and Policies

Analyze the Political Environment: Governments may be hostile to foreigners, foreign Notes
goods, and foreign services. Understand the stability of government, attitudes to
imports, attitudes towards your country, government involvement in business and
trade, and attitudes towards economic growth.
Understand the Economic Environment: Know these economic indicators: GDP per
capita growth, balance of payments, currency convertibility and controls, the inflation
rate, and saving rate. Real GDP per growth is a good indicator of a country’s
receptiveness to imports. You must also understand if the country has a balance of
payments problem. If there is a problem, importing will not grow. Be wary if you
cannot get your earnings converted into U.S. dollars, and if inflation reduces foreigner’s
purchasing power between ordering and the time you are eventually paid. Some
economic indicators that suggest a high demand for a short time period include a
low savings rate, a trade deficit, and reduced importing. In these cases, you cannot
count on long-term success in the country.
Collect Information about Market Access: Barriers to imports, ease of import process,
legal protection for patents and trademarks, laws on profits and repatriation of
profits, and regulations on labor employed by foreigners. Focus on the process of
importing in a country. In countries such as Italy, France, Brazil, India, and China,
which are hostile to imports, hassles and red tape sometimes create costly slowdowns
for firms.
Know your Product’s Potential: Understand consumer characteristics/needs, availability
of complementary products, and availability of suitable sales and support employees.
Pinpoint needs for re-engineering. re-sizing, re-packaging, and changing material
components.

3. Determine Entry Strategy and Pricing:
Identify likely End-User Price: You must decide on the price consumers are likely to
pay for the product and work backwards to determine the price of your product to
importers.
Determine your Initial Goal in Exporting: Do you want to make a quick profit based on
volume sales? Then price your product low. Do you want to establish an image of
quality? Then consider pricing your product high. If your firm wants to follow a
strategy of learning and long-term growth, then price your product low to a
distributor or agent, which will teach you the facets of your new market.
Determine your Price based on the following criteria: The basis for determining the price
are as follows:
Channel Length: Identify market channel lengths. If the path from the export
firm is long as given in following example, then your wholesale price must be
lower than in the case of a shorter channel.

Example: Through an importer, primary wholesaler, secondary wholesaler, and a retailer
to the customer

Market Demand: How much of a demand is there for your product? Is there a
large and emerging middle class that is able to buy your product? What are
your competitors charging for this product and based on its attributes, can
you charge a different price?

Risks Faced: Your Company will have to analyze currency value changes and
hedge against them. Impending dollar depreciation may allow the export

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