IBM 416 Lecture Notes - Lecture 7: Original Equipment Manufacturer

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Article 1: How to Start an Import/Export Business (Nicole)
· What is the total export of U.S. in dollars? - $772 billion
· How many countries did U.S. export to? - 150
· What percent of exporters are small businesses? - 96%
· What are the three main reasons that importing is such a big business in the United States and
around the world? - availability, cachet, price
· What are the two factors that make one product less expensive for a nation to manufacture than
another? - resource and technology
What are the types of import/export businesses discussed in the article? - EMC, ETC, Import/export
· What are their characteristics?- EMC he EMC does it all--hiring dealers, distributors and
representatives; handling advertising, marketing and promotions; overseeing marking and packaging; arranging
shipping; and sometimes arranging financing. In some cases, the EMC even takes title to the goods, in essence
becoming its own distributor. EMCs usually specialize by product, foreign market or both, and--unless they've
taken title--are paid by commission, salary or retainer plus commission.
Export trading company (ETC): While an EMC has merchandise to sell and is using its energies to
seek out buyers, an ETC attacks the other side of the trading coin. It identifies what foreign buyers want
to spend their money on and then hunts down domestic sources willing to export. An ETC sometimes
takes title to the goods and sometimes works on a commission basis.
Import/export merchant: This international entrepreneur is a sort of free agent. He has no specific
client base, and he doesn't specialize in any one industry or line of products. Instead, he purchases goods
directly from a domestic or foreign manufacturer and then packs, ships and resells the goods on his own.
This means, of course, that unlike the EMC, he assumes all the risks (as well as all the profits).
· What is the main difference between import/export merchant and the EMC? - the EMC, he assumes
all the risks (as well as all the profits
· What are the middlemen described in the article?
Manufacturer's representative: a salesperson who specializes in a type of product or line of
complementary products; for example, home electronics: televisions, radios, CD players and sound
systems. He often provides additional product assistance, such as warehousing and technical service.
Distributor or wholesale distributor: a company that buys the product you've imported and sells it to a
retailer or other agent for further distribution until it gets to the end user
Representative: a savvy salesperson who pitches your product to wholesale or retail buyers, then passes
the sale on to you; differs from a manufacturer's representative in that he doesn't necessarily specialize in
a particular product or group of products
Retailer: the tail end of the trade channel where the merchandise smacks into the consumer; as yet
another variation on a theme, if the end user is not Joan Q. Public but an original equipment
manufacturer (OEM), then you don't need to worry about the retailer because the OEM becomes your
end of the line. (Think Dell Computer purchasing a software program to pass along to its personal
computer buyer as part of the goodie package.)
· What are their characteristics? (desrcibed above)
· What are the right characteristics (the right stuff) of an exporter? -enthusiastic salesperson, a dynamo
at tracking things like invoices and shipping receipts, and your idea of heaven is seeing where new ideas and
new products will take you, and if, to top it off, you love the excitement of dealing with people from different
· What are the top three countries America trades with? -Canada, Mexico, Japan
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