IB 3101 Lecture Notes - Lecture 11: Foreign Exchange Risk, Trade Finance, International Trade

33 views3 pages
Week 11 Chapter 14 Exporting, Importing, and Countertrade
Exporting is very difficult, hardest part is to figure out how to actually start
Only 5.3% of US firms export! Most of the value of US exports comes from a
small number of firms that export A LOT.
Exporting firms:
Market opportunities
Foreign exchange risk
Import and export financing
Challenges of doing business in foreign market
Pitfalls of Exporting
Poor market analysis
A lack of customization
A poor distribution program
Poorly executed promotional campaigns
Problems securing financing
Underestimation of the expertise required for foreign market
Underestimation of the amount of paperwork
Finding foreign demand for a firm’s products, dealing with the financing,
paperwork, etc. are HUGE roadblocks to setting up export operations.
Ways to Reduce the Risks of Exporting
Hire an EMC (export management companies) or export consultant
Firms can go the Department of Commerce for help, but if they don’t have a
very good idea of what needs to be done, it’s unlikely they’ll set up export
Focus on one, or a few markets at first
Enter a foreign market on a small scale
Recognize the commitment involved and time it takes to building export
Develop a good relationship with local distributors and customers
Hire locals
Consider local production
Lack of Trust
Exporters prefer to receive payment prior to shipping goods
Importers prefer to receive goods prior to making payments
Solution can be the use of a third party
o International trade financing
Letter of credit
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows page 1 of the document.
Unlock all 3 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Notes+

Unlimited access to class notes and textbook notes.

YearlyBest Value
75% OFF
$8 USD/m
$30 USD/m
You will be charged $96 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.