Post by Trade facilitator on Sept 15, 2013 12:14:47 GMT 1
As in every field of commerce, what makes business in import/export trade succeed is preparation. There is need to develop an export plan, which sets a target that you can work to, and to provide a guideline for everyone in the organization. Such a plan will include how you risk will organize your export/import business; select the products you want to deal in, an identification of export market segment and a blueprint for competing with competitors in target export markets. In formulating such a plan, import/export regulations and other trade barriers should be considered since they have significant impact on the outcome of the export transactions.
A business plan allows the promoter to consider objectively those elements that contribute to a successful venture. As a planning tool, it indicates goals, strategies, and objectives in a systemic manner. Such a plan guides operations and provides the yardstick for measuring performance during project implementation. A good export plan should articulate the role exporting will play in the company’s growth, the scope and nature of product lines, identified market size abroad, distribution channel, export pricing, promotional methods, sales targets and budgets, commissions on sales (especially when selling through overseas agents), and should lead to action conclusions and activity schedules. A well prepared business plan supported by financial projections is necessary, especially when external funding is required for the business.
In international trade: “It is far cheaper to think a mistake than to make a mistake”. When you think a mistake, what you lose is at most, your time. But when you make a mistake, you not only waste valuable time and effort but, also the materials and money involved. What this means is that, before you make any large financial commitment, it is important to think through the entire process first, to be sure you understand what this business involves, what needs to be done, and to develop a plan of action based on the insight. In international trade, any mistake can have devastating financial consequences. Therefore, it is necessary that the prospective exporter do some background research first, to develop a ‘proof positive’ business plan to ensure success. It is better to spend some time at your desk drawing up your plans, preparing, thinking things through and then implementing them, than getting started the moment the first idea occurs to you.
Organizing Your Export Office
The first step is to set-up an export and shipping office. Export must be regarded as the major part of your company’s overall commercial operation since the main objective of export is to gain business from overseas and earn foreign exchange. The management of a large export company will often be divided into domestic and overseas divisions. Internal specialists will handle transportation, insurance and finance. A smaller export company might use external specialists and “outsource” advice and assistance as the need arises. The following are the various organizational structures that the export office may assume:
Horizontal structure is most commonly used. The company is established to cater for all aspect of export work. Usually, it is founded upon a product or geographical basis. An export manager should be in charge of operations, with key staff responsible for personnel, research and statistics, promotion, sales and dispatch. As the business grows, departments or sections may develop and the senior executives will have managers and staff below them.
In a horizontal structure, the export-marketing manager would be in charge of departments that would in turn deal with all aspects for one market. One department might look after European market, another would deal with the USA and Canada, and still another would control Africa and another, the Middle East and so on. This form of structure tends to produce total involvement from all staff since they are likely to be managing several functions. The job is, therefore, more interesting.
Vertical Structure- Here, there would be a specialist for specific functions. Financial experts will handle financial matters. However, this may create limitations and boredom and make the staff disinterested – they may not see the business as a whole. Furthermore, this system lacks any degree of reliability since there is a limited liability to cover for sickness and holidays.
In a vertical structure organization, individuals would deal with specific functions that relates to all markets. Credit control, insurance, transport, production and parking, order processing, invoicing, documentation, filing and finance will be handled as specific areas, but covering all market.
A Multi-National Structure – This applies to large companies operating on a worldwide scale. There are three main types of these:
An export-based organization: this relates to the structure of a major company that has decided that its overseas operations should be
managed by one export operations office;
A product-based organization: This applies when the organization is product oriented and may be selling many diverse ranges such as agricultural commodities as well as manufactured products. Each division will have a self-contained aspect both at home and abroad.
An area-based organization: This is where a company might organize itself on a geographical basis, especially if the company is large and offer many products in the same area. The world might be divided into zones such as Europe, America and Asia. As conditions vary, the company makes the best use of local people in the
country who understand local conditions.
There are no fixed rules here or any one ideal structure to suite everyone. When setting up your company structure, consider the size, number of employees, plans for future development and expansion; consider also the type of product; is it a high volume product or one that requires efficient after sales service or both? Does the staff have worldwide experience or is it limited to one specific area? Are the links with banks, insurance and freight companies good and sound?
Export Office Personnel
Clearly, the staff employed in an export office or department must be reliable and competent, as in any business. Some staff functions of particular importance are as follows:
Custom Liaison – Here, staff are required to handle enquiries, quotations, orders and possibly, complaints. Staff must ensure that orders are processed without delay;
Transport – The staff concerned should arrange for the smooth carriage of goods to the overseas markets. Here, negotiations will be with agents or directly with the airlines and shipping companies; and
Insurance – This is an extremely important aspect of export and since all cargo must be insured, staff must ensure that it is done.
Other staff functions include production, research, development, documentation and record keeping. All are vital to the success of the business.
Qualities Of Export Office Personnel
Anyone who works in an export office ought to have an aptitude for languages, an interest in world affairs, and a sense of responsibility, diplomacy, and the ability to work with people of any color, religion, race or nationality.
Handling of Enquiries, Quotations and Orders
Enquiries: All enquiries must e dealt with immediately (or within 24 hours), and should be answered in the same way that they were received, for example, by fax, e-mail, telephone or letter. If for some reason they cannot be acknowledged immediately, then the customer must be advised of the delay.
Quotations: All quotations should be sent out as soon as possible (or not later than 48 hours) and a clear record kept of the details. It is advisable to state the duration of which the quotation is open for acceptance. Much will depend upon the nature of the trade and the goods involved. However, custom and practice suggest that one or two months are often a suitable period, for example, you can state: “this quotation is valid for two months from the date of issue”.
Orders: All orders should be processed upon receipt (immediately). Terms and delivery date must be agreed on.
Record Keeping
There are different record keeping systems, but the following are commonly used:
Export sales records – These should show export revenue and earnings, including budgets and forecasts for each coming year;
Customer dispatch cards, computerized files – Each card file should give details of each customer’s transaction, such as method of payment, the port to which shipment is to be made, financial arrangements and insurance details and so on. The card files should form an important part of your record system; and
Customer flow charts – This should show each order, the date received, the date processed and the data of dispatch.
A business plan allows the promoter to consider objectively those elements that contribute to a successful venture. As a planning tool, it indicates goals, strategies, and objectives in a systemic manner. Such a plan guides operations and provides the yardstick for measuring performance during project implementation. A good export plan should articulate the role exporting will play in the company’s growth, the scope and nature of product lines, identified market size abroad, distribution channel, export pricing, promotional methods, sales targets and budgets, commissions on sales (especially when selling through overseas agents), and should lead to action conclusions and activity schedules. A well prepared business plan supported by financial projections is necessary, especially when external funding is required for the business.
In international trade: “It is far cheaper to think a mistake than to make a mistake”. When you think a mistake, what you lose is at most, your time. But when you make a mistake, you not only waste valuable time and effort but, also the materials and money involved. What this means is that, before you make any large financial commitment, it is important to think through the entire process first, to be sure you understand what this business involves, what needs to be done, and to develop a plan of action based on the insight. In international trade, any mistake can have devastating financial consequences. Therefore, it is necessary that the prospective exporter do some background research first, to develop a ‘proof positive’ business plan to ensure success. It is better to spend some time at your desk drawing up your plans, preparing, thinking things through and then implementing them, than getting started the moment the first idea occurs to you.
Organizing Your Export Office
The first step is to set-up an export and shipping office. Export must be regarded as the major part of your company’s overall commercial operation since the main objective of export is to gain business from overseas and earn foreign exchange. The management of a large export company will often be divided into domestic and overseas divisions. Internal specialists will handle transportation, insurance and finance. A smaller export company might use external specialists and “outsource” advice and assistance as the need arises. The following are the various organizational structures that the export office may assume:
Horizontal structure is most commonly used. The company is established to cater for all aspect of export work. Usually, it is founded upon a product or geographical basis. An export manager should be in charge of operations, with key staff responsible for personnel, research and statistics, promotion, sales and dispatch. As the business grows, departments or sections may develop and the senior executives will have managers and staff below them.
In a horizontal structure, the export-marketing manager would be in charge of departments that would in turn deal with all aspects for one market. One department might look after European market, another would deal with the USA and Canada, and still another would control Africa and another, the Middle East and so on. This form of structure tends to produce total involvement from all staff since they are likely to be managing several functions. The job is, therefore, more interesting.
Vertical Structure- Here, there would be a specialist for specific functions. Financial experts will handle financial matters. However, this may create limitations and boredom and make the staff disinterested – they may not see the business as a whole. Furthermore, this system lacks any degree of reliability since there is a limited liability to cover for sickness and holidays.
In a vertical structure organization, individuals would deal with specific functions that relates to all markets. Credit control, insurance, transport, production and parking, order processing, invoicing, documentation, filing and finance will be handled as specific areas, but covering all market.
A Multi-National Structure – This applies to large companies operating on a worldwide scale. There are three main types of these:
An export-based organization: this relates to the structure of a major company that has decided that its overseas operations should be
managed by one export operations office;
A product-based organization: This applies when the organization is product oriented and may be selling many diverse ranges such as agricultural commodities as well as manufactured products. Each division will have a self-contained aspect both at home and abroad.
An area-based organization: This is where a company might organize itself on a geographical basis, especially if the company is large and offer many products in the same area. The world might be divided into zones such as Europe, America and Asia. As conditions vary, the company makes the best use of local people in the
country who understand local conditions.
There are no fixed rules here or any one ideal structure to suite everyone. When setting up your company structure, consider the size, number of employees, plans for future development and expansion; consider also the type of product; is it a high volume product or one that requires efficient after sales service or both? Does the staff have worldwide experience or is it limited to one specific area? Are the links with banks, insurance and freight companies good and sound?
Export Office Personnel
Clearly, the staff employed in an export office or department must be reliable and competent, as in any business. Some staff functions of particular importance are as follows:
Custom Liaison – Here, staff are required to handle enquiries, quotations, orders and possibly, complaints. Staff must ensure that orders are processed without delay;
Transport – The staff concerned should arrange for the smooth carriage of goods to the overseas markets. Here, negotiations will be with agents or directly with the airlines and shipping companies; and
Insurance – This is an extremely important aspect of export and since all cargo must be insured, staff must ensure that it is done.
Other staff functions include production, research, development, documentation and record keeping. All are vital to the success of the business.
Qualities Of Export Office Personnel
Anyone who works in an export office ought to have an aptitude for languages, an interest in world affairs, and a sense of responsibility, diplomacy, and the ability to work with people of any color, religion, race or nationality.
Handling of Enquiries, Quotations and Orders
Enquiries: All enquiries must e dealt with immediately (or within 24 hours), and should be answered in the same way that they were received, for example, by fax, e-mail, telephone or letter. If for some reason they cannot be acknowledged immediately, then the customer must be advised of the delay.
Quotations: All quotations should be sent out as soon as possible (or not later than 48 hours) and a clear record kept of the details. It is advisable to state the duration of which the quotation is open for acceptance. Much will depend upon the nature of the trade and the goods involved. However, custom and practice suggest that one or two months are often a suitable period, for example, you can state: “this quotation is valid for two months from the date of issue”.
Orders: All orders should be processed upon receipt (immediately). Terms and delivery date must be agreed on.
Record Keeping
There are different record keeping systems, but the following are commonly used:
Export sales records – These should show export revenue and earnings, including budgets and forecasts for each coming year;
Customer dispatch cards, computerized files – Each card file should give details of each customer’s transaction, such as method of payment, the port to which shipment is to be made, financial arrangements and insurance details and so on. The card files should form an important part of your record system; and
Customer flow charts – This should show each order, the date received, the date processed and the data of dispatch.
