Dr B K Mukhopadhyay
Exporting is becoming increasingly important as companies in all parts of the world gearing up to supply and service markets outside their tiol boundaries. Everyone wants a bigger share in the market!! Some win, some lose and that is all in the game!!
Clearly, intertiol business includes all business transactions involving two or more countries, where these business relationships may be between private individuals, companies, groups of companies, non-profit organizations or government agencies. Though in some ways, intertiol business is an extension of domestic business, it is different mainly for two reasons (i) intertiol business objectives are likely to be different from domestic business objectives; (ii) the environmental conditions in which intertiol business is conducted are usually of greater complexity than is the case with domestic business. These complexities arise from differences in culture, currencies, legal systems and the endowment of tiol resources, among others. Today’s developments in communication and transportation technology have been facilitating trade worldwide, leading to the cliché that ‘all business is now intertiol business’ - people working in maritime industries are inevitably involved in intertiol business.
Of course, maging an intertiol business is more complex than maging a domestic business. Especially, in these days of globalization, autarky is out of date. Every country has to enter into this process of integration and interdependence. Globalization of markets implies that the world is one large marketplace and globalization of production implies that firms locate their production facilities for maximum efficiency and lowest cost, so that products are no longer seen as Indian, Australian or Japanese or German products, but ‘global’ products in ture. On this score even the staunch critics have to remember that things are changing at jet speed where one technology is fast replacing the earlier one.
Little Did We Know that Airlines Would Be Competing With Railways
All of the relevant factors are to be properly scanned, especially by the minnows, before embarking upon a big venture – spreading wings abroad!!
In this age of globalization the forces that promote globalization are not to be lost sight of:
(a) The lowering of tariff and non-tariff barriers (free trade); (b) developments in technology [viz. jet aircraft, containerization, the microprocessor, the Internet and robotics]. Who could question today that developments in communication and
(b) Has not travel made it possible for intertiol business to coordite its activities and to view the world as a single marketplace?
Changes in the economic and political domains are conducive to the rise and fall of tion-states. Though the US is the world’s domint tion, yet it is likely to be challenged more and more by fast emerging economies like India, Chi, among others, in the next few decades. So one has to impartially look into the costs and benefits of globalization and note that although there may be a net benefit, the costs - especially job losses - will be borne by particular localities.
Government has to Play the Key Role
turally, the role of the Government comes to the fore. Governments commonly use three activities to support export activities of tiol firms. First, tax incentives treat earnings from export activities preferentially either by applying a lower rate to earnings from these activities or by refunding taxes already paid on income associated with exporting. The tax benefits offered by export-conscious governments include varying degrees of tax exemption or tax deferral on export income, accelerated depreciation of export-related assets, and generous tax treatment of overseas market development activities. Governments also support export performance by providing outright subsidies, which are direct or indirect fincial contributions that benefit producers. Subsidies can severely distort trade patterns when less competitive but subsidized producers displace competitive producers in world markets. The third support area is governmental assistance to exporters. Companies can avail of a great deal of government information concerning the location of markets and credit risks. Assistance may also be oriented toward export promotion.
Of course some of the people and organizations assist various tasks. Some of these, including purchasing agents, export brokers, and export merchants, have no assignment of responsibility from the client. Others, including export magement companies, manufacturers’ export representatives, export distributors, and freight forwarders, are assigned responsibilities by the exporter. turally, there roles are no less important.
That is why, home country issues involve deciding whether to assign export responsibility inside the company or to work with an exterl organization specializing in a product or geographic area. Most companies handle export operations within their own in-house export organization. Depending on the company’s size, responsibilities may be incorporated into an employee’s domestic job description. Altertively, these responsibilities may be handled as part of a separate division or organizatiol structure.
The very fact emerges today is that intertiol marketing does not have any all-fitting-size, though in the intense competition ‘heat is all set to rise’! Whether India has to change the grapes marketing policy [India being one of the remote countries where grape is produced twice in a year]; Bangladesh can maintain the tempo of low-cost readymade garments supplier; Bhutan will go on heavily depending on hydro-power sales….no correct answer can be given since yesterday is history and tomorrow is a mystery. But we do have the time to plan in such a manner that innovention s [innovation plus invention] aspects are not lost sight of.
Then How to Go Ahead??
Once a company enters into the tunnel it is obvious that it has to come out of the tunnel! Intense competition, the steadily growing trend, is both a problem and an opportunity. On the flip side, unsupportive cultures and poor strategic alignment significantly underperform their competitors. Is it not a fact that most executives understand what’s at stake and what matters, even if their companies don’t always seem to get it right? The ongoing global situation has been calling for ‘superior product performance’ and ‘superior product quality’ as their top strategic goals. And the two most important cultural attributes have been ‘strong identification with the consumer/customer experience’ coupled with a ‘passion/pride in products.’
According to a recent survey in the U.S. on senior executives, marketing will be the most important area of expertise for the next-generation of leaders. The study [commissioned by the Institute of Intertiol Research] sought to identify key areas for leaders. Marketing was the clear choice, with 31 percent of votes, followed by 20 percent for operations and 16 percent for fincial expertise. Sales and engineering were deemed least critical to leadership with 11% and 6% respectively. Marketer Seth Godin attributes the rising recognition of marketing to fierce marketplace competition. “Being good enough is no longer good enough …..This is the most cluttered marketplace in history- just about everything is available everywhere, all the time. Leaders understand that spreading the word about their offerings is the only path to success.
Last but not the least: it has been rightly viewed that in global marketing, the issue of customer value is inextricably tied to the sourcing decision. In today’s competitive marketplace, companies are under tremendous pressure to lower costs; one way to do this is to locate manufacturing and other activities in Chi, India, Bangladesh and other low-wage countries. The decision of where to locate key business activities depends on other factors besides cost. There are no simple rules to guide sourcing decisions - the sourcing decision is one of the most complex and important decisions faced by a global company. Several factors may figure in the sourcing decision: magement vision, factor costs and conditions, customer needs, public opinion, logistics, country infrastructure, political factors, and exchange rates, among others.
Obviously enough, simply tinkering around the existing practices has severe limitations.
(The Writer, a noted Magement Economist; Principal, Eminent College of Magement and Technology and an Intertiol Commentator on Business and Economic Affairs, can be reached at firstname.lastname@example.org)