12 Foreign Trade Policy 2009-14 and Mkt Strategies.pptx

12 Foreign Trade Policy 2009-14 and Mkt Strategies.pptx

1. Foreign Trade Policy 2009-14 and Export Marketing Strategy Prof Bharat Nadkarni

2. EXIM Procedures & Documentation The GOI has announced new Foreign Trade Policy and Procedures for 2009 – 14, making important changes in the export import system of our country. The year 2009 witnessed one of the most severe global recessions, countries all over the world have been affected in different degrees. Luckily, India has not been affected to the same extent as other countries of the world, still its exports have declined due to fall in demand from developed countries. After a year, there has been some sign of recovery, however, declining demand remains to be a matter of concern for the country. Considering the situation, the short term objectives of the foreign trade policy 2009-14 are to increase the exports and to provide support mainly to those sectors which have been hit badly by recession. The long term objectives of the foreign trade policy are to double India’s export of goods and services by 2014 and to double India’s share in global trade by 2020.

3. EXIM Procedures & Documentation Exports help in Earning foreign exchange Better profits Improving quality of goods Entering new markets Imports help in Making available scarce resources or unavailable resources Technical know-how Exports e.g. An exporter may import raw material, make finished product out of it and export abroad. Building good relations with other countries.

4. EXIM Procedures & Documentation Definition of Export / What is Export? According to section 2(e) of Foreign Trade (Development and Regulation) Act, 1992, the term “export” means “taking out of India any goods by land, sea or air”. As such, the goods must leave India, or cross the customs borders of India to a foreign destination, for being considered as export. The term export means physical exports of any goods. Now, the scope of exports has been widened, export includes “services” exports also. Thus, exports now include goods and services both. Deemed Exports Deemed exports does not involve physical Exports of goods. It involves supplying of goods to certain specified persons/ Units who finally export them in the same form or after their processing.

5. EXIM Procedures & Documentation In India, the commerce ministry through the Director General of Foreign Trade (DGFT) governs the exports and imports. The ministry announces the foreign trade policy for certain periods from time to time (usually five years). Currently, foreign trade policy 2009-14 is in force and policy lays down the basic rules for all export-import transactions in India. Every person / Units wish to engage in Export – Import activities, must apply for and obtain an Importer – Exporter Code number. EXIM depends on the nomenclature (list) given in ITC (HS) classification. ITC (HS) stands for Indian Trade Classification ( Harmonised system) for export and import items. This classification is published by the DGFT. In this nomenclature (list) goods are codified by numerical (number) code for identification of goods for the purpose of export – import control. Ex. Tariff item HS code 33012937 – Sandalwood oil.

6. EXIM Procedures & Documentation All goods fall in the category of : Freely exportable Restricted Canalised or through State Trading Enterprises. Banned or Prohibited. Restrictions on countries of Export.

7. EXIM Procedures & Documentation Export Marketing Strategy and Preparation for Exports Export marketing strategy involves all activities needed to market goods and services in other countries. It includes, Selection of a target market Identifying needs of customers Deciding pricing, promotion, distribution policies Fulfilling export procedures. The job is tough and complex as compared to domestic marketing due to S T E P I N.

8. EXIM Procedures & Documentation Export Marketing Strategy and Preparation for Exports Export marketing strategy involves all activities needed to market goods and services in other countries. It includes, Selection of a target market Identifying needs of customers Deciding pricing, promotion, distribution policies Fulfilling export procedures. The job is tough and complex as compared to domestic marketing due to S T E P I N.

9. EXIM Procedures & Documentation Key Environmental factors relevant to International Business Social & Cultural environmental factors include Demographic factors 2. Technological environmental factors Economic environmental factors Political and Government environmental factors International trading environmental factors Natural environmental factors

10. EXIM Procedures & Documentation The Environmental challenges Substantial challenges face any organisation intent on getting to the future first. The first challenge, how to navigate from here to there arises as both public and private institutions struggle to plot a course through and increasingly inconsistent environment where experience is rapidly devalued and familiar landmarks no longer serve as guideposts. Never before has the institutional terrain been changing so quickly or have industry boundaries been so malleable. Never before have competitors, partners, suppliers and buyers been so indistinguishable. How, then, does one get to the future first even when there is no map? (C K Prahalad and Gary Hamel in the preface to Competing for the future)

11. EXIM Procedures & Documentation What makes business different are the differences in the environment and eventually may make the international business strategy different from the domestic one. A detailed analysis of the business environment of the foreign countries is, therefore, an essential prerequisite for formulating international business strategies. As Cateora point out “the key to successful international business is adaptation to the differences in the environment that usually exist from one country to another. Adaptation is not a passive process but a conscious effort on the part of the international player to anticipate the influences of both the foreign and domestic uncontrollable environments on a business strategies and then to adjust the strategies to minimise their efforts.

12. EXIM Procedures & Documentation The root cause of most international business problems is the “Self Reference Criterion” (SRC) in making decisions, that is, an unconscious reference to one’s own cultural values, experiences and knowledge as the basis for decisions. The SRC is one of the most difficult to break … Lee. Ex. P & G stormed into Japanese market with American products, American managers, American sales methods and promotion strategies. The results were disastrous until the company learnt how to adapt product and marketing styles to Japanese culture. Similarly, the American company, Texas Instruments which started making semi-conductors in Japan took an American approach to hiring, pay and benefits, dismissing the Japanese system of offering bonuses two times a year as impractical. The workers disagreed, morale crumbled and the company had trouble recruiting employees.

13. EXIM Procedures & Documentation Later, when company adopted the Japanese methods of recruiting and reward including bonuses and a promotion system based on seniority, the situation vastly changed.

14. EXIM Procedures & Documentation An export marketing strategy should include the following aspects: Determination : it is not to get rid of surplus goods. It is a state of mind, must consider it as an important and long term activity. Selecting the product : choice of product, every product can not be sold everywhere, demand forecasting, proper knowledge of govt. policies, product adaptation, entry strategies, reaching ultimate customer etc Identifying / Finding out product’s target market : research of overseas market, handle one at a time, collect sufficient market information – trade directories, Journals, Market survey reports, Periodicals, export promotion councils (EPCs), Federation of Indian Export Organisation (FIEO), Import promotion Institutions abroad etc.

15. EXIM Procedures & Documentation Production Capacity : International markets are very large which may need careful study – it should not be thinly spread. Quality and Standards : Goods for exorts must be produced according to International standards like ISO : 9000 and ISO 14000. Deciding method of Exporting : (a) Direct Exporting. In direct exporting, the manufacturer directly exports on his own, they are known as manufacturer exporters. He makes use of following arrangements – Appoints agents in the foreign markets – Setting up sales branches – Appointing travelling salesman – Booking orders through direct contacts. (b) Indirect Exporting. The manufacturer exports through – Merchant exporters – Export house – Trading houses – Canalising Agencies – Export consortia or Co-operative Export house.

16. EXIM Procedures & Documentation Export Procedure Preliminary stage Pre-Shipment stage Shipment stage Post-Shipment stage

17. EXIM Procedures & Documentation Export Pricing Strategy : Cost based pricing Following competitors Negotiated prices Customer determined price Break-even price Marginal cost pricing Transfer pricing Creative pricing

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