fundamentals of export business plan laos

7/29/2019 Fundamentals of Export Business Plan Laos

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FUNDAMENTAL OF EXPORT

BUSINESS PLAN

Presented by

Rahim Jabbar

November 2010

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An Overview of Export Business

The Outline

Detailed Explanation Introduction

Current Market Position

Market & Industry Trend

Export Audit

Market Assumptions

Export Objectives

Export Marketing Strategic Plan Export Management Plan

Action Plan

Financial Forecasts

Summary & Conclusion

Points of Discussion

FUNDAMENTAL OF EXPORT BUSINESS PLAN

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AN OVERVIEW OF

EXPORT BUSINESS


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AN OVERVIEW OF EXPORT BUSINESS ACTIVITIES

EXPORTPRODUCT

EXPORTMARKET

EXPORTER

Internal company analysis (Strength & Weaknesses)S/W/O/T analysis strategic decisions

Objectives & Targets

Export Market Audit (Opportunities/Threats)

PRODUCT MARKET

COMBINATION (PMC)

EXPORT MARKETING STRATEGY(EMS)

What is needed tosuccessfully sellthe export product?

EXPORT MARKETING PLAN:Market segment

ProductIdentityPrice

DistributionPromotion

Trading Partner

How to enter theselected exportmarket successfully?

EXPORTBUSINESS PLAN

(INCLUDINGFINANCIAL PLAN

& SCHEDULE

EXPORT INGACTIVITIES

FEED-BACKS

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FIRST STEPS TO BUILDING

AN EXPORT BUSINESS PLAN

PLAN, but more importanty, IMPLEMENT it!

Be ready to CHANGE as you LEARN and GROW

Ensure Management and Staff COMMITMENT

What do you wish to achieve?

(Goals & targets)

Capabilities?Restrictions?

Seek AGREEMENT on all aspects of the Plan

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KEEP THE PLAN SIMPLE AND FLEXIBLE

An Export Busines Plan should be SIMPLE and FLEXIBLE

Some market information and planning elements

may not be available at the time of drawing up

an initial export planThe export plan will generate more information

and understanding as your Company learns more

about exporting and your Companys

competitive position improves in the

Global market place.

6


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A GENERAL FORMAT


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EXPORT MARKETING & BUSINESS PLAN (1)

1. Introduction, Mission and Business Principles

2. Current Market Position

3. Market & Industry Trend

4. Export Audit4.1 Market Audit

4.2. Competitive Audit

4.3. Company Audit

4.4. S/W/O/T Conclusion


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6. Export Objectives

7. Export Marketing Strategy7.1. Strategy Summary

7.2. Market & Segment(s)

7.3. Positioning Strategy

7.4. Product Strategy7.5. Branding Strategy

7.6. Pricing Strategy

7.7.Distribution Strategy

7.8. Promotional Strategy

7.9. Trade Partner Strategy

5. Assumptions about the Target Export Market


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8. Management Plan

9. Action Plan

10. Financial Forecasts

11. Periodic Review & Evaluation


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DETAILED

EXPLANATION


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INTRODUCTION, MISSION AND BUSINESS PRINCIPLES (1)

The first thing put things and principles

into perspective

an introduction a sense of location

who you are, what the company is, what it does

(business concept),

a short historic track record

a brief statement on your current position

and performance

the markets that are currently covered


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INTRODUCTION, MISSION AND BUSINESS PRINCIPLES (2)

The first thing put things and principles into perspective:

a brief description on the set of basic thinking & ideas that

form the basis for the future of your Companys business

the sense of direction

the company's mission statement (the companys charter)

where your Company wants to be (the Companys goal)

how your Company wants to get there(the Companys strategy)


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CURRENT MARKET POSITION (1)

The CURRENT SITUATION/CONDITION is the STARTING POINT forTHE FUTURE international market expansion

As a preparation for compliance to market access requirements

adaptations in the production, marketing and logistics processes

may require investments.

An x-ray of the Companys current market position

to identify the gap to be closed between the current market

position and desired market position

to clarify to what extent the organization has optimized the

opportunities in the current markets.


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PRODUCT:What products does the Company sell?

What is their market position?

What competitive alternatives areavailable in the market?

PLACE:What is the Companys current market coverage?

Which distribution channels doesthe Company use?

How does this relate to the competition?


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PRICE:What is the Companys pricing policy?

To what extent does the Company apply different

pricing from the competition?

How does the Company apply pricing flexibility in

order to promote sales (e.g. discounts, quantity

offers, contractual tenders etc.)?

PROMOTION:Describe the promotional tools you employ, i.e. the

Companys promotional mix (trade fairparticipation, advertising,

Direct Marketing, e-Marketing etc.).


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PEOPLE:

Describe the company's policy towards social

accountability, in terms of occupational health and

safety for the workers, and to society as a whole.

PLANET:

Elaborate on the Companys company's environmental

awareness, eco-mindedness and the Companys

position on environmental management


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MARKET & INDUSTRY TREND (1)

Description of important developments - past, present and

future - in the Companys current and potential markets,

at two levels:

first, describe the international and target market trends

you can identify for the Companys industry

in generic terms;

second, go one level deeper and zoom in on trends you've

identified in pre-selected markets with high potential

(priority countries) to be singled out as the MOST

POTENTIAL ONE based on RELEVANT MARKET SIZE and

FAVORABLE IMPORT GROWTH, and potentially WINNABLE)


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MARKET & INDUSTRY TREND (2)

Consider important variables:

economic, political and technological developments

favorable trade relations

historical, cultural or geographic characteristics

affinity and proximity

market characteristics

supply chain characteristics

competitor activitymarket access regulations

fashion, innovation, and consumer preferences


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EXPORT AUDIT: TARGET EXPORT MARKET AUDIT

Major aspects/

dimensionsOPPORTUNITES THREATS

Social-cultural

Technological

Economic

Political

Legal

Environmental


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EXPORT AUDIT: COMPETITIVE AUDIT (1)

THREAT OF SUBSTITUTE PRODUCTS

The availability of close substitute products will increase the

propensity of customers to switch to alternatives in response

to price increases (high elasticity of demand).

Factors that determine the threat of substitute products:

buyer propensity to substitute

relative price performance of substitutesbuyer switching costs

perceived level of product differentiation

( )


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THREAT OF ENTRY OF NEW COMPETITOR

Factors that determine the threat ofentry of new competitors:

the presence of entry barriers

economies of product differences

brand equity

switching costs or sunk costs

capital requirements

access to distribution

absolute cost advantages

learning curve advantages

expected retaliation by incumbents

government policies

( )


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THE INTENSITY OF COMPETITIVE RIVALRY

Factors that determine the intensity of competitive rivalry:

number of competitors

industry growth rate

intermittent industry overcapacity

diversity of competitors

level of advertising expenses

economies of scale


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EXPORT AUDIT: COMPANY AUDIT

Major aspects/

dimensionsSTRENGTHS WEAKNESSES

Men

Money

Means

Methods

Machines

Measurable

EXPORT AUDIT COMPANY AUDIT


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Strengths Weaknesses

Men

Loyal workforce Skilled technicians

Good account managers

Limited English language skills Limited international marketing

experience

Routine oriented

Ageing workforce

Methods Management by objectives

Responsibility and

accountability accepted bymanagement

Responsibility and

accountability accepted by

management

Continuous job rotation

Professional marketing

department

No professional market information

system

Time availability Dominant product drive

Dominant financial control

Low insight in industry benchmarks

No ISO 9001:2008

No ISO 14000 compliance yet

R&D department


(An Example)

EXPORT AUDIT COMPANY AUDIT


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Strengths Weaknesses

Means

Sound cash flow Good bank relation

Limited budget for brand building No funds for international market research

Limited budget for process and product

adaptation

Machines Up-to-date production

equipment

Packing station

Preventive maintenancesystem

Limited flexibility

Energy consumption inefficient

Foreign maintenance dependability

Spare part lead time Low degree of computerised

manufacturing

Measurables High customer satisfaction

Specific product specification

Sales growth

Sustainable profitability

Successful product launches

Growing customer base

High production efficiency

Spare capacity

Energy bills/costs

Rejection rate

Shipping costs

Average stock level too high

Occupational hazards and injury incidence

Employee absentee rate


(An Example)


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EXPORT AUDIT: S/W/O/TCONCLUSION(1)

POSITIVE NEGATIVE

INTERNAL STRENGTHS WEAKNESSES

EXTERNAL OPPORTUNITIES THREATS


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EXPORT AUDIT: S/W/O/TCONCLUSION (2)

The main challenges:

addressing the WEAKNESSESSTRENGTHS (Companys

strengths and weaknesses are CONTROLLABLE)

optimizing the impact of the Companys STRENGTHS to tap

identified market OPPORTUNITIES.

OPPORTUNITIES and THREATS (UNCONTROLLABLE/given

market conditions) drivers for company adaptation and

improvement


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EXPORT AUDIT: S/W/O/TCONCLUSION

SWOT analysis completed final decision to export or

not (balance the strong points and opportunities against

the weak points and the threats)

Does the Company think the organization is STRONGENOUGH TO COPE with the extra challenge and workload

of the exporting venture?

If YES is ready for the Big Jumpthe next step will beto focus on the Companys immediate and potential

competition. Get ready to take them on!!!


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MARKET ASSUMPTIONS

SOCIAL-

CULTURAL

DYNAMICS

TECHNOLOGICAL

TRENDS

ECONOMIC

DYNAMICS &

TRENDS

ENVIRONMENTAL

CHANGES

LEGAL

ENVIRONMENT

POLITICAL

DYNAMICS

MARKET

DYNAMICS

COMPETITIVE

SITUATION

COMPANYS EXPORTINGACTIVITIES:

Marketing strategies

Marketing activities

Cash-flow

MARKET ASSUMPTIONS


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We expect the Japanese economy to recover

as of next year.

We expect the distribution system to further concentrate

to industry captains and

Large Scale Retail buying groups.

We assume a continuation of trade liberalisation.

The product life cycle will be extended through

functional innovation, including packaging for small

households in the consumer market.

MARKET ASSUMPTIONS

(An Example)

MARKET ASSUMPTIONS


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The growing number of young consumers will create a

demand for new varieties and brands.

We expect a solid domestic market development

ensuring sufficient cash flow for sustaining

our export venture.

We assume that the exchange rate of the Japanese Yen inrelation to the US dollar remains relatively stable.

MARKET ASSUMPTIONS

(An Example-continued)


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EXPORT OBJECTIVES: SMART

SPECIFIC:the Companys product(s) and market(s)

should be specified.

MEASURABLE: the Companys objectives should be

quantitative, expressed in terms of sales value, sales

growth, market share, number of customers etc.

ACHIEVABLE: the Companys objectives should be based

on the Companys company's strengths and its critical

success factors (the internal potential) and market

opportunities (external potential).


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EXPORT OBJECTIVES: SMART(2)

REALISTIC:the Companys objectives should be realistic in

the sense that the required investments remain in

proportion to expected gains.

TIME-LED: set a specific period within which the

Companys objectives are to be achieved. It is advisable to

formulate short-term, mid-term and long-term objectives.


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Export Marketing

Strategy


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EXPORT MARKETING STRATEGY: TARGET SEGMENT

MARKET

People or organizations with needs or wants andthe ABILITY and WILLINGNESS TO BUY in the

export market

MARKET SEGMENTA subgroup of people or organizations sharingone or more characteristics that cause them to

have SIMILAR PRODUCT NEEDS.

SEGMENTATIONThe process of dividing a market into

meaningful, relatively SIMILAR, IDENTIFIABLEsegments or groups.


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EXPORT MARKETING STRATEGY: TARGET SEGMENT

Different Basis of Segmentation

GEOGRAPHIC

SEGMENTATIONRegions

Cities

States

Countries

DEMOGRAPHIC

SEGMENTATIONAge

Gender

Income

Occupation

Religion

Social class

Family size

PSYCHOGRAPHIC

SEGMENTATIONLifestyles

Personality

Values

Beliefs

BEHAVIORAL

SEGMENTATIONOccasion of usage

Benefits sought

Usage rate

Loyalty status


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EXPORT MARKETING STRATEGY: POSITIONING

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Positioning is about finding the BEST POINT/PLACE IN THE

CONSUMER MIND IN THE MARKET for the product/

service and the most appropriate for the target market. (It is

all in the consumers mind!)

The process of developing a competitive position for a

brand starts with the segmentation of the market, followed

by targeting (selecting a particular segment) to whom a

product or a brand is to be positioned (=positioning).


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In order to explore competitive values to be

wrapped in the product or brand to be positioned,

we should analyze the target consumers

( CONSUMER INSIGHTS) and the competitors

product/brands.( COMPETITORS MAPPING)



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Class

PrideDistinctive look

PracticalFuel EconomyAffordable

SportyFunYoung

ConservativeSomewhat

older

MercedesB.M.W.

Toyota.

Honda.Mitsubishi

Lexus


Competitive Mapping


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Raw

Materials

AuxiliaryMaterials

COMBINED &

PROCESSEDPRODUCT

TO FULFILL

THE NEEDS &

SATISFY THE

WANTS OF

CONSUMERS/

CUSTOMERS

METHODS/

TECHNIQU

ES

WORKS

EXPORT MARKETING STRATEGY: PRODUCT

A Definition of Product


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Functions

Usage

PRODUCTAttributes/

FeaturesBENEFITS VALUES

C

O

N

S

U

M

E

RS

Components of a Product


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Develop the product range in accordance with

the CUSTOMER NEEDS and

prevailing MARKET CONDITIONS

(competition and rules and regulations)

in the target markets.

Can you use the Companys existing product

assortment or does it need adaptation?

Product Development



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Do the Companys products offer features (physical

property of the product) or benefits that add value

to the customer/consumer?

Are there elements of the Companys intrinsic product

which are not appreciated by the Companys customers?

Always remember that product safety, recyclability and

user-friendliness are dominant success factors in the

developed markets due to legislation.

Features/AttitubesBenefits Analysis



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Unique Selling Proposition (USP)

Before developing a USP, it helps to know:

The features of the product/service

How and why the customers uses the product services

Features of competitive products


EXPORT MARKETING STRATEGY PRODUCT


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Unique Selling Proposition (USP) (continued)Steps to develop a USP (1)

List all main features/attributes of the product.

(Features/ attributes describe what the product/service does).

Features can be: quality, type and level of service, price,

functional or technical characteristics.

Convert each feature/attribute benefit.

(A benefit describes what customer need it fulfils).

Customer buy benefit, therefore obtaining value from that.

An example:Feature of an industrial machine: reliability, which means

available for more hours of the working day

( benefit for the buyer).



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Steps to develop a USP (2)

Rank the benefits according to their relative importance

to the customer

Group the benefits into standard ones, i.e. available to all

competitive products or the different and special (unique)

to your product/service)

If no anything special or different, you have to develop at least

one unique benefit ( IT IS ALL IN THE MIND = PERCEPTION)

Unique Selling Proposition (USP) (continued)



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Packaging needs market adaptation (advisable to

include the trade partner in the packaging adaptation

decisions)

Packaging must be PRACTICAL, CONVENIENT andPROMOTIONAL engineering, design, graphics,

distribution and marketing issues to be addressed over

packaging solutions for exports.

New packaging issues in developed markets:environmental concerns,

safety concerns

Product Packaging



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Product life cycle stage: Does the Companys product

fit in the current life cycle stage in the market?

Product profitability: Does the Companys margin justifythe Companys market entry efforts?

Product seasonality: Does the Companys timing of the

Companys product launch match seasonal demand, or

is there a possibility for counter season offering?

Critical Success Factors:


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EXPORT MARKETING STRATEGY: BRANDING

Operating in a foreign market under the Companys own BRAND

NAME requires SUBSTANTIAL INVESTMENTS.

Only advisable if,

It will lead to higher revenues,

It will create binding and stimulate repeat purchases

the Companys own brand and company image is appreciated

by the trade

Done in STEP-WISE, GRADUAL APPROACH

Alternatives to own branding that can be considered:

Operate under partners companies own brand name orprivate label

Make product according to the buyers specifications (with or

without licensing agreement)

EXPORT MARKETING STRATEGY BRANDING


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THE

BASIS

(Product/

Service)

THE

IDENTIFIER/

RELATOR

(Name/

Logo)

THE

NARRATOR

(The Message/Advertisement)

THE

PRESENTER

(Packaging)

Should be

matching to

each other

THE

PROXY OFVALUE

(The Price)

Copyright Rahim Jabbar/ @ 2010

EXPORT MARKETING STRATEGY: BRANDING

Identity system

Components of a Brand

EXPORT MARKETING STRATEGY: PRICING (1)


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EXPORT MARKETING STRATEGY: PRICING (1)

COST-PLUS PRICING.

The Companys production costs PLUS the PROFITthat needs to be made.

This strategy is used mostly in opportunity marketing.

The focus is more on selling instead of

sustainable long term marketing.

COMPETITIVE PRICING

With competitive pricing, the exporter establishes the

Companys MARKET PRICE by benchmarking with

competitors' prices and DIFFERENTIATE THROUGH

MARKETING MIX INCENTIVES.

The result should be a better price performance ratio

than the competitor average.

EXPORT MARKETING STRATEGY: PRICING(2)


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EXPORT MARKETING STRATEGY: PRICING(2)

PENETRATION PRICING

Penetration pricing is applying LOW MARGINS or even applymarginal costing (in case present sales cover the contribution to

overheads while the Company still has spare capacity to utilise)

and SELL AT THE LOWEST PRICE of all the Companys competitors.

The focus is on ENTRY and HIGH VOLUME.

A negative aspect

the product/company will also receive ALOW QUALITY IMAGE (or PRICE FIGHTER) which may hinder

upward marketing later on.

(PERCEIVED) VALUE PRICING.

Adopting VALUE PRICING is suitable when there is no competition(yet) or when the product is perceived as UNIQUE or SUPERIOR.

The VOLUME may be SMALL, the MARGINS are HIGH, which offers

the Company an opportunity to lower the price at a later stage

and increase volume.

EXTPORT MARKETING STRATEGY: DISTRIBUTION


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Basic questions to answer in formulating adistribution strategy:

What am I selling?

Who are my prospects/target consumers?

Where are they?

How can I reach them?

How does the distribution channel work?

What does it imply to sell through thischannel (trade margins)

How many channels should I use?



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Manufacturer

ClusterExport

Organization

Source: CBI, Export Planner, 2004

Importer

Buyer

Buyer

Agent

Retailer

CUSTOMER

Country or

Tariff

Border

E-commerce

Joint venture

Trade partner

LABYRINTH OF

INROADS



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SIMPLIFIED ENTRY STRUCTURE

Trader

Exporter

Country or

Tariff

Border

Agent

Trader

ImportingWholesalers

Distribution

(Outlets)

Customer

Source: CBI, Export Planner, 2004



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THE AGENT

An independent person or company who merelyintermediates (bringing exporter/seller and

importer/buyer together).

His services are paid (usually by the exporter) in the form of a

commission, which is a percentage of the (CIF) value

of the goods imported.

THE IMPORTER

An independent company, specialized in importing

a certain range of goods from abroad.

An importer buys directly from the exporter and thus

becomes the rightful owner of (or 'takes title' to) the goods.

In turn, he will try to sell the goods to wholesalers or, in the

case of professional goods, to customers.



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THE IMPORTING WHOLESALER

An importing wholesaler is a company that not only importsbut also operates facilities to forward the goods into the

distribution channels by means of promotional support.

THE BROKER

A broker is an independent person or company who,

somewhat like an the agent, brings together buyer and

seller and gets paid by the party who hired him.

The broker holds neither title, nor stock.

Occasionally, he can provide consultancy services, basedon his sector knowledge.



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THE TRADING HOUSE

A trading house is an independent company that

specializes in trading certain range(s) of goods.

A trading house or company buys and sells on its own

account and at its own risk.

It decides on its own export assortment.Trading houses usually have a strong commercial

acumen and professionalism.

Sometimes their after-sales performance, which is

necessary for most technical andprofessional products, is weak.

A trading company can be located in the Companys

own country or in the target country.

EXTPORT MARKETING STRATEGY: PROMOTION


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The AIDAS formula = the FIVE (5)

KEY GOALS of any effective

promotional mix:

GetAttention

Capture Interest

Create Desire, that

Leads toAction, and

Customer Satisfaction



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EXPORTERS/

TRADERS/

SUPPLIERS/

MANUFACTURERS

MESSAGES

ABOUTTHE EXPORT

PRODUCT &

COMPANY

A VARIETY OFCOMMUNICATION

MATERIALS

DISTRIBUTED& PUBLICISED

& BROADCASTED

RECEIVEDAND

INTERPRETED

PROSPECTS/

BUYERS IN

THE TARGET

MARKET

INLFUENCE

HIS/HER/THEIR

OPINION, ATTITUDE,

BEHAVIOR

RESPONSES

(among other BUYING

OR OTHERWISE)

FEED-

BACKS


THE CYCLE OFMARKETING

COMMUNICATION

Copyright Rahim Jabbar/ @ 2010



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PROMOTIONALACTIVITIES

PERSONAL

SELLING

SALES

PROMOTIONPUBLIC

RELATIONS

DIRECT MAIL

& E-MAIL

TRADE FAIRS

& EXHIBITION

ADVERTISING& WEBSITES

SPONSORSHIP

PROMOTIONAL MIX SHOULD BE DESIGNED SO AS TO MUTUALLY STRENGHTEN

ONE ANOTHER (EFFECTIVE PROMOTIONS).

ACTIVITIES WITH ASTERISKS (*/**/***) ARE SUITABLE FOR EXPORT MARKETING

***

**

*


EXTPORT MARKETING STRATEGY: TRADE PARTNER


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EXTPORT MARKETING STRATEGY: TRADE PARTNER

It takes considerable amount of TIME, ENERGY and

MONEY to establish a position in the complex in the

developed market as a target export destination

Exporter should find a trading partner that would

likely be having LONG-TERM PERSPECTIVE and NURTURE

MUTUALLY ADVANTAGEOUS RELATIONSHIP with the

buyer.


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Management Plan

EXPORT MANAGEMENT PLAN (1)


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ASSIGNING MANAGEMENT RESPONSIBILITIES

The Companys export venture should by no means

jeopardize the Companys domestic position.

Consider CRITICAL CONTROL POINTS and CONTINGENCY

PLANS in order to MANAGE THE RISKS of this

international adventure.




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ASSIGNING MANAGEMENT RESPONSIBILITIES

The followings whould be resolved

Who will be responsible?

How will operations be run?

Which systems will be in place?

How will the workload be divided?

How will your Company control EXPORT MARKETING

activities, or balance them and their claim on the

Companys capacities and resources with the

Companys DOMESTIC MARKETING EFFORTS?



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Exporting Action Plan

EXPORT ACTION PLAN (1)


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Action Plan Quarter 1 Quarter 2 Quarter 3 Quarter 4

Budget Year

1

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec in USD

1 Kick-off export venture

Establish Task force

Cultivate commitment at all levels

2 Establish learning organisation

Attract young marketing

professional 5000

Develop new systems and

procedures 2000

Implement skill enhancementprogramme 2100

3

Establish market information

system

Develop terms of reference and

benchmarks

Assign market research tasks

Research first priority markets 6000

Reseach second priority markets 3000

4

Establish product adaptation

system

Develop procedures between

marketing and production dept

Product adaptation and innovation 9000



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Budget Year

1


5

Implement process adaptation

programme

Cost saving programme

Environmental management

programme 4000

6 Direct Marketing Campaign

Collect prospect list 1000

Prepare one-on-one mailings in first

priority country

Run the mailing 1000

Follow-up 1000

Prepare one-on-one mailings in

second priority countries

Run the mailing

Follow-up

7 Upgrade website

Develop functional design

Subcontract the webdevelopment 2500

New website online



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Budget Year

1


8

Trade fair participation in first

priority countrySelect appropriate fair

Study exhibitors and identify

competitors and prospects 600

Make reservations

Prepare samples, documentation

and stand 3000

Arrange logistics

Arrange free publicity andadvertorials 1000

Prepare and send invitations 400

Participate 7000

Field research and follow-up visits 1500

Follow-up 1000

9

Introduce CRM as key management

toolCompare different software

packages

Purchase and implement CRM

system 2500

10

Performance monitoring and

evaluation


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Financial Forecasts

BUSINESS = MONEY-EARNING ACTIVITIES


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THAT REQUIRE MONEYMONEY MATTERS

BASIC QUESTIONS BUSINESS PEOPLE ASK THEMSELVES ABOUT

How much money am I bringing in?Sales revenues

How much am I spending?Expenses for activities

Is my business making any money?Revenues - Expenses

Whats the value of what my business owns?Assets

How much does my business owe to others?

LiabilitiesWhat is my business worth?Value of ownership(= Equity)

BASIC PROFIT EQUATION


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PROFIT PRICE VOLUME COSTS

= X -

CONSTRAINED BY

Market space

for the product

field in the TEM

CONSTRAINED BY

Competitive

environment

in the TEM

DRIVEN BY

Structure

Inputs

Process

Activities

IN EXPORT BUSINESS

In order to MAXIMIZE PROFIT, exporter should:Improve operational efficiency and effectiveness

Economize costs

Maximize volume of export sales gain more share

Optimize export price

SALES REVENUES ARE TO COVER VARIABLE


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VARIABLE

COSTS

CONTRIBUTION

MARGINS

TO COVER

FIXED COSTS+ OPERATIONAL

INCOME

SALES

REVENUES

CONVERTED

INTO LOCAL

CURRENCY

EXPORT

PRICE

VOLUME/

QUANTITY

OF GOODSEXPORTED

X

COSTS AND CONTRIBUTES TO FIXED COSTS

VARIABLE COSTS AND FIXED COSTS


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VARIABLE COSTS AND FIXED COSTS

EXAMPLES OF FIXED

COSTS

4000 PAYROLL

4100 RENT

4101 FIXED COSTS BLDNGS

4102 REPAIR/MAINTENANCE

4103 GAS,WATER.ELECTRIC

4104 SERVICE COSTS

4109 OCCUPANCY COSTS

4300 MILEAGE COMPENSAT

4319 AUTOMOBILE COSTS

4500 PROMOTION/ADVERTISE4520 TRAVEL/HOTELS

4522 MISCELL. TRAVEL

4530 REPRESENTATION

4532 DEBTOR NON-COLLECT

4599 SALES COSTS

4600 INTERESTS & COSTS

4603 INTEREST TAXES

4604 INTEREST DEPOSITS4700 ACCOUNTANTS

4710 CONSULTANCY

4715 STATIONERY

4720 TELECOM/MAIL

4725 MEMBERSHIPS/SUBSCR.

4735 COMPUTERS

4750 INSURANCES

4790 MISCELL. COSTS

VARIABLE COSTS are expenses that

change in proportion to the activity of abusiness (volume-related and are paid

per quantity produced).

Variable costs are sometimes called unit-

level costs as they vary with the number

of units produced.Direct labor and overhead are often called

conversion cost, while direct material and

direct labor are often referred to as prime

cost.

FIXED COSTS are business expenses thatare not dependent on the level of goods

or services produced by the business.

They tend to be time-related, such as

salaries or rents being paid per month.

CONTRIBUTION MARGINOPERATIONAL INCOME


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VARIABLE

COSTS

CONTRIBUTION

MARGINS

VARIABLE

COSTS OFEXPORT

GOODS

SOLD

VARIABLE

OPERATIONAL

COSTS

FIXED

OPERATIONAL

COSTS

OPERATIONAL

INCOME

BREAK-EVEN IS ACHIEVED WHEN CONTRIBUTION

MARGINS EQUAL FIXED COSTS

CASH IS KING, PROFIT IS THE QUEEN


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*)

77

THE

BUSINESS

FIRM

VENDORS BUYERS/

CUSTOMERS

Services/

Products

In

Services/

Products

Out

Expenses

torInputs

Sales

Revenues

MONEY INMONEY OUT

A PRUDENT BUSINESS ALWAYS STAYS ON TOP OF ITS CASH FLOW: EVEN A

PROFITABLE BUSINESS CAN GO BANKRUPT IF CASH IS NEGATIVE (UNABLE TO

REPAY MONEY OWED TO OTHERS, TO PAY FOR DAILY NEEDS,ETC.)

A FIRM SHOULD TRACK ITS CASH-FLOW

FINANCING

SOURCES

F

UN

D

S

*)Various counter-

flows depending

on the types

of relationship

THREE CATEGORIES OF CASH FLOWS


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THREE CATEGORIES OF CASH-FLOWS

1.OPERATIONAL CASH FLOWS: Cash received orexpended as a result of the company's internal business

activities. It includes cash earnings plus changes to

working capital. Over the medium term this must be net

positive if the company is to remain solvent.

2.INVESTMENT CASH FLOWS: Cash received from the sale

of long-life assets, or spent on capital expenditure

(investments, acquisitions and long-life assets).

3.FINANCING CASH FLOWS: Cash received from the issue

of debt and equity, or paid out as dividends, share

repurchases or debt repayments.

A FIRM SHOULD TRACK ITS CASH-FLOWS


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In US$ January February MarchOpening cash balance $ - $ 599.50 $ 449.50

Operating Cash Flow

.. List of all operating items

(+/-) $ (2,650.50) $ (500.00) $ 750.00

Investing Cash Flow.. List of all investing items

(+/-) $ (1,750.00) $ (650.00) $ -

Financing Cash Flow

.. List of all investing items

(+/-) $ 5,000.00 $ 1,000.00 $ -Total cash flow for the month $ 599.50 $ 449.50 $ 1,199.50

Closing cash balance $ 599.50 $ 449.50 $ 1,199.50

A FIRM SHOULD TRACK ITS CASH FLOWS

EVALUATION & REVIEW


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OBJECTIVES &

TARGETS

ACTUALBUSINESS

RESULTS

EVALUATION: CAUSAL FACTORS THATCONTRIBUTE TO THE SUCCESS OR ANY

DEVIATIONS FROM THE PLAN

ADAPT & REVISE THE PLAN BUSINESSACTIVITIES

A SUCCESSFUL EXPORT BUSINESS!!!

Export Marketing & Business Plan


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Summary

&

Conclusion

TEN STEPS TO ENSURE YOUR SUCCESSIN EXPORT BUSINESS


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IN EXPORT BUSINESS

ANALYSEMARKET

POTENTIALIN TARGET

MARKET

EVALUATE

YOURPRODUCTSPOTENTIAL

DETERMINETHE WAY TO

ENTERTHE TARGET

MARKET

DEVELOP

A STRONGDETERMI-NATION

APPLY THEMARKETING

STRATEGYEFFECTIVELY

ORGANIZETHE EXPORTING

OPERATIONALTEAM

DEVELOPA COMPETITIVE

MARKETINGSTRATEGY

IDENTIFYTECHNICAL

ANDADMINISTRATIVE

CHALLENGES

EVALUATEAND CONTROL

EXPORTINGBUSINESS

OPERATION

ALLOCATERESOURCESREQUIRED

CONTINUOUSLYREVIEW EACH ANDEVERY STEP OF

EXPORTING BUSINESSACTIVITIES AND

INTEGRATEALL ACTIVITIES

(1) (2) (3) (4)

(5)

(6)(7)(8)(9)

(10)


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83

THANK

YOU

REFERENCES


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REFERENCES

Capon, Noel and James M. Hulbert, Marketing Management

in the 21st Century, Prentice Hall, 2001

Davidson, Hugh, Even More Offensive Marketing, Penguin

Books, 1997

Hiam, Alexander and Charles D. Schewe, The Portable MBA

inMarketing, John Wiley & Sons, Inc., 1992Jabbar, Rahim, Approaches towards Segmentation,

Targeting & Positioning, 2002, (unpublished)

Laman Trip, Johan F., Export Planner, 5th Edition, Center for

the Promotion of Imports from Developing Countries, CBI, 2004

U.S. Small Business Administration, Breaking Into The Trade

Game: A Small Business Guide to Exporting, 3rd Edition, 2005

fundamentals of export business plan laos

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