Export Management | Management Optional Notes for UPSC PDF Download

Concept of export management

The global prevalence of export businesses has surged in recent times, propelled by the rapid pace of globalization. Exportation involves the lawful exchange of goods and services between nations for trade purposes. Domestic producers supply export goods to international end-users, and export management plays a pivotal role in overseeing these transactions. It encompasses the managerial processes associated with export activities, fostering harmonization and integration within the export business. 

Export management focuses on handling export orders, striving to meet objectives efficiently and punctually in accordance with the requirements stipulated by overseas buyers. Its primary goal is to secure export orders and ensure the timely delivery of goods, adhering to mutually agreed-upon quality standards, specifications, and terms and conditions between the exporter and the importer.

The nature of export management

The evaluation of export management can be based on its functional aspects related to exports and the administrative procedures integral to managing exports.

Categorization of Export

Types of Exports:

1. Merchandise Exports: Exporting physical goods like clothes, machines, furniture, and artwork.
2. Service Exports: Sending out services that aren't physical, such as software, architectural, entertainment, or technical consultancy services.
3. Project Exports: Developing a project in another country, following a detailed plan to achieve specific goals within a set timeframe.
4. Deemed Exports: When goods made in India are supplied to recipients within the country. This category is introduced by the Export Import Policy of the Government of India.

Explanation in Simple Terms:

• Merchandise Exports: Sending physical stuff like clothes and machinery to other countries.
• Service Exports: Offering services like software or technical advice to clients abroad.
• Project Exports: Working on projects overseas, following a plan to achieve goals within a timeframe.
• Deemed Exports: When goods made in India are sold within the country to specific recipients, as outlined by Indian government policies.
  

Examples of Deemed Exports:

• Supplying goods against duty-free licenses.
• Providing goods for projects funded by international agencies or the Indian government.
• Selling goods to industries like power, oil, gas, and refineries within India.

Export marketing planning process

Function of Export Manager

1. Essential for International Orders: Export managers play a crucial role in handling business for international orders.
2. Competency Requirement: They need to be skilled and capable of managing export operations effectively.
3. Challenges with Conventional Structures: Traditional management structures like purchases, marketing, finance, etc., may not ensure efficiency in export management across all stages of the export process.
4. Importance of Export Managers: Export managers are necessary to ensure smooth operations in export businesses.
5. Key Responsibilities:
   • Synchronizing and integrating export transactions within existing management structures and external agencies.
   • Ensuring timely delivery of goods according to purchaser specifications.
   • Being accountable for completing orders on time, within budget, and meeting technical requirements.
   • Providing guidance to connect different departments involved in the export order.
6. Required Skills and Knowledge:
   • Export planning, financial management, and inventory management.
   • Merchandising, risk management, foreign exchange operations, and negotiation with banks.
   • Understanding of information systems, communication, personnel management, and industrial relations.
   • Coordination and control skills.
7. Authority Delegation: The efficiency of an export manager depends on the level of authority delegated by senior management.

Process of Export Management

1. Planning for Export Business:

   • Before venturing into the export business, it's essential to create a comprehensive plan.
   • This plan should outline strategies to secure export orders, considering target markets, potential customers, and competitive advantages.

2. Order Confirmation and Organization Structure:

   • Once an export order is confirmed with a customer, establishing a robust organizational structure is crucial.
   • This involves forming a team of skilled and competent personnel to carry out the various tasks involved in fulfilling the export order.

3. Role of the Export Manager:

   • The Export Manager plays a pivotal role in overseeing all operations related to the export order.
   • Their responsibilities include managing the team, coordinating tasks, and ensuring the timely execution of the export order.

4. Managerial Tasks:

   • Communication with Importers: Maintaining effective communication with the importer is vital for clarity and smooth coordination.
   • Order Implementation Plans: Formulating detailed plans for the execution of the export order, considering timelines and resources.
   • Issuing Executive Instructions: Providing clear instructions to export employees on their roles and responsibilities.

5. Information Flow and Monitoring Progress:

   • Establishing an information system to facilitate continuous updates on the progress of the export order.
   • Monitoring tasks to ensure they are performed according to the prescribed schedules.

6. Evaluation and Corrective Measures:

   • If the progress of the export order is not satisfactory or tasks are not meeting deadlines, the export manager evaluates the variances.
   • Taking suitable corrective measures to address issues and ensure the order stays on track.

7. Reporting to Top Management:

   • Regularly submitting progress reports to the top management keeps them informed about the status of the export order.
   • This reporting ensures transparency and allows for any necessary adjustments in strategy.
8. Major Functions of Export Manager:
   • Procuring export orders.
   • Planning the execution of export orders.
   • Providing direction for exports.
   • Overseeing the execution of export orders.
   • Maintaining communication with importers.
   • Evaluating and reprogramming orders when necessary.
   • Reporting on the progress of export order execution.

Development of Export Strategies

Market Analysis and Entry Methods:

1. Indirect Entry Methods:
   • Require less marketing investment but offer less control over marketing.
   • Examples include:
     • Using local agents or representatives.
     • Hiring Manufacturer's Representatives or Sales Agents.
     • Partnering with Foreign Distributors/Importers.
     • Collaborating with Overseas Retailers.
2. Direct Exporting:
   • Involves establishing an export department within the company.
   • Allows direct access to foreign customers and more control over export strategies.
   • Can establish relationships with foreign markets and buyers.
   • May utilize an export manager for global markets.
3. Export Management Company (EMC):
   • Acts as an off-site export sales department.
   • Conducts market research and develops marketing strategies.
   • Identifies foreign distributors or sales representatives.
   • Operates on a commission basis.
4. Export Trading Company (ETC):
   • Similar to EMC but more likely to take title to the product and pay directly.
   • Can also function as an export department.
   • Less responsibility toward the supplier.
5. Licensing and Franchise Agreements:
   • Licensing allows rapid entry into foreign markets and reduces capital requirements.
   • Franchise agreements give more control over marketing.
6. Contract Manufacturing:
   • Involves agreements with foreign manufacturers to produce company products locally.
   • Simplifies foreign market entry when the manufacturer already produces the product domestically.

Benefits of Exporting

1. Possession of International Experience:
   • Exporting provides firms with specific international experience.
   • It allows exporters to possess unique assets and capabilities, enabling them to offer distinctive or low-cost products within the value chain.
2. Ownership Advantage:
   • Having a unique product or cost advantage is a key benefit for entering foreign markets.
   • Companies with lower ownership advantage may hesitate to expand globally.
3. Low Risk Entry Model:
   • Companies with both international experience and ownership advantage can enter foreign markets with low-risk models.
   • This allows for strategic market expansion with minimized risk.
4. Lower Investment Requirement:
   • Exporting goods typically requires lower investment compared to other international trade methods.
   • This makes it a more accessible option for companies looking to expand globally.
5. Operational Control in Exporting:
   • Managers have operational control over the export of goods.
   • However, they may not have full control over all marketing activities of the company in the foreign market.
6. Consumer Distance and Intermediaries:
   • Exported goods reach consumers who are geographically distant from the exporter.
   • Various intermediaries are involved in managing risks associated with the export process.

Problems and issues in export management

• Language Barriers: Difficulty in communication due to language differences poses a challenge in export management.
• High Risk: Foreign trade involves high risk, especially in transportation by sea or air, where environmental threats can damage products.
• Government Control: International trade is often under governmental control, requiring licenses for operations.
• Legal Differences: Varied laws in different countries create challenges for export managers.
• Payment Difficulties: Challenges in payment processing can hinder smooth export management.
• Custom Duties: Imposed custom duties add to the complexity of export management.
• Lack of Information: Difficulty arises when there's a lack of smooth information flow in export management.

Other Challenges in Export Management:

• Evil Effects of Foreign Trade: Negative impacts on economies due to foreign trade activities.
• Economic Dependence: Dependence on other countries for raw materials can be a disadvantage.
• Disadvantage for Agriculture Countries: Agricultural countries may face challenges in export management due to slower production and managerial issues.
• International Rivalry: Developed nations often benefit more from export business compared to developing countries.

Suggested Solutions:

• Language Proficiency: Traders should be familiar with various languages for effective communication.
• Exchange Rate Knowledge: Export managers must be aware of exchange rates for better financial management.
• Modernization of Processes: Modernizing foreign trade processes and standardizing products can enhance export management.
• Addressing Disadvantages: Tackling issues like financial management, technological advancements, and meeting customer demand can mitigate export disadvantages.
• Enhanced Communication Technology: Improved communication technology enables clearer transactions between customers and suppliers in real-time.

Summary of Export Management

• Exporting is a common way for manufacturers to expand into foreign markets.
• Success in export management requires enthusiastic, honest, and positive support from all functional managers.
• Good export management ensures completion of export orders within the allocated time and budget.