ELLEN Come on in, Rick. Would you mind closing the door?
RICK Sure. Why all the secrecy?
ELLEN No secrecy. I just don't want to be interrupted.
RICK Uhuh. Sounds like I'm going to get chewed out.
ELLEN Rick, can you be serious for five minutes?
RICK I’ll try, but you know me, Boss.
ELLEN You know that Miles has given notice? He's going to work for Cool Beans.
ELLEN Not cool at all. That's going to leave us scrambling to fill his position. RICK Just stuff a shirt and prop it up in the meeting room. That'll be fine. ELLEN Listen, Rick, I don't have time for fooling around.
RICK: OK, Ellen, I’m at your service. What do you need done?
ELLEN: I need you to wrap up your work on the Food Forum project.
RICK: No problem. I'll have it done in plenty of time.
ELLEN: Rick, we're already a week past deadline. I have to nail down a final date now. RICK: How about a week from today?
ELLEN: Not good enough. I have a meeting with Terrence Landis Monday morning.
RICK: Then when do you need it?
ELLEN: I'll need it by Friday noon in order to have time to get ready for the meeting.
RICK: Gee, Ellen, I don't know. That's kind of tight.
ELLEN: I know it is Rick, and I'd like to give you more time, but I’m up against the wall.
RICK: OK, Chief, you'll have it by noon on Friday.
ELLEN: Thanks, Rick.
RICK: As the wharf boss said in On the Waterfront, “Let’s go to work!”
Answer the following questions
) What does Rick think this meeting is about?
a. Rick thinks that perhaps Ellen is going to reprimand him.
b. He thinks maybe Ellen will offer him Miles's old job.
c. Rick thinks Ellen's angry at him for chewing gum.
) Why does Ellen ask Rick to close the door?
a. She doesn't want to be interrupted while she's talking to Rick.
b. She wants to yell at Rick and she doesn't want anyone else to hear her.
c. She wants to tell Rick secret.
) Suppose you are in a meeting, and your boss asks you to be serious for five minutes. What do you need to do?
a. Concentrate on the importance of the meeting.
b. Tell a few good jokes to help everyone lighten up.
c. Look at your watch and don't talk for exactly five minutes.
) Which is the best way to tell a colleague that you've resigned from your job?
a. "I'm going to get chewed out." b. "No secrecy." c. "I've given notice."
) How does Rick react to the news that Miles has given notice?
a. He doesn't believe the news b. He becomes very serious and expresses concern. c. He's not bothered at all.
6) What does Ellen actually want to discuss at this meeting with Rick?
a. Ellen wants Rick to schedule a meeting with Mi. Landis.
b. Ellen wants him to finish up the Food Forum project ASAP.
c. She's asking Rick to extend the deadline for the Food Forum project.
7) How does Ellen feel about Miles's resignation?
a. She's not bothered at all.
b. She thinks it's very cool that he's leaving.
c. She thinks it will be difficult to find someone to do his job.
a. "That's impressive." b. "I take courses just for fun." c. "I need to do some networking."
6) What do you know about Tiffany's work habits?
a. She always works late, including today. b. She never works late c. She sometimes works late
7) Why does Tiffany write her college papers at the office?
a. She doesn't want to buy paper for her printer at home.
b. Tiffany writes her papers when she's bored by the work at the office.
c. Tiffany doesn't have computer at home.
8) If a colleague asks you to skim through a report before a meeting, what do you need to do?
a. Count the pages in the report and sign it at the bottom.
b. Read every word and be prepared to discuss every detail.
c. Read the report quickly, looking for the main points.
9) How do you know that Tiffany has used networking as a way to help her career?
a. She says that she heard about her present job from college professor.
b. She says that she got this job through an employment agency.
c. She says that the only way to get a good job is by reading the newspaper ads.
10) Tiffany invites Anthony to go to class with hex tomorrow night. What are they going to do first?
a. They're going to order dinner from the comer restaurant to eat at the office.
b. Tiffany and Anthony are going to have a quick dinner.
c. They're going to go to a restaurant for a relaxed, seven-course meal.
CHAPTER 1: INTRODUCTION
Exporting and the Management of Risk 1. The Meeting of Minds
An exporter and a buyer negotiate together. At some point there is a "meeting of minds”: their discussion becomes an agreement - with important legal consequences for both sides. This is a dangerous moment for first-time exporters: they know their local market but exporting poses new problems in production, delivery and, above all, pricing. A hasty agreement can cause heavy losses.
THE PRINCIPLE: Once scope (the goods to be delivered) and price (the price to be paid) are agreed, the bare bones of a legally enforceable agreement are in place. Before reaching such agreement, the exporter must be sure that the goods can be delivered exactly as promised and that the price covers the full cost of exporting.
Một khi hàng hoá được chuyển giao và giá sẽ phải thanh toán được các bên thỏa thuận, thì các quy định trong hợp đồng sẽ trở nên có hiệu lực cuỡng chế. Trước khi ký kết hợp đồng, nhà xuất khẩu phải đảm bảo rằng hàng hoá được giao theo đúng như thỏa thuận và giá cả phải tính đến tất cả các chi phí liên quan đến xuất khẩu.
IN MORE DEPTH
Let us start with a company and a product. Office Enterprises makes office furniture: its main lines are desks and filing cabinets. The company is located in a country we can call Verbena, a small island republic, somewhere in the tropics. Office Enterprises was founded ten years ago by Alec Patel. So far, Patel has sold products only on the domestic market.
At a seminar in 1995, Patel meets Juliana Gomez, owner of Esperanza Trading. Esperanza Trading is an import-export company located in Esperanza, a developing country, also in the tropics. Gomez sees a potential market for Patel's office furniture in Esperanza. A negotiation begins. The two negotiators quickly reach an agreement, a ''meeting of minds" as lawyers call it: Office Enterprises will supply 30 leather-covered executive chairs for which Esperanza Trading will pay $9.000.1 "Everything else," they say, "we can agree when the time comes.”
This agreement, although nothing is in writing and no details have been worked out, is a contract: each side has commitments to the other—both have rights, and both have duties. What are these rights and duties? Office Enterprises has the duty to deliver the chairs and the right to collect payment. Esperanza Trading's situation is exactly complementary: it has the right to receive the chairs and the duty to pay for them. In contract language, the scope of the contract is 30 chairs, and the price is $9.000.
Scope against price—that is the essence of the export contract. Let's look more closely at scope, price, and the associated risks.
SCOPE PRICE Let’s look more closely at scope, price, and associated risks.
First, scope: the product. An exportable product will normally be mature, in other words, the manufacturer should have experience in making the product and enough production capacity in coping with the size of the order, quality assurance problems should already be solved.
Closely related to scope is Delivery. The exporter must have access to safe and timely means of delivery: for example, the export of cut flowers will certainly lose money unless the grower is certain of regular and reliable air shipment. Unfortunately, exporters sometimes contract to supply goods but fail to think about the problems of delivering their goods until after the contract is signed. By then it is too late: a bad name in the trade or an expensive lawsuit are the common results of this lack of foresight.
1 : Most of the deals in this book are denominated in Verbena dollars (V$). This imaginary has no steady value and is liable to float from chapter to chapter.
And finally price. Does the contract price cover the exporter’s costs and leave a reasonable profit margin. Answering this question calls for careful and knowledgeable pricing. There are two pricing models are worth mentioning: the free market and the loaded market model. First the “free-market” approach.
An appropriate portion of the overhead costs of the factory (e.g.,if the export deal is worth 2% of annual sales, the export price should include roughly 2% of annual overhead costs);
The extra costs associated with exporting (e.g., the cost of international faxes and telephone calls, additional freight costs, the administrative cost of preparing the full export documentation, the cost of waiting perhaps ninety days for payment rather than the usual thirty, and so on);
A profit margin (high enough to make a fair profit but low enough to make the goods competitive in the intended market.)
The resulting price is a fair reflection of the manufacturer's costs, plus a reasonable expectation of profit. Charging a lower price immediately erodes profit, the erosion that quickly leads to losses.
Verbena Fan is a successful producer in the domestic market. It is looking for new markets and sees good potential sales in Esperanza.
The wholesale price of the product is $3 cheaper in Verbena than the wholesale price of a comparable product in Esperanza. Negotiations with an importer in Esperanza begin. To secure the business, Verbena Fan quotes an attractive price of $22. The contract is signed.
Wholesale price of fan in Verbena
Wholesale price of similar product in Esperanza
Export price low enough to beat competition in Esperanza
The Learning Process
During manufacture and shipping, additional costs continually arise. When payment is later than expected, Verbena Fan must borrow from the bank, further increasing costs Warranty claims are more expensive internationally than they are locally—more costs
When the extra costs of export production emerge, the real wnole sale price is higher.
After warranty claims are met, the true wholesale price emerges.
An expected profit of up to $2 per fan turns into a actual loss of $4
Loss per fan
The Anatomy of an Export Loss
The arithmetic of exporting is often sobering: the manufacturer’s export price is likely to be appreciably higher than the price he charges locally- and it may well be more than any buyer is prepared to pay. But why? What are the extra costs that drive export prices uneconomically high? These costs fall into three categories:
♦ Direct additional costs;
♦ Intangible management costs;
♦ The cost of capital.
Direct Additional Costs
Some additional costs are easily identified. Some examples: international telephone calls are clearly more expensive than local ones; costly foreign travel is neces'sary for face-to-face negotiation; packaging must often be upgraded to withstand a sea journey or rough handling. Extremely important are the extra costs of meeting warranty claims: a warranty repair that costs a few dollars to make in Verbena will cost far more when the full international costs are added in.2
Intangible Management Costs
Other costs are less tangible: for example, misunderstandings can arise if foreign languages are involved; management time must be invested in completing export formalities: obtaining the certificate of origin or the export license, negotiating the transport contract, collecting a letter of credit—all are time-consuming activities.
Chi phí quản lý vô hình
Có những chi phí khác rất khó nhìn thấy: ví dụ, hợp đồng viết bằng ngoại ngữ, nếu nhà xuất khẩu hiểu sai có thể dẫn đến bồi thường; bộ phận quản lý phải mất nhiều thời gian để lo thủ tục chứng từ xuất khẩu như chứng thư xuất xứ hoặc giấy phép xuất khẩu, rồi phải đàm phán hợp đồng vận chuyển, mở tín dụng thư - tất cả đều cần đến nhiều người tham gia và công ty phải mất tiền để trả lương cho họ.