Commerce department international trade

RICK: Hi, Ellen. What's up?

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.

RICK Cool.

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.

8) If your client asks you to nail down a date for a meeting, what do you need to do?

a. Give your client three or four possible dates for the meeting.

b. Choose a specific date for the meeting and notify your client.

c. Secure the calendar to the wall so it won't blow away when the window's open.

9) When does Ellen need the Food Forum work from Rick?

a. by 12:00 on Friday b. by noon on Monday c. a week from today

10) What is Rick's response to Ellen's request?

a. He's happy that Ellen has given him more time.

b. He says that he can't possibly complete the work by Friday.

c. He'd like more time but promises to finish by the deadline.
8.8 NETWORKING

TIFFANY Wow, what a long day!

ANTHONY No kidding. Are you getting ready to leave?

TIFFANY No. I’ve got some things to do.

ANTHONY Do you work late a lot?

TIFFANY Sometimes. But this isn't work.

ANTHONY What are you doing?

TIFFANY I'm writing a paper for a course I’m taking. I don’t have a computer at home.

ANTHONY Do they mind if you do that kind of work in the office?

TIFFANY Oh, no. As long as I do it on my own time, Ellen says it's fine. And I bring in my own paper to print it on.

ANTHONY Are you taking courses for fun, or working toward a degree?

TIFFANY: I’m working on an M.B.A. I'd like to open my own agency some day.

ANTHONY: Wow, that's impressive. You know, I took a couple of business courses and enjoyed them. I’d like to take more some day.

TIFFANY Why not start now? AdRad will pay tuition for work-related courses.

ANTHONY Even for a new employee?

TIFFANY Yeah, it's one of the benefits. Didn’t you read the manual? ANTHONY I just skimmed through it. I haven’t had much time recently.

TIFFANY Well, the courses are great and you meet a lot of interesting people that can help you in your career.

ANTHONY In a college class?

TIFFANY Sure. Actually, I heard about this job from one of my professors.

ANTHONY Seriously?

TIFFANY Really. A lot of the teachers are tied into local businesses. It's great for networking.

ANTHONY It wouldn't hurt me to meet some people.

TIFFANY And most of the students are professionals working to advance their skills. I've made lots of contacts in the advertising business through my classes.

ANTHONY Is the program hard to get into?

TIFFANY Yes, but I think if you've come this far in your career, you've probably got the credentials to be accepted.

ANTHONY Do you know who I should talk to about applying?

TIFFANY Why don't you come to class with me tomorrow night? I can introduce you to Professor Cassandra and show you around.

ANTHONY That would be great. Are you sure you don’t mind?

TIFFANY Not at all. Class starts at seven. We can leave from here and grab something to eat first.

ANTHONY Thanks, Tiffany. I'll see you tomorrow.

TIFFANY Good night.
QUESTIONS:

1 Tiffany and Anthony are talking in Tiffany's cube. What time is it?

a. It's probably about 5:00 p.m. because they're talking about going home.

b. It must be about noon since they're planning to get some lunch.

c. It seems to be early in the morning as they've just arrived at the office.

2) Why is Tiffany planning to stay at the office?

a. Tiffany needs to use the computer for some college work.

b. She wants to work late so that she can earn some extra money.

c. Tiffany is finishing Anthony's work for him.

) Why is Tiffany taking courses?

a. She wants to get an MBA degree and start her own business.

b. She takes courses for fun.

c. Ellen told Tiffany she has to take the courses.

) Where can you find information about the benefits your company offers?

a. in any newspaper b. in the employee manual c. in a college class

) If you want to meet and talk with people who can help you advance your career, how can you express this?

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.

1-6

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.

rehearsal

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.

Scope against price—that is the essence of the export contract. Let's look more closely at scope, price, and the 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.

1. 
   The cost of making the goods in the factory;
   
2. 
   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);
   
3. 
   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);
   
4. 
   A profit margin (high enough to make a fair profit but low enough to make the goods competitive in the intended market.)
   

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:

♦ 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