DISCUSSION QUESTIONS
8-1. What is the difference between export marketing and export selling?
Export selling basically presents an extension strategy whereby products are offered for
sale outside the home country without adaptation. The mindset of export selling is,
8-2. Describe the stages a company typically goes through as it learns about exporting.
The chapter outlines seven stages:
1. The firm is unwilling to export.
2. The firm fills unsolicited export orders but does not pursue unsolicited orders.
8-3. Governments often pursue policies that promote exports while limiting imports. What are
some of those policies?
First and foremost, governments can impose duties on imports. In addition, most
governments utilize nontariff trade barriers that serve as deterrents or obstacles to imports
8-4. What are the various types of duties that export marketers should be aware of?
Ad valorem duties are expressed as a percentage of the customs value of particular goods.
Specific duties are expressed as a specific amount (in the importing country’s currency)
unfairly low prices. Pasta makers in Italy and Turkey were assessed antidumping duties
8-5. How did the current economic crisis affect financing for global trade?
The global financial crisis undermined the ability of firms of all sizes to get the financing
8-6. What is the difference between an L/C and other forms of export-import financing? Why do
sellers often require letters of credit in international transactions?
A letter of credit constitutes an agreement whereby an importer’s bank assumes the
obligation of payment on behalf of the importer. The seller is assured of payment because
CASES
Case 8-1: Increasing U.S. Exports
Overview: As 2014 came to an end, it was clear that U.S. President Barack Obama’s goal of
doubling America’s exports by 2015 would not be realized. Weak global demand for
manufactured goods and a strong U.S. dollar were holding back exports.
Nearly 85 percent of the goods and services produced in the United States are consumed at
home. In his 2010 State of the Union address, U.S. President Barack Obama vowed to double
U.S. exports by 2015; doing so will require boosting exports 15 percent annually (see Exhibit
8-1).
To this end, President Obama created a National Export Initiative (NEI) and established the
President’s Export Council. Boeing CEO James McNerney currently heads the Council. As
President Obama noted, “The more American companies export, the more they produce. And the
more they produce, the more people they hire—and that means more jobs.
According to the SBA, Colombia, South Korea, and Panama account for about $ 16 billion in
annual exports for small businesses. The recent ratification of FTAs with these three countries is
expected to give exports a boost.
The Obama administration has begun negotiations with 47 countries with the goal of creating a
global FTA in services.
Discussion Questions
8-7. What is key critical thinking issue raised in this case?
If there is apathy among U.S. business owners, how can the government ‘force’ them to
8-8. Assess the prospects for achieving President Obama’s goal of doubling U.S. exports by
2015.
Obama has set a goal that he may not be able to reach. U.S. business owners that do not
export at this time cannot be included in this analysis. Existing exporters will need to
8-9. Why is it the case that many small business owners in the United States traditionally gave
little thought to exporting?
One is the limited ambition exhibited by many American business owners; this may
result in complacency and a lack of export consciousness. A second barrier is lack of
knowledge of market opportunities abroad or misperceptions about those markets. The
8-10. What would you do to increase tourist visits to the United States?
8.11. Greece and Egypt have also experienced declines in tourism recently. What are some of
the reasons for the decline?
Case 8-2: Asian Shoe Exports to Europe
Overview: Europe is famous as a source for fine leather goods such as handbags and shoes. Each
year, consumers in Europe buy 2.5 billion pairs of shoes. Shoes from China currently account for
about one-third of the market; since 2001, when China joined the WTO, Chinese imports have
increased tenfold. Imports from Vietnam have doubled in the same period (see Exhibit 8-1). The
flood of shoe imports from China and Vietnam has been a boon for European retailers and value-
conscious consumers. Officially, the EU tariffs on Chinese and Vietnamese shoe imports are
known as antidumping duties. In general, such tariffs reflect a finding that products are being
sold in export markets for less than the selling price in the exporter’s home country. In other
words, as explained in the chapter, they are being “dumped.” In economic terms, China and
Vietnam—both ruled by Communist governments—are considered “nonmarket economies.”
From the EU’s point of view, this means that the two countries’ domestic prices are artificial. In
such countries, where many enterprises are state-owned, profitability in the Western sense is less
of a priority than job creation. To prove dumping, investigators have only to compare the cost of
the imported shoes with the prices of shoes produced in true market economies where the laws of
supply and demand determine costs and prices. In such a comparison, the Chinese and
Vietnamese appear to have a significant price advantage.
8.12. When tariffs are imposed on European imports of shoes from China and Vietnam, who
stands to gain? Who stands to lose?
Gainers include China and Vietnam and other low cost producing economies and
8.13. European policymakers object to the fact that some Asian shoe production is government
subsidized. But as, an editorial in the Financial Times noted, “If Beijing and Hanoi want
to subsidize European consumers to build their shoe collections, let them.” Do you
agree?
Student answers will vary depending upon how they feel about low cost consumer goods
8.14. Antidumping duties can be described as a form of protectionism. As the global economic
crisis deepened in 2008 and 2009, many countries began implementing protectionist
policies. Was this a positive trend, or were such policies likely to prolong the recession?
Increased tariffs lead to higher retail prices which in turn can decreases consumer