Questions
14-1. Analyze two challenges that SpinCent overcame in developing its export activity. Describe
how it overcame them.
14-2. Based on its Asian experiences, map a sequence to guide SpinCent’s export expansion to
sub-Saharan Africa.
TEACHING TIPS: A good source of additional information on exporting is www.export.gov.
Students can find an abundance of resources useful to the practical aspects of exporting, and
the availability of governmental help to exporters at this site. Review the PowerPoint slides
for Chapter Fourteen and select those you find most useful for enhancing your lecture and
class discussion. For additional visual summaries of key chapter points, also review the
figures and tables in the text.
CLOSING CASE:
The Borderfree Option: Going Global—Simplified
Electronic commerce is changing the way companies around the world do business. The Internet
has opened up a whole new era of business opportunities, making virtual information, on any
product from virtually any market accessible readily and inexpensively. Now, opening a website,
whether you like it or not, means you are global.
Consumers from anywhere and everywhere can go to your website and, when there, do business.
Done well, enterprising companies can leverage cross-border e-commerce into
powerful international expansion. Done poorly, a retailer wastes energy, effort, and equity.
Founded in 1999, Borderfree is headquartered in New York City. It has offices in Dublin,
London, Tel Aviv, Toronto, and Shanghai. From these, Borderfree helps more than 200 retailers
—such as Neiman Marcus, Lands’ End, and Harrods—conduct cross-border online sales in more
than 220 countries that are transacted in 74 currencies. Borderfree, by linking customers and
companies through tap-web and mobile platforms, helps consumers worldwide shop across
geographies and devices while enabling companies to leverage their brand, inventory, and
expertise. In 2014, Borderfree generated more than $125 million in revenue. It is paid by its
clients based on a percentage of sales, generally up to 12 percent, that take place on Borderfree’s
platform.
Questions
14-3. Explain what Borderfree does. Why would an SME find that appealing?
14-4. What mix of ownership, location, and internalization advantages would encourage a
company to hire Borderfree?
14-5. Borderfree’s clients expect it to be knowledgeable about the key markets in which they
operate and to be able to advise on how to prioritize, budget, and compete. How does Borderfree
make that happen?
14-6. Borderfree promises to help its partners drive international growth. What sorts of
marketing and sales techniques help it do so?
7, Learning Outcome: Differentiate the resources and assistance that help international
traders, AACSB: Analytical thinking.)
14-7. Do you think most international trade might eventually take place through intermediaries
like Borderfree.com? Does that influence your interest in importing and exporting?
ADDITIONAL EXERCISES: Export and Import Strategies
Exercise 14.1. Research has shown that although the largest firms in the world also tend to
be the world’s largest exporters, export intensity is not positively correlated with the size of a
firm. Begin a discussion by asking students to explore the reasons for this. Then, ask
students to discuss the levels of export intensity they would expect to find with respect to a
variety of industries. Be sure they explain their reasoning and compare differences across
industries. (LO: 1, Learning Outcome: To introduce the idea exporting and profile its
elements, AACSB: Analytical Skills.)
Exercise 14.2. A major barrier to international trade activities is the issue of trust. Even
when importers and exporters are known to each other, there is a high degree of risk
associated with international trade transactions, i.e., exporters want to be sure they’ll be paid
and importers want to be sure they receive the full value of an order. Ask students to discuss
the reasons letters of credit and the various forms of a draft help both importers and
exporters overcome this challenge. Under what conditions might each instrument be
preferred? (LO: 3, Learning Outcome: To identify the problems and pitfalls that challenge
international traders, AACSB: Dynamics of the Global Economy.)
Exercise 14.3. Ask each student (or team of students) to choose a product to import to the
United States from a foreign country market. Are there regulations regarding their chosen
product that they would have to be aware of before importing? Have them look up the tariff
for the product. Tariffs can be found on the United States International Trade Commission
Web site (www.usitc.gov). (LO: 2, Learning Outcome: To introduce the idea of importing
and its elements, AACSB: Dynamics of the Global Economy.)