fundamentals of export business plan major points

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FUNDAMENTAL OF EXPORT

BUSINESS PLAN

Presented by

Rahim Jabbar

November 2010

1



• An Overview of Export Business

• The Outline

• Detailed Explanation– Introduction

– Current Market Position

– Market & Industry Trend

– Export Audit

– Market Assumptions

– Export Objectives

– Export Marketing Strategic Plan– Export Management Plan

– Action Plan

– Financial Forecasts

•Summary & Conclusion

Points of Discussion

FUNDAMENTAL OF EXPORT BUSINESS PLAN

2



3

AN OVERVIEW OF

EXPORT BUSINESS



AN OVERVIEW OF EXPORT BUSINESS ACTIVITIES

EXPORTPRODUCT

EXPORTMARKET

EXPORTER

•Internal company analysis (Strength & Weaknesses)•S/W/O/T analysis strategic decisions

•Objectives & Targets

Export Market Audit (Opportunities/Threats)

PRODUCT MARKET

COMBINATION (PMC)

EXPORT MARKETING STRATEGY(EMS)

What is needed tosuccessfully sellthe export product?

EXPORT MARKETING PLAN:•Market segment

•Product•Identity•Price

•Distribution•Promotion

•Trading Partner

How to enter theselected exportmarket successfully?

EXPORTBUSINESS PLAN

(INCLUDINGFINANCIAL PLAN

& SCHEDULE

EXPORT INGACTIVITIES

FEED-BACKS

4



FIRST STEPS TO BUILDING

AN EXPORT BUSINESS PLAN

• PLAN, but more importanty, IMPLEMENT it!

• Be ready to CHANGE as you LEARN and GROW

• Ensure Management and Staff COMMITMENT

•What do you wish to achieve? (Goals &

targets)

•

Capabilities?•Restrictions?

•Seek AGREEMENT on all aspects of the Plan

5



KEEP THE PLAN SIMPLE AND FLEXIBLE

• An Export Busines Plan should be SIMPLE and FLEXIBLE

•Some market information and planning elements

may not be available at the time of drawing up an

initial export plan•The export plan will generate more information

and understanding as your Company learns more

about exporting and your Company’s

competitive position improves in the Global

market place.

6



7

A GENERAL FORMAT



8

EXPORT MARKETING & BUSINESS PLAN (1)

1. Introduction, Mission and Business Principles

2. Current Market Position

3. Market & Industry Trend

4. Export Audit4.1 Market Audit

4.2. Competitive Audit

4.3. Company Audit

4.4. S/W/O/T Conclusion



9


6. Export Objectives

7. Export Marketing Strategy7.1. Strategy Summary

7.2. Market & Segment(s)

7.3. Positioning Strategy

7.4. Product Strategy7.5. Branding Strategy

7.6. Pricing Strategy

7.7.Distribution Strategy

7.8. Promotional Strategy

7.9. Trade Partner Strategy

5. Assumptions about the Target Export Market



10


8. Management Plan

9. Action Plan

10. Financial Forecasts

11. Periodic Review & Evaluation



11

DETAILED

EXPLANATION



12

INTRODUCTION, MISSION AND BUSINESS PRINCIPLES (1)

The first thing put things and principles into

perspective

•an introduction a sense of location

•who you are, what the company is, what it does

(business concept),

•a short historic track record

•a brief statement on your current position and

performance

•the markets that are currently covered



13

INTRODUCTION, MISSION AND BUSINESS PRINCIPLES (2)

The first thing put things and principles into perspective:

•a brief description on the set of basic thinking & ideas that

form the basis for the future of your Company’s business

the sense of direction

•the company's mission statement (the company’s

charter)

•

where your Company wants to be (the Company’s goal) •how your Company wants to get there (the Company’s

strategy)



14

CURRENT MARKET POSITION (1)

•

The CURRENT SITUATION/CONDITION is the STARTING POINT forTHE FUTURE international market expansion

•As a preparation for compliance to market access requirements

adaptations in the production, marketing and logistics processes

may require investments.

•An x-ray of the Company’s current market position

to identify the gap to be closed between the current market

position and desired market position

to clarify to what extent the organization has optimized the

opportunities in the current markets.



15


•PRODUCT:•What products does the Company sell?

•What is their market position?

•

What competitive alternatives are available in themarket?

•PLACE:•What is the Company’s current market coverage?

•

Which distribution channels does the Companyuse?

•How does this relate to the competition?



16


•

PRICE:•What is the Company’s pricing policy?

•To what extent does the Company apply different

pricing from the competition?

•How does the Company apply pricing flexibility in

order to promote sales (e.g. discounts, quantity

offers, contractual tenders etc.)?

•PROMOTION:•Describe the promotional tools you employ, i.e. the

Company’s promotional mix (trade fairparticipation, advertising, Direct Marketing, e-

Marketing etc.).



17


•PEOPLE:

•Describe the company's policy towards social

accountability, in terms of occupational health and

safety for the workers, and to society as a whole.

•PLANET:

•Elaborate on the Company’s company's environmental

awareness, eco-mindedness and the Company’s

position on environmental management



18

MARKET & INDUSTRY TREND (1)

Description of important developments - past, present and

future - in the Company’s current and potential markets, at two

levels:

•first, describe the international and target market trends

you can identify for the Company’s industry in generic

terms;

•second, go one level deeper and zoom in on trends you've

identified in pre-selected markets with high potential

(priority countries) to be singled out as the MOST

POTENTIAL ONE based on RELEVANT MARKET SIZE and

FAVORABLE IMPORT GROWTH, and potentially WINNABLE)



19

MARKET & INDUSTRY TREND (2)

Consider important variables:

•economic, political and technological developments

•favorable trade relations

•historical, cultural or geographic characteristics

•affinity and proximity

•market characteristics

•supply chain characteristics

•

competitor activity•market access regulations

•fashion, innovation, and consumer preferences



20

EXPORT AUDIT: TARGET EXPORT MARKET AUDIT

Major aspects/

dimensionsOPPORTUNITES THREATS

Social-cultural

Technological

Economic

Political

Legal

Environmental



21

EXPORT AUDIT: COMPETITIVE AUDIT (1)

THREAT OF SUBSTITUTE PRODUCTS

The availability of close substitute products will increase the

propensity of customers to switch to alternatives in response

to price increases (high elasticity of demand).

Factors that determine the threat of substitute products:

•buyer propensity to substitute

•

relative price performance of substitutes•buyer switching costs

•perceived level of product differentiation

( )



22


THREAT OF ENTRY OF NEW COMPETITOR

Factors that determine the threat of entry of newcompetitors:

•the presence of entry barriers

•economies of product differences

•brand equity

•switching costs or sunk costs

•capital requirements

•access to distribution

•absolute cost advantages

•learning curve advantages

•expected retaliation by incumbents

•government policies

( )



23


THE INTENSITY OF COMPETITIVE RIVALRY

Factors that determine the intensity of competitive rivalry:

•number of competitors

•industry growth rate

•intermittent industry overcapacity

•diversity of competitors

•level of advertising expenses

•economies of scale



24

EXPORT AUDIT: COMPANY AUDIT

Major aspects/

dimensionsSTRENGTHS WEAKNESSES

Men

Money

Means

Methods

Machines

Measurable

EXPORT AUDIT COMPANY AUDIT



25

Strengths Weaknesses

Men

Loyal workforce Skilled technicians

Good account managers

Limited English language skills Limited international marketing

experience

Routine oriented

Ageing workforce

Methods Management by objectives

Responsibility and

accountability accepted bymanagement

Responsibility and

accountability accepted by

management

Continuous job rotation

Professional marketing

department

No professional market information

system

Time availability Dominant product drive

Dominant financial control

Low insight in industry benchmarks

No ISO 9001:2008

No ISO 14000 compliance yet

R&D department


(An Example)

EXPORT AUDIT COMPANY AUDIT



26

Strengths Weaknesses

Means

Sound cash flow Good bank relation

Limited budget for brand building No funds for international market research

Limited budget for process and product

adaptation

Machines Up-to-date production

equipment

Packing station

Preventive maintenancesystem

Limited flexibility

Energy consumption inefficient

Foreign maintenance dependability

Spare part lead time Low degree of computerised

manufacturing

Measurables High customer satisfaction

Specific product specification

Sales growth

Sustainable profitability

Successful product launches

Growing customer base

High production efficiency

Spare capacity

Energy bills/costs

Rejection rate

Shipping costs

Average stock level too high

Occupational hazards and injury incidence

Employee absentee rate


(An Example)



27

EXPORT AUDIT: S/W/O/T CONCLUSION(1)

POSITIVEFACTORS TO

ACHIEVE

OBJECTIVES

NEGATIVEFACTORS TO

ACHIEVE

OBJECTIVES

EXTERNAL

FACTORS

OPPORTUNITIES THREATS

INTERNAL

FACTORS STRENGTHS WEAKNESSES



28

EXPORT AUDIT: S/W/O/T CONCLUSION (2)

•The main challenges:

•addressing the WEAKNESSES STRENGTHS (Company’s

strengths and weaknesses are CONTROLLABLE)

•optimizing the impact of the Company’s STRENGTHS to tap

identified market OPPORTUNITIES.

•OPPORTUNITIES and THREATS (UNCONTROLLABLE/given

market conditions) drivers for company adaptation and

improvement



29

EXPORT AUDIT: S/W/O/T CONCLUSION

•SWOT analysis completed final decision to export or

not (balance the strong points and opportunities against

the weak points and the threats)

•

Does the Company think the organization is STRONGENOUGH TO COPE with the extra challenge and workload

of the exporting venture?

•

If YES is ready for the Big Jumpthe next step will beto focus on the Company’s immediate and potential

competition. Get ready to take them on!!!



30

MARKET ASSUMPTIONS

SOCIAL-

CULTURAL

DYNAMICS

TECHNOLOGICAL

TRENDS

ECONOMIC

DYNAMICS &

TRENDS

ENVIRONMENTAL

CHANGES

LEGAL

ENVIRONMENT

POLITICAL

DYNAMICS

MARKET

DYNAMICS

COMPETITIVE

SITUATION

COMPANY’S EXPORTING ACTIVITIES:

•Marketing strategies

•Marketing activities

•Cash-flow

MARKET ASSUMPTIONS



31

•We expect the Japanese economy to recover as of

next year.

•We expect the distribution system to further

concentrate to industry captains and Large Scale Retail

buying groups.

•We assume a continuation of trade liberalisation.

•The product life cycle will be extended through

functional innovation, including packaging for small

households in the consumer market.

MARKET ASSUMPTIONS

(An Example)

MARKET ASSUMPTIONS



32

•The growing number of young consumers will create

a demand for new varieties and brands.

•We expect a solid domestic market development

ensuring sufficient cash flow for sustaining our export

venture.

•We assume that the exchange rate of the JapaneseYen in relation to the US dollar remains relatively

stable.

MARKET ASSUMPTIONS

(An Example-continued)



33

EXPORT OBJECTIVES: SMART

•SPECIFIC:the Company’s product(s) and market(s) should

be specified.

•MEASURABLE: the Company’s objectives should be

quantitative, expressed in terms of sales value, sales

growth, market share, number of customers etc.

•ACHIEVABLE: the Company’s objectives should be based

on the Company’s company's strengths and its critical

success factors (the internal potential) and market

opportunities (external potential).



34

EXPORT OBJECTIVES: SMART (2)

•REALISTIC:the Company’s objectives should be realistic in

the sense that the required investments remain in

proportion to expected gains.

•TIME-LED: set a specific period within which the

Company’s objectives are to be achieved. It is advisable to

formulate short-term, mid-term and long-term objectives.



35

Export Marketing

Strategy



36

EXPORT MARKETING STRATEGY: TARGET SEGMENT

Market Segmentation

Market SegmentA subgroup of people or organizations sharing one or

more characteristics that cause them to have

SIMILAR PRODUCT NEEDS in the export market

MarketPeople or organizations with

needs or wants and the ABILITY and WILLINGNESS TOBUY in the export market

Market SegmentationThe process of dividing a market into meaningful,

relatively SIMILAR, IDENTIFIABLE segments or groupsin the export market.



37

EXPORT MARKETING STRATEGY: TARGET SEGMENT

Different Basis of Segmentation

GEOGRAPHIC

SEGMENTATION•Regions

•Cities

•States

•Countries

DEMOGRAPHIC

SEGMENTATION•Age

•Gender

•Income

•Occupation

•Religion

•Social class

•Family size

PSYCHOGRAPHIC

SEGMENTATION•Lifestyles

•Personality

•Values

•Beliefs

BEHAVIORAL

SEGMENTATION•Occasion of usage

•Benefits sought

•Usage rate

•Loyalty status



EXPORT MARKETING STRATEGY: POSITIONING

38

•Positioning is about finding the “BEST POINT/PLACE IN THE

CONSUMER MIND IN THE MARKET” for the product/

service and the most appropriate for the target market. (It is

all in the consumer’s mind!)

•The process of developing a competitive position for a

brand starts with the segmentation of the market, followed

by targeting (selecting a particular segment) to whom a

product or a brand is to be positioned (=positioning).




39

•In order to explore competitive values to be

wrapped in the product or brand to be positioned,

we should analyze the target consumers (

CONSUMER INSIGHTS) and the competitors’

product/brands.( COMPETITORS MAPPING)




40

•“Class”

•Pride•Distinctive look

•Practical•Fuel Economy•Affordable

•Sporty•Fun•Young

•Conservative•Somewhat

older

•Mercedes•B.M.W.

•Toyota.

•Honda.•Mitsubishi

•Lexus


Competitive Mapping



41

Raw

Materials

AuxiliaryMaterials

COMBINED &

PROCESSEDPRODUCT

TO FULFILL

THE NEEDS &

SATISFY THE

WANTS OF

CONSUMERS/

CUSTOMERS

ME T H OD S /

T E C H N I Q U

E S

W O R K S

EXPORT MARKETING STRATEGY: PRODUCT

A Definition of Product



42


42

Functions

Usage

PRODUCTAttributes/

FeaturesBENEFITS VALUES

C

O

N

S

U

M

E

RS

Components of a Product



43

•Develop the product range in accordance with

•the CUSTOMER NEEDS and

•prevailing MARKET CONDITIONS

(competition and rules and regulations) in the

target markets.

•Can you use the Company’s existing product

assortment or does it need adaptation?

Product Development




44

•Do the Company’s products offer features (physical

property of the product) or benefits that add value to the

customer/consumer?

•Are there elements of the Company’s intrinsic product

which are not appreciated by the Company’s customers?

•Always remember that product safety, recyclability and

user-friendliness are dominant success factors in the

developed markets due to legislation.

Features/Attitubes Benefits Analysis




45

Unique Selling Proposition (USP)

Before developing a USP, it helps to know:

•The features of the product/service

•How and why the customers uses the product services

•Features of competitive products


EXPORT MARKETING STRATEGY PRODUCT



46


Unique Selling Proposition (USP) (continued) Steps to develop a USP (1)

•List all main features/attributes of the product.

(Features/ attributes describe what the product/service does).

Features can be: quality, type and level of service, price,

functional or technical characteristics.

•Convert each feature/attribute benefit.

(A benefit describes what customer need it fulfils).

Customer buy benefit, therefore obtaining value from that.

An example:•Feature of an industrial machine: reliability, which means

available for more hours of the working day ( benefit for

the buyer).




47


Steps to develop a USP (2)

•Rank the benefits according to their relative importance to the

customer

•Group the benefits into standard ones, i.e. available to all

competitive products or the different and special (unique) to

your product/service)

•If no anything special or different, you have to develop at least

one unique benefit ( IT IS ALL IN THE MIND = PERCEPTION)

Unique Selling Proposition (USP) (continued)




48


•Packaging needs market adaptation (advisable to

include the trade partner in the packaging adaptation

decisions)

•Packaging must be PRACTICAL, CONVENIENT andPROMOTIONAL engineering, design, graphics,

distribution and marketing issues to be addressed over

packaging solutions for exports.

•New packaging issues in developed markets:•environmental concerns,

•safety concerns

Product Packaging




49


• Product life cycle stage: Does the Company’s product

fit in the current life cycle stage in the market?

• Product profitability: Does the Company’s margin justifythe Company’s market entry efforts?

• Product seasonality: Does the Company’s timing of the

Company’s product launch match seasonal demand, or

is there a possibility for counter season offering?

Critical Success Factors:

O S



50

EXPORT MARKETING STRATEGY: BRANDING

Operating in a foreign market under the Company’s own BRAND

NAME requires SUBSTANTIAL INVESTMENTS.

Only advisable if,

•It will lead to higher revenues,

•It will create binding and stimulate repeat purchases

•the Company’s own brand and company image is appreciated

by the trade

•Done in STEP-WISE, GRADUAL APPROACH

Alternatives to own branding that can be considered:

•Operate under partner’s companies own brand name orprivate label

•Make product according to the buyer’s specifications (with or

without licensing agreement)

EXPORT MARKETING STRATEGY BRANDING



51

THE

BASIS

(Product/

Service)

THE

IDENTIFIER/

RELATOR

(Name/

Logo)

THE

NARRATOR

(The Message/ Advertisement)

THE

PRESENTER

(Packaging)

Should be

matching to

each other

THE

PROXY OFVALUE

(The Price)

Copyright Rahim Jabbar/ @ 2010

EXPORT MARKETING STRATEGY: BRANDING

Identity system

Components of a Brand

EXPORT MARKETING STRATEGY: PRICING (1)



52

EXPORT MARKETING STRATEGY: PRICING (1)

COST-PLUS PRICING.

The Company’s production costs PLUS the PROFIT that needsto be made.

This strategy is used mostly in opportunity marketing.

The focus is more on selling instead of sustainable long term

marketing.

COMPETITIVE PRICING

With competitive pricing, the exporter establishes the

Company’s MARKET PRICE by benchmarking with

competitors' prices and DIFFERENTIATE THROUGH

MARKETING MIX INCENTIVES.

The result should be a better price performance ratio than the

competitor average.

EXPORT MARKETING STRATEGY: PRICING(2)



53

EXPORT MARKETING STRATEGY: PRICING(2)

PENETRATION PRICING

Penetration pricing is applying LOW MARGINS or even applymarginal costing (in case present sales cover the contribution to

overheads while the Company still has spare capacity to utilise)

and SELL AT THE LOWEST PRICE of all the Company’s competitors.

The focus is on ENTRY and HIGH VOLUME.

A negative aspect

the product/company will also receive ALOW QUALITY IMAGE (or PRICE FIGHTER) which may hinder

upward marketing later on.

(PERCEIVED) VALUE PRICING.

Adopting VALUE PRICING is suitable when there is no competition(yet) or when the product is perceived as UNIQUE or SUPERIOR.

The VOLUME may be SMALL, the MARGINS are HIGH, which offers

the Company an opportunity to lower the price at a later stage

and increase volume.

EXTPORT MARKETING STRATEGY: DISTRIBUTION



54


Basic questions to answer in formulating adistribution strategy:

•What am I selling?

•Who are my prospects/target consumers?

•Where are they?

•How can I reach them?

•How does the distribution channel work?

•

What does it imply to sell through thischannel (trade margins)

•How many channels should I use?




55


Manufacturer

ClusterExport

Organization

Source: CBI, Export Planner, 2004

Importer

Buyer

Buyer

Agent

Retailer

CUSTOMER

Country or

Tariff

Border

E-commerce

Joint venture

Trade partner

LABYRINTH OF

INROADS




56


SIMPLIFIED ENTRY STRUCTURE

Trader

Exporter

Country or

Tariff

Border

Agent

Trader

ImportingWholesalers

Distribution

(Outlets)

Customer




57


THE AGENT

•

An independent person or company who merelyintermediates (bringing exporter/seller and importer/buyer

together).

•His services are paid (usually by the exporter) in the form of a

commission, which is a percentage of the (CIF) value of the

goods imported.

THE IMPORTER

•An independent company, specialized in importing a certain

range of goods from abroad.

•An importer buys directly from the exporter and thus

becomes the rightful owner of (or 'takes title' to) the goods.

•In turn, he will try to sell the goods to wholesalers or, in the

case of professional goods, to customers.




58


THE IMPORTING WHOLESALER

An importing wholesaler is a company that not only importsbut also operates facilities to forward the goods into the

distribution channels by means of promotional support.

THE BROKER

•A broker is an independent person or company who,

somewhat like an the agent, brings together buyer and

seller and gets paid by the party who hired him.

•The broker holds neither title, nor stock.

•Occasionally, he can provide consultancy services, basedon his sector knowledge.




59


THE TRADING HOUSE

•A trading house is an independent company that

specializes in trading certain range(s) of goods.

•A trading house or company buys and sells on its own

account and at its own risk.

•It decides on its own export assortment.•Trading houses usually have a strong commercial

acumen and professionalism.

•Sometimes their after-sales performance, which is

necessary for most technical and professional products, isweak.

•A trading company can be located in the Company’s own

country or in the target country.

EXTPORT MARKETING STRATEGY: PROMOTION



60


The AIDAS formula = the FIVE (5)

KEY GOALS of any effective

promotional mix:

•Get Attention

•Capture Interest

•Create Desire, that

•Leads to Action, and

•Customer Satisfaction




61

EXPORTERS/

TRADERS/

SUPPLIERS/

MANUFACTURERS

MESSAGES

ABOUTTHE EXPORT

PRODUCT &

COMPANY

A VARIETY OFCOMMUNICATION

MATERIALS

DISTRIBUTED& PUBLICISED

& BROADCASTED

RECEIVEDAND

INTERPRETED

PROSPECTS/

BUYERS IN

THE TARGET

MARKET

INLFUENCE

HIS/HER/THEIR

OPINION, ATTITUDE,

BEHAVIOR

RESPONSES

(among other BUYING

OR OTHERWISE)

FEED-

BACKS


THE CYCLE OF MARKETING

COMMUNICATION




62

PROMOTIONALACTIVITIES

PERSONAL

SELLING

SALES

PROMOTIONPUBLIC

RELATIONS

DIRECT MAIL

& E-MAIL

TRADE FAIRS

& EXHIBITION

ADVERTISING& WEBSITES

SPONSORSHIP

PROMOTIONAL MIX SHOULD BE DESIGNED SO AS TO MUTUALLY STRENGHTEN

ONE ANOTHER (EFFECTIVE PROMOTIONS).

ACTIVITIES WITH ASTERISKS (*/**/***) ARE SUITABLE FOR EXPORT MARKETING

***

**

*


EXTPORT MARKETING STRATEGY: TRADE PARTNER



63

EXTPORT MARKETING STRATEGY: TRADE PARTNER

It takes considerable amount of TIME, ENERGY and

MONEY to establish a position in the complex in the

developed market as a target export destination

Exporter should find a trading partner that would

likely be having LONG-TERM PERSPECTIVE and NURTURE

MUTUALLY ADVANTAGEOUS RELATIONSHIP with the

buyer.



64

Management Plan

EXPORT MANAGEMENT PLAN (1)



65

ASSIGNING MANAGEMENT RESPONSIBILITIES

•The Company’s export venture should by no means

jeopardize the Company’s domestic position.

•Consider CRITICAL CONTROL POINTS and CONTINGENCY

PLANS in order to MANAGE THE RISKS of this international

adventure.





66

ASSIGNING MANAGEMENT RESPONSIBILITIES

The followings whould be resolved

•Who will be responsible?

•How will operations be run?

•Which systems will be in place?

•How will the workload be divided?

•How will your Company control EXPORT MARKETING

activities, or balance them and their claim on the

Company’s capacities and resources with the

Company’s DOMESTIC MARKETING EFFORTS?




67

Exporting Action Plan

EXPORT ACTION PLAN (1)



68


Action Plan Quarter 1 Quarter 2 Quarter 3 Quarter 4

Budget Year

1

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec in USD

1 Kick-off export venture

Establish Task force

Cultivate commitment at all levels

2 Establish learning organisation

Attract young marketing

professional 5000

Develop new systems and

procedures 2000

Implement skill enhancementprogramme 2100

3

Establish market information

system

Develop terms of reference and

benchmarks

Assign market research tasks

Research first priority markets 6000

Reseach second priority markets 3000

4

Establish product adaptation

system

Develop procedures between

marketing and production dept

Product adaptation and innovation 9000




69



Budget Year

1


5

Implement process adaptation

programme

Cost saving programme

Environmental management

programme 4000

6 Direct Marketing Campaign

Collect prospect list 1000

Prepare one-on-one mailings in first

priority country

Run the mailing 1000

Follow-up 1000

Prepare one-on-one mailings in

second priority countries

Run the mailing

Follow-up

7 Upgrade website

Develop functional design

Subcontract the webdevelopment 2500

New website online




70



Budget Year

1


8

Trade fair participation in first

priority countrySelect appropriate fair

Study exhibitors and identify

competitors and prospects 600

Make reservations

Prepare samples, documentation

and stand 3000

Arrange logistics

Arrange free publicity andadvertorials 1000

Prepare and send invitations 400

Participate 7000

Field research and follow-up visits 1500

Follow-up 1000

9

Introduce CRM as key management

toolCompare different software

packages

Purchase and implement CRM

system 2500

10

Performance monitoring and

evaluation



71

Financial Forecasts

BUSINESS = MONEY-EARNING ACTIVITIES



72

THAT REQUIRE MONEYMONEY MATTERS

BASIC QUESTIONS BUSINESS PEOPLE ASK THEMSELVES ABOUT

•How much money am I bringing in? Sales revenues

•How much am I spending? Expenses for activities

•Is my business making any money?Revenues - Expenses

•What’s the value of what my business owns? Assets

•

How much does my business owe to others?

Liabilities•What is my business worth?Value of ownership(= Equity)

BASIC PROFIT EQUATION



73

PROFIT PRICE VOLUME COSTS

= X -

CONSTRAINED BY

•Market space

for the product

field in the TEM

CONSTRAINED BY

•Competitive

environment

in the TEM

DRIVEN BY

•Structure

•Inputs

•Process

•Activities

IN EXPORT BUSINESS

In order to MAXIMIZE PROFIT, exporter should:•Improve operational efficiency and effectiveness

•Economize costs

•Maximize volume of export sales gain more share

•Optimize export price

SALES REVENUES ARE TO COVER VARIABLE



VARIABLECOSTS

CONTRIBUTIONMARGINSTO COVER

FIXED COSTS+ OPERATIONALINCOME

SALESREVENUES

CONVERTEDINTO LOCALCURRENCY

EXPORTPRICE

VOLUME/ QUANTITY

OF GOODSEXPORTED

X

COSTS AND CONTRIBUTES TO FIXED COSTS

VARIABLE COSTS AND FIXED COSTS



75

VARIABLE COSTS AND FIXED COSTS

EXAMPLES OF FIXED

COSTS

4000 PAYROLL

4100 RENT

4101 FIXED COSTS BLDNGS

4102 REPAIR/MAINTENANCE

4103 GAS,WATER.ELECTRIC

4104 SERVICE COSTS

4109 OCCUPANCY COSTS

4300 MILEAGE COMPENSAT

4319 AUTOMOBILE COSTS

4500 PROMOTION/ADVERTISE4520 TRAVEL/HOTELS

4522 MISCELL. TRAVEL

4530 REPRESENTATION

4532 DEBTOR NON-COLLECT

4599 SALES COSTS

4600 INTERESTS & COSTS

4603 INTEREST TAXES

4604 INTEREST DEPOSITS4700 ACCOUNTANTS

4710 CONSULTANCY

4715 STATIONERY

4720 TELECOM/MAIL

4725 MEMBERSHIPS/SUBSCR.

4735 COMPUTERS

4750 INSURANCES

4790 MISCELL. COSTS

VARIABLE COSTS are expenses that

change in proportion to the activity of abusiness (volume-related and are paid

per quantity produced).

Variable costs are sometimes called unit-

level costs as they vary with the number

of units produced.Direct labor and overhead are often called

conversion cost, while direct material and

direct labor are often referred to as prime

cost.

FIXED COSTS are business expenses thatare not dependent on the level of goods

or services produced by the business.

They tend to be time-related, such as

salaries or rents being paid per month.

CONTRIBUTION MARGINOPERATIONAL INCOME



76

VARIABLECOSTS

CONTRIBUTION

MARGINS

VARIABLE

COSTS OFEXPORTGOODSSOLD

VARIABLEOPERATIONAL

COSTS

FIXEDOPERATIONAL

COSTS

OPERATIONALINCOME

BREAK-EVEN IS ACHIEVED WHEN CONTRIBUTIONMARGINS EQUAL FIZED COSTS

CASH IS KING, PROFIT IS THE QUEEN



D

IV

&

I

77

THEBUSINESS

FIRM

VENDORS BUYERS/ CUSTOMERS

Services/ Products

In

Services/ Products

Out

Expenses

torInputs

Sales

Revenues

MONEY INMONEY OUT

A PRUDENT BUSINESS ALWAYS STAYS ON TOP OF ITS CASH FLOW: EVEN A

PROFITABLE BUSINESS CAN GO BANKRUPT IF CASH IS NEGATIVE (UNABLE TO

REPAY MONEY OWED TO OTHERS, TO PAY FOR DAILY NEEDS,ETC.)

A FIRM SHOULD TRACK ITS CASH-FLOW

FINANCINGSOURCES

F

UN

D

S

Dividends &

interests

THREE CATEGORIES OF CASH FLOWS



78

THREE CATEGORIES OF CASH-FLOWS

1.OPERATIONAL CASH FLOWS: Cash received orexpended as a result of the company's internal business

activities. It includes cash earnings plus changes to

working capital. Over the medium term this must be net

positive if the company is to remain solvent.

2.INVESTMENT CASH FLOWS: Cash received from the sale

of long-life assets, or spent on capital expenditure

(investments, acquisitions and long-life assets).

3.FINANCING CASH FLOWS: Cash received from the issue

of debt and equity, or paid out as dividends, share

repurchases or debt repayments.

A FIRM SHOULD TRACK ITS CASH-FLOWS



79

In US$ January February MarchOpening cash balance $ - $ 599.50 $ 449.50

Operating Cash Flow

.. List of all operating items

(+/-) $ (2,650.50) $ (500.00) $ 750.00

Investing Cash Flow.. List of all investing items

(+/-) $ (1,750.00) $ (650.00) $ -

Financing Cash Flow

.. List of all investing items

(+/-) $ 5,000.00 $ 1,000.00 $ -Total cash flow for the month $ 599.50 $ 449.50 $ 1,199.50

Closing cash balance $ 599.50 $ 449.50 $ 1,199.50

A FIRM SHOULD TRACK ITS CASH FLOWS

EVALUATION & REVIEW



80

OBJECTIVES &

TARGETS

ACTUALBUSINESS

RESULTS

EVALUATION: CAUSAL FACTORS THATCONTRIBUTE TO THE SUCCESS OR ANY

DEVIATIONS FROM THE PLAN

ADAPT & REVISE THE PLAN BUSINESSACTIVITIES

A SUCCESSFUL EXPORT BUSINESS!!!

Export Marketing & Business Plan



81

Summary

&

Conclusion

TEN STEPS TO ENSURE YOUR SUCCESSIN EXPORT BUSINESS



82

IN EXPORT BUSINESS

ANALYSEMARKET

POTENTIALIN TARGET

MARKET

EVALUATE

YOURPRODUCT’S POTENTIAL

DETERMINETHE WAY TO

ENTERTHE TARGET

MARKET

DEVELOP

A STRONGDETERMI-NATION

APPLY THEMARKETING

STRATEGYEFFECTIVELY

ORGANIZETHE EXPORTING

OPERATIONALTEAM

DEVELOPA COMPETITIVE

MARKETINGSTRATEGY

IDENTIFYTECHNICAL

ANDADMINISTRATIVE

CHALLENGES

EVALUATEAND CONTROL

EXPORTINGBUSINESS

OPERATION

ALLOCATERESOURCESREQUIRED

CONTINUOUSLYREVIEW EACH ANDEVERY STEP OF

EXPORTING BUSINESSACTIVITIES AND

INTEGRATEALL ACTIVITIES

(1) (2) (3) (4)

(5)

(6)(7)(8)(9)

(10)



83

THANK

YOU

REFERENCES



REFERENCES

•Capon, Noel and James M. Hulbert, “Marketing Management

in the 21st Century”, Prentice Hall, 2001

•Davidson, Hugh, “Even More Offensive Marketing”, Penguin

Books, 1997

•Hiam, Alexander and Charles D. Schewe, “The Portable MBA

in Marketing”, John Wiley & Sons, Inc., 1992•Jabbar, Rahim, “ Approaches towards Segmentation,

Targeting & Positioning”, 2002, (unpublished)

•Laman Trip, Johan F., “Export Planner ”, 5th Edition, Center for

the Promotion of Imports from Developing Countries, CBI, 2004

•U.S. Small Business Administration, “Breaking Into The Trade

Game: A Small Business Guide to Exporting, 3rd Edition, 2005

fundamentals of export business plan major points

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