Launching a Profitable Transaction: Introduction
Launching a Profitable Transaction: Introduction
THE NEXT FIVE CHAPTERS EXPLAIN THE BASICS OF IMPORTING AND exporting. They apply to manufactured products as well as the growing service industries such as computer software, construction engineering, or insurance.
These basics are the bridge from producer to buyer. This bridge has been in place for many years, and so has been tested by time. Nevertheless, it is possible to perceive the fundamentals as obstacles. Don't let the learning process deter you. Anyone can learn the nuts and bolts of international trade.
This chapter addresses the first 7 commonalities of an importing or exporting transaction. If you understand these concepts, your import/export business will get off to an excellent start toward early profitability.
1. Terminology
2. Homework
3. The product
4. Contact making
5. Market research
6. Initial quotations
7. Pricing for the bottom line
Don't mistakenly assume that the order presented in this book represents a hierarchy of importance, or that these fundamentals are in the precise order of an import/export project. In reality, many things happen simultaneously; seldom does a concept stand alone.
TERMINOLOGY
Because of increasing international interdependency, trade literacy has become as important as computer literacy in modern business. As you progress in your reading, frequently refer to the extensive glossary of terms found at the end of this book. Many of these terms also are defined wherever they first appear in the text. Don't be frightened off by the new terminology—you can learn it!!
HOMEWORK
Research is one of the keys to winning the trade game! Even if you have some experience in international trade, it's unwise to jump into an unresearched project. In fact, it's not unusual to spend several weeks learning about the product and its profit potential before getting serious.
An import/export project requires you to answer 4 preliminary questions before deciding whether the project merits further investigation.
1. In what product or service are you interested? For the prospective importer/exporter, this decision is personal as well as technical. For the manufacturer of a product or provider of a service, this step is moot—you sell your own product or service.
2. To whom will you sell the product or service? And from whom will you obtain the product or service? Who are your contacts? Do you have more than one source for the product you intend to import or export? Choose very carefully the country where you intend to sell your product.
3. Are people and/or firms willing to buy this product or service? Although products and services that carry the label "Made in U.S.A." continue to be popular, they no longer sell themselves. But, if an American product has a mature market in the United States, it very likely has a market in other parts of the world. On the other hand, many foreign goods cost less, which increases sales potential, but if the product is unique to a given culture or the quality is cheap, Americans might not buy it.
4. Do the rough calculations of price and quantity warrant undertaking the project? Determine whether the margin of profit makes the project worthwhile. What changes must you make to the product to ensure a profitable export or import? Bear in mind that just as much work goes into importing or exporting an unprofitable product or service as trading a profitable one. Don't waste time with losers.
THE NEXT FIVE CHAPTERS EXPLAIN THE BASICS OF IMPORTING AND exporting. They apply to manufactured products as well as the growing service industries such as computer software, construction engineering, or insurance.
These basics are the bridge from producer to buyer. This bridge has been in place for many years, and so has been tested by time. Nevertheless, it is possible to perceive the fundamentals as obstacles. Don't let the learning process deter you. Anyone can learn the nuts and bolts of international trade.
This chapter addresses the first 7 commonalities of an importing or exporting transaction. If you understand these concepts, your import/export business will get off to an excellent start toward early profitability.
1. Terminology
2. Homework
3. The product
4. Contact making
5. Market research
6. Initial quotations
7. Pricing for the bottom line
Don't mistakenly assume that the order presented in this book represents a hierarchy of importance, or that these fundamentals are in the precise order of an import/export project. In reality, many things happen simultaneously; seldom does a concept stand alone.
TERMINOLOGY
Because of increasing international interdependency, trade literacy has become as important as computer literacy in modern business. As you progress in your reading, frequently refer to the extensive glossary of terms found at the end of this book. Many of these terms also are defined wherever they first appear in the text. Don't be frightened off by the new terminology—you can learn it!!
HOMEWORK
Research is one of the keys to winning the trade game! Even if you have some experience in international trade, it's unwise to jump into an unresearched project. In fact, it's not unusual to spend several weeks learning about the product and its profit potential before getting serious.
An import/export project requires you to answer 4 preliminary questions before deciding whether the project merits further investigation.
1. In what product or service are you interested? For the prospective importer/exporter, this decision is personal as well as technical. For the manufacturer of a product or provider of a service, this step is moot—you sell your own product or service.
2. To whom will you sell the product or service? And from whom will you obtain the product or service? Who are your contacts? Do you have more than one source for the product you intend to import or export? Choose very carefully the country where you intend to sell your product.
3. Are people and/or firms willing to buy this product or service? Although products and services that carry the label "Made in U.S.A." continue to be popular, they no longer sell themselves. But, if an American product has a mature market in the United States, it very likely has a market in other parts of the world. On the other hand, many foreign goods cost less, which increases sales potential, but if the product is unique to a given culture or the quality is cheap, Americans might not buy it.
4. Do the rough calculations of price and quantity warrant undertaking the project? Determine whether the margin of profit makes the project worthwhile. What changes must you make to the product to ensure a profitable export or import? Bear in mind that just as much work goes into importing or exporting an unprofitable product or service as trading a profitable one. Don't waste time with losers.
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