Deck 14: Managing Human Resources in an International Context

Question 1

What does a customhouse broker do?

Answer 1

The commercial activities that cross national borders are known as international business. The goods, services, technology, personnel etc. all are moved from one country to another and also to many countries and vice versa. This movement is known as import and export in layman language. It is generally done through various modes of entry like licensing, franchising etc.
The custom house brokers do the following activities:
1. It acts as agent for the importer and brings the goods through custom as he knows the rules and regulations and tariff schedule.
2. They also arrange transportation after the goods are released from custom.
3. They also know the limit of the quota on the import goods. This helps them to guide the importers/exporters to carry out the process smoothly.

Question 2

What does a freight forwarder do?

Answer 2

The commercial activities that cross national borders are known as international business. The goods, services, technology, personnel etc. all are moved from one country to another and also to many countries and vice versa. This movement is known as import and export in layman language. It is generally done through various modes of entry like licensing, franchising etc.
There are some mediators who help the buyer and seller to ship their products. The freight forwarder is the person who acts as an intermediary between different transportation services and a shipper. They also handle the shipping of logistics from one destination to another means from the seller's destination to buyer's destination. A freight forwarder also handles the insurance of the goods to reduce the risk of damage and loss occur due to damage and customs documentation like certificate of purchase, tax and shipping slip related to the shipment.

Question 3

The Ethics of Exporting: Do Home Values Apply?
In early 2011, Australia banned the export of Australian cattle to Indonesia after reliable reports of cruelty in Indonesian slaughterhouses came to the attention of the Queensland government. At first glance, this action sounds like a responsible commitment to the humane treatment of animals.
Yet there is a dilemma or two here because there are beef ranchers in Queensland who depend totally on the live export market for their sales. And Indonesia is a huge market for them. One-third of the meat eaten in Indonesia is Australian beef.
In addition, as a result of the ban, there is less food for the 40 million Indonesians who live below the poverty line. "Ah, but they probably don't eat imported beef," you may be thinking. That's true, but when there's less food in the system, the poor will feel the effects first.
Other ethical issues related to exporting also touch on whether the home-country ethics should be upheld for the exports. Should the United Kingdom, which has outlawed the death penalty, export execution drugs to the United States? Should quality standards thought appropriate for the domestic market be maintained for the export markets in areas such as pharmaceuticals?
These issues about the ethics of exporting are the question here. To what degree are ethics domestic and to what degree are they universal? Another way to phrase the question is, Should exports have ethics embedded in them? What do you think?

Answer 3

Case Summary: A, banned the export of cattle in the year 2011, so I after seeing the cruelty in slaughterhouses of I, through reports. On one side it sounds responsibility of the country to its animals and on another side the export of A and the food of I, as A is the biggest exporter of animals and animals of A are the biggest source of food for the people of I, especially poor people. It harms source of food for I. Now, it is a matter of ethics.
The ethics are domestic till when only one country's people or policies of one country are affected and when it affected other countries in the world it will become universal.
The ethics in export embedded through the interaction between the country of seller and exporter. It should be a matter of concern to maintain the confidence of the public and to maintain the dignity of the policies and rights of people of the countries.

Question 4

State Manufacturing Company, a producer of farm equipment, had just received an inquiry from a large distributor in Italy. The quantity on which the distributor wanted a price was sufficiently large that Jim Mason, the sales manager, felt he had to respond. He knew the inquiry was genuine, because he had called two of the companies that the distributor said he represented, and both had assured him that the Italian firm, Agricole Italiana, was a serious one. It paid its bills regularly with no problems. Both companies were selling to the firm on open account terms.
Mason's problem was that he had never quoted on a sale for export before. His first impulse was to take the regular Ex Works price and add the cost of the extra-heavy export packing plus the inland freight cost to the nearest U.S. port. This price should enable the company to make money if he quoted the price FAS port of exit.
However, the terms of sale were bothering him. The traffic manager had called a foreign freight forwarder to learn about the frequency of sailings to Italy, and during the conversation she had suggested to the traffic manager that she might be able to help Mason. When Mason called her, he learned that because of competition, many firms like State Manufacturing were quoting CIF foreign port as a convenience to the importer. She asked him what payment terms he would quote, and he replied that his credit manager had suggested an irrevocable, confirmed letter of credit to be sure of receiving payment for the sale. He admitted that the distributor, however, had asked for payment against a 90-day time draft.
The foreign freight forwarder urged Mason to consider quoting CIF port of entry in Italy with payment as requested by the distributor to be more competitive. She informed him that he could get insurance to protect the company against commercial risk. To help him calculate a CIF price, she offered to give him the various charges if he would tell her the weight and value of his shipment FOB factory. He replied that the total price was $21,500 and that the gross weight, including the container, was 3,629 kilos.
Two hours later, she called to give him the following charges:
*Total coverage of marine insurance is commonly calculated on the basis of the total price plus 10 percent.
During that time, Mason had been thinking about the competition. Could he lower the FOB price for an export sale? He looked at the cost figures. Sales expense amounted to 20 percent of the sales price. Couldn't this be deducted on a foreign order? Research and development amounted to 10 percent. Should this be charged? Advertising and promotional expense amounted to another 10 percent. What about that? Because this was an unsolicited inquiry, there was no selling expense for this sale except for his and the secretary's time. Mason felt that it wasn't worth calculating this time.
If you were Jim Mason, how would you calculate the CIF port of entry price?

Question 5

In exporting, to what point does the seller pay transportation and delivery costs? Where does the responsibility for loss or damage pass to the buyer? Use Incoterms in your response.

Question 6

Use the globalEDGE site (http://globalEDGE.msu.edu/) to complete the following exercises:
You own a small business and, for the first time, are considering exporting. As a new exporter, you want to consult several resources that offer guidance on how to export. Locate the "Trade Tutorials" category on globalEDGE, and identify three sources that you could use to learn more about exporting. Provide a description of the services available for new exporters through each of these sources.

Question 7

Explain the various export payment terms that are available and the protection they offer the seller.

Question 8

Use the globalEDGE site (http://globalEDGE.msu.edu/) to complete the following exercises:
Your company is planning to expand its operations to Spain. Because countries have different import requirements, top management has requested a report on Spain's procedures and regulations for imports. Utilize FedEx Country Profiles provided by the FedEx International Resource Center to find the information requested.

Question 9

What is the procedure for a letter-of-credit transaction?

Question 10

The manager of the international department of the Cape Cod Five Bank learns on the way to work that the ship on which a local exporter shipped some goods to Spain (Wellfleet oysters in salt-water tanks) has sunk in high seas. She has received all the documents required in the letter of credit and is ready to pay the exporter for the shipment. In view of the news about the ship, the manager now knows that the Spanish customer will never receive the goods. Should the manager pay the exporter, or should she withhold payment and notify the overseas customer?

Question 11

What is a foreign trade zone? Check with a customhouse broker or a U.S. Customs official or do some online research to determine the advantages of a foreign trade zone over a bonded warehouse.

Question 12

What are the purposes of an export bill of lading?

Question 13

An importer brings plain sports shirts into the U.S. because the import duty is lower than it is for shirts with adornments. In New Jersey, the importer sews on a figure of a fox. Could the importer do this operation in a foreign trade zone?

Question 14

How would you find sources for a product that you want to import?