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Mind Map for My Exam Revision - Coggle Diagram
Mind Map
for
My Exam Revision
4) Regional Economic Integration
2) International Entry Modes
Modes of entry
The Entrepreneurial Mind
Opportunity Obsession
Leadership
Tolerance of Risk, Ambiguity and Uncertainty
Creativity
Courage
Motivation to Excel
Self-Reliance
Determination
Adaptability
Commitment
Factors that inhibit Internationalisation
Lack of Financial resources
Lack of Marketing capabilities
Lack of Human resources
Lack of Networks
Lack of Managerial skills
Lack of Market insights
Key Drivers for Business Internationalization
Markets opportunities/Demand driven
Risk diversification
Competition/Cost driven
How can Firms enter Foreign Markets?
Licensing
Franchising
Turnkey projects
Joint venture
Wholly owned subsidiary
Exporting
Pros and cons of each mode of entry
Factors that Affect the Choice of Entry Mode
Economic Risks
Costs
Political Risks
Firm Strategy
Trade Barriers
Transport Costs
Pros
Offset lags in domestic demand
Extend product life cycles
Use idle capacity
Increase sales and income
Avoid local manufacturing operations costs
Cons
High transport costs
Foreign agents may not act profitably
Lower-cost manufacturing locations
Why internationalize the business?
Lower barriers to trade and investment
Lower transportation costs
Lower information processing and communication costs
Global communication networks and global media
Risks in export/import business
Business risk
Legal risk
Financial risk
Political risk
Globalization VS Internationalization
Globalization of Markets
Integrated global economic system
Globalization of Production
3) Trade Barriers
Free Trade VS Trade Intervention
Tariff Rate Quotas
Free trade
Government does not attempt to restrict what its citizens can buy
Trade Intervention
Governments intervene in international trade
Trade Barriers
Tariff Barriers
Specific Tax
Specific Tax
Advalorem Tax
Non-Tariff Barriers
Subsidies
Administrative policies
Local content requirements
Antidumping policies
Voluntary export restraints
Tariff Rate Quotas
Quotas
Tariff
Ad Valorem Tax
Tax as a proportion of the value of the imported goods
Specific Tax
Tax as a fixed charge for each unit
Subsidy
Is a government payment to a domestic producer
Forms of Subsidy
Low-interest loans
Cash grants
Tax breaks
Government equity participation in the company
Subsidies help domestic producers to
Consumers typically absorb the costs of subsidies
Quota
Direct restriction on the quantity of imported goods
EU placed imports quota on poultry meat
Import Quota
Thailand placed quota on Japanese steel
Tariff Rate Quotas
A hybrid of a quota and a tariff
A lower tariff is applied to imports within the quota than to those over the quota
6) INCOTERMS
5) Export Import Procedures
12) Methods of Payment
Open Account
Mitigating Risks Tools
Cash flow
Export credit insurance
Factoring
Nonpayment
Export working capital financing
Characteristics
Pros
Boost competitiveness
Successful trade relationship
Applicability
Recommended Usage
Used in secure trading markets
Used in Competitive markets
Cons
Exposed to nonpayment risk
Additional costs
Risk
Flake on payment after shipment
Letter of Credit
Credit Transactions
3) Dispatches goods
4) Releases documents
2) transmits LC
5) Debiting account
6) Checks documents
1) Open an LC
Types
Deferred Payment LC
Standby LC
Transferable/
Non-transferable LC
Confirmed LC
Irrevocable
Revocable LC
Tips for Exporters
Consult
Consider
Negotiate
Determine
Ensure
Beware
Characteristics
Pros
Payment after shipment.
Variety of payment
Risk
Risk is between seller and buyer
Applicability
Less-established trade relationships
Con
Complex and labor intensive
Expensive
Cash in Advance
Characteristics
Risk
Exporter << no risk
Importer << complete risk
Applicability
High-risk trade relationships
Export markets
Internet-based businesses
Pros
Pay before Ship
Reduce nonpayment risk
Cons
May lose customers
When to Use
in case
The exporter
Rare product in high demand
Internet-based business
The importer
Doubtful creditworthiness
New customer
Commercial risks
Documentary Collection
D/C
Transfer of Goods
Time of Payment
Exporter Risk
D/A
2) The documents are released to the importer
3) The importer becomes must pay at a future date
4) The collecting bank contacts the importer for payment
1) The exporter extends credit
D/C Transaction Flow
2) The exporter’s remits bank
3) The collecting bank releases the documents
4) The collecting bank transmits the funds
1) The exporter ships
Key Points
Banks do not verify the documents nor take any risks
The exporter retains title to the goods until the importer pays or accepts the draft
D/Cs are less complicated and less expensive than LCs
Characteristics
Applicability
Established trade relationships
Politically and economically stable
Open account >> too risky LC >> too expensive
Pros
Bank assistance
Simple, fast, and less costly
Risk
More risk for exporter
Little recourse for exporter
Cons
Bank's’ role is limited
Banks do not verify the accuracy
8) Duty and Taxes
Offences and Penalties
Offences
Non-compliance with customs procedures
False declarations
Smuggling
Evasion of customs duties
Penalties
400% of the value of the goods
Imprisonment
200% of the duty
100% VAT
Calculation
Export Duty = FOB * duty rate + other surcharges
Excise Tax = (CIF+import duty+Fee)
[(Rate of excise tax) / (1-(1.1
Rate of excise tax))
Import Duty = CIF * duty rate + other surcharges
Valuation
This is subject to adjustments
Due upon the arrival of the vessel
Exported goods' value is based on FOB
Imported goods' value is based on CIF
Paid before the goods are released
1) Thailand has implemented the WTO Valuation Agreement.
Excise Tax
Entertainment Tax
Discotheque
Massage Parlour
Night Club
Environment Tax
Battery
Golf Course
Petrol & Petroleum Product
Ozone Depleting Substance
Sin Tax
Horse Racecourse
Tobacco
Lottery
Playing Cards
Liquor
Luxury Tax
Perfume & Cosmetics
Carpet & Other Covering Material
Glass & Glassware
Motorcycle
Electric Appliances
Beverages
Automobile
Processed Marble & Granite
Yacht
Customs Duties
3) Imports Classification is based on the Harmonized System
4) Duties are levied on a specific or an ad valorem basis,
2) Collected on both imports and very limited number of exports
5) Preferential duty rates are available on imported goods
1) Imposed under the Customs Act and the Customs Tariff Decree
Other Taxes and Surchages
Tax for the Ministry of Interior
Tax for Thai Health Promotion Foundation
For Tobaccos & Alcohol
Duties and Taxes in Export/Import Business
Surcharge
Other Taxes
Value Added Tax (VAT)
Excise Tax
Customs Duties
Value Added Tax (VAT)
INCOTERMS for Sea and Inland Waterway Transport
FOB
CFR
CIF
FAS
Free Alongside Ship
Free on Board
Cost and Freight
Cost Insurance and Freight
VAT Exemptions
INCOTERMS for Any Modes of Transport
FCA
Carriage and Insurance Paid To
DAP
Delivered at Place
FCA
Carriage Paid To
DPU
Delivered at Place Unloaded
FCA
Free Carrier
DDP
Delivered Duty Paid
EXW
Ex Works
VAT Tax Base
10) Export Import Documents
Export Packing List
Export packing list
It also shows the individual
Legal
Tare
Net
Gross weights & Measurements
Used by the shipper or forwarding agent
Insurance Certificate
Insurance certificate
Air Waybills
Issued by the air carrier
Bill of lading for air-shipped cargo
Certificate of Origin
Indicate product's production source
Insurance certificate
Determine the specific tariff schedule
Bill of Lading
1) Issued to the exporter
2) Take possession of the goods
3) Serves 3 purposes
Receipt
Contract
Document of Title
Health Certificate
Certify the product's bacteriology
HACCP System
Consular Invoice
Consular invoice
Shipment of goods
Used for value verification
Certificate with Respect to Meat
Certify the meat's veterinary supervision
The meat is not infectious disease
Examination for diseases and contaminants
Commercial Invoice
A commercial invoice
It serves as "evidence of a transaction"
Contain the description
Used for classify the merchandise
Sanitary Certificate
The products have been frozen and packed
The products have processed cleanly
The temperature at loading time was -18C
Quotation
Begins with the receipt & followed by request
A quotation specifies sale and payment term
Description must be more detailed
It serves as “Letter
Phytosanitary Certificate
Free from quarantine injurious pest
Conform with the phytosanitary regulations
Others
Shipper's Export Declaration
Export License
Inspection Certification
Sale Contract
Sale Contract
Evolve as trading relationship evolves.
Make all aspects of the trading process
Writing Clarity is very important
Potential sources of confusion exist
Longer term contracts >> follow as familiarity
Early contracts >> shipment-by-shipment basis
Agreement Key Points
7) Order lead time
8) Level of effort required of importer
6) Sales promotion and advertising
9) Trademarks, copyrights, and patents
5) Shipping Terms
10) Territory
4) Amount of Sales
11) Deliver
3) Warranties and Service
12) Provision for termination of the agreement
13) Price
14) Insurance
15) Provision for settlement of disputes
2) Payment Terms
1) The products
Key Points
Provide all proper documentation
Documentation must be precise
Number & kind of document varies
7) Cargo Insurance
1) Introduction
Course Learning Outcome
To learn about different types of methods of payment
To understand INCOTERMS
To understand international entry modes
To be aware of trade barriers and regional economic integration
To familiarize with export and import procedures
Class Schedule
Section 2: Monday and Wednesday 10:00 – 11:50 hr
Plus additional classes “From Gen Z to be CEO”
Section 1: Monday and Wednesday 08:00 – 09:50 hr
Missed Assignments/Quizzes/Exam
Can be retaken only in the most dire family or personal circumstances
Access to Technology and Communication
Meeting Platform
Zoom
Zoom Webinar
Vlearn
Class Management Platform
Google Classroom (main)
Email
Mahidol email account
nuntana.udo@mahidol.edu
Online Decorum
Professional and business-like action is expected
Discussion is expected.
Academic dishonesty will result in an F
Teaching and Learning/Assessment Methods
Assignments *3 (30%)
Live Sessions
Exams
2 (35
2=70%)
Exam 1: May 22, 2021 (12.00-17.00hr)
Exam 2: July 2, 2021 (14.00-16.00hr)
11) Preparing Goods for Delivery
9) Price, Duty and Taxes Calucation