[Notes] Chapter 3: Global Supply Chain Management

[Notes] Chapter 2: Global Sourcing And Trade

1)Why Company Go Global Marketplace ?

• International Customers. - Give the strong incentive to follow them into foreign market.
• International Competition. - It give the advantage to the company market their product/ service in global market.
• Regulation. - When environmental protection rules are strong in a country, there is an incentive to import the product from countries with laxer regulations.
• New, Expanded markets. - this happen when the company may be looking for new markets and the domestic market is saturated, but that does not need to happen before a company looks to foreign market.
• Economics Of Scale. - A company can gain greater economies of scale by producing more while supplying foreign markets.

2) Export

• The least committing method, simply making an individual sale and export the product from the home country.

3) Joint Venture

• The firm entering a foreign market may have a joint venture with a firm in the host country wholly owned subsidiary.
•  The foreign firm buys or builds a subsidiary in the foreign market.
• Global companies organize themselves in one of two ways, national or stateless.
• A national organization scheme is one in which the company treats each national subsidiary as relatively independent. 

4) Sourcing

• also known as purchasing or procurement, is the series of activities that results in decisions regarding from whom/ where goods, materials, and services should be obtained.
• The sourcing office makes its decision based a wide variety of factors, such as the need for given products, the characteristics of the suppliers, and logistical feasibility.

5)Terms Of Sale And Incoterms.


Terms of Sale :

• Selling terms in this case refers to the point at which ownership is passed from the seller to the buyer, and the arrangement for carriage and related activities.
• The buyer and seller agree at the time of contact on the terms of sale (selling terms ).
• a contract which mentions a sale price without selling terms is meaningless and not legally biding.
• destination contract are when the contract calls for the cargo to be delivered to a given destination.
• In a shipment contract, transfer of ownership occurs when the cargo is delivered to the first carrier. 

Incoterms

• INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods.  It is essential that you are aware of your terms of trade prior to shipment.

INCOTERMS 2012

• EXW – EX WORKS (… named place of delivery) - The Seller’s only responsibility is to make the goods available at the Seller’s premises. The Buyer bears full costs and risks of moving the goods from there to destination.
• FCA – FREE CARRIER (… named place of delivery) - The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. The Seller loads the goods if the carrier pickup is at the Seller’s premises. From that point, the Buyer bears the costs and risks of moving the goods to destination.
• CPT – CARRIAGE PAID TO (… named place of destination) - The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage
• CIP – CARRIAGE AND INSURANCE PAID TO (… named place of destination) - The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the cargo insurance.
• DAT – DELIVERED AT TERMINAL (… named terminal at port or place of destination) - The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the Buyer’s disposal at a named terminal at the named port or place of destination. “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.
• DAP – DELIVERED AT PLACE (… named place of destination) - The Seller delivers when the goods are placed at the Buyer’s disposal on the arriving means of transport ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the goods to the named place
• DDP – DELIVERED DUTY PAID (… named place) - The Seller delivers the goods -cleared for import – to the Buyer at destination. The Seller bears all costs and risks of moving the goods to destination, including the payment of Customs duties and taxes.

2. MARITIME-ONLY TERMS

• FAS – FREE ALONGSIDE SHIP (… named port of shipment) - The Seller delivers the goods to the origin port. From that point, the Buyer bears all costs and risks of loss or damage.
• FOB – FREE ON BOARD (… named port of shipment) - The Seller delivers the goods on board the ship and clears the goods for export. From that point, the Buyer bears all costs and risks of loss or damage.
• CFR – COST AND FREIGHT (… named port of destination) - The Seller clears the goods for export and pays the costs of moving the goods to destination. The Buyer bears all risks of loss or damage.
• CIF – COST INSURANCE AND FREIGHT (… named port of destination) - The Seller clears the goods for export and pays the costs of moving the goods to the port of destination. The Buyer bears all risks of loss or damage. The Seller, however, purchases the cargo insurance.

6) International Trade Pattern

Trade Trends

• Rich countries with rich countries
• colonial networks
• neighboring countries
• common cultures.