How to Establish an Export Office
As soon as a company starts to obtain export business, some form of export office will be required along- with a system under which it should operate and certain people able to deal with the work. And before any goods can be dispatched, some dealings may be required with the Customs and Bank authorities.
The chapter has been divided into the following sections:
- The design of an export office.
- The personnel in an export office.
- The handling of export inquiries, quotations, orders and records.
- The installation of machines.
The Design of an Export Office
The three basic functions of an industrial company are production, sales and finance. To these may be added numerous additional functions such as administration, research and development, statistics and records, promotion, personnel, training and purchasing. Underlaying this functional view of an organization it must be appreciated that basically a company consists of people, so however the export office may be designed it must always pay attention to the quality of personnel.
There can be many ways of designing an export office.
In no two companies the same kind of set up can be found. However, a broad set-up can be established in the following manner.
- Exports as part of Other Operations.
Since the prime object of exports is to obtain additional business for a company from overseas, we can treat exports as an integral part of a company’s overall commercial operation. Hence a commercial department can be divided into domestic and overseas divisions, under the control of the commercial manager.
In this case the remaining export functions such as transportation, insurance, finance and so on can be handled by the company’s specialists concerned and there is as a result no export department as such in the company. This type of set-up is most suitable for a smaller company, and has much to commend it on the basis that a customer is a customer, wherever he happens to be.
How to Establish an Export Office
A Horizontally Based Department.
This is the most usual solution, a special department being set up to look after all exports, under an export director or manager. It may be based on a product basis or a geographical one, depending on the nature of the business and its involvement in export. As it develops there will be a number of senior export executives in charge of sales, research, despatch, statistics, personnel and production who will have in turn specialist managers and staffs below them.
This is most suitable for medium to large companies handling a good deal of export business, but its weakness is that it tends to keep domestic and export business in two watertight compartments, and thus may today be a somewhat old-fashioned outlook.
- A vertically Based Department
This also separates domestic and export business, but instead of subdividing on a product or geographical basis, it is vertical in structure to the extent that it consists of specialists in each area. This means every export transaction is handled at some stage by a specialist, all insurance is deal with by insurance experts, and the same with documentation etc. It has expertise which is often denied to horizontal organizations, but it often lacks an overall direction.
- A Multi-National Structure
This structure applies to only large companies operating all over the world. This is usually the case when the organization is product oriented and is selling products as diverse as typewriter, shavers, computers and combine harvesters. Each division operates as a self-contained entity, both at home and overseas.
The Personnel in an Export Office
The staff working in the exports department of a company may have to undertake some special functions which the staff in the domestic sales department may not have to do. The main functions of the export office are as follows:
Staff are needed to handle customer liaison in respect of enquiries, quotations and orders. They need to advise customers of the progress of their orders, and ensure that delays do not occur. They are the essential back-up to export salesman, with whom they must work closely
The actual transport of goods to overseas markets must be arranged either directly with the carriers concerned or though shipping and forwarding agents.
Since it is necessary for all cargoes to be insured, staff’s needed to ensure that this is always done either on behalf of the company or the customer, so that the goods are never left uninsured.
This is always a problem area. In an export office there must be people to ensure that some system of credit control is operated; to decide and operate methods of payment; to deal-with the bank whenever necessary with regard to payment; and to handle credit insurance by the Export Credit Guarantee Corporation.
While each section is normally responsible for its own documents their sheer number means that some form of control has to be exercised so that all the documents for any transactions are brought together and dealt with as required. This means having someone in-charge of documentation.
Records, Statistics and Information
In an export office there must be staff able to keep necessary shipping and sales records and such statistics as are required. In addition, information must be recorded about methods of transport, rates, and procedures and while this may be kept by the individuals concerned it must be available to anyone in the export office.
There are two main aspects concerned with the production of goods for export with which the export office staff is concerned. One is the completion, packing and despatches of goods, in accordance with instructions which the export office will have to issue. The second, which often precedes the other, is the planning and production of goods for export and the modifications which may be required to existing products for export markets.
In case of merchant exporters, the buying in of the goods will need to be done either by a separate buying department or by the export office staff.
Research and Development
The export staff must be consulted on various aspects of research and development, so that new products will be considered in the light of both their domestic and export suitability.
Normally all the legal matters are under the control of the company secretary or a special legal department. Since so many aspects of export have legal implications for the company, the export office staff must work closely with the company’s legal personnel.
Additional Qualifications of an Export Personnel
Anyone who is working in the exports must have certain additional qualifications, of which the most important are given below:
A sense of Diplomacy
People working at any level in export must be willing and able to work with people of any nationality, race or religion. They must be able to act with impartiality, tolerance and understanding. To be able to behave in a truly diplomatic way is an essential part of the make-up of a good exporter.
An Aptitude for Languages
it is true that much of the world’s business is conducted in English. But everyone does not speak or write it fluently. All export staff should be encouraged to learn at least one language in addition to English, and if it is not their mother tongue it should be learnt as a first requirement in export. French, German and Spanish are the next three most important, but language like Russian may also be of immense use at times. Ideally all correspondence should be answered in the language in which it be first written and a well-equipped export office should have people fluent in several language’s.
A Well-Developed Sense of Responsibility
Overseas buyers may not know about your working days and holidays, about your working hours and off hours. Hence export staff must be able to act without constantly referring to some form of higher authority. It is normal for certain export functions to be carried out by the appropriate departments in the company, but staff will be needed in the export office to make liaison with all these departments. The main areas where this is necessary are as follows.
Most export staff would agree that clock-watching is impossible if shipments are to go on time.
An Interest in the World
Al export staff must have a comprehensive knowledge of geography, and know ports, cities and countries in the world by heart. In addition, export staff must be keenly aware of world events, because if for example war or riots break out the insurance of their cargoes will be affected, or the arrival, despatch of the goods delayed.
A Liking for Export
A liking for the job is essential in any walk of life. it is more true of export, however because it produces challenges in complicated procedures, last minute requests, and involved local regulations which have to be dealt with quickly and accurately and which will never be handled properly unless the staff genuinely enjoys the work. If staff is not interested in export they should stay out of it and this applies at any level in the company, especially to senior management.
The Handling of Export Enquiries, Quotations, Orders and Records
There are certain basic principles regarding the handling of export enquiries, quotations and orders which should be applied in any export office.
All enquiries should be dealt with immediately and answered by the same method by which they are sent, e.g. by airmail, telex, etc. If they cannot be dealt with at once, they should be acknowledged to the effect that details are following. They should be followed up if no reaction is received and a careful record kept of them.
All quotations except tenders, should be sent as quickly as possible, but with tenders there is usually a date by which they have to be sent. Make sure all the relevant details are included in quotations even if these have not been specified by the enquirer. Quotations must be followed up and a record kept of what orders were received from them.
Orders must be acknowledged by return, unless there is a query regarding the terms of purchase„ Any points in an order which are unclear or have been omitted must be got clarified at that time only.
Delivery dates must be agreed and customers informed at all stages if there seems likely to be any delays. A progress chart should be kept to ensure the smooth delivery of the order and to enable the correct documents to be supplied at the appropriate time.
Companies will wish to install their own systems of records but the following may provide a base for any such system.
Customer Flow Charts
These show each order, the date received, when it was sent for execution, and when dispatched. If you add the approximate date of arrival you may check with your customer that this order has arrived, thus showing that you are concerned that your deliveries shall not be late.
In addition to these totals, forecasts for each year will have to be made and compared with actual results. These figures can be shown on charts, either in block or graphical form.
Customer Despatch Cards
These show the details of the despatch of an order overseas, including the method of packing used, the documents required and sent; the method of transport; the insurance and how it was arranged, how the customer paid for the goods, and when the transaction was completed. If all stages are dated, the state of an order can immediately be checked, so if there looks like being any delay the customer may be advised accordingly.
Customer Sales Cards
The simplest form of sales cards consists of a top card containing all the details of the customer you need to know, such as the marks he uses, the port to which the shipment should be made, his wishes about insurance and the method of payment agreed as well as any special instructions he has given. Successive cards, one for each year, show the details of each order, with cumulative totals so that all your dealings with him are clearly recorded.
Expert Sales Records
The kind of records will depend on the business one is doing, but especially there are three things you will need:
- a) Sales by product, by year, by quantity and value to all customers.
- b) Sales by product, by year, by quantity and value to individual markets.
- c) Sale to all overseas markets of each product by quantity and value.
In addition to sales records, the records of earnings, e.g. the revenue you obtain compared with costs incurred should also be kept. If you have a central statistical department, you will need to arrange to provide the figure for each export transaction in a tabulated form.
The installation of Machines
Along-with the clean and decorated export office there should be some other advanced machines also which can make the operations very expedient. The Export-Import policy 1990-93 has further liberalized import of some machines.
Import of Office Machines (Under 1990-93 Exim Policy)
Registered exporters whose F.O.B value of exports during any of the two preceding years had been Rs. 1 Crore or more will be eligible for import of specified office machines once in two licensing periods. Registered exporters having exports of Rs. 25 Lakhs but less than Rs. 1 Crore will be allowed import of facsimile machine against surrender of REP/Additional licences. Export House and Trading Houses will be authorized to supply facsimile machines to their supporting manufacturers who had supplied goods of a minimum value of Rs. 25 Lakhs.
The machines mentioned below have been taken out of list of office machines permissible for import:
i) Computer with printer
ii) Word processors.
iii) Electrically operated calculating machines;
iv) Photographing machines;
v) Slide projectors and 8/16 mm projectors.
New office machines allowed for import under 1990-93 Exim Policy are:
- Synchronized slide projectors;
- Electronic White Board with or without arrangements for taking hard copy;
- Digital pager;
- Electronic diary/Memo-writer;
- Teleconferencing equipment (on the recommendation of ministry of Information and Broadcasting and approval of Department of Telecommunications).
Facsimile machine, dictation tape recorder and paper shredding machine continue to be permitted for import.
How to Establish an Export Office