Case: D2 | Export risks

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Paranoia or realism?

08-04-2022 313 views 1

D2 | Export risks

Whether you like it or not, export comes with a risk or two. Or three.

Honestly, you will definitely have to face export risks in a very early stage. Companies who are planning to export are subject to different types and ranges of risk rather than they would experience in the domestic market.

International trade is affected by, but not limited to, a range of risks such as:

Credit and/or financial risk.
- The possibility that a customer will default on payment.
- The customers business declares bankruptcy.
- Transport and/or insurance fees fluctuate or suddenly increase due to external influences.
- Import taxes and duties may change without much notice.
Currency exchange risk, heavily depending on the stability of the local market currency.
Legal risk, which may have an impact to areas such as local import procedures, taxation, employment practices, (inter)national laws and regulations, property rights, the protection of intellectual property, agency/distributorship agreements and other related subjects.
Shipping risk. Whether you are shipping goods abroad or locally, you may face issues such as contamination, seizure, vandalism, theft, loss, and breakage.

Got a bit depressed? Terrified? Don’t! There’s no need to.
There is a lot you can do to protect corporate interests. This is why it is essential to be aware of the various types of potential commercial risks and to understand the strategies that can help the company to protect its business against these risks. Curious? Have a look at the Chase case; its Head of Export will share some of his experiences with you.

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Assignments for students

What to do?

You need to carry out basic research on the export risks for the country you are interested to do business with.

First of all, there are products that are prohibited or restricted in some countries. Is your product one of them? If so, you’re in trouble and you’ve got to go back to the drawing board.
Second, write down all export risks your company will be somehow facing. Don’t skip even the slightest detail, because risks can suddenly increase in importance. It could make or break your plan, so be accurate and develop a complete risk assessment.
Finally, answer all questions keeping your business case in mind. You will be asked to mention inevitable export risks and to propose measures to keep those risks to an acceptable level.

Which standards apply?

All questions are answered; any motivation is valid, concise and to the point.
The determination of export risks is valid and specific to the targeted country.
The measures are consistent with the risks mentioned, valid and to the point.

Core assignments for students

Discover whether you master the essence of this case by completing the corresponding core assignments. If necessary, you can share your answers with your teacher or supervisor.

Case: D2 | Export risks

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Are you responding on own behalf or on behalf of a group (of students)?*

On my own behalf

On behalf of a group (of students)

Enter the first and last names of all group members

D2.1 Is your product allowed to enter the foreign trade market you’re currently targeting on?*

Yes, allowed to enter the trade market I'm currently focussing on

Don't know!

No, not allowed to enter the trade market I'm currently focussing on

D2.2 Are there any changes required to meet local demand and regulations i.e. technically, in packaging, manuals, etc? If so, please list the major changes.

D2.3 What export risks are of main concern? Make a top three.*

D2.4 Based on your research, which credit and/or financing risks definitely need attention?*

D2.5 How can these risks be managed to an acceptable level? Write down two measures or more. Be specific and to the point.*

D2.6 Based on your research, which shipping risks need to be addressed?*

D2.7 How can the shipping risks be controlled to an acceptable level? Write down two measures or more. Be specific and to the point.*

D2.8 Regardless of their current impact, are there any other export risks you have been identifying? If so, please sum them up using bullet points.

Do you want to add any other information, relevant relevant to this assignment? If so, keep it short.

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Edvard Spaapen

Editor of content during development stage