Sampling is one of the primary ways to gather the important data you will need in order to be successful in a new market. The FITTskills Feasibility of International Trade course delves into the best methods for researchers to create a representative sample.

For researchers to make conclusions about the population from the sample, it must be representative.

This means the sample group should include the same major characteristics of the larger group, as well as be chosen in a way that will reduce the likelihood of selecting members who are not representative of the population as a whole.

To accurately create a representative sample, researchers must ask themselves a simple question.

What Sampling Methods Will Be Used?

After defining the sample characteristics, the researcher must choose members of the sample to participate in the study. To do this, researchers use either of the following:

A probability based method

This is a random selection method, in which respondents in the sample pool each have a pre-established chance of being selected for the survey.

A non-probability based method

 This is a selection method in which respondents are chosen because of convenience, judgment, or through quota methods.

The probability sample provides data that can be statistically tested to identify the degree of its similarity to the larger population. Even so, there may be errors that have nothing to do with the sampling method. This possibility should be considered when evaluating the cost/value trade-off of using a probability versus a non-probability based sample.

Probability based methods of sample selection can take a great deal of time and expense that can be magnified when applied internationally.

To benefit from the precision of these methods, a researcher must be sure the sampling tool is complete and current, as well as be sure that the individuals who are randomly chosen are accessible. The expense of this approach is justified by the benefits gained.

The non-probability based sample is often selected because of cost, time, and value considerations, or because the entire population might not be available to the researcher. The ability to identify and access an unbiased random sample might be hampered by cultural factors or logistical problems. In such cases, the precision of the probability based sample is lost, making the high cost difficult to justify.

If the survey is being used to gather more general ideas or trends, a non-probability based sample can be adequate, if it is carefully chosen. The researcher should understand there is no method to statistically test whether it is representative of the entire population.

There are four generally accepted methods of selecting a non-probability based sample:

 1. Convenience

This is the least reliable, the least expensive, and the easiest method. The researcher chooses whoever is close and easy to access. For international trade research, this method might be difficult to implement if the company has no previous contact in the market, because selecting people who happen to be passing by might not be acceptable. An example of the convenience method is taste-testing in a supermarket.

2. Judgment

This is a more reliable method than convenience because respondents are chosen based on some pre-defined characteristic. An example is the use of key clients to test changes to a product.

3. Quota

This involves a greater effort to define the sample, but offers higher reliability and a greater degree of similarity with the characteristics of the population. at large. The researcher specifies the characteristics of value to the research question and selects a group that has the same proportion of these characteristics as the larger population.

4. Sample size

As with the method of choosing the sample, the researcher can use either a qualitative or a statistical approach to selecting the sample. The choice depends on the degree of accuracy and the amount of acceptable risk.

There are several methods of gathering primary data. Focus groups are a very effective way of obtaining qualitative data, while surveys and questionnaires can deliver qualitative or quantitative data, depending on how the survey is designed. Developing questions for surveys, interviews, and focus groups requires skill and experience. Poorly worded or structured questions will produce inaccurate results.

The method chosen for a research project will depend on the type of data that is required and the research objectives that must be met.

An essential consideration for primary research is selecting a sample to survey. It is too impractical for companies to survey an entire population to gather research, but it is important to select a sample best matching the population at large in order to gain the most realistic results.

Are there more factors to consider when making sample group that we haven’t listed? Share them with us in the comments down below.

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Reverse supply chain management has received greater industry interest in recent years, driven by growing concerns about environmental protection issues, recycling, sustainable development, and safety regulations. These issues have spurred organizations to think about how their product will impact the environment, and what sort of carbon footprint it will leave.

A growing number of manufacturers accept product returns at the end of their initial post-consumer lives and reuse the products to get more value from the product.

Companies are adopting this green influence on reverse supply chain because customers have shown they value companies with strong social and environmental corporate policies. Other companies have adopted greener policies because, not only does it improve customer opinions on the company, but also provides a competitive advantage by reducing costs. The updated 7th edition of the FITTskills Global Value Chain course looks at this trend towards circular supply chains.

Countries taking the circular approach

The increased importance of reverse supply chain as a source of value has led companies to adopt a circular supply chain approach, which reduces waste, provides an alternative source of inputs, and takes advantage of the original forward supply chain investment.

The move towards circular supply chains by organizations is being pushed forward by important international regulations and new environmental approaches:

• European Union Packaging Directive: Initiated in 2001, this directive requires all countries in the E.U. to recycle 50 percent of their packaging waste or incinerate it to provide energy.

• Japanese recycling laws: In Japan, businesses are responsible for recycling packaging materials into reusable.

• California recycled content laws: California requires manufacturers to recycle 25 percent of all plastic containers.

• UK Landfill Directive: In 2007, an addition was made to this legislation that requires all UK-based companies to recycle or treat their waste products, regardless of their size and turnover.

The European Commission has adopted a Circular Economy Package with ambitious 2030 targets. It includes revised legislative proposals on waste to accelerate Europe’s transition towards a circular economy.

The switch will increase global competitiveness, foster sustainable economic growth, and lead to the creation of new jobs.

Consumers hold the power

Another reason for the growth in reverse supply chain management strategies is consumer power. With a global market and Internet commerce, customers have a wider range of companies to purchase from than ever before.

Consumers are also becoming more informed about the products they purchase and are showing increasing concern about the conditions under which products are manufactured and disposed.

Customers now expect to be able to return products they do not like or were purchased in error.  They expect to be able to exchange older goods for new products so they do not have to be concerned with disposal or recycling issues. Repairs and warranty service are an accepted part of customer service. Slow or poorly managed service in these areas can result in a loss of customer loyalty and negative publicity.

The transition from a linear supply chain to a circular supply chain requires organizations to rethink how they imagine their supply chain. They must envision it as a network with materials and goods circling through the chain in various ways. Some considerations for creating circular supply chains include:

• Outputs become inputs because goods don’t end their lives with customers, but become an input into the supply This means accounts payable and accounts receivable processes will form a loop instead of a straight line.
• The use of information communication technology (I.C.T.) to coordinate all the moving parts a circular supply chain requires action in real time, otherwise a circular supply chain is not
• Assessing reuse opportunities requires researching suppliers and working with the top tier for a common vision towards a circular supply chain while ensuring Corporate Social Responsibility (C.S.R.) standards are
• The cash flow demands of a circular supply chain, compared to a linear one, may be The margins might improve, but a supplier’s need for cash may change.
• The management of components, such as the evidence, materials, production information, and components for the entire life cycle, requires making a detailed plan.

The Circular Economy

The new sharing economy business model, the move to circular supply chains, and the move to find more environmentally friendly ways to deal with waste, are a part of the circular economy movement.

A circular economy can be understood as an economy that is restorative and regenerative by design and aims to keep products, components, and materials at their highest utility and value at all times.

A circular economy is alternative to the traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extracting the maximum value while the product is in use. When the product has reached the end of its life-cycle, then core materials are recovered and regenerated.

The circular economy is waste-free and resilient by design. It is a new economic model that is ambitious as well as practical. Designing the economy in such a way that is restorative of ecosystems, ambitious with its innovation, and impactful for society, is a bold challenge. But it is achievable when guided by these simple principles.

• Ecosystems support rebuilding
• Use resources to generate value, and not just financial value
• Support healthy societies and cultures
• Raw materials can be cycled indefinitely
• Support human health and happiness

The circular economy is built on the concepts of “making more with less” and “modelling life cycles in the natural world”, as a network of interdependent, ongoing cycling systems. At the root of these circular economy definitions are the concepts of innovation, collaboration, waster reduction, regenerative ecosystems, and reuse and recycling.

Is your organization making the transition toward a circular supply chain? Why or why not? We want to hear from you in the comments down below. 

The post The benefits of a circular supply chain appeared first on Trade Ready.

The challenges of e-commerce are becoming easier to overcome due to the increasing familiarity with it in many markets as well as advancements in the online shopping ecosystem. Be that as it may, there are still issues requiring research and thought when setting up an e-commerce operation.

Some of the challenges posed by e-commerce have been outlined in the updated 7th edition of the FITTskills International Sales and Marketing course.

1. Distrust in the security and privacy of online transactions

Companies that establish e-commerce operations face several security risks, including:

• Denial of service: These attacks stop authorized users from accessing a website, resulting in reduced functioning of the website or its complete
• Unauthorized access to sensitive information: Hackers can obtain intellectual property and alter it, destroy it, or steal it to sell to a competitor.
• Malicious alterations to websites: Hackers have been known to alter website content to negatively impact a company’s reputation or to direct customers to competing websites when they click on a link.
• Theft of customer information: Many cases have arisen where customer credit card details, addresses, and other personal information have been stolen for criminal
• Damage to computer networks: Viruses and worm attacks can seriously affect a company’s
• Creation of counterfeit sites: Fake websites can now be created easily and at little cost to the fraudsters. These sites look identical to the authentic versions and can cause serious damage to company valuations and reputations.

To deal with these risks, companies must establish various levels of e-commerce security.

Authentication systems, such as usernames and passwords, are a basic level of control to help ensure only authorized employees have access to the website or customer information. Firewalls prevent external users from gaining access to information held on company computers, while intrusion detection software can provide an early warning for hacking attacks.

2. Viruses, malware and online attacks

As well as the financial losses, companies can also suffer a loss of reputation or market share. Companies could also open themselves up to face criminal charges.  Companies must follow government guidelines as to the level of e-commerce security and privacy they must implement.

If an attack occurs, and these guidelines have not been adhered to, a company can be prosecuted.

Viruses, Trojan horses, and worms are malicious software programs designed to damage computers in some manner. Viruses and worms infect a computer, replicate, and spread. Trojan horses are malicious programs hidden in what appears to be reputable or helpful software downloaded onto a computer. Attacks by these types of malicious programs can have serious consequences, including:

• Deletion of company data, or inability to access data
• Recording of keystrokes made by an authorized user, enabling theft of passwords and usernames
• Hijacking of the computer system
• Forwarding viruses to customer and partner computers

Companies must ensure all computers have firewall and virus protection. Employees should also be advised to not download unauthorized programs or documents from the Internet. It is also advisable to avoid opening email attachments unless the employee is expecting the named attachment to be sent to them. Companies should also make backups of essential data and store them on external drives, in cloud storage, or with reputable data storage companies.

3. Payment options and reliability

While some customers still have concerns about security and the privacy of information over the Internet, the advancement of new privacy and financial e-commerce security technologies have calmed many such fears. In addition, the expansion of connectivity bandwidth and the availability of high-seed downloads is continuing to revolutionize the sales and distribution of digital products and services.

To gain the confidence of customers, companies offer alternative payment methods so customers can select the option which makes them feel most comfortable.

Numerous online payment mechanisms exist today. PayPal is a highly subscribed service, promising secure payment in multiple currencies. Wire transfers and pre-paid accounts are other secure payment methods often offered to customers.

Companies can use other approaches to instill trust in customers both during the early stages of the decision-making process and after a sale. Trust can be built by providing efficient and reliable services that meet customer needs. For example, Tesco (a U.K.-based food retailer) has an online food shopping service. Customers can log onto the Tesco website, select their groceries and when they would like the items delivered to their home. For working customers who have little free time, this convenience often outweighs the need to personally select fruit, vegetables, and meat. And if customers are satisfied with the quality of the products delivered, they will become repeat customers.

When e-commerce operations follow an omnichannel approach, they are wise to implement fraud management efforts across channels. In doing so, they can quickly detect and address suspicious activities, no matter where and how they occur. In so doing, they offer a more secure shopping experience.

4. Complexity, uncertainty, and fraud

The O.E.C.D. Observer published a spotlight on the digital economy in 2016. The article addresses the untapped potential of e-commerce. Across the 35-member countries of the Organisation for Economic Co-operation and Development (O.E.C.D.), half of all consumers made an online purchase in 2014, but 75% of those consumers connect to the Internet daily.

This is reason to conclude there is untapped potential, particularly for cross-border e-commerce.

To illustrate, only 15% of consumers in the E.U. shop online from another E.U. Member States. The O.E.C.D. considers the reasons why the full capacity of digital consumption has still not been reached despite improved consumer access to goods and services at competitive prices due to the Internet and mobile technology.

The O.E.C.D. notes “online shoppers complain about complexity and uncertainty about delivery for instance, or dispute resolution, and can be victims of misleading or fraudulent business practices. And improvements in business transparency, such as who to contact when a problem occurs with a good or a service, don’t often extend to improved disclosures about how personal data may be collected and used by businesses online. Although consumers now have more tools to help police market conduct, the role of well-equipped consumer watchdog authorities, like the French D.G.C.C.R.F., remains essential to enhance trust in the digital marketplace.”

Has your organization had to overcome technical hurtles in order to offer a smooth e-commerce experience? Tell us about it in the comments down below.  

The post How to protect against 4 e-commerce security challenges appeared first on Trade Ready.

As the dangers of climate change become more prevalent, more regulation regarding how to safeguard the environment is being put in place.

Environmental regulations are developed by governments and organizations to protect their environment, not only related to off-shore or contract manufacturing, but also for product and packaging disposal. As a result, manufacturers must pay careful attention to the environmental impact of their operations.

Are you up to date with the new standards?

Every international trade professional must be aware of the various environmental regulations at play in a given market. The updated FITTskills 7th edition Products and Services for a Global Market course outlines the importance of environmental regulations.

 Environmental regulations vary from country to country and from product to product.

For example, the performance of the agri-food sector is closely related to the environment. Common issues are related to pesticide and herbicide use, discharge of chemicals into rivers, recycling of a certain percentage of products, and the storage of hazardous waste.

Environmental packaging regulations present food companies with challenges due to existing health standards already imposing strict constraints. Changes to packaging mandated by regulations can make the product less convenient for consumers, which can affect sales. Infractions of environmental regulations are much more important to the general public, especially in developed countries.

Consumer awareness and purchasing power ensures organizations are more responsive to making changes to products, packages, and processes to make sure environmental issues are acted upon, even if they are not regulated.

Environmental regulations – good or bad for trade?

Since the 1970s, environmental protection and sustainability, and their perceived status as barriers to competition and trade, have been hot topics in industrialized countries. Industries are concerned that initiatives to reduce the impact of industrial air pollution and regulated waste disposal would put them at a competitive disadvantage with their competition in other countries not subject to the same regulations.

On the other side of the issue, nations are concerned about countries with lax environmental regulations. The fear is these countries will encourage companies to move and set up manufacturing facilities there, as opposed to operating in nations that have implemented regulated environmental policies. At the international level, there are moves to address environmental concerns, including the conventions on climate change such as the one in Kyoto and, more recently, in Paris.

In 1972, the Organisation for Economic Co-Operation and Development (OECD) published Guiding Principles Concerning the International Economic Aspects of Environmental Policies. Among its recommendations was the proposition that industries be forced to pay for all required upgrades to meet environmental regulations.

This recommendation was made with the goal of obtaining uniform practises while addressing subsidy concerns. The fear was some governments would reimburse businesses for equipment or facility upgrades as an incentive to conform to regulations. This would amount to an unfair competitive advantage for those in nations not doing the same.

Sustainability as a guiding principle

In both the General Agreement on Tariffs and Trade (GATT-Article VI) and the General Agreement on Trade in Services (GATS – Article VI), the World Trade Organization (WTO) reinforces sustainable development as a guiding principle.

It provides member countries with the option of implementing environmental trade policies and regulations necessary to protect the health and lives of animals and humans.

However, these measures must not be implemented purely as a disguised form of restricting international trade.

Manufacturing and marketing in countries with less stringent environmental regulations may be a cost advantage for organizations, but given the rise of consumer awareness, corporate social responsibly, and the use of the Internet for social commentary, it is important to be aware of the marketing implications of taking advantage of weaker environmental protection regulations when operating in other countries.

An example of environmental compliance in action is the situation from 2013 regarding micro-bead pollution.

Learn from microbeads ban

In 2013, the Marine Pollution Bulletin published a paper describing how the Great Lakes were under threat by tiny plastic microbeads found in facial scrubs. One bottle of facial scrub could send as many as 330,000 microbeads down the drain, where they are too small to be filtered out by wastewater facilities and so they eventually make their way into the lakes.

Once in the lakes, the microbeads settle at the bottom and choke out plant life, attracting hungry creatures, who mistake them for fish eggs. Once ingested, the animals cannot digest them due to the plastic and, ultimately, the animals starve to death. The plastic accumulates in animals along the food chain. Furthermore, plastic acts as a sponge for pollutants like motor oils and pesticides. These toxins work their way into the bloodstreams of animals throughout the food chain, including fish consumed by people.

Environmentalists say there is not much that can be done about the plastic already in the lakes. Instead, they are focusing their efforts on preventing more plastic from entering the water.

In the United States, many states have discussed bills banning the sale and distribution of soaps, toothpastes, and other products containing microbeads. Manufactures put up little resistance and agreed to the deadlines to phase out microbeads.

Unilever, which owns soap companies including Noxema, Dove, and Axe, completed the phase out of microbeads in their products by 2015. Companies like L’Oreal, Colgate-Palmolive, Procter & Gamble, and Johnson & Johnson all agreed to stop using microbeads in the products.

What changes has your organization made to conform to environmental regulations? Let us know in the comments down below.

The post Why trade professionals need to be aware of changing environmental regulations appeared first on Trade Ready.

Any market entry strategy can involve working with a business partner. Direct exporters may partner with distributors and indirect exporters may partner with trading houses. All forms of strategic alliance involving partner organizations, mergers, and acquisitions are more likely to succeed if an organization has developed a working partnership with the target organization first.

Even with Greenfield investment, an organization might need to work with a foreign partner to, for example, find financing or obtain supplies for a newly built factory.

Local partners can provide on-the-ground knowledge and contacts. Foreign partners also help reduce the risk to the organization.

In a broad sense, partners can also include governments and other organizations, such as financial institutions. Governments play a significant role in the promotion of international trade and offer a number of support services to organizations to facilitate expansion into markets. The same can be said for non-governmental organizations (NGOs) and industry associations. Consultants also provide international trade services that organizations can access. Financial institutions can play a supportive role for organizations embarking on international trade.

The success or failure of market entry depends on the partners with which an organization works. The search for the best partner possible can be both time consuming and costly. Partnerships can succeed only if the participants are willing to devote sufficient time, energy, resources, and skilled people to make them work. This includes the effort needed to find the right partnership. The updated FITTskills seventh edition International Market Entry Strategies course dives into where you should be looking when searching for a foreign business partner.

Finding the Right Business Partners 

Organizations may have to evaluate many candidates before a suitable partner is found. Fortunately, there are many sources of information and assistance that can provide the names of potential candidates, supply background information about them and help verify information provided by the candidates. Such information is vital to building your team of foreign partnerships.

1. Business Associates

Effective partnering depends on effective networking. This is especially true for small businesses. Formal and informal business links are important ways of developing contacts, securing business information, initiating cooperative activities, gaining access to new sources of capital and obtaining technology.

Business associates with experience in the target country are especially valuable, as an organization can often hear about a potential partner when discussing other matters with a business contact.

Initial exploratory meetings with potential partners often produce much better insight into market dynamics, segments, and competitors. This means early meetings with other market insiders are often an incredibly valuable source of information.

Networking through people you have a relationship with is one the best ways to find potential partners. Personal introductions carry a certain level of trust, so start searching for introductions to likely partners. Let people close to you know you are looking for a partner. Ask for introductions. People are often willing to share their networks when it seems like a ‘win-win’ for everyone involved.

If you identify someone specific you would like as your partner, ask your network for introductions. You would be surprised how often you’re only a couple of introductions away from almost anyone.

2. Business Associations

Business associations include chambers of commerce, boards of trade, industry associations, and bilateral business councils set up to develop trade with specific target countries. These associations can provide contacts and business information. Chambers of commerce and industry associations in target countries are also good sources of information. In many countries, industry associations maintain industry statistics as well as membership lists.

3. Business Advisors

Organizations should consider using consultants and specialists, such as lawyers and accountants, to search for potential partners. Although this can add to the expense of market entry, business advisors can use their experience to set up new networks rapidly and speed up the introduction of contacts.

For smaller organizations new to international trade, such services can greatly decrease the time involved in establishing an effective partnership.

Some organizations with investments in a group of local firms might seek partnerships with organizations that have invested in a complementary group of firms, as a means of helping their clients expand and develop.

4. Financial Institutions

Banks, individual traders (brokers), export credit agencies (ECAs), and trading organizations are all useful sources of information about potential partners in target market. An organization’s bank has a vested interest in the organization expanding its business successfully, and if bank has a branch in the target country, the local branch will usually provide a broad range of local business information.

An organization’s relationship with relevant financial institutions can be critical for international trade, not only in terms of partnerships, but for all types of market entry strategies. Financial institutions can often provide referrals to other institutions and individuals that can assist the organization in achieving its goals. Financial institutions can also provide information and support towards financing a venture. They are also excellent sources for information about current governmental and non-governmental programs, such as foreign investment programs.

5. Social Networking Sites for Entrepreneurs

Similar to business associations, online communities of entrepreneurs can be a good source of information related to potential partners.

There is a growing number of social networking sites devoted to making connections between potential partners. They provide a platform for sharing information and often encourage discussion.

This can be a unique way to access current information and opinions related to the target market and potential partners.

How did you your business partners help your business grow? Let us know in the comments down below. 

The post The 5 types of foreign business partners you should seek when expanding globally appeared first on Trade Ready.

E-commerce is radically shifting how customers are interacting with businesses. No longer does a potential customer have to travel to a brick-and-mortar store to look through a limited selection. They can now go online and shop across a multitude of stores in a matter of seconds. As customers turn to the Internet to do their everyday shopping, businesses must shift their attention to the digital space. The FITTskills Global Value Chain training course outlines the rise of e-commerce and how it can benefit your business.

E-commerce involves conducting business operations using the Internet. Online business encompasses a wide range of functions and is completely reliant on I.T.

Up-front costs for web-based business operations are usually low and data can be exchanged between global organizations rapidly and cost effectively. An organization can track exactly what is happening in any part of the supply chain at any time. This knowledge can be used to anticipate problems, identify bottlenecks, and keep meeting consumer demand. E-commerce can deliver products directly from the manufacturer to end customer, and has led to the fast rise of online retailers, such as Walmart, Costco, and Home Depot, to provide their customers with online options. Inventory issues directly impact customers and can quickly impact an organization’s brand and reputation.

Advantages of e-commerce

The advantages of e-commerce include:

• Market access and competition: Buyers and sellers have access to goods, services and supply chains all over the world.

Global access to new markets means more product choices for consumers who can quickly research options and determine the most suitable choice. For sellers, it means more choice for non-core competency providers including suppliers, distribution and even third-party payment processing services.

• Improved communication: Buyers are able to communicate quickly with sellers and in many cases are able to track the status of their purchases online. Supply chains have constant inter-communication to mitigate production risks effectively.

• Real time access to data: Technologies enabling real time inventory and production statuses, and websites offering current marketing material, reduce time to market production and allow more immediate customer marketing feedback.

• Cost: For suppliers, online business and electronic communication reduces, and in some cases, removes the need for physical space for inventory and extra staff.

It can also cut some production and distribution costs if goods and/or services can be accessed online or downloaded by consumers.

E-commerce can also reduce marketing costs by sending targeted emails to customers as opposed to other marketing options. Finally, increased competition and not having to travel to purchase goods reduces costs for buyers.

An excellent example of a business taking full advantage of e-commerce opportunities is Sotheby’s. Sotheby’s is a large and growing online auction site that realized the merit of increasing its auction inventory to attract a bigger audience on the Internet. It revised its Internet strategy by opening its website, www.sothebys.com, to smaller dealers and auction sites, instead of competing directly with its competitors in the online auction business. With this approach, Sotheby experienced exponential growth in its inventory, which attracted a bigger market. Sotheby’s not only provides dedicated websites for its members, but it also handles all billing and collection, which has attracted thousands of participating collectible businesses with inventory to sell.

At the same time, Sotheby’s has remained focused on its high-end clients. It now offers an iPad application for international realty to attract consumers interested in purchasing multi-million dollar properties. The app was designed specifically for those who want to see more than just static photos and written descriptions when researching homes online. According to John Passerini, vice president of interactive marketing at Sotheby’s International Realty, the app allows buyers to understand the “context” of the properties they’re viewing, and where those properties are located in relation to nearby amenities like golf courses, vineyards, theaters and restaurants.

Barcoding and RFID Tags

With e-commerce becoming more prevalent and one of the unique selling points being able to track a purchase at every stage, having a way to easily identify products is essential for e-commerce. Bar codes are machine-readable representations of information that enable companies to label goods and track their movement through the supply chain. Barcoding facilitates monitoring of the supply chain in the manufacturing process, in warehouses, during shipping, and at point of sale. As products are sold, purchase orders for replacements can be transmitted automatically.

This immediate response reduces the risk and cost of carrying excess inventory.

In many cases, the supplier will produce more product in response to an order, and the supplier’s supply time will be shorter. Also, barcoding and other representations of information save administrative time, as they allow for easier processing of materials.

While still prevalent, barcoding systems are now being replaced by radio-frequency identification (RFID).

Radio frequency identification, or RFID, refers to technologies that use radio waves to automatically identify people or objects. The most common method is to store a serial number that identifies a person or object on a microchip that is attached to an antenna (the chip and the antenna together are called an RFID transponder or an RFID tag). The antenna enables the chip to transmit the identification information to a reader. The reader converts the radio waves reflected back from the RFID tag into digital information that can then be passed on to computers to make use of the information.

There are two types of RFID: active tags and passive tags. Active RFID tags have an internal power source and emit radio frequencies that can be detected by RFID readers or sensors up to hundreds of metres away. Passive RFID tags do not contain an internal power source. When they encounter radio waves from the RFID reader, the coiled antenna in the tag generates a magnetic field from which it can derive energy to transmit the RFID information.

Sensors for RFID tags can be located in warehouses, manufacturing sites, vehicles, and stores. Some systems permit precise tracking of shipments and estimated time of arrival using global positioning systems (GPS).

For foreign suppliers and buyers, the ability to track inventory throughout the global value chain anywhere on the globe provides more certainty.

Inventory tracking systems can feed into inventory management software and EDI systems to keep organizations informed to facilitate scheduling, planning and forecasting.

The use of barcodes and RFID tags allows the customer to actively track every step of the supply chain, from initial purchase all the way to delivery. This level of control creates a strong sense of customer satisfaction, which boosts the chances for returning customers.

How is your company embracing e-commerce? Let us know in the comments down below. 

The post Get on board with e-commerce – your competition is already there! appeared first on Trade Ready.

Products and services

• Are part of the product, such as a warranty
• Affect products, such as transportation
• Are part of the reverse supply chain, such as free delivery of product

The FITTskills Products and Services for a Global Market training course explores the continually evolving relationship between products and services, as well as how servitization can help you export your services.

The relationship between products and services

Provided on a global scale, these product-related services generate billions in international trade revenue.

Consider the American coffee company Starbucks. The service provided by baristas making Starbucks beverages is an integral part of customers purchasing the company’s products. In 2015, service generated $19.2 billion USD in revenue for Starbucks.

Starbucks entered the market offering a coffee shop experience. The company sells its signature fair-trade coffee, perfectly ground, brewed, and served in their coffee shops all over the world. In 2016, Starbucks had baristas serving coffee in 50 countries. In terms of continued growth, it expects to have more than 37,000 stores by 2021. Starbucks continues to innovate both in terms of its products and its brand experience.

Starbucks offer coffee-based drinks, such as lattes, as well as teas and smoothies. It also sells coffee paraphernalia, such as mugs, coffee beans, and coffee makers. Customers can also buy food products. Starbucks uses these associated products to enhance its coffee service and offer more to customers with a ‘one-stop-shopping’ strategy. Customers can go in for coffee and also have a snack or lunch. Starbucks has also expanded its home brewing by selling beverage pods for consumers using single-cup brewing systems.

Understanding how organizations can employ services to enhance their products is directly related to increasing a product’s competitive advantage through a ‘service-added competitive strategy.’

Many manufacturers are exploring the “servitization” of their products by reviewing production, operations, and ownership aspects of their products to move towards a service model. For example, in the United Kingdom, Finning Equipment has moved towards a service model where its equipment is tracked to monitor, maintain, and if necessary, replace equipment based on use and physical condition data.

How servitization improves customer satisfaction and increases profits in manufacturing

Servitization refers to the process manufacturing companies and other organizations undergo to develop the capabilities they need to provide services that complement their traditional products. As equipment becomes increasingly complex, customers need more service expertise than ever before. Manufacturers around the world are redeveloping their approach to meet the needs of their customers.

Servitization has grown to become a popular strategy for boosting both customer satisfaction and profits in the manufacturing industry.

Through the design process, the addition of services is a part of product development and adaptation. The servitization strategy is driving manufacturers to review their business models and consider service and leasing models instead of ownership models. This is very much in line with models supported by the circular economy movement.

Three key benefits of servitization for manufacturers

Manufacturers benefit from integrating servitization into their business model through:

• More effective solutions: Before servitization took hold, manufacturers simply sold products and services as an afterthought. Today, customers want a strong service program to complement the equipment they purchase. By offering service programs, manufacturers can play an active role in solving their customers problems, rather than just selling a product.
• Greater financial stability: The long-term service contracts that go along with servitization guarantee more secure revenue streams. Service contracts lay the foundation for customer loyalty and provide upselling and cross-selling opportunities.
• Increased customer retention: Some manufacturers report that servitization increases customer retention because it allows them to become familiar with their customers, their equipment, and their needs. The close relationship gives manufacturers the information they need to make their customers’ businesses more efficient.

These three benefits seen by manufacturers can help an organization understand how adding servitization to their service exports can help improve their service products to customers. With increased demand for additional benefits – including mobile management systems and responsive customer service – more manufacturing companies will start offering service contracts. By integrating service into their business models, manufacturers benefit from increased financial stability and opportunities to develop better relationships with their customers.

How does your organization keep its customers satisfied? Let us know in the comments down below. 

The post Improve your service exports with servitization appeared first on Trade Ready.

Social media has been playing a role in the shopping journey for a while now, and all signs point to this continuing moving forward. In its early stages, social media focused on the individual. But it is increasingly serving as a platform for commercial activity and to personalize a company’s relationship with its customers, prospects, and partners. 

The updated seventh edition of FITTskills International Sales & Marketing course investigates the power social media can provide to organizations. The results found shed light on how businesses can best use social networking.

Social networking, by the numbers

Facebook dominates the social media preferences of B2C marketers at 65%, followed by Twitter at 10%, and LinkedIn at 9%. The majority of B2B marketers (41%) consider LinkedIn the most important social media used by their organization, followed by Facebook (30%), and Twitter (19%). These statistics are based mostly on the responses from marketers in the U.S. at 52%, with 20% of respondents from the U.K., Canada, and Australia, and 28% responding from other countries.

According to marketers, the top two benefits of social media marketing are increased exposure and increased traffic.

The three most common reasons marketers use social media are to develop loyal fans, gain marketplace intelligence, and to generate leads. Social media channels offer a company the opportunity to speak to, and hear from their client base, prospects, and business partners. The speed and ease with which such two-way communication takes place helps a company to quickly respond to market expectations. Other important ways organizations believe social media marketing benefits their organization include:

• Increased exposure
• Increased traffic
• Developed local fans
• Marketplace insight
• Generated leads
• Improved search ranking
• Expansion of business partnerships
• Established thought leadership
• Improved sales
• Reduced marketing expenses

It is also important to understand why customers use social media. A Gallup Poll report shows a large majority of customers (94%) use social media to connect with friends and family. Less popular reasons consumers use social media is to follow trends and to find product information and reviews (29%). The poll further shows only 20% use social media to comment on trends and write reviews.

In the future, more retailers are likely to adopt social selling solutions such as selling via comments or user-generated content galleries. An example of a business already selling socially is apparel retailer TopShelf Style. When TopShelf Style places an item for sale on Instagram, customers who want to buy it simply comment “sold” and provide their email address. An invoice is then generated and sent to the shopper so they can complete the transaction.

Facebook, Twitter, and Pinterest released buy buttons in 2015 and, while none of them gained widespread adoption, it is expected that social networks will continue investing in social commerce.

Companies can use social networks to engage in Customer Relationship Management (CRM) and for advertising with web banners or text advertisements, for example.

Social networks make it easier for companies to reach out to global contacts.

A disadvantage of social networking for companies may lie in its popularity. If every company advertises on a social network, people will start to tune out the congestion of advertisements or move to another service with limited or no advertising.

Social News

Social news is a personalized news forum delivered on platforms such as Facebook, Twitter, and Reddit according to how users engage with news stories from various sources. In addition to platforms carrying general news stories, there are social news sites specializing in certain categories of news, such as technology. The third-party sources from which the platforms draw “news” could include traditional news sources as well as stories from friends, preferred bands, websites, YouTube, and advertisers.

The social platforms show news stories according to how users interact with the news.

User interactions might involve activities such as voting, liking, commenting, and sharing. This creates a more targeted and personalized news consumption experience as well as a more targeted audience for marketers.

Viral Marketing

Viral marketing uses blogs, news sites, and social networks to raise awareness of a brand.

The intent of viral marketing is to encourage people to voluntarily share advertising messages – word-of-mouth accounts passed from one friend to another via social networks. Viral advertisements may appear as video clips, interactive Flash games, or text messages. The idea of viral marketing is based on the fact that people tend to freely share their likes and dislikes about products and services. Some recent marketing campaigns that went viral include Old Spice, Air New Zealand, and LG.

Marketers try to determine which Internet users have a high Social Networking Potential (SNP) and then design a viral marketing program intended to peak the interest of those users. Such a strategy increases the transmission of viral messages.

There are several advantages to using viral marketing as a means of spreading the word about a company. Viral marketing is inexpensive, it can spread internationally in a short period of time, and companies can easily modify their advertisements.

How does your organization use social media to its benefit? Let us know in the comments down below. 

The post How to use social media as a marketing tool appeared first on Trade Ready.

Nearly every modern-day business relies upon technology. Through the prolific use of computers, smart phones, tablets, or the Internet, businesses have built themselves on the back of technology. However, with such reliance comes the potential for some major technological risks. 

Organizations face technological risks when its hardware, software, and/or online applications are compromised by cyber-attack or equipment failure.

In the current business environment, data breaches occur in organizations of all sizes. Personal records and financial information can be stolen and sold on the black market by criminals in a matter of days or even hours.

Every organization with a website or employees with smart phones has global exposure to cyber-attacks, which are difficult to understand and to predict.

1. Identify key risks, measure probability, and impact

Once the information is collected, organizations identify the key areas of concern and measure the probability of occurrence and impact on their business activities. This assists the organization in the development of a mitigation plan, should the venture move forward. Many organizations will hire IT specialists to assist with the process.

2. Analyze security threats

Organizations must identify any security vulnerabilities, which may occur as a result of the new international venture.

This can include external threats such as cyber-crime and cyber-terrorism, as well as internal threats, such as the distribution of restricted information. Organizations should review the security requirements related to the following areas:

• System access and controls
• Authentication
• Transaction authorization
• Data integrity
• Audit trail
• Security event tracking
• Exception handling
• System activity logging

In addition, organizations may want to perform system tests to determine any vulnerabilities related to security controls and system performance under recovery conditions.

3. Analyze risk of hardware and software failure

Organizations should consider what the risk of hardware and/or software failure entails for the venture and for overall operations. How stable is the equipment and software the organization uses or plans to use? What are the potential consequences of failure?

Want to learn more about how to mitigate possible risks by developing and implementing strategies and activities to monitor and manage them? Check out the FITTskills Feasibility of International Trade online course!

4. Analyze outsourcing risks

It is very common for organizations to hire third-party company to handle systems development and maintenance, network administration, disaster recovery services, application hosting, and cloud computing. It is crucial that organizations choose vendors carefully, in order to ensure their viability, capability, reliability, track record, and financial position.

5. Identify controlled technology

Some organizations buying and selling technology will need to research what constitutes controlled technology in their jurisdiction. For instance, in the U.S. there is a Commerce Control List (CCL) listing goods and technologies requiring permits in order to be exported from the U.S.. If an organization is trading in these items, it must analyze the required permits that must be obtained.

For export control purposes, ‘controlled technology’ means specific information that someone would need to develop, produce, or use goods whose export is legally controlled.

This information could be plans, manuals, models, and so on. It could be written, printed, recorded, saved electronically, spoken or passed on it some other way.

For example, most goods designed specifically for military use are controlled exports. Therefore, information for them, such as production drawings, is a controlled technology.

Organizations should access services and publications in the relevant jurisdictions to obtain more specific information about controlled technology and possible exclusions.

6. Measuring impact

Once the foreign physical asset risks have been analyzed, their potential impact must be measured.

Consider a hypothetical example of an Canadian confectionery company, CanCocoa. CanCocoa has decided to expand its e-commerce operations and is going to launch its business in the United States. The plan involves attending trade shows and events in the United States to launch the online store. CanCocoa is not currently planning on opening retail outlets yet but it is considering this for the future. CanCocoa is debating how to process the incoming U.S. order and customer inquiries. It is exploring whether to handle the orders in-house or outsource this work to a third-party company.

CanCocoa has hired a third-party IT consulting company to analyze the potential risks in this new venture. CanCocoa has identified a potential outsourcing company and has provided that information to the consultants.

7. Rank potential risks and specify desired outcomes

The consulting company takes the information CanCocoa has provided and ranks the potential risks. They provide CanCocoa with a threat profile summary, outlining the types of risk they could encounter as well as the likelihood of the risk occurring.

The threat profile provided to CanCocoa indicates the organization will want to look into mitigation strategies to address the priority issues, including cyber-crime, outsourcing, internal fraud, and hardware/software failure. The company may want to investigate another outsourcing provider that has more security measures in place to reduce its exposure to outsourcing risk. It may also want to look at a capital investment in more stable hardware/software before launching the venture. This analysis addresses the critical areas the company needs to fix before launching its newest venture.

Once the data is collected and analyzed, the organization reaches a decision point. This decision cannot be made by considering technology risk alone. Once all the risk factors have been analyzed, an organization must choose from the risk management options. These are:

• Risk avoidance
• Risk transfer
• Risk reduction
• Risk retention

An organization must prepare a strategy based off the risk management option they have chosen.

Has your organization been the victim of cyber-attacks? How did you handle the situation? Let us know in the comments down below.

The post 7 steps to minimize technological risks appeared first on Trade Ready.

As described in the FITTskills Global Value Chain textbook, a savvy international trade practitioner will look at these 9 factors before they decide to globally source their organization’s goods. 

1. Characteristics of the Raw Materials and Components

Many aspects of the strategic procurement process are affected by the characteristics of the goods begin sourced. Will goods be import as raw materials or as components for manufacturing? Is the supply of raw materials limited? Will modifications be made to the goods before they are sold?

The characteristics of the goods being sourced can impact costs (e.g. taxes, tariffs, duties, fees), logistics (e.g. transportation, storage and handling requirements), and time frames. These characteristics need to be considered throughout the procurement process.

2. Monetary Risk

Although the use of foreign suppliers can save costs due to factors such as lower costs of labour and proximity to raw materials, there are also risks that can impact costs including:

• Unanticipated and rising shipping costs
• Cost of delays or loss of goods in transit
• Rising costs of transactions, such as documentation fees, contract management fees and third-party supplier audit fees
• Costs related to time zone differences, extra time for storage or transport delays, e.g. approval is given in one country, but the time difference or traditional days off mean the action cannot be enacted until the next business dayMany organizations use primary and secondary sourcing as a mitigation strategy. A primary source is used as long as it meets company requirements for supply, delivery, and quality while a secondary supplier is available to cover shortfalls. Often the secondary supplier in on-shore or near-shore in order to address supply issues quickly, and although typically more expensive, this can prevent greater monetary risk to the organization due to lost customers purchasing competitors’ products.

There are also financing tools available to organizations to offset financial risk, such as hedging against currency fluctuations, factoring, and forfaiting.

3. Competitive Advantage

When considering global sourcing, an organization must weigh the impact on its competitive advantage.

Protection of intellectual property and quality are important aspects of competitive advantage. Organizations who believe their intellectual property is absolutely core to their competitive advantage should be very selective about the components they source from global suppliers. The more an organization has to divulge of its proprietary information, even in terms of specifications, the greater the risk to its competitive advantage.

Organizations must also keep the purpose of global sourcing in mind, by ensuring their costing is realistic and includes all the costs of sourcing, such as planning, transition, and implementation costs. If a competitive advantage is to be gained by lowering costs, it is important to ensure there are no hidden costs that will eliminate any realized cost advantage.

Organization must ensure they understand what their competitive advantage is and all the factors of global souring so they can best utilize, protect, and enhance their competitive advantage.

Want to learn more about how to minimize your risk and keep your goods safe by taking all measures needed to prepare them for transport? Check out the FITTskills Global Value Chain online course.

4. Culture

Cultural differences can complicate business communications, causing such issues as shipping delays and incorrect orders.

Miscommunication can severely disrupt and frustrate business dealings, making international sourcing a negative experience for all parties involved.

Being culturally sensitive can help mitigate this risk.

Global sourcing success requires the understanding of the cross-cultural differences between the sourcing organization and the potential supplier. If the key players in global sourcing initiatives are not aware of the impact of their behaviours on the interactions with potential suppliers, the resulting misunderstandings, miscommunication and hurt feelings will prevent any attempts at business agreements.

5. Ethics

Ethical business practices in other countries cannot be assumed as a standard practice. Although sourcing organizations are seeking the lowest prices, there can be negative backlash from customers if they find that, for example, farmers or mine workers are exploited or purchases are funding wars and insurgents, such as the “blood or conflict diamonds” of Sierra Leone, Angola, and Ivory Coast.

In developing countries, producers of certain raw commodities, such as coffee, bananas, cocoa, sugar, tea, and cotton, are being assisted by the Fair Trade social movement, which seeks to ensure producers receive equitable compensation and serves to promote sustainable community development.

The Fair Trade movement believes buying goods from producers, at a fair price, is more efficient and sustainable than traditional forms of international aid.

Although the concept of fair trade began in the 1960s, Fairtrade International only launched the certification program and the Fairtrade label in 2002.  The focus is on agricultural commodities produced in developing countries. The movement is supported by many non-profit organizations as a means to address exploitative labour practices, such as forced and child labour. It also seeks to ensure a fair return to farmers so they can support themselves and their families.

6. Regulatory Environment and Compliance

Other countries have different standards, laws, regulations, and business practices that can impact sourcing from other countries, either by adding costs or requirements that would be considered illegal in one’s own country. It is always important to remember to conduct business from the perspective of the end customer. Questionable practices that can be related to an organization’s product can have a negative effect on an organization’s brand and reputation.

7. Quality

The implications of a quality failure from an international source are much more severe than a quality failure from a domestic source. With lead times involving different time zones and much longer distances, it can take several months to rectify a quality problem. Quality issues also affect downstream supply chains.

Poor quality increases the rate of returns from unhappy customers, which results in discounting, recycling, or disposal (write-off) of defective products.

All these increase reverse supply chain costs, which negatively impacts the bottom line.

Companies can help ensure the quality of supplies by sourcing suppliers that implement quality-management systems, such as those of the International Organization of Standardization (ISO). However, higher standards of quality will mean some potential suppliers are not eligible for the supply chain, minimizing the number available.

8. Logistics

Once quality supplies have been secured, the next consideration is managing their transportation. Even assuming transport costs have been factored into the feasibility research, there are still risks in transportation that are beyond the control of the exporter and importer because supplies are generally in transport for long distances and for long periods of time.

9. Intellectual Property Protection

Sourcing international suppliers for raw materials or components doesn’t pose a high risk for loss of intellectual property compared to outsourcing manufacturing. However, there is an intellectual property protection risk, if the components contain proprietary design or material elements or require proprietary equipment.

Is our list missing anything? How would you prepare when deciding whether or not to globally source your goods?  Let us know in the comments down below.

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