Appendices to CBI Export Planner - crecer

CBI Export Plannerb. Market prices go upReasons:• General cost increase• Supply decreases• Effects of currency fluctuations• Price leader increases prices• Some supplier is ‘skimming’Possible reactions:• Follow price increase• - same, but with temporary decrease(discount)• Promote your ‘low price”• Increase supply• Appeal to consumeristic organization• Appeal to government.Whatever your (forced or voluntary) changes in your prices may be, always make surethat your customer and your trading partner understand the reasons for it. Those reasonsshould be made acceptable and justifiable in their minds.Currency decisionsThe choice of currency in which you want to be paid eventually will prove moreacademic than realistic. Since the buyer has the money - and since he can choose fromscores of suppliers - he will dictate the terms. In nine out of ten contracts he will decideon his country’s currency, just because he does not like the headaches of buying foreignmoney when he could get his own.However, for the sake of completeness, let us look at the deliberations.Your advantages when invoicing and getting paid in your currency are:• you know what you get in terms of value for money• you do not have to organize complicated and expensive currency transactions (usuallywith your bank).The disadvantages are:• your buyer may refuse paying in your currency - or at least charge you with the costs ofcurrency exchange• your currency may not be available on the money markets in Europe• during the transaction period your currency may lose value quicker than the otherparty’s currency. Your buyer will profit from that more than you• you will have to pay twice for currency exchange if /when you buy materials andmachines for production from Europe.If you plan exports to Europe, do not shy away from quoting in European currency,particularly if your exports become substantial. Many buyers already use the Euro - intheir budgeting, in their financial statements.46 III - The export marketing mix