INTERNATIONAL MARKETING

ASSIGNMENT QUESTION BANK (TOTAL MARKS: 100)

Note: 1) Attempt any 10 questions 2) All questions carry equal marks.

Q2. Describe the significance of the various methods of quoting the price of a product to the foreign buyer and show what costs are included in each method.

Ans. International pricing is affected by factors such as difference in cost, demand conditions, competition, and government laws.

Pricing OrientationCompanies mainly follow two different types of pricing orientation:

The cost Approach The Market Approach

The cost Approach involves computing all relevant cost and adding a desired profit mark up to arrive at the price. It is popular because it is simple to comprehend and use and leads to stable prices.

Under the market approach pricing starts in a reverse fashion. First, an estimate is made of the acceptable price in the target segment. An analysis is performed to determine if this price would meet the company’s profit objectives. The market approach focuses on pricing from the viewpoint of the customer. Unfortunately in many countries, it may not be easy to develop an adequate price demand relationship and therefore implementation of the market approach may occur in vacuum. It is this kind uncertainly that forces marketers to force for the cost approach.

Export PricingIt is affected by three factors:

The price destination The nature of Product The currency used for billing

Export Price EquationThere are five principal ways of quoting export prices, ex-factory, free along side ship, free on board, cost insurance and freight and delivery duty paid.

Transfer PricingIt refers to the pricing of goods/services among unit within corporation. Essentially, pricing decisions are affected by the following factors:

Income tax liability within the host country Tariff and/or custom duties Exchange controls Profit repatriation restriction Quota restrictions Predict status

Marginal Cost PricingPricing on marginal cost basis means that the prices should be so set that at least the marginal cost, popularly known as direct cost are recovered. Ordinarily the total cost can be divided into two broad categories: fixed cost and variable cost. Upto a certain level of output, fixed costs remains unchanged irrespective of the volume of production. Variable costs, on the other hand vary in proportion to the volume of production. Thus, under the marginal cost pricing system, the relevant cost is the variable cost or the direct cost. The use of marginal cost pricing in the case of export markets is advocated on the basis that if manufacturers are able to realize the direct cost including those in export operations specifically, they would be able to export without any way affecting the overall profitability of their firms.

There are a number of points in support of the use of marginal cost for export pricing:Export sales are additional sales and, therefore, these need not be burdened with overhead costs, which are ordinarily recovered from the domestic markets.The manufacturer’s product is probably less well-known in foreign markets than that of his competitors from developed countries.The markets for the products of developing countries are usually in countries with low national income. In such cases, high prices may limit the sales to a small segment of the market. Low prices, on the other hand, may serve to widen and create markets.Competition in foreign markets may require quotation of a lower price.The fixed or overhead costs may be recovered by two possibilities:

1. From the domestic market2. Extra loading may be done on commodities that can bear high costs.

Q5. “one of the fastest growing international activities in recent years had been offshore sourcing”In the light of above statement discuss the various forms of offshore sourcing and the criteria of selecting them. Illustrate your answer with suitable example?

Ans. Offshore sourcing is one of the fastest growing international activities in recent years. Offshore sourcing means purchasing the material from suppliers outside the country of manufacturer firm. Its being pursued by most of the organisations as a reaction to increased competition or a strategy to gain competitive advantage.Text: Offshore sourcing is basically the buying of goods in any form may be in raw or semi-finished or finished from the suppliers overseas. Various forms of off-shore sourcing are as follows:

Offshore Purchasing: It is a relationship between independent buyers and sellers in which goods are exchanged for money. The policies for exchanging goods can be decided as per the requirements and the company standards. The transactions can be done directly or through the agent. It may be on Transaction to transaction basis or may be a long-term contract.

Offshore sub-contracting: In this case buyer is involved with the source than in a simple buyer-seller relationship. In this case buyer provides the seller with product specifications and technical assistance or even some financing to get the product

Joint Venture Offshore Manufacturing: In this case A local company and a foreign company forms a joint venture in terms of technology and other terms to give the product in the market

Controlled offshore manufacturing: This relationship is of a parent and wholly owned foreign operation, generally a subsidiary corporation that supplies the parent’s need of a product.

Selecting criteria for various offshore sources are as follows:

Company capabilities and resources: Different forms of offshore sourcing demand different abilities on the part of enterprises and vastly different commitment of resources. Whether the capital is available with the company to invest for this purpose. It also needs a commitment of time by the enterprise and some experience.

Availability and capability of supplier or partner: It means whether the supplier exists in the country in which parent company wants to locate the source. It also must be clarified whether the supplier is available with the required machineries and manpower to cater the requirements of the company.

Projected sourcing volumes and variability: Companies needing large volumes can justify the large fixed investment as the fixed cost can be spread over the high volume of output. But for companies with smaller

needs independent supplier will be more active. In case if company establishes its own manufacturing plant it will try to keep it running to cover its fixed cost. and if business is variable, the company will choose the purchasing or subcontracting alternatives

Degree of integration of offshore and domestic operations: Company has to keep a considerable control over all sources to integrate offshore sources tightly with the company sources. A closely controlled offshore operation will facilitate coordinated production schedule and easy transfer of technology.

Q6. “ The market entry decision is an important element in internalization process of a firm”- What are the alternative tools available with an entrepreneur to enter foreign market? Discuss their major advantages and disadvantages.

Ans. One major choice concerns the method of entering the selected market. A foreign market entry strategy is a comprehensive plan that lays down the objectives, resources and policies that will guide the country’s international business. Foreign Market entry modes can be classified as follows:

Export Entry modes

a. Indirect: Purchasing of goods by foreign visitors and adds to our foreign exchange. Or foreign firms having branch offices and buy on the basis of their parent offices abroad.

Advantages:

1. Problems of direct exporting such as investment, etc are avoided.2. Operational Cost spread over several parties results in saving in unit cost3. Consolidated Shipment reduces unit freight

Disadvantages: 1. May take too many unrelated lines resulting in producer neither getting

expertise nor the attention.2. Possibility of manufacturer continually dependent on export house

b. Direct: Direct exporting is successful when a manufacturer wants to exploit foreign markets aggressively.

Advantages:1. Greater control over foreign marketing plan2. Greater concentration of marketing effort on manufacturer’s own

product line. 3. Quicker information feedbacks on markets, competition and

performances.

Disadvantages:

1. It doesn’t give immediate access to the foreign markets.

2. Operational costs involved in direct export are high.

Contractual entry mode:

a. International licensing: It is the transfer of industrial property rights from a licensor in one country to licensee in other country.

Advantages:

1. Circumvention of import restrictions and transportation costing penetrating foreign markets.2. Low entry cost and low direct risk.3. It involves transfer of intangible property rights rather than physical transfer of goods.

Disadvantages:

1. Licensor’s lack of control over the licensee’s marketing program.2. Lower absolute size of returns from investments.3. It give the licensee exclusive rights to use the technology or trade

mark in the manufacture and sale of specified product in the licensee country.

Investment Entry: It means to enter into the foreign market either through acquisition or joint venture.

a. Through Acquisition: It involves acquisition of a firm in the target country rather than starting from scratch.

Advantages:

1. Faster start in the target country.2. Quick returns promised on investments.3. Investor easily gains controls over the going concern.

Disadvantages:

1. All the advantages are potential and depend totally on the choice of the acquired firm and a wrong choice can transform the advantage into disadvantage.

b. Through joint venture: It occurs when an international company invests in a business enterprise in a target country together with a local partner firm.

Advantages:

1. Local partner in the target country contributes capital and reduces the outside Partner’s investment outlay and risk exposure.

2. Local partner also contributes his knowledge of local business environment and the ongoing contacts.

Disadvantages:

1. Joint ventures dilute the control over the foreign operations.

Q7. "Distribution contributes more than half to marketing success" - In the light of the above statement,

(a) Analyse the factors that should be taken into consideration while choosing a marketing channel for a product.(b) What consideration should be kept in view in selecting a channel for the distribution of auto parts manufactured in India, in country in West Asia?

Ans.(a) Factors Considered for Choosing Marketing Channel for a ProductInternational marketing channels are similar to those in domestic setting. The difference is only due to environmental influence. Factors that must be considered while choosing a marketing channel of a product are as follows:

Market: It means whether the market is dispersed or concentrated. It also considers the market potential for the same product.

Product: It considers the type of product, which is to be sold in the market. Whether the product is a technical one or a consumer product.

Marketing skill of the company: It considers the marketing skill and experience of the company in the market.

Degree of Control: It considers the level of control that is required over the channels to work successfully in the market.

Financial condition: Whether the financial condition of the company is strong or needs some financial support to work properly in the market.

Characteristics of the product: Whether the product is a high value product. What is the life of the product? Whether it is a kind of fashion goods or general item. These are all different characteristics, which are also considered while selecting a marketing channel.

Type of Customers: Whether the customers are government departments or industrial buyers or something else. It also helps in deciding the marketing channel.

Volume of Sales expected: Existing size of the market and forecasted future market size also forms a factor in deciding the channel of distribution.

Firms own Resources: It means how much resources are available with the firm to be involved in the marketing activities.

Behaviour of competitors: What the other firms in the similar line are doing also helps to decide the channel.

These are all various factors, which needs to be considered at any time while selecting the marketing channel for international market.

(b) Various considerations to be kept in view while selecting a channel for auto parts manufactured in India to be distributed in country in West Asia are as follows:

Investment required on the part of firm for a particular channel.

Present market potential and the expected future market potential of the product in that country.

Other firms existing in the market for the similar product.

Quantity required of the product in that country.

Whether the prices of the product as compared to the one given by the other firms in the market are competitive to bear a particular Channel Cost.

Legal stipulations of the market must be checked, as it is a necessity in some of the markets to have a local agent to handle all imports and exports.

Q8. Discuss the relative importance of price and non-price factors in International marketing. What in your view should be the strategy for export pricing adopted by Indian manufacturers?

Ans. Pricing is an important decision in any business whether domestic or international. It directly affects the revenue and thus the profitability. Also proper pricing aids proper growth as development of mass market depends to a large extent of price.

Price destination is an important factor in International marketing. It means who is the real customer or who is going to pay the price for the product. Whether it is final consumer or distributor or a joint venture organisation. It is of major concern that whether the customer is able to pay that price or not. Target customer must be potential enough to purchase that product.

Another important non-price factor is the nature of the product. It means whether the product is raw or semi-processed material components, finished or largely finished products or services or intangible property, patents, trademarks formulas. If the material is in raw form the customer for the product will be mainly the industries who are going to process that raw material to convert it in usable form and hence it will look for the supplier that is sometimes nearby available so that it can be purchased anytime whenever required and if it is in processed form it must reach the international market on time so that it can be utilized by the customer before expiry.

Another most important factor involved in International marketing is the currency used for the billing i.e. the currency of the purchaser’s country, the seller’s home currency or leading international currency. The currency matters a lot as the price offered by Indian industry in international market will largely differ from the prices offered by any international competitor.

Export pricing Strategy to be followed by Indian manufacturer is as follows:Indian manufacturer must have a good domestic market to bear the fixed expenses of the organisation and then the product must be dumped in the foreign market to develop the good-will and make a stand in the market. Extra loading must be done on the product that can bear high costs. Existence of large home market always gives an edge to the prices of the product in the market. The home market must also be capable of giving the higher prices. Overheads of the organisation must be kept substantial in start. It must also consider the taxes and duties which are to be levied on the product when it is going to be supplied to the foreign market. The margins for retailers and wholesalers must also be taken into account so that all the intermediaries involved in the business are benefited. Pricing must take into account the cost that will be incurred in promotional measures of the product in the foreign market. The proper distribution channel must be selected to make the product easily available in the market and to give better services to the customer as compared to other competitors.

Q10. Enumerate the various techniques of sales promotion in overseas market and discuss their suitability for promoting sales of engineering goods

Ans. International promotion can be done in the following five ways:

ADVERTISING

Advertising is most susceptible to sociological difference. The task of advertising is to communicate information and persuasive appeals effectively. Advertising in foreign markets is a expensive affair. Advertising on scale is meaningful for large multinational corporations operating through their own subsidiaries in several markets. For small enterprise, advertising in overseas market in a big way is out of question for the reason of cost. They can however, advertise in trade directories or in some specialized journals. It would be desirable for them to approach professional consultants regarding choice of media, message etc.It is sometimes argued that within certain geographical areas, not necessarily, political national boundaries, the custom, culture and demand structure are increasingly becoming uniform due to extensive information flow and increased international travel. Within such a setting, it becomes, therefore, logical and economic to follow a unified advertising policy.On the other hand, there can be no doubt that across the country people may speak different languages, may have different religions and traditions, and are subject to divergent physical and climatic conditions. To motivate in such situations will definitely require proper adaptation of the advertising strategy to such diverse elements.The criteria, which help in determining whether unified or diversified strategy should be followed, are the type of product and the homogeneity and heterogeneity of markets.

DIRECT MAILING

Two distinctive features of direct mailing are that the system is selective and that it is personal. It is selective because the approaches are made directly only to those who have been identified as the target audience. It is personal because the letter and other publicity materials are mailed either by name or by designation of the identified receiver.The crucial first step in direct mailing is the preparation of mailing list. Once the list is prepared, the letter and other printed materials are to be designated in away so as to give a personal touch. The receiver must feel that it is not a routine letter but something different and personal. Direct mailing is generally less costly than advertising. Another most important requisite is the preparation of suitable sales literature.

Sales literature can take the following forms:1. Company brochure or leaflet2. Product leaflets3. Price list4. Catalogues containing full listing and basic description of specific products

PERSONAL SELLING

It is an effective means of reaching the buyers. It involves an alive, immediate and interactive relationship between the buyer and the seller. Major advantages of personal selling are:The strategy can be adjusted to meet the requirements of the buyersThe seller gets to know the prospective buyers reaction almost instantaneouslyHe can collect information about buyers, markets and environmentHe can provide technical and commercial information to the buyers

Personal selling calls for very meticulous preparation on the part of salesmen on terms of acquiring all the necessary information about the product, pricing but also skills for personal communication. Salesman should develop the necessary skills to be able to survive and grow in the competitive markets the world over. Personal selling can also cultivate long term personal relationship with the buyer. Personal selling can be effectively used in industrial market for selling technical goods like machinery and equipment. However, it is expensive but effective.

STORE PROMOTIONS

A promotion method where a country’s merchandise is promoted by a department store where either a complete floor or a shelf can be hired for displaying products.

TRADE FAIRS AND EXHIBITIONSFairs and exhibitions constitute the means of presenting goods and services in an attractive manner with the aid of colour, light and motion in order to catch the imagination of the visitor, attract his attention and get him interested in the objects displayed. They help to reach the public which may not be reached in any other way or which by nature would disregard other media or publicity. Fairs are more useful for industrial products whose demonstration is more effective.

Trade fairs:

Participation in trade fairs will help an exporter to have an idea of: What is available in the market concerned

Who would be his competitors To what extent would the product have to be adapted Prevailing prices in the world markets Strength and weaknesses of competing products

In addition, he would also be able to know the developments and technological trends in his industry. He may also come across possible buyers for his product and an agent to represent him.

There are two types of trade fairs:

General FairIn these fairs, there are exhibitors of all types and they have attraction both for the business firms as well as for the household buyers. There may be separate pavilions for separate product groups.

Specialized FairsThese fairs are highly specialize in the sense that only specific products are displayed. These fairs are intended for the trade and industry and not for the general public. The objective of such fairs is not only to conclude deals immediately but also to have first hand knowledge of technical developments in that particular sector, to identify business partners on a long term basis or to get ideas for product development.

Exhibitions

Solo ExhibitionsSometimes the government of a country may organize an exhibition of its export products in a country where market prospects are bright. The exhibition may be a specialized one i. e. where only small number of related product groups are displayed or a general exhibition showing all important export products.

Company ExhibitionSuch an exhibition is organized by an exporting firm to exhibit its own products depending on the nature of the products. The exhibition may be open to trade and consumer both.

Q12. (a) Discuss the various factors to be considered while designing product for international market. (b) Distinguish between product adaptation and product standardization.

Ans. (a) Product design is a major strategic issue. A company can either offer a standard product worldwide or adapt it to local requirements. To operate overseas, a periodic review of product line is necessary.Various factors to be considered while designing product for international market are as follows:

Climatic conditions: The raw material of a product may have to be changed for its supply to another country because of different climate. For e.g., Sony’s music system operating in India has a dust protection system.

Product use: Sometimes the product design has to be changed to pertaining to its use and performance. For e.g., Mixer/ grinder in U.S.A has a power rating between one to two minutes because of simple use of this equipment.

Cultural views: Sometimes design is to be changed due to fashion, taste and preference. For e.g., Brighter colour are liked in Africa.

Quality: it reflects the end-issue values. Like a nut used elsewhere will have a

different quality as compared to when it is being used as a auto part.

Specific Requirements: Sometimes design is to be changed due to some specific requirement of the customer.

Level of sophistication: Design of item exported should match with level of sophistication in the target market.

Strategy: Product design can also be used as a strategy to enter the target market. For e.g., Hyundai enter into the Indian market with small car to compete with Maruti.

Standardization: Standardization of the product is must to gain the loyalty of the customers.

Life cycle: Understanding the product life cycle is another important element. Compared to developing economies, the product sold in developed countries has shorter life.

Branding: It is the value addition to the given product. E.g., Sony, Toyota, etc.

Packaging: Different market environment required different packaging for adequate protection and shelf life of a product.

(b) Difference between product adaptation and product standardization.

Product Adaptation Product Standardization

Product adaptation means to change a product due to un-suitability to a particular Market.

Product standardization means to make the designs tandard for a product.

It is done by either changing the product through value addition or making it functionally different

It is done by keeping the features of the product constant for all the Supplies.

Products may vary in different countries due to variable functional requirements.

Product features are almost constant and are made keeping in view the various requirements.

Technology keeps on Changing to adapt to the Changing environment

It helps in saving on technology as same specs are used for standardized products.

Changing features due to changes in environmental factors keeps on updating the product in customer’s mind

It helps in winning the loyalty of the customers due to standard features of the product.

Q13 (a) What are benefits that a company can accrue through international marketing? (b) How does international marketing differs from domestic marketing.

Ans 13(a) The factors, which motivate the firms to go international, may be broadly classified into two groups:1) The Pull factors

2) The Push factors3)

The pull factors are those forces of attraction, which pull the business to the foreign markets. Companies are motivated to internationalize because of the attractiveness of the foreign market. These include the relative profitability and growth prospect.

The Push factors refer to the compulsions of the domestic market, like saturation of the market, which prompt companies to internationalize. These are reactive reasons.

Important reasons are:

a) Profit MotiveOne of the most important reasons of internationalization of business are to earn profit. Often it has been found that international business could be more profitable than selling in the domestic market. One of the important motivations for foreign investment is to reduce the cost of production by taking advantage of cheap labour input or raw material.

b) Growth opportunitiesThe growth potential of many foreign markets is a strong attraction for foreign companies. In a number of developing countries, both the population and income are growing fast. It may be noted that the several developing countries, the newly industrializing countries and the People’s Republic of China in particular have been growing much faster than the developed countries.

c) Domestic Market ConstraintsThese drive many companies to expand the market beyond the national border. The market for a number of products tends to saturate or decline in the advanced countries. This often happens when the market potential has been almost fully tapped. Another type of domestic market constraint arises from the scale economies. The technologicalAdvances have increased the size of optimum scale of operation substantially in many industries making it necessary to have foreign market in addition to domestic market, to take advantage of economies of scale. It is the thrust given to exports that enabled certain countries like South Korea to set up economic size plants.

d) CompetitionCompetition may become a driving force behind internationalization. A protected market does not normally motivate companies to seek business outside home market. The economic liberalization in India since 1991 has increased competition from foreign firms. Hence, many Indian companies are now going international in a big way.

e) Government Policies and RegulationMany Governments give number of incentives and other positive support to domestic companies to export and to invest in foreign companies. Sometimes companies may be obliged to earn foreign exchange to finance their imports and to meet certain other foreign exchange requirements like payment of import bill, payment of royalty and dividend and debt. Some companies move to foreign countries because of certain regulations like the environmental laws.

f) Spin-off BenefitsInternational business helps the company to improve its image. International marketing may have to pay for the internal market too by giving the domestic market better product. Further, the foreign exchange earnings may enable a company to import capital goods technology etc. Another attraction of exports is the economic incentives offered by the government.

g) Strategic VisionThe systematic and growing internationalization of many companies is essentially a part of their business policy or strategic management.

(b) Some salient features of difference between the International Marketing and Domestic Marketing are:

1. Sovereign Political Entities:Each country is a sovereign political entity and goods and services have to move across national boundaries. As a result, They may have to face a number of restrictions. They may fall in any of the following categories:Tariffs or Custom DutiesThese only make the goods expensive and are not intended to ban foreign goods entirely.

2. Quantitative RestrictionsThese are mainly intended to restrict trade in the specific commodities subject to restrictions, the major objective being protection of domestic industries.

3. Exchange ControlsIn some cases though the entry of goods is not banned, importers may not be allowed the necessary foreign exchange controls.

4. Local TaxesOne of the objectives is to make the foreign goods comparatively costlier than domestic goods.

5. Different Legal SystemsEach country has its own legal system and very often, the legal systems operated by different countries differ from each other. The existence of different legal systems makes the task of businessmen more difficult as they are not sure as to which particular system will apply to their transactions. However, attempts are being made to bring uniformity in some specific areas.

6. Different Monetary SystemsEach country has its own monetary system and the exchange value of each country’s currency is different from that of the other.

7. Lower Mobility of Factors of ProductionFactors of production are less mobile as between nations than in the country itself.

8. Differences in Market CharacteristicsEach country has its own procedures and documentary requirements and traders have to comply with these regulations if they want to export to or import goods from foreign countries.

9. Greater Degree of RisksThere is a greater degree of risk involved in international marketing than in domestic marketing due to:

Larger volume of transactions and the higher value of these transactions. Longer time period involved in these transactions due to longer time in transit

and the longer credit period involved. Comparatively less knowledge about the parties’ reputation and credibility.

10. Cultural DifferencesExporting means operating in cross-cultural environment. This makes the task of marketing more complex because the marketer must appreciate how different is the foreign culture from his own and how the difference has to be reflected in shaping his behavior pattern as well as his export marketing strategy.

Q14. What do you understand by offshore sourcing? What are the factors responsible for firms resorting to more and more on offshore sourcing? Discuss the various forms of offshore sourcing and the criteria of selecting them.

Ans. Offshore sourcing means purchasing the material from suppliers outside the country of manufacturer firm. Its being pursued by most of the organisations as a reaction to increased competition or a strategy to gain competitive advantage. Offshore sourcing is basically the buying of goods in any form may be in raw or semi-finished or finished from the suppliers overseas. Various reasons for the organisations to go for offshore sourcing are as follows:

1. Cost reduction2. Quality improvement3. Increased exposure to worldwide technology.4. Delivery and reliability improvements5. Competition to domestic supply base6. Establishing a presence in the foreign market7. Satisfying offset requirement8. Increasing the no. of available sources

Various forms of off-shore sourcing are as follows:

Offshore Purchasing: It is a relationship between independent buyers and sellers in which goods are exchanged for money. The policies for exchanging goods can be decided as per the requirements and the company standards. The transactions can be done directly or through the agent. It may be on Transaction to transaction basis or may be a long-term contract.

Offshore sub-contracting: In this case buyer is involved with the source than in a simple buyer-seller relationship. In this case buyer provides the seller with product specifications and technical assistance or even some financing to get the product

Joint Venture Offshore Manufacturing: In this case A local company and a foreign company forms a joint venture in terms of technology and other terms to give the product in the market.

Controlled offshore manufacturing: This relationship is of a parent and wholly owned foreign operation, generally a subsidiary corporation that supplies the parent’s need of a product.

Selecting criteria for various offshore sources are as follows:

Company capabilities and resources: Different forms of offshore sourcing demand different abilities on the part of enterprises and vastly different commitment of resources. Whether the capital is available with the company to invest for this purpose. It also needs a commitment of time by the enterprise and some experience.

Availability and capability of supplier or partner: It means whether the supplier exists in the country in which parent company wants to locate the source. It also must be clarified whether the supplier is available with the required machineries and manpower to cater the requirements of the company.

Projected sourcing volumes and variability: Companies needing large volumes can justify the large fixed investment as the fixed cost can be spread over the high volume of output. But for companies with smaller needs independent supplier will be more active. In case if company establishes its own manufacturing plant it will try to keep it running to cover its fixed cost. And if business is variable, the company will choose the purchasing or subcontracting alternatives

Degree of integration of offshore and domestic operations: Company has to keep a considerable control over all sources to integrate offshore sources tightly with the company sources. A closely controlled offshore operation will facilitate co-ordinate production schedule and easy transfer of technology.

Q15. Discuss briefly the functions of various organisations set-up in India for promotion of exports.

Ans. Various organisations setup in India and their functions for promoting exports are as follows:

Ministry of commerce and Industry: It is the primary government agency, which is responsible for all the activities of evolving and directing the foreign trade policies and programs. It also includes the developing of commercial relation with other countries, state trading and also looks after the various trade promotional measures and their development.

The main functional divisions of ministry are:1. Trade Policy Division: It is responsible for the set-up of all policies and

programs needed for export.2. Foreign trade territorial division: It is division decides the division of

various territories so that all the customers can get a prompt and good service.

3. Export Products Division: It is the division which looks after the design features of the product which we are going to export as it must be according to the changing demand of the customer abroad.

4. Export Service Division: It is the division which handles all the after sales service in the export market.

Board of Trade: It is highest forum on trade policies for government industries. It looks after the policies and also the problems faced by the industry in export and also recommend solutions for those problems for the consideration and Implementation by the government.

Commodity Organisations: Various commodity organisations were set-up on the basis of various functions involved in export. These organisations are as follows:1. Export Promotion Council: I look after the current developments and

changes required to be made in policies or product or anything to facilitate future growth in export.

2. Commodity boards: It handles all the problems related to production, development and marketing.

3. Export development authorities: These authorities basically look after the measures to develop export in different countries as much as possible. There are two export development authorities:

Marine Products EDA: To Serve the sea food industry. Agricultural and Processed food products EDA:

To serve the development of value added products Service Institution: The government of India has established

various service organisation which are as follows:

1. Indian Institute of foreign trade2. India trade promotion3. National center for trade information4. Export credit guarantee corporation5. Export - Import bank6. Indian institute of packaging7. Indian council of arbitration8. Federation of Indian export organisation9. Development of commercial intelligence and statistics

Government trading organisation: The government of India has set-up a no. of government trading corporations like estate trading corporations, MMTC, Project Equipment Corporation, etc. These corporations have supplemented the efforts of private sector in foreign trade.

State level export promotion organisations: These organisations also participate in efforts for export promotion. Some of the governments had also set-up Export Promotion boards and corporations.