Short guide to approaching an international trade issue

I thought some of you might be interested in (what has proven to be) a rather efficient approach to dealing with an international trade issue. This is a basic skeleton for a strategic approach to the issue, not purporting to be an exhaustive treatment.

Defining Intelligence Needs

Before formulating a strategy, intelligence must be gathered. Before gathering intelligence, the intelligence needs have to be well defined. Here are some examples of intelligence needs categories and scopes leading to proper definition of such needs:

Corporate structure
- Levels
- Leadership
- Functions

Financial
- Available credit
- Bank procedures
- Equity

Management
- Is client an intermediary at the mercy of his end-clients
- How does he handle quality claims issues
- Does he have enough and adequate resources for the business it’s doing

Leaders’ psychology
- Habits
- Hobbies
- Ideology
- Family
- Pets

Environment
- what is going on in the market in that region at that point in time

Gathering Intelligence

1. Secondary Research

a. Remote
- Web search starting with the company website, search words being the name not only of the company but of its shareholders and leaders
- Information especially about SMEs from underdeveloped countries is very hard to find on the net
b. Local
- ON the ground you might get tips on websites that don’t show up in the first pages of the google search
- Locally you might have access

2. Primary Research
a. Remote
- phone interviews with partners and sympathetic parties with direct knowledge of infringing party
b. Local
- Visit offices and production
- Interview staff
- Interview leader
- Take pictures of people, offices and merchandise
- Interview local partners
- Try to get on the Network in order to view valuable information

Establishing Risks beside the issue at hand

1. Financial
- Too tight on the finances, if one of his clients doesn’t pay, his suppliers are in trouble
- Bad investments draining cash flow
- Equity depleted, danger of bankruptcy

2. Operational
- Not enough or appropriate resources to handle transactions properly – leads to errors
- Does not insure his clients so if they don’t pay it will break him
- Frequent quality claims for the purpose of delay or non-payment

3. Market
- If market is going down, there is a risk that the customer will find reason to annul the contract
- Customer’s customers are annulling contracts and he is forced to cancel with you
- Difficult local import or banking bureaucracy

Gaining leverage in order to avoid risks

- If you represent 30% or more of his supply, you might have leverage with cutting off supply
- If you know that your shipment is going to a particular important client of your customer, threaten to hold off
- If you can, purchase merchandise from the infringing party and offset the invoices
- Have SGS inspection before sending off merchandise in order to avoid quality claims

Usually the issue will be one of delayed or refusal of payment for any reason outlined above in the risk section. Many responses are available, including legal action, however all the risks need to be taken into consideration because one action from you can trigger a response from the infringing party corresponding to one of the risks identified that could in turn trigger some of the other risks and ultimately lead to a failed enterprise. In fact, one has to identify a dominant strategy in the situation, a strategy that no matter what the response, it will lead to a satisfactory result for you.

Soon we will look at the tactics involved in the execution of a dominant strategy, because even though the perfect strategy might be outlined, execution can make it or break it.